# Food Stamp Program: Simplification of Program Rules

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A95-635

## Record

- **Collection:** Federal Register
- **Document type:** Proposed Rule
- **Published:** January 11, 1995
- **Citation:** 60 FR 2703

## Text

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

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A95-635. Public record. Not legal advice.