Food Stamp Program: Simplification of Program Rules

SUMMARY: This action proposes several changes in Food Stamp Program

rules relating to social security numbers, combined allotments,

residency, excluded resources, contract income, self-employment

expenses, certification periods, the notice of adverse action,

recertification, and suspension under retrospective budgeting. The

changes are being proposed as means to simplify regulatory requirements

and to increase consistency with requirements of the Aid to Families

with Dependent Children Program.

DATES: Comments must be received on or before March 13, 1995 to be

assured of consideration.

ADDRESSES: Comments should be submitted to Judith M. Seymour,

Eligibility and Certification Regulation Section, Certification Policy

Branch, Program Development Division, Food and Consumer Service, USDA,

3101 Park Center Drive, Alexandria, Virginia 22302. Comments may also

be datafaxed to the attention of Ms. Seymour at (703) 305-2454. All

written comments will be open for public inspection at the office of

the Food and Consumer Service during regular business hours (8:30 a.m.

to 5 p.m., Monday through Friday) at 3101 Park Center Drive,

Alexandria, Virginia, Room 720.

FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed

rulemaking should be addressed to Ms. Seymour at the above address or

by telephone at (703) 305-2496.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be significant and was reviewed by

the Office of Management and Budget under 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 in 7 CFR 3015, Subpart V and related Notice (48 FR 29115), this

Program is excluded from the scope of Executive Order 12372 which

requires intergovernmental consultation with State and local officials.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas,

Under Secretary for Food, Nutrition, and Consumer Services, has

certified that this proposed 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

administer the Program.

Paperwork Reduction Act

Pursuant to 7 CFR 273.14, State welfare agencies must recertify

eligible households whose certification periods have expired.

Households are required to submit a recertification form. This rule

authorizes State agencies to use a shortened or modified form of the

application used for initial certification. The reporting and

recordkeeping burden associated with the application, certification and

continued eligibility of food stamp applicants is approved by the

Office of Management and Budget under OMB No. 0584-0064. OMB approval

of the recertification procedures contained in Sec. 273.14 of this

proposed action is not necessary because the procedures do not add new

or additional requirements on State agencies. In fact, the proposal

gives State agencies more flexibility in recertifying households.

The public reporting burden for the collection of information

associated with the application, certification and continued

eligibility of food stamp applicants is estimated to average .1561

hours per response, including the time for reviewing instructions,

searching existing data sources, gathering and maintaining the data

needed, and completing and reviewing the collection of information.

Send comments regarding this burden estimate or any aspect of the

information collection requirements, including suggestions for reducing

the burden, to the Certification Policy Branch, Program Development

Division (address above) and to the Office of Information and

Regulatory Affairs, OMB, Room 3208, New Executive Office Building,

Washington, DC 20503, Attn: Laura Oliven, Desk Officer for FCS.

Executive Order 12778

This rule has been reviewed under Executive Order 12778, Civil

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

respect to any State or local laws, regulations or policies which

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

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

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

rule or the application of its provisions, all applicable

administrative procedures must be exhausted. In the Food Stamp Program

the administrative procedures are as follows: (1) for Program benefit

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

2020(e)(1) and 7 CFR 273.15; (2) for State agencies--administrative

procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for

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

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

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

set out at 7 CFR 278.8.

Background

In this rule, the Department proposes to revise Food Stamp Program

regulations in response to State agency requests for waivers of Program

requirements and suggestions for simplification of rules. In some

cases, we are proposing to amend the regulations to incorporate

guidance we have already provided to State agencies. In other

instances, we are proposing to modify Program rules to provide more

[[Page 2704]]

consistency with requirements in the Aid to Families with Dependent

Children (AFDC) program. Each proposal is discussed in detail below.

Social Security Numbers for Newborns--7 CFR 273.2(f)(1)(v), 7 CFR

273.6(b)

Current regulations at 7 CFR 273.6(a) require an applicant

household to provide the State agency with the social security number

(SSN) of each household member. A household member who does not have an

SSN must apply for one before he or she can be certified, unless there

is good cause for such failure as provided in 7 CFR 273.6(d). If a

household member refuses or fails without good cause to apply for an

SSN, the individual is ineligible to participate.

Under a program instituted by the Social Security Administration

(SSA) called ``Enumeration at Birth (EAB),'' 45 CFR 205.52, parents of

a newborn child may apply for an SSN for the child when the child is

born if this service is available at the hospital. When providing

information for the child's birth certificate, the parent may request

that the child be assigned an SSN and issued an SSN card as part of the

birth registration process. The State records that information and

subsequently provides enumeration data to SSA in Baltimore via magnetic

tape. The time it takes for States to transmit data to SSA varies.

However, SSA generally prints and mails cards within 3 days of receipt

of the required data.

Most hospitals give parents Form SSA-2853, ``Message From Social

Security.'' This receipt form, which describes the EAB process and how

long it will take to receive a card, contains the child's name and is

signed and dated by a hospital official. It is accepted by State

agencies for welfare or other public assistance purposes.

Current program regulations do not address the EAB system. Food and

Consumer Service (FCS) regional offices were informed in a memorandum

dated July 28, 1989, to instruct State agencies that the Form SSA-2853

(OP4) could be used as verification of application for an SSN if the

State agency has other documentation connecting the baby named on the

form to the household. We are proposing an amendment to 7 CFR

273.2(f)(1)(v) to reflect that a completed Form SSA-2853 is acceptable

as proof of SSN application for an infant. However, the proposed

amendment would give State agencies and households more flexibility in

this area than the 1989 policy memo granted.

In cases in which a household is unable to provide or apply for an

SSN for a newborn baby immediately after the baby's birth, Section

273.6(d) currently allows for good cause exceptions to the SSN

requirement. The regulations allow the member without an SSN to

participate for one month in addition to the month of application.

However, good cause does not include delays due to illness, lack of

transportation or temporary absences of that household member from the

household, and good cause must be shown monthly in order for the

household member to continue to participate.

Several State agencies have requested and been granted waivers to

allow households up to four months following the month in which a baby

is born to apply for an SSN for a newborn. In justifying the need for a

waiver, the State agencies cited the difficulty some households

experience in obtaining a certified copy of the birth certificate

needed to apply for an SSN.

To avoid a delay in adding a new member to the household, we

propose to amend 7 CFR 273.6(b) to provide that, in cases in which a

household is unable to provide or apply for an SSN for a newborn baby

immediately after the baby's birth, a household may provide proof of

application for an SSN for a newborn infant at its next

recertification. If the household is unable to provide an SSN or proof

of application at its next recertification, the State agency shall

determine if the good cause provisions of 7 CFR 273.6(d) are

applicable.

Combined Allotments--7 CFR 273.2(i) and 274.2(b)

Current regulations at 7 CFR 274.2(b)(3) provide for the issuance

of a combined allotment (prorated benefits for the application month

and full benefits for the subsequent month) for eligible households

applying after the 15th of the month that qualify for expedited

service. The regulations require that to receive the combined

allotment, a household must supply all required verification within the

5-day expedited service timeframe. If the household does not supply all

required verification within the expedited service timeframe, the

household receives a prorated amount for the initial month issued

within 5 days of application (with waived verification, if necessary,

to meet the expedited timeframe) and a second allotment for the

subsequent month issued after all necessary verification has been

obtained.

On March 31, 1992, the U.S. District Court for the Northern

District of Georgia ruled against USDA in Johnson v. USDA and Madigan.

This case concerned combined allotments for expedited service. The

Court agreed with the plaintiffs that Section 8(c)(3)(B) of the Food

Stamp Act, 7 U.S.C. 2017(c)(3)(B), requires that if an eligible

household applies for food stamps after the fifteenth of the month and

is entitled to expedited service, it must receive the prorated initial

month's allotment and the full allotment for the second month within

the expedited timeframe. In such a case, any additional requirements

would be postponed until the end of the second month.

In light of the District Court's decision, the Department chose to

alter national food stamp policy regarding combined allotments. On June

16, 1993, the Department issued a policy memorandum to its regional

Food Stamp Program directors informing them of the change in policy.

The regional directors were instructed to inform the State agencies in

their regions of the change. The Department is proposing in this rule

to incorporate the provisions of the policy memorandum into the Food

Stamp Program's regulations.

Currently, the regulations regarding combined allotments are

contained at 7 CFR 274.2(b) (2), (3), and (4). In order to simplify

these regulations, the Department is proposing to move the combined

allotments requirements out of 7 CFR 274.2(b) and into 7 CFR 273.2(i).

In 7 CFR 274.2, the Department is proposing to delete paragraphs (b)

(2), (3), and (4), and redesignate paragraphs (b)(1), (c), (d), and (e)

as paragraphs (b), (d), (e), and (f), respectively. The Department is

proposing to add two sentences to the end of redesignated paragraph (b)

which will contain the requirements for issuing benefits to expedited

service households. The Department is also proposing to add a new

paragraph (c) which will reference the combined allotment regulations

at 7 CFR 273.2(i). In 7 CFR 273.2(i)(4)(iii), the Department is

proposing to revise paragraph (C), and to add two new paragraphs, (D)

and (E). 7 CFR 273.2(i)(4)(iii)(C) will include the requirements

currently contained at 7 CFR 274.2(b)(2), which concern combined

issuance for households certified under normal processing timeframes. 7

CFR 273.2(i)(4)(iii)(D) shall contain the new requirement that a

household which applies after the 15th of the month and is processed

under expedited service procedures shall be issued a combined allotment

consisting of prorated benefits for the initial month of application

and benefits for the first full month of participation.

[[Page 2705]]

In these cases, any unsatisfied verification requirement would be

postponed until the end of the second month. 7 CFR 273.2(i)(4)(iii)(E)

shall include the requirements currently contained at 7 CFR

274.2(b)(4), which concern households not entitled to combined

allotments.

The regulations at 7 CFR 273.2(i)(4)(iii)(B) currently require that

households which apply after the fifteenth of the month and are

assigned certification periods of longer than one month, must have all

postponed verification completed before it can be issued its second

month's benefits. Migrant households which apply after the fifteenth of

the month and are assigned certification periods of longer than one

month must provide all postponed verification from within-State sources

before the second month's benefits can be issued, and must provide all

postponed verification from out-of-State sources before the third

month's benefits are issued. Because of the change in policy regarding

combined allotments, eligible households that are entitled to expedited

service and apply after the 15th of the month must now receive a

combined allotment which includes their first and second month's

benefits. Since these households will have already received their

second month's benefits, postponed verification must now be completed

prior to the third month of benefits. As noted above, this is current

policy for migrants in regard to completing out-of-State verification,

and the Department is proposing to broaden the requirement to make it

mandatory for all households which apply after the fifteenth of the

month and are assigned certification periods of longer than one month.

Therefore, the Department is proposing to amend 7 CFR

273.2(i)(4)(iii)(B) accordingly. The Department is also proposing to

make a conforming amendment to 7 CFR 273.10(a)(1)(iv), which contains a

similar verification requirement to that currently contained in 7 CFR

273.2(i)(4)(iii)(B).

Current regulations at 7 CFR 273.2(i)(4)(iii)(B) require that when

households which apply for benefits after the 15th of the month provide

the required postponed verification, the State agency shall issue the

second month's benefits within five working days from receipt of the

verification or the first day of the second calendar month, whichever

is later. The Department is proposing to remove this requirement.

Current regulations at 7 CFR 273.2(i)(4)(iii)(C) require that

households which are eligible for expedited service and that apply

after the fifteenth of the month must be issued their second month's

benefits on the first working day of the second calendar month, not the

day benefits would normally be issued in a State using staggered

issuance. Because of the potentially lengthy period of time between

issuance of the combined allotment for the month of expedited service

and the first full month of participation and issuance of a second

allotment for the third month of participation if benefits are issued

to the household in a State using staggered issuance, the Department

has decided to retain the issuance requirement of 7 CFR

273.2(i)(4)(iii)(C) for the third month of benefits. Therefore, the

Department is proposing to add a new paragraph 7 CFR

273.2(i)(4)(iii)(F) which will require that in States with staggered

issuance, households be issued their third allotment by the first

working day of the third calendar month. For allotments in subsequent

months, State agencies will employ their normal issuance mechanisms.

Current regulations at 7 CFR 273.2(i)(4)(i)(B) require that

households entitled to expedited service furnish a social security

number (SSN) for each household member before the first full month of

participation. Households that are unable to provide the required SSNs

or who do not have one prior to the first full month of participation

can only participate if they satisfy the good cause requirements with

respect to SSNs specified in 7 CFR 273.6(d).

Because of the change in combined allotment policy, eligible

households that apply after the fifteenth of the month and are entitled

to expedited service can receive their second month's benefits without

having to furnish an SSN. The Department is proposing to revise the

regulations at 7 CFR 273.2(i)(4)(i)(B) to require that households

entitled to expedited service that apply after the fifteenth of the

month furnish an SSN for each person prior to the third month of

participation.

Current regulations at 7 CFR 273.2(i)(4)(iii) provide that

households that are certified for expedited service and have postponed

verification requirements may be certified for either the month of

application or for longer periods, at the State agency's option. 7 CFR

273.2(i)(4)(iii)(A) currently addresses verification requirements for

households that are certified only for the month of application, and 7

CFR 273.2(i)(4)(iii)(B) currently addresses verification requirements

for households that are certified for longer than the month of

application. Neither section of the regulations addresses verification

requirements for households that apply before the 15th of the month.

The Department is proposing to eliminate this deficiency by amending 7

CFR 273.2(i)(4)(iii)(A) to address verification requirements for

households that apply on or before the 15th of the month and to amend 7

CFR 273.2(i)(4)(iii)(B) to address verification requirements for

households that apply after the 15th of the month.

Current regulations at 7 CFR 273.2(i)(4)(iii) give State agencies

the option of requesting any household eligible for expedited service

which applies after the 15th of the month to submit a second

application (at the time of initial certification) if the household's

verification requirements have been postponed. Under current policy,

that second application would be denied for the first month and acted

on for the second month. However, now that expedited service households

will be receiving a combined allotment of their first and second

month's benefits, under our proposal, the second application would be

denied for both the first and second months and acted on for the third

month. The Department believes that current regulations do not allow

for this procedure and is, therefore, proposing to amend the

regulations at 7 CFR 273.10(a)(2)(i) to require that if a household

files an application for recertification in any month in which it is

receiving food stamp benefits, the State agency shall act on that

application for eligibility and benefit purposes starting with the

first month after the current certification period expires.

Residency--7 CFR 273.3

Current rules at 7 CFR 273.3 require food stamp households to live

in the project area in which they apply unless the State agency has

made arrangements for particular households to apply in nearby

specified project areas. A proposed rule on Consistency for Food Stamp

Program, Aid to Families with Dependent Children, and Adult Assistance

Programs (the Consistency rule), published September 29, 1987, at 52 FR

36549, would have permitted State agencies to allow Statewide

residency. The change was proposed to increase consistency with

requirements of the AFDC and the Adult Assistance programs under Titles

I, X, XIV, and XVI of the Social Security Act, which require that

applicants reside in the State, but have no project area requirement.

Under that proposed rule, State agencies would still have been able to

designate limited project areas and restrict where a given household

could apply. That proposed rule was not

[[Page 2706]]

published as a final rulemaking because of the initiation of a broader

AFDC/food stamp consistency effort. However, in the interest of Program

simplification, the Department has decided to repropose the provision.

We are proposing, therefore, to amend 7 CFR 273.3 to give State

agencies the option of permitting households to live anywhere in the

State rather than in the project area in which they apply for benefits.

Comments received on this provision of the proposed Consistency

rule were favorable. One commenter did ask, however, that State

agencies which continue to require an applicant to apply in a

particular project area office be required to forward the application

from an ``incorrect'' office to a ``correct'' receiving office. The

regulations at 7 CFR 273.2(c)(2)(ii) provide that if a household files

an application at the incorrect office within a project area, the State

agency shall forward the application to the correct office the same

day. The application processing timeframes begin when the correct

office receives the application. This provision of 273.2(c)(2)(ii)

would continue to apply to State agencies which require applicants to

apply in a particular project area. We are proposing, however, to add a

new paragraph (iii) to 7 CFR 273.2(c)(2) to address application

processing timeframes in States which opt to allow Statewide residency.

If a State agency does not require that households apply in specified

project areas, the application processing timeframes would begin the

day the application is received by any office.

The Department is also proposing to make a second amendment to 7

CFR 273.3 to clarify the requirements for transferring food stamp cases

between project areas. Several commenters on the Consistency rule

requested this clarification. The Department is proposing to amend 7

CFR 273.3 to state that when a household moves within a State, the

State agency may either require the household to reapply in the new

project area or transfer the case from the previous project area to the

new one and continue the household's certification without requiring a

new application. If the State agency chooses to transfer the case, it

must act on changes in the household circumstances resulting from the

move in accordance with 7 CFR 273.12(c) or 7 CFR 273.21. The State

agency must also ensure that potential client abuse of case transfers

from project area to project area is identifiable through the State

agency's system of duplicate participation checks required by 7 CFR

272.4(f). Finally, the State agency must develop transfer procedures to

guarantee that the transfer of a case from one project area to another

does not affect the household adversely. These proposed requirements

are consistent with the requirements for transferring cases between

project areas stated in Policy Interpretation Response System (PIRS)

Category 3 Policy Memo 3-91-03 issued December 17, 1990.

Funeral Agreements--7 CFR 273.8(e)(2)

Regulations at 7 CFR 273.8(e)(2) exclude the value of one burial

plot per household member from resource consideration. Questions have

arisen concerning the treatment of pre-paid funeral agreements. In the

Consistency rule, we proposed to adopt a funeral agreement policy

similar to that of the AFDC program. AFDC regulations at 45 CFR

233.20(a)(3)(i)(4) exclude from resource consideration ``bona fide

funeral agreements (as defined and within limits specified in the State

plan) of up to a total of $1,500 of equity value or a lower limit

specified in the State plan for each member of the assistance unit.''

We proposed in the Consistency rule to amend 7 CFR 273.8(e) to allow

for an exemption from resource consideration of up to $1,500 for bona

fide, pre-paid funeral agreements that are accessible to the household.

Funeral agreements that are inaccessible to a household were not

affected by the proposed rule, as they are excluded from resource

consideration under the provisions of 7 CFR 273.8(e)(8).

There were 26 comments on the funeral agreement provision in the

proposed rule. Many commenters mistakenly thought that the proposed

provision would limit the exclusion of inaccessible funeral agreements

to a maximum of $1,500. Others believed the $1,500 limit on the

exclusion of funds in accessible funeral agreements should be either

raised or removed.

In this rule, the Department is again proposing the funeral

agreement exclusion. We are retaining the $1,500 limit on the exclusion

in order to remain consistent with AFDC and to lessen the likelihood of

abuse of the exemption. Therefore, the Department is proposing to amend

7 CFR 273.8(e)(2) to exclude as a resource the value of one bona fide

funeral agreement up to $1,500 in equity value per household member.

Determining Income--7 CFR 273.10(c)(2)

Current regulations at 7 CFR 273.10(c)(2)(iii) provide that

households receiving Federal assistance payments (PA) or State general

assistance (GA), Supplemental Security Income (SSI), or Old-Age,

Survivors, and Disability Insurance (OASDI) benefits on a recurring

monthly basis shall not have their monthly income from these sources

varied merely because mailing cycles may cause two payments to be

received in one month and none in the next month.

There are other instances in which a household may receive a

disproportionate share of a regular stream of income in a particular

month. For example, an employer may issue checks early because the

normal payday falls on a weekend or holiday. We have granted waivers to

several State agencies to allow income such as State employment checks

received monthly or twice a month to be counted in the month the income

is intended to cover rather than the month in which it is received.

We are proposing to amend 7 CFR 273.10(c)(2)(iii) to specify that

income received monthly or semimonthly (twice a month, not every two

weeks) shall be counted in the month it is intended to cover rather

than the month in which it is received when an extra check is received

in one month because of changes in pay dates for reasons such as

weekends or holidays.

Contract Income--7 CFR 273.10(c)(3)(ii)

Section 5(f)(1)(A) of the Food Stamp Act, 7 U.S.C. 2014(f)(1)(A),

provides that households which derive their annual income (income

intended to meet the household's needs for the whole year) from

contract or self-employment shall have the income averaged over 12

months. Current regulations at 273.10(c)(3)(ii) implement this

provision of the Act, stating that ``[h]ouseholds which, by contract or

self-employment, derive their annual income in a period of time shorter

than 1 year shall have that income averaged over a 12-month period,

provided the income from the contract is not received on an hourly or

piecework basis.'' The regulations at 7 CFR 273.11(a)(1)(iii) address

how self-employment income which is not a household's annual income and

is intended to meet the household's needs for only part of the year

should be handled. 7 CFR 273.11(a)(1)(iii) provides that ``[s]elf-

employment income which is intended to meet the household's needs for

only part of the year shall be averaged over the period of time the

income is intended to cover.'' The regulations, however, fail to

specify how contract income which is not a household's annual income

and is intended to meet the household's needs for only part of the year

should be handled. This omission in the regulations has been

[[Page 2707]]

brought to our attention in several waiver requests from State

agencies. We are taking action to rectify this deficiency in the

regulations by proposing to amend 7 CFR 273.10(c)(3)(ii) to clarify

that contract income which is not the household's annual income and is

not paid on an hourly or piecework basis shall be averaged over the

period the income is intended to cover.

Certification Periods--7 CFR 273.10(f)

In October 1991, the Department solicited suggestions from State

agencies for simplifying the recertification process. Several State

agencies recommended changes in the requirements for certification

periods to allow more flexibility in aligning the food stamp

recertification and the PA/GA redetermination in joint cases. We have

granted waivers to State agencies to facilitate matching the PA/GA and

food stamp periods, including extension of food stamp certification

periods for up to 16 months.

Alignment of the food stamp recertification with the PA/GA

redetermination has long been a problem for State agencies. Section

3(c) of the Food Stamp Act, 7 U.S.C. 2012(c), requires that the food

stamp certification period of a GA or PA household coincide with the

period for which the household is certified for GA or PA. However,

because PA/GA and Food Stamp Program processing standards and the

period for which benefits must be provided are not the same, it is

often difficult to get the certification periods for the programs to

coincide.

Some State agencies have requested that the Food Stamp Program

return to the policy of open-ended certification periods which existed

prior to the Food Stamp Act of 1977 so that the food stamp portion of

the case may be recertified at the same time as the PA/GA

redetermination. Section 11(e)(4) of the Act, 7 U.S.C. 2020(e)(4),

however, requires that households be assigned definite certification

periods and thus precludes the use of open-ended certification periods.

It is also clear in the legislative history of the Act that Congress

intended for households participating in the Food Stamp Program to be

subject to distinct certification periods. The House of Representatives

Report No. 464, 95th Cong., 1st Sess. (August 10, 1977), states on page

277 that ``* * * in no event should [the mandate that the food stamp

certification period be identical to the PA eligibility period] lead to

food stamp eligibility for public assistance recipients being a

perpetual entitlement as their assistance might be instead of being

subject to distinct entitlements marked off by certification period[s]

* * *'' We feel, therefore, that the intent of the Act clearly

prohibits us from returning to open-ended certification periods.

We are proposing, however, three alternative means of assisting

State agencies in aligning PA/GA and food stamp certification periods.

First, we are proposing to amend 7 CFR 273.10(f)(3) to allow the

following procedure: When a household is certified for food stamp

eligibility prior to an initial determination of eligibility for PA/GA,

the State agency shall assign the household a food stamp certification

period consistent with the household's circumstances. When the PA/GA is

approved, the State agency shall reevaluate the household's food stamp

eligibility. The household will not be required to submit a new

application or undergo another face-to-face interview. If eligibility

factors remain the same, the food stamp certification period can be

extended up to an additional 12 months to align the household's food

stamp recertification with its PA/GA redetermination. The State agency

would be required to send a notice informing a household of any such

changes in its certification period. At the end of the extended

certification period the household must be sent a Notice of Expiration

and must be recertified before being determined eligible for further

food stamp assistance, even if the PA/GA redetermination has not been

completed. In the event that a household's PA/GA redetermination is not

completed at the end of the food stamp certification period and, as a

result, the household's food stamp and PA/GA certification periods are

no longer aligned, the State agency may employ the procedure described

above to once again align those certification periods.

Our second proposal for aiding State agencies in aligning PA/GA and

food stamp certification periods is to allow State agencies to

recertify a household currently receiving food stamps when the

household comes into a State office to report a change in circumstances

for PA/GA purposes. At that time, the State agency would require the

household to fill out an application for food stamps and to undergo a

face-to-face interview. If the household is determined eligible to

continue receiving food stamps, its current certification period would

end and a new one would be assigned.

Our third proposal for aiding State agencies in aligning PA/GA and

food stamp certification periods would allow State agencies to assign

indeterminate certification periods to households certified for both

food stamps and PA/GA. Under this proposal, a household's food stamp

certification period would be set to expire one month after the

household's scheduled PA/GA redetermination, so long as the period of

food stamp certification did not exceed 12 months. Therefore, if a food

stamp certification were set to expire in seven months, that being the

month after the month the PA redetermination was due, but the PA

redetermination was not done on time, the food stamp certification

period could be postponed up to an additional five months to align food

stamp recertification and PA/GA redetermination. In the twelfth month,

the household would have to be recertified for food stamp purposes,

even if the PA redetermination had not yet been completed.

The Department is proposing to amend 7 CFR 273.10(f)(3) to permit

State agencies to implement the three above-described procedures.

Calculating Boarder Income--7 CFR 273.11(b)

Current rules at 7 CFR 273.11(b) provide that State agencies must

use the maximum food stamp allotment as a basis of establishing the

cost of doing business for income received from boarders when the

household does not own a commercial boardinghouse. Boarders are not

included as members of the household to which they are paying room and

board. The households receiving the room and board payments must

include those payments as self-employment income, but can exclude that

portion of the payments equal to the cost of doing business. The rules

provide that the cost of doing business is either (1) the maximum food

stamp allotment for a household size equal to the number of boarders;

or (2) the actual documented cost of providing room and meals, if that

cost exceeds the maximum allotment. The Department is proposing to

revise current regulations to provide State agencies with an additional

option for calculating border income.

The Consistency rule included a provision that would have required

State agencies to use, in place of the maximum allotment method, a flat

percentage equal to 75 percent of the boarder-generated income as the

means of establishing the cost of doing business for income received

from boarders. The proposal allowed the household to use actual

expenses if it could verify that its actual expenses were higher than

the flat percentage. This is currently the policy of the AFDC

[[Page 2708]]

program as indicated in 45 CFR 233.20(a)(6)(v)(B).

There were only a few comments received on this proposal in the

Consistency rule. The majority opposed the proposal, arguing that use

of the fixed percentage would further burden households by requiring

them to document all their actual expenses or face the possibility of

overstating the income they receive from boarders.

Several State agencies have obtained waivers to allow use of a flat

percentage to calculate allowable costs of doing business for

households with boarders. It is our understanding that other State

agencies prefer the maximum allotment method.

In this rule, we are proposing to add a new paragraph, 7 CFR

273.11(b)(1)(ii)(C), to give State agencies the option of using actual

costs, the maximum allotment for a household size equal to the number

of boarders, a flat amount, or a percentage of income from boarders to

determine the cost of doing business of households with boarders.

Households must be given the opportunity to claim actual costs. We are

not proposing a percentage limit at this time. Current waivers specify

75 percent, 60 percent, or the limit used in the State's AFDC program.

We are seeking comments concerning an appropriate percentage.

Day Care Providers--Sec. 273.11(b)(2)

The Department is also proposing to allow households who are day

care providers to use a standard per individual amount as a cost of

doing business. Under current regulations, at 7 CFR 273.11(a)(4)(i),

households which provide in-home day care can claim the cost of meals

fed to individuals in their care as a cost of doing business, provided

they can document the cost of each meal. Several State agencies have

obtained waivers to use a flat dollar amount, such as $5 a day, or to

use the FCS Child and Adult Care Food Program reimbursement rates,

which are updated annually to reflect the cost of meals as specified in

7 CFR 26.4(g).

We believe use of a standard reimbursement rate for the cost of

providing day care would eliminate the burden on day care providers to

document itemized costs incurred for producing the income and would

increase the benefits for households that fail to adequately document

business costs. Use of a standard would also decrease the amount of

time needed to process these self-employment cases and reduce payment

errors. Therefore, we are proposing to amend 7 CFR 273.11(b) to add a

new paragraph, (2), to allow use of a standard amount for determining

the self-employment expenses of households providing day care. State

agencies would be required to inform households of their opportunity to

verify actual meal expenses and use actual costs if higher than the

fixed amount. When establishing a standard amount, State agencies

should take into account the differences in cost for full-day and part-

day care. Households that are reimbursed for the cost of meals fed to

individuals in their care, for example through the FCS Child and Adult

Care Food Program, cannot claim the standard but may claim actual

expenses that exceed the amount of their reimbursement.

Exemption From Providing a Notice of Adverse Action--7 CFR 273.13(b)

Current regulations at 7 CFR 273.13(a) require State agencies to

send a notice of adverse action (NOAA) to a household prior to any

action to reduce or terminate the household's benefits, except as

provided in 7 CFR 273.13(b). That section does not include an exception

to the NOAA requirements when mail sent to a household is returned with

no known forwarding address. The AFDC regulations at 45 CFR

205.10(a)(4)(ii) do not require a notice of adverse action in this

situation. In the Consistency rule, the Department proposed to add an

exemption from sending an NOAA if agency mail is returned with no known

forwarding address. Since it is unlikely that the Postal Service can

deliver a NOAA mailed to an address which is no longer correct, it is

reasonable to specify in regulations that no notice is required if

delivery cannot be reasonably expected.

Few comments were received on this proposal and most were

favorable. Therefore, the Department is reproposing the amendment to 7

CFR 273.13(b) to provide that no NOAA is required if the household's

mail has been returned with no known forwarding address.

Recertification--7 CFR 273.14

Background. Over the years, the Department has become aware,

through State agency waiver requests and other means, of the need to

simplify the food stamp recertification process. The need for

simplification has become especially important in this time of tight

budgetary constraints and of increased demand on the time of State

eligibility workers. In this rule, the Department is proposing to

simplify recertification procedures in several areas.

State agencies have requested more flexibility in developing

recertification procedures. We understand the need of State agencies to

be able to adopt procedures that are consistent with those of other

programs and which can be administered in conjunction with computerized

systems. However, the Department is limited in the extent to which it

can give State agencies more flexibility because of the provisions of

the Food Stamp Act. There are two main provisions in the Act that

govern the timeframes for recertification. Section 11(e)(4), 7 U.S.C.

2020(e)(4), provides that each participating household must receive a

notice of expiration of its certification prior to the start of the

last month of its certification period. That section of the Act also

provides that a household which files an application no later than 15

days prior to the end of the certification period shall, if found to be

still eligible, receive its allotment no later than one month after the

receipt of the last allotment. Section 11(e)(4) allows modification of

the timeframes for monthly reporting households.

We are proposing changes to the recertification process that will

provide State agencies with more flexibility and at the same time

retain the right of a household to receive uninterrupted benefits if it

applies by the filing deadline and meets interview and verification

requirements within the required timeframes. In exchange for the

increased flexibility, State agencies would be responsible for

providing households sufficient notice and time to comply with

application, interview, and verification requirements. The proposed

changes are discussed below.

In accordance with Sec. 273.14(a) of the current regulations,

households that meet all eligibility requirements must have their

recertifications approved or denied by the end of their current

certification period and, if recertified, be provided uninterrupted

benefits. The regulations give State agencies two options for handling

the cases of households who do not provide verification or attend an

interview as required for recertification. The State agency may either

deny the household's application at the end of the current

certification period or within 30 days after the date the application

was filed. State agencies also have the option of establishing

verification timeframes. A household which does not meet all the

verification requirements within required timeframes loses its right to

uninterrupted benefits but can receive benefits within 30 days after

the date the application was filed. These requirements are stated in 7

CFR 273.14 (c) and (d). State agencies have found these procedures

confusing and have requested that they be simplified.

[[Page 2709]]

In this rulemaking we are proposing to reorganize the

recertification section in an attempt to provide a clearer expression

of the requirements. The proposed revision of 7 CFR 273.14(a) contains

general introductory statements regarding actions the household and the

State agency must take to ensure that eligible households receive

uninterrupted benefits. We propose to include in revised 7 CFR

273.14(b) requirements for the notice of expiration, the

recertification form, the interview and verification. In revised 7 CFR

273.14(c), we propose to include the filing deadlines for timely

applications for recertification. These and other revisions are

discussed below.

1. Recertification Process

a. Notice of expiration (NOE). Several State agencies have

requested that we reduce the mandated content of the NOE. Under current

regulations at 7 CFR 273.14(b)(3), the following information is

required in the NOE:

(1) The date the current certification period ends;

(2) The date by which the household must file an application for

recertification to receive uninterrupted benefits;

(3) Notice that the household must appear for an interview,

which will be scheduled on or after the date the application is

timely filed in order to receive uninterrupted benefits;

(4) Notice that the household is responsible for rescheduling a

missed interview;

(5) Notice that the household must complete the interview and

provide all required verification in order to receive uninterrupted

benefits;

(6) Notice of the number of days the household has for

submitting missing verification;

(7) Notice of the household's right to request an application

and have the State agency accept an application as long as it is

signed and contains a legible name and address;

(8) The address of the office where the application must be

filed;

(9) Notice of the consequences of failure to comply with the

notice of expiration;

(10) Notice of the household's right to file the application by

mail or through an authorized representative;

(11) Notice of the household's right to request a fair hearing;

and

(12) Notice of the fact that any household consisting only of

Supplemental Security Income (SSI) applicants or recipients is

entitled to apply for food stamp recertification at an office of the

Social Security Administration.

We have reviewed the requirements for the NOE and have determined

that none of the requirements in the current rule can be eliminated

because they are required either by the provisions of the Act or

judicial orders. Therefore, we have retained all of the current

recertification requirements in the proposed revised section

273.14(b)(1).

b. Recertification form. In response to our request for ideas for

simplifying the recertification process, several State agencies

suggested that we develop a short recertification form to be used in

conjunction with current case file information. Several State agencies

have requested and been granted waivers to allow use of a modified

application form for recertification. The forms developed by the State

agencies do not require households to provide information which is

already available in the case file.

This rule proposes to revise 7 CFR 273.14(b)(2) to allow State

agencies to use a modified application form for recertifying

households. This form could only be used for those households which

apply for recertification before the end of their current certification

period. FCS does not plan to develop a model recertification form, so

individual State agencies must devise this form themselves. However,

because Section 11(e)(2) of the Act, 7 U.S.C. 2020(e)(2), requires that

the Department approve all deviations from the uniform national food

stamp application, all State agency-designed recertification

applications must be approved by FCS before the forms can be used.

To allow State agencies as much flexibility as possible in the

design of their modified recertification forms, we are not specifying

the exact questions that must be asked. The State agency should design

an application that suits its own needs, whether it be a short form on

which the household notes changes since its last certification, or a

computer printout of household circumstances annotated by the

caseworker, or some other type of form. Whichever type of form the

State agency chooses to use, it must be able to obtain from that form,

or have available in the case record, all information concerning

household composition, income and resources needed to redetermine

eligibility and the correct benefit amount for the first month of the

new certification period. However, while we are not specifying

questions that must be on the forms, we would require that all

recertification forms include the information required by 7 CFR

273.2(b)(1) (i), (ii), (iii), (iv) and (v). This information is

required by Section 11(e)(2) of the Act, 7 U.S.C. 2020(e)(2), and

apprises applicants of their rights and responsibilities under the

Program. The information regarding the Income and Eligibility

Verification System in 7 CFR 273.2(b)(2) may be provided on a separate

form.

c. Interviews. Under current regulations, State agencies are

required to conduct face-to-face interviews with households applying

for recertification. Several State agencies suggested that we modify

the requirement that all households have face-to-face interviews. Some

State agencies suggested eliminating the face-to-face interview

entirely or reserve the office interview for those households that do

not have telephones. Other State agencies indicated that case workers

should be allowed to decide on a case-by-case basis which households

should be interviewed. Other suggestions included eliminating the

interview requirement entirely for households that are not error-prone,

eliminating recertification interviews unless there is questionable

information that cannot be resolved in any other manner, and giving

State agencies the option of not interviewing households receiving AFDC

if they are not due for an AFDC redetermination.

We consider the face-to-face interview to be an important source of

information about household circumstances. However, we have granted

waivers on a State-by-State basis to substitute a telephone interview

for the face-to-face interview for households with very stable

circumstances, such as households in which all members are elderly or

disabled and have no earned income. In an effort to be responsive to

State agency requests for simplification and flexibility, we are

proposing to revise 7 CFR 273.14(b)(3) to allow telephone interviews in

place of face-to-face interviews at recertification for some categories

of households. We are not allowing State agencies to substitute

telephone interviews for face-to-face interviews on a case-by-case

basis. Section 11(e)(2), 7 U.S.C. 2020(e)(2), currently provides for

the waiver of the face-to-face interview on a case-by-case basis for

those households for whom a visit to the food stamp office would be a

hardship. We feel, however, that to allow caseworkers the option of

waiving a face-to-face interview for any household based only on that

caseworker's personal determination that a face-to-face interview is

not needed may compromise the right to equal treatment guaranteed all

food stamp recipients under Section 11(c) of the Act, 7 U.S.C. 2020(c).

We are proposing to revise 7 CFR 273.14(b)(3) to allow State

agencies to interview by telephone any household that has no earned

income and whose members are all elderly or disabled. We are also

proposing to give State agencies the option of conducting a face-to-

face interview only once a year with a food stamp household that

receives PA or

[[Page 2710]]

GA. The interview could be conducted at the same time the household is

scheduled for its PA or GA face-to-face interview. At any other

recertification during that time period, the State agency may choose to

interview the household by telephone. However, the State agency would

be required to grant a face-to-face interview to any household that

requests one.

Several State agencies suggested that group interviews or

videotapes be used whenever possible to cover areas of the

recertification process common to all recipients. Current regulations

do not prohibit the use of group interviews for informing households

about the Program and Program rights and responsibilities. However, a

certification worker must obtain information about specific household

circumstances in a setting which guarantees confidentiality and

privacy, as required by 7 CFR 273.2(e)(1).

d. Verification. Current regulations at 7 CFR 273.14(c)(3) give

State agencies the option of establishing timeframes for submission of

verification information. To increase consistency with procedures for

initial applications and provide sufficient time for households to

obtain the required verification information, we are proposing to

revise 7 CFR 273.14(b) to add a new paragraph (4) to require State

agencies to allow households a minimum of 10 days in which to satisfy

verification requirements.

Current regulations at 7 CFR 273.2(f)(8)(i) require State agencies

to verify at recertification a change in income or actual utility

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

than $25, and previously unreported medical expenses and total

recurring medical expenses which have changed by $25 or more. 7 CFR

273.2(f)(8)(i) also requires that State agencies not verify income,

total medical expenses, or actual utility expenses which are unchanged

or have changed by $25 or less, unless the information is ``incomplete,

inaccurate, inconsistent, or outdated.'' Several State agencies have

requested that we simplify verification requirements at recertification

by requiring them to only reverify information that is questionable,

rather than information that is ``incomplete, inaccurate, inconsistent

or outdated.'' The Department does not see that there is any

substantive difference between the terms ``incomplete, inaccurate,

inconsistent or outdated'' and the term ``questionable.'' Presumably,

State agency caseworkers would consider questionable any information

that is incomplete, inaccurate, inconsistent, or outdated. Therefore,

if replacing the words ``incomplete, inaccurate, inconsistent, or

outdated'' with the word ``questionable'' will simplify Program

administration for State agencies, we see no objection to doing so. We

are proposing, therefore, to amend 7 CFR 273.2(f)(8)(i)(A) and (C), and

(ii) to replace the terms ``incomplete, inaccurate, inconsistent or

outdated'' with the term ``questionable.''

e. Filing deadline. Currently, 7 CFR 273.14(c)(1) provides that for

monthly reporting households the deadline for filing an application for

recertification is the normal date for filing a monthly report. Several

State agencies have requested that, for the purpose of administrative

efficiency and flexibility, the Department make the filing deadline for

monthly reporters the 15th of the last month of the household's

certification period (recertification month), the same as it is for

nonmonthly reporting households.

We are proposing to revise 7 CFR 273.14(c) to give State agencies

the option of making the filing deadline for monthly reporters either

the 15th of the recertification month or the household's normal date

for filing a monthly report.

2. Timely Processing

Current regulations at 7 CFR 273.14(d) provide that the State

agency shall act to provide uninterrupted benefits to any household

determined eligible after the household timely filed an application,

attended an interview, and submitted all necessary verification

information. Action to approve or deny a recertification application

must be taken by the end of the certification period if the household

has met all required application procedures. Households which are

certified for one month or are in the second month of a two-month

certification period must receive benefits within 30 days of their last

issuance. Other households must receive benefits in their normal

issuance cycle if they have met all processing requirements. If

verification requirements are unsatisfied at the end of the

recertification month, the State agency must provide benefits within

five working days after the household supplies the missing verification

information. If the State agency is at fault for delaying the

household's benefits, it must provide benefits as soon as the household

is determined eligible. Current regulations at 7 CFR 273.14(e) provide

that eligible households which have complied with all requirements are

entitled to restored benefits if the State agency does not provide

benefits in the first month of the new certification period.

7 CFR 273.14(f)(1) currently addresses failure of the household to

appear for an interview or provide verification information as

required. 7 CFR 273.14(f)(2) provides requirements for households that

do not file a timely application.

To clarify recertification requirements that address a variety of

situations that may occur in application processing, we are proposing

to reorganize sections 7 CFR 273.14(d), (e), and (f) into two new

sections 7 CFR 273.14(d) and (e). New section 7 CFR 273.14(d) would

combine all of the provisions of the previous sections relating to

timeframes for providing benefits when all processing deadlines are

met. New section 7 CFR 273.14(e) would address situations in which the

household or the State agency fail to meet processing deadlines.

3. Delayed Processing

We are proposing to include in new section 273.14(e) requirements

for providing benefits when delays in application processing occur.

Section 273.14(e)(1) will address delays caused by the State agency,

and section 273.14(e)(2) will address delays caused by the household.

We are also proposing a change in provisions for handling the

recertification of households which do not comply with the requirements

for interviews or verification. Under current regulations at 7 CFR

273.14(a)(3), a State agency may deny a household's application for

recertification at the time a household's certification period expires

or within 30 days after the date the application was filed as long as

the household has had adequate time to satisfy verification

requirements. Under current regulations at 7 CFR 273.14(a)(2), a

household that fails to attend a scheduled interview or to provide

required verification information within required timeframes loses its

right to uninterrupted benefits but cannot be denied eligibility at

that time, unless the household fails to cooperate or the household's

certification period has elapsed.

To increase consistency with AFDC procedures and provide maximum

flexibility to State agencies, we are proposing to include in revised

section 7 CFR 273.14(e) a provision to allow State agencies the option

of denying eligibility to households as soon as a failure to comply

with the interview or verification requirement occurs. The State agency

would be required to send the household a denial notice informing it

that its application for recertification has been denied. The notice

would have to contain the reason for the denial, the action required to

continue

[[Page 2711]]

participation, the date by which it must be accomplished, the

consequences of failure to comply, notification that the household's

participation will be reinstated if it complies within 30 days after

its application for recertification was filed and is found eligible,

and that the household has a right to a fair hearing. If the household

subsequently requests an interview or provides the required

verification information within 30 days of the date of its

recertification application and is found eligible, the State agency

must reinstate the household. Under this option, benefits must be

provided within 30 days after the application for recertification was

filed or within 10 days of the date the household provided the required

verification information or completed the interview, whichever is

later.

Current regulations at 273.14(f)(2) provide that any application

not submitted in a timely manner shall be treated as an application for

initial certification, except for verification requirements. If the

household does not submit a recertification form before its

certification period expires, the household's benefits for the first

month of the new certification period are prorated in accordance with 7

CFR 273.10(a)(2). However, Section 13916 of the 1993 Leland Act amended

Section 8(c)(2)(B) of the Act, 7 U.S.C. 2017(c)(2)(B), to eliminate

proration of first month's benefits if a household is recertified for

food stamps after a break in participation of less than one month.

Therefore, if a household submits an application for recertification

after its certification period has expired, but before the end of the

month after expiration, the application is not considered an initial

application and the household's benefits for that first month are not

prorated. We are proposing to include this new provision in revised

section 7 CFR 273.14(e)(2)(ii).

4. Expedited Service

Section 11(e)(2) of the Act, 7 U.S.C. 2020(e)(2), states that when

a household contacts a food stamp office to make a request for food

stamp assistance, it shall be permitted to file an application form.

There is no distinction made in the law between an application for

initial certification and an application for recertification. Section

11(e)(9) of the Act, 7 U.S.C. 2020(e)(9), requires State agencies to

provide coupons within five days after the date of application to

destitute migrant or seasonal farmworkers, households with gross

incomes less than $150 a month and liquid resources that do not exceed

$100; homeless households; and households whose combined gross income

and liquid resources are less than their monthly rent, mortgage and

utilities. Since implementation of the expedited service provision of

the Act, questions have arisen concerning whether expedited service

requirements apply at recertification.

Nothing in the legislative history of the Act gives any indication

as to whether Congress intended households eligible for expedited

service to receive such service every time they are certified for the

Program, only at initial certification, or when there has been a break

in benefits. We originally interpreted the Act and regulations to

require that expedited service screening requirements apply only at

initial certification. Since the law makes no distinction between

applications for initial certification and recertification, we have

concluded that expedited service provisions should apply to all

households at recertification. This policy was prompted by the

realization that some households that move between the last time they

were certified and the date of their required recertification might not

receive uninterrupted benefits. We believe it was the intent of

Congress to provide expedited service when a household would not

receive its next allotment by its next normal issuance cycle.

Many State agencies have argued that expedited service at

recertification is detrimental to recipient households because it

interferes with their normal issuance cycle. Instead of receiving their

benefits at the usual time each month, households recertified for

expedited service often receive their benefits for the first month of

the new certification period much earlier than normal. The next month

they have to wait longer to receive benefits. In addition, to obtain

expedited benefits, some households have to pick up their coupons at

their local assistance office instead of having them mailed, which is

an inconvenience to the household. We have determined that because of

the requirements of Section 11(e)(2) of the Act, households may not be

asked to waive their right to expedited service. Therefore, State

agencies are not allowed to mail expedited issuance coupons, even at

the household's request if such action would result in failure to meet

the five-day requirement for delivery of benefits.

State agencies have also argued that expediting issuance for

households at recertification leads to an increased administrative

burden. In some States, more than 50 percent of participating

households now meet the criteria for expedited service. This has placed

a tremendous burden on State agencies experiencing severe budgetary

constraints, making it difficult for them to meet the 30-day and 5-day

requirements for initial applications. State agencies argue that

applying expedited screening requirements at recertification only

increases the application processing problem without providing a

substantial benefit to most households.

In light of the issues discussed above, we have again reexamined

our policy and have concluded that not all households must receive

expedited service at recertification. Section 11(e)(4) of the Act, 7

U.S.C. 2020(e)(4), states that households that apply in a timely

fashion must receive their benefits no later than one month after the

receipt of their last allotment. We believe that this provision of the

law, which ensures that a household that punctually applies for

recertification will continue to receive its benefits in its normal

issuance cycle, should take precedence over the requirement for

expedited service.

We are proposing, therefore, to amend the regulations by including

a new section, 7 CFR 273.14(f), which will clarify that households

which punctually apply for recertification, or who apply late but

within the certification period, are not entitled to expedited service.

However, households which do not apply for recertification until the

month after their certification period ends are entitled to expedited

service if they are otherwise eligible for such service. A conforming

amendment to 7 CFR 273.2(i)(4)(iv) is also proposed.

Retrospective Suspension--7 CFR 273.21(n)

Current regulations at 7 CFR 273.21(n) allow State agencies the

option of suspending issuance of benefits to a household that becomes

ineligible for one month. State agencies that do not choose suspension

must terminate a household's certification when it becomes ineligible,

and the household must reapply to reestablish its eligibility for the

Program. Current regulations at 7 CFR 273.21(o) provide that when a

household is suspended based on prospective ineligibility, the State

agency shall not count any noncontinuing circumstances which caused the

prospective ineligibility when calculating the household's benefits

retrospectively in a subsequent month.

The need for suspension typically occurs when a household paid

weekly (or biweekly) receives an extra check in a month with five (or

three) paydays. Under current policy, State agencies which opt to

suspend rather than terminate a household's participation

[[Page 2712]]

must anticipate prospectively which month the household will be

ineligible and suspend the household's participation for that month.

Many State agencies have received waivers that allow them to suspend

the household for the issuance month corresponding to the budget month

in which the household receives the extra check. This is the method

used for suspension in the AFDC program. In an effort to achieve

consistency between the AFDC and Food Stamp Programs, we are proposing

to amend 7 CFR 273.21(n) to allow State agencies the option of

prospective or retrospective suspension. The option to suspend and the

method of suspending must be applied Statewide.

Implementation

The Department is proposing that the provisions of this rulemaking

must be implemented no later than 180 days after publication of the

final rule. The Department also proposes to allow variances resulting

from implementation of the provisions of the final rule to be excluded

from error analysis for 90 days from the required implementation date,

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

List of Subjects

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.

7 CFR Part 274

Administrative practice and procedure, Food Stamps, Fraud, Grant

programs--social programs, Reporting and recordkeeping requirements,

State liabilities.

Accordingly, 7 CFR parts 273 and 274 are proposed to be amended as

follows:

1. The authority citation of parts 273 and 274 continues to read as

follows:

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

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

2. In Sec. 273.2:

a. A new paragraph (c)(2)(iii) is added.

b. A new sentence is added to the end of paragraph (f)(1)(v).

c. The last sentence of paragraph (f)(8)(i)(A) is amended by

removing the words ``incomplete, inaccurate, inconsistent, or

outdated'' and adding in their place the word ``questionable''.

d. The second sentence of paragraph (f)(8)(i)(C) is amended by

removing the words ``incomplete, inaccurate, inconsistent, or

outdated'' and adding in their place the word ``questionable''.

e. Paragraph (f)(8)(ii) is amended by removing the words

``incomplete, inaccurate, inconsistent, or outdated'' and adding in

their place the word ``questionable''.

f. Paragraphs (i)(4)(iii)(A), (i)(4)(iii)(B), and (i)(4)(iii)(C)

are revised.

g. New paragraphs (i)(4)(iii)(D), (i)(4)(iii)(E), and

(i)(4)(iii)(F) are added.

h. A new sentence is added at the end of paragraph (i)(4)(iv).

The additions and revisions read as follows:

Sec. 273.2. Application processing.

* * * * *

(c) Filing an application. * * *

(2) Contacting the food stamp office. * * *

(iii) In State agencies that elect to have Statewide residency, as

provided in Sec. 273.3, the application processing timeframes begin

when the application is filed in any food stamp office in the State.

* * * * *

(f) Verification. * * *

(1) Mandatory verification. * * *

(v) Social security numbers. * * * A completed SSA Form 2853 shall

be considered proof of application for an SSN for a newborn infant.

* * * * *

(i) Expedited Service. * * *

(4) Special procedures for expediting service. * * *

(iii) * * *

(A) For households applying on or before the 15th of the month, the

State agency may assign a one-month certification period or assign a

normal certification period. Satisfaction of the verification

requirements may be postponed until the second month of participation.

If a one-month certification period is assigned, the notice of

eligibility may be combined with the notice of expiration or a separate

notice may be sent. The notice of eligibility must explain that the

household has to satisfy any verification requirements that were

postponed. For subsequent months, the household must reapply and

satisfy any verification requirements which were postponed or be

certified under normal processing standards. During the interview, the

State agency should give the household a recertification form and

schedule an appointment for a recertification interview. If the

household does not satisfy the postponed verification requirements and

does not appear for the interview, the State agency does not need to

contact the household again.

(B) For households applying after the 15th of the month, the State

agency may assign a 2-month certification period or a normal

certification period of no more than 12 months. Verification may be

postponed until the third month of participation, if necessary, to meet

the expedited timeframe. If a two-month certification period is

assigned, the notice of eligibility may be combined with the notice of

expiration or a separate notice may be sent. The notice of eligibility

must explain that the household is obligated to satisfy the

verification requirements that were postponed. For subsequent months,

the household must reapply and satisfy the verification requirements

which were postponed or be certified under normal processing standards.

During the interview, the State agency should give the household a

recertification form and schedule an appointment for a recertification

interview. If the household does not satisfy the postponed verification

requirements and does not attend the interview, the State agency does

not need to contact the household again. When a certification period of

longer than 2 months is assigned and verification is postponed,

households must be sent a notice of eligibility advising that no

benefits for the third month will be issued until the postponed

verification requirements are satisfied. The notice must also advise

the household that if the verification process results in changes in

the household's eligibility or level of benefits, the State agency will

act on those changes without advance notice of adverse action. If the

State agency chooses to exercise the option to require a second

application in accordance with the introductory text of paragraph

(i)(4)(iii) of this section, it shall act on that application starting

with the first month after the current certification period expires. If

the household is eligible, the State agency shall issue benefits within

five working days of the receipt of the necessary verification. When

the postponed verification requirements are not completed within 30

days after the end of the household's last certification period, the

State agency shall terminate the household's participation and shall

issue no further benefits.

(C) Households which apply for initial month benefits (as described

in Sec. 273.10(a)) after the 15th of the month, are processed under

standard processing timeframes, have completed the application and have

satisfied all verification requirements within 30 days of the date of

application, and have been determined eligible to receive

[[Page 2713]]

benefits for the initial month of application and the next subsequent

month, shall be issued a combined allotment which includes prorated

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

month of participation. The benefits shall be issued in accordance with

Sec. 274.2(c) of this chapter.

(D) Households which apply for initial benefits (as described in

Sec. 273.10(a)) after the 15th of the month, are processed under

expedited service procedures, have completed the application, and have

been determined eligible to receive benefits for the initial month and

the next subsequent month, shall receive a combined allotment

consisting of prorated benefits for the initial month of application

and benefits for the first full month of participation within the

expedited service timeframe. If necessary, verification will be

postponed to meet the expedited timeframe. The benefits shall be issued

in accordance with Sec. 274.2(c) of this chapter.

(E) The provisions of paragraphs (i)(4)(iii)(C) and (i)(4)(iii)(D)

of this section do not apply to households which have been determined

ineligible to receive benefits for the month of application or the

following month, or to households who have not satisfied the postponed

verification requirements. Households eligible for expedited service

may, however, receive benefits for the initial month and next

subsequent month under the verification standards of paragraph (i)(4)

of this section. Benefits of less than ten dollars ($10) shall not be

issued to a household under the provisions of paragraphs (i)(4)(iii)(C)

and (i)(4)(iii)(D) of this section.

(F) In a State with staggered issuance, if a household applies

after the 15th of the month and is certified for more than two months,

it shall be issued its third month's benefits on the first working day

of the third calendar month, not the staggered issuance date. If the

State agency chooses to exercise the option to require a second

application in accordance with paragraph (i)(4)(iii) of this section

and receives the application before the third month, it shall not deny

the application but hold it pending until the third month. The State

agency will issue the third month's benefits within five working days

from receipt of the necessary verification information but not before

the first day of the month. If the postponed verification requirements

are not completed within 45 days of the date of application, the State

agency shall terminate the household's participation and shall issue no

further benefits.

(iv) * * * State agencies shall apply the provisions of this

section at recertification if a household does not apply for

recertification until the month after its certification period ends.

* * * * *

3. In Sec. 273.3:

a. The existing undesignated paragraph is designated as paragraph

(a), and is further amended by removing the first sentence and adding

two sentences in its place.

b. Paragraph (b) is added.

The additions read as follows:

Sec. 273.3 Residency.

(a) A household shall live in the State in which it files an

application for participation. The State agency may also require a

household to file an application for participation in a specified

project area (as defined in Sec. 271.2 of this chapter) or office

within the State. * * *

(b) When a household moves within the State, the State agency may

require the household to reapply in the new project area or it may

transfer the household's casefile to the new project area and continue

the household's certification without reapplication. If the State

agency chooses to transfer the case, it shall act on changes in

household circumstances resulting from the move in accordance with

Sec. 273.12(c) or Sec. 273.21. It shall also ensure that duplicate

participation does not occur in accordance with Sec. 272.4(f) of this

chapter, and that the transfer of a household's case shall not

adversely affect the household.

4. In Sec. 273.6, a new paragraph (b)(4) is added to read as

follows:

Sec. 273.6 Social security numbers.

* * * * *

(b) Obtaining SSNs for food stamp household members. * * *

(4) If the household is unable to provide proof of application for

an SSN for a newborn, the household must provide the SSN or proof of

application at the next recertification. If the household is unable at

the next recertification to provide proof of application, the State

agency shall determine if the good cause provisions of paragraph (d) of

this section are applicable.

* * * * *

5. In Sec. 273.8, the first sentence of paragraph (e)(2) is revised

to read as follows:

Sec. 273.8 Resource eligibility standards.

* * * * *

(e) Exclusions from resources. * * *

(2) Household goods, personal effects, the cash value of life

insurance policies, one burial plot per household member, and the value

of one bona fide funeral agreement per household member, provided that

the agreement does not exceed $1500 in equity value, in which event the

value above $1500 is counted. * * *

* * * * *

7. In Sec. 273.10:

a. The second sentence of paragraph (a)(1)(iv) is amended by adding

the words ``second full'' after the words ``benefits for the''.

b. Paragraph (a)(1)(iv) is further amended by removing the third

and fourth sentences.

c. Paragraph (c)(2)(iii) is revised.

d. A new sentence is added at the end of paragraph (c)(3)(ii);

e. A new sentence is added to the end of paragraph (f)(3), and four

new paragraphs, (f)(3)(i), (f)(3)(ii), (f)(3)(iii), and (f)(3)(iv) are

added; and

f. The first sentence of paragraph (g)(2) is amended by adding the

words ``if the household has complied with all recertification

requirements'' after ``current certification period.''

The additions and revision read as follows:

Sec. 273.10 Determining household eligibility and benefit levels.

* * * * *

(c) Determining income. * * *

(2) Income only in month received. * * *

(iii) Households receiving income on a recurring monthly or

semimonthly basis shall not have their monthly income varied merely

because of changes in mailing cycles or pay dates or because weekends

or holidays cause additional payments to be received in a month.

(3) Income averaging. * * *

(ii) * * * Contract income which is not the household's annual

income and is not paid on an hourly or piecework basis shall be

prorated over the period the income is intended to cover.

* * * * *

(f) Certification periods. * * *

(3) * * * To align the PA or GA and food stamp recertification, the

State agency may do the following:

(i) When the household's eligibility for PA or GA has been

determined, the State agency may review the household's food stamp

eligibility. If eligibility factors remain the same, the household's

certification period can be extended up to an additional 12 months to

align the household's food stamp recertification with its PA/GA

redetermination. The State agency would be required to send a notice

informing the household of changes in its certification period. At the

end of the

[[Page 2714]]

extended certification period the household must be sent a Notice of

Expiration and must be recertified before being eligible for further

food stamp assistance, even if the PA/GA redetermination is not set to

expire. This procedure may also be used to align a household's PA/GA

and food stamp certification periods if those certification periods are

no longer aligned as a result of the household's failure to comply with

the PA/GA redetermination requirements.

(ii) Except as specified in paragraph (f)(3)(iii) of this section,

State agencies may assign households food stamp certification periods

that expire the month following the household's required PA/GA

redetermination, provided the food stamp certification period does not

exceed 1 year. If a PA/GA household has not had its PA/GA

redetermination by the end of the 11th month following its initial

certification or its last redetermination for food stamps, the State

agency shall send the household a notice of expiration of its food

stamp certification period and recertify the household in accordance

with the provisions of Sec. 274.14 of this chapter.

(iii) State agencies which have a monthly reporting system and,

therefore, allow more than 1 year to elapse before redetermining their

PA/GA cases, but which can predict with certainty in which month the

PA/GA redetermination will take place, may assign PA/GA food stamp

households definite food stamp certification periods that expire at the

end of the month following the month in which the PA/GA redetermination

is scheduled. If for any reason the PA/GA redetermination is not made

by the end of the month for which it was scheduled, the State agency

shall send the household a notice of expiration of its food stamp

certification period and recertify the household in accordance with the

provisions of Sec. 274.14 of this chapter.

(iv) If a household reports a change in circumstance for PA/GA, the

State agency may review the household's food stamp eligibility at the

same time. The household will be required to submit a recertification

form for food stamps and to undergo a face-to-face interview. If the

household is determined eligible, its old certification period shall be

terminated and a new period not to exceed 12 months shall be assigned.

* * * * *

8. In Sec. 273.11.

a. The heading of paragraph (b) is revised;

b. The introductory text of paragraph (b)(1)(ii) is revised.

c. Paragraph (b)(1)(ii)(B) is amended by removing the period at the

end of the paragraph and adding in its place a semicolon and the word

``or''.

d. A new paragraph (b)(1)(ii)(C) is added;

e. A new paragraph (b)(2) is added.

The revisions and additions are as follows:

Sec. 273.11 Action on Households with Special Circumstances.

* * * * *

(b) Households with income from boarders and day care. (1)

Household with boarders. * * *

(ii) Cost of doing business. In determining the income received

from boarders, the State agency shall exclude the portion of the

boarder payment that is a cost of doing business. Provided that the

amount allowed as a cost of doing business shall not exceed the payment

the household receives from the boarder for lodging and meals, the cost

of doing business shall be equal to one of the following:

* * * * *

(C) a flat amount or fixed percentage of the gross income, provided

that the method used to determine the flat amount or fixed percentage

is objective and justifiable and is stated in the State's food stamp

manual. However, if the applicant or recipient requests use of the

verified actual amount, the State agency shall use the actual amount.

* * * * *

(2) Income from day care. Households deriving income from day care

may elect one of the following methods of determining the cost of meals

provided to the individuals:

(i) Actual documented costs of meals;

(ii) A standard per day amount based on estimated per meal costs;

or

(iii) Current reimbursement amounts used in the Child and Adult

Care Food Program.

* * * * *

9. In Sec. 273.13, a new paragraph (b)(15) is added to read as

follows:

Sec. 273.13 Notice of adverse action.

* * * * *

(b) Exemptions from notice. * * *

(15) The household's address is unknown and mail directed to it has

been returned by the post office indicating no known forwarding

address. The household's benefits must, however, be made available to

it within five working days if the household contacts the State agency

during the payment period covered by a returned benefit.

10. Sec. 273.14 is revised to read as follows:

Sec. 273.14 Recertification

(a) General. No household may participate beyond the expiration of

the certification period assigned in accordance with Sec. 273.10(f)

without a determination of eligibility for a new period. The State

agency must establish procedures for notifying households of expiration

dates, providing recertification forms, scheduling interviews, and

recertifying eligible households prior to the expiration of

certification periods. Households must apply for recertification and

comply with interview and verification requirements.

(b) Recertification process.

(1) Notice of expiration.

(i) The State agency shall provide households certified for one

month or certified in the second month of a two-month certification

period a notice of expiration (NOE) at the time of certification. The

State agency shall provide other households the NOE before the first

day of the last month of the certification period, but not before the

first day of the next- to-the-last month. Jointly processed PA and GA

households need not receive a separate food stamp notice if they are

recertified for food stamps at the same time as their PA or GA

redetermination.

(ii) Each State agency shall develop a NOE. A model form (Form FCS-

439) is available from FCS. The NOE must contain the following:

(A) the date the certification period expires;

(B) the date by which a household must submit an application for

recertification in order to receive uninterrupted benefits;

(C) the consequences of failure to apply for recertification in a

timely manner;

(D) notice of the right to receive an application form upon request

and to have it accepted as long as it contains a signature and a

legible name and address;

(E) information on alternative submission methods available to

households which cannot come into the certification office or do not

have an authorized representative and how to exercise these options;

(F) the address of the office where the application must be filed;

(G) the household's right to request a fair hearing if the

recertification is denied or if the household objects to the benefit

issuance;

(H) notice that any household consisting only of Supplemental

Security Income (SSI) applicants or recipients is entitled to apply for

food stamp recertification at an office of the Social Security

Administration;

[[Page 2715]]

(I) notice that failure to attend an interview may result in delay

or denial of benefits; and

(J) notice that the household is responsible for rescheduling a

missed interview and for providing required verification information.

(iii) To expedite the recertification process, State agencies are

encouraged to send a recertification form, an interview appointment

letter, and a statement of needed verification required by

Sec. 273.2(c)(5) with the NOE.

(2) Recertification form.

(i) The State agency shall provide each household with a

recertification form to obtain all information needed to determine

eligibility and benefits for a new certification period. This form can

only be used by households which are applying for recertification

before the end of their current certification period. Recertification

forms must be approved by FCS as required by Sec. 273.2(b)(3). The

recertification form must elicit from the household sufficient

information regarding household composition, income and resources that,

when added to information already contained in the casefile, will

ensure an accurate determination of eligibility and benefits. The

information required by Sec. 273.2(b)(1) (i), (ii), (iii), (iv) and (v)

must be included on the recertification form. The information regarding

the Income and Eligibility Verification System in Sec. 273.2(b)(2) may

be provided on a separate form. A combined form for PA and GA

households may be used in accordance with Sec. 273.2(j). Monthly

reporting households shall be recertified as provided in

Sec. 273.21(q). State agencies may use the same form for households

required to report changes in circumstances and monthly reporting

households.

(ii) The State agency may request that the household bring the

recertification form to the interview or return the form by a specified

date (not less than 15 days after receipt of the form).

(3) Interview. (i) As part of the recertification process, the

State agency shall conduct a face-to-face interview with a member of

each household. The face-to-face interview may be waived in accordance

with Sec. 273.2(e). The State agency may also waive the face-to-face

interview for a household that has no earned income if all of its

members are elderly or disabled. The State agency has the option of

conducting a telephone interview or a home visit for those households

for whom the office interview is waived. However, a household that

requests a face-to-face interview must be granted one.

(ii) If a household receives PA/GA and will be recertified more

than once in a 12-month period, the State agency may choose to conduct

a face-to-face interview with that household only once during that

period. The face-to-face interview shall be conducted at the same time

that the household receives a face-to-face interview for PA/GA

purposes. At any other recertification during that year period, the

State agency may interview the household by telephone or conduct a home

visit. However, a household that requests a face-to-face interview must

be granted one.

(iii) If a household does not appear for an interview scheduled

before it has submitted a recertification form, the State agency must

reschedule the interview. State agencies shall schedule interviews so

that the household has at least 10 days after the interview in which to

provide verification before the certification period expires.

(4) Verification. Information provided by the household shall be

verified in accordance with Sec. 273.2(f)(8)(i). The State agency shall

provide the household a notice of required verification as provided in

273.2(c)(5) and notify the household of the date by which the

verification requirements must be satisfied. The household must be

allowed a minimum of 10 days to provide required verification

information.

(c) Timely application for recertification.

(1) Households reporting required changes in circumstances that are

certified for one month or certified in the second month of a two-month

certification period shall have 15 days from the date the NOE is

received to file a timely application for recertification.

(2) Other households reporting required changes in circumstances

that submit applications by the 15th day of the last month of the

certification period shall be considered to have made a timely

application for recertification.

(3) For monthly reporting households, the filing deadline shall be

either the 15th of the last month of the certification period or the

normal date for filing a monthly report, at the State agency's option.

The option chosen must be uniformly applied to the State agency's

entire monthly reporting caseload.

(4) For households consisting of applicants or recipients of SSI

who apply for food stamp recertification at offices of the SSA in

accordance with Sec. 273.2(k)(1), an application shall be considered

filed for normal processing purposes when the signed application is

received by the SSA.

(d) Timely processing.

(1) Households that were certified for one month or certified for

two months who are in the second month of the certification period and

have met all required application procedures shall be notified of their

eligibility or ineligibility. Eligible households shall be provided an

opportunity to receive benefits no later than 30 calendar days after

the date the household received its last allotment.

(2) Other households that have met all application requirements

shall be notified of their eligibility or ineligibility by the end of

their current certification period. In addition, the State agency shall

provide households that are determined eligible an opportunity to

participate by the household's normal issuance cycle in the month

following the end of its current certification period.

(e) Delayed processing.

(1) Delays caused by the State agency. Households which have

submitted an application for recertification in a timely manner but,

due to State agency error, are not determined eligible in sufficient

time to provide for issuance of benefits by the household's next normal

issuance date shall receive an immediate opportunity to participate

upon being determined eligible, and the allotment shall not be

prorated. If the household was unable to participate for the month

following the expiration of the certification period because of State

agency error, the household is entitled to restored benefits.

(2) Delays caused by the household.

(i) If a household does not submit a new application by the end of

the certification period, the State agency must close the case without

further action.

(ii) If a recertification form is submitted more than one month

after the filing deadline, it shall be treated the same as an

application for initial certification. In accordance with

Sec. 273.10(a)(1)(ii), the household's benefits shall not be prorated

unless there has been a break of more than one month in the household's

certification.

(iii) A household which submits an application by the filing

deadline but does not appear for an interview scheduled after the

application has been filed, or does not submit verification within the

required timeframe, loses its right to uninterrupted benefits. The

State agency has three options for handling such cases:

(A) Send the household a denial notice as soon as the household

fails to appear for an interview or submit required verification

information. If the interview is completed, or the household provides

the required

[[Page 2716]]

verification information within 30 days of the date of application and

is determined eligible, the household must be reinstated and receive

benefits within 30 calendar days after the application was filed or

within 10 days of the date the interview is completed or required

verification information is provided, whichever is later. In no event

shall a subsequent period's benefits be provided before the end of the

current certification period.

(B) Deny the household's recertification application at the end of

the last month of the current certification period. The State agency

may on a Statewide basis either require households to submit new

applications to continue benefits or reinstate the households without

requiring new applications if the households have been interviewed and

have provided the required verification information within 30 days

after the applications have been denied.

(C) Deny the household's recertification request 30 days after

application. The State agency may on a Statewide basis either require

households to submit new applications to continue benefits or reinstate

households without requiring new applications if such households have

been interviewed and have provided the required verification within 30

days after the applications have been denied.

(f) Expedited service. A State agency is not required to apply the

expedited service provisions of Sec. 273.2(i) at recertification if the

household applies in a timely manner for recertification or applies

late but within the certification period.

11. In Sec. 273.21, paragraph (n)(1) is amended by adding a

sentence to the end of the paragraph to read as follows:

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

* * * * *

(n) Suspension. * * *

(1) * * * The State agency may on a Statewide basis either suspend

the household's certification prospectively for the issuance month or

retrospectively for the issuance month corresponding to the budget

month in which the noncontinuing circumstance occurs.

* * * * *

PART 274--ISSUANCE AND USE OF COUPONS

12. In Sec. 274.2:

a. Paragraphs (b)(2), (b)(3), and (b)(4) are removed.

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

(b), (d), (e), and (f), respectively.

c. Two sentences are added to the end of newly redesignated

paragraph (b).

d. A new paragraph (c) is added.

The additions read as follows:

Sec. 274.2 Providing benefits to participants.

* * * * *

(b) * * * For households entitled to expedited service, the State

agency shall make available to the household coupons or an ATP card,

not later than the fifth calendar day following the date the

application was filed. 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 day the application was filed.

(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 (one) allotment, or as two separate

allotments made available at the same time, in accordance with the

timeframes specified in S273.2(i) of this chapter.

* * * * *

Dated: January 4, 1995.

Ellen Haas,

Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 95-635 Filed 1-10-95; 8:45 am]

BILLING CODE 3410-30-U