Food Stamp Program: Simplification of Program Rules

DEPARTMENT OF AGRICULTURE

7 CFR Parts 272, 273, 278, and 279

[Amendment No. 364]

RIN 0584-AB60

Food Stamp Program: Simplification of Program Rules

AGENCY: Food and Consumer Service, USDA.

ACTION: Final rule.

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SUMMARY: This rule finalizes provisions of a proposed rulemaking

published on January 11, 1995. It amends Food Stamp Program rules

relating to residency, social security numbers, combined allotments,

excluded resources, contract income, self-employment expenses,

certification periods, the notice of adverse action, recertification,

and suspension. The amendments simplify regulatory requirements and

increase State agency flexibility. The rule also makes several

technical amendments to Food Stamp Program rules.

DATES: This final rule is effective November 18, 1996 and must be

implemented no later than May 1, 1997, except the provisions of 7 CFR

273.14(b)(2), which have been submitted to the Office of Management and

Budget for approval under the Paperwork Reduction Act of 1995. The

provisions of this section will become effective upon approval. FCS

will publish a notice in the Federal Register announcing the effective

date and implementation date.

FOR FURTHER INFORMATION CONTACT: Margaret Werts Batko, Assistant Branch

Chief, Certification Policy Branch, Program Development Division, Food

and Consumer Service, USDA, 3101 Park Center Drive, Alexandria,

Virginia, 22302, (703) 305-2516.

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

This final rule contains information collection requirements

subject to review by the Office of Management and Budget (OMB) under

the Paperwork Reduction Act of 1995 (Pub. L. 104-13). The reporting and

recordkeeping burden associated with the application, certification,

and continued eligibility of food stamp applicants is approved under

OMB No. 0584-0064. The burden for applications, including applications

for recertification, is estimated to average .2290 hours per response.

To determine the continued eligibility of food stamp recipients,

State welfare agencies must recertify eligible households whose

certification periods have expired, and households are required to

submit a recertification form. Section 273.14(b)(2) of this rule

authorizes State agencies to use a modified form of the application

used for initial application.

The amendments to 7 CFR 273.14(b)(2) made by this rule do not

impose any new collection requirements. The methodology used to

determine the current burden estimates for all applications assumes

that some households will be recertified more often than other

households. The methodology also assumes that every applicant will

complete every line item on the application form; therefore, the burden

is overestimated for some households and underestimated for others.

Based on this methodology, we believe the current burden estimate

sufficiently reflects the potential reduced burden resulting from use

of a modified recertification form.

Comments. Comments are invited on: (a) whether the proposed

collection of information is necessary for the proper performance of

the functions of the agency, including whether the information will

have practical utility; (b) the accuracy of the agency's estimate of

the burden of the proposed collection of information, including the

validity of the methodology and assumptions used; (c) ways to enhance

the quality, utility and clarity of the information to be collected;

and (d) ways to minimize the burden of the collection of information on

those who are to respond, including through the use of appropriate

automated, electronic, mechanical, or other technological collection

techniques or other forms of information technology. Comments may be

sent to Department of Agriculture, Clearance Officer, OIRM, AG Box

7630, Washington, DC 20250. Comments and recommendations on the

proposed information collection must be received by December 16, 1996.

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.

Public Participation

This rule contains technical amendments at 7 CFR 272.1(g)(74),

273.2(f)(1), 273.4(a)(2), 273.4(a)(9), 273.4(a)(11), 273.20, 278.1(h),

and 279.3 which were not part of the proposed rule published January

11, 1995 and are unrelated to the provisions of the proposed rule.

These amendments are being published without an opportunity

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for public comment and will become effective 30 days following

publication. The amendments are technical in nature and public comment

would not be useful or necessary. Ellen Haas, Under Secretary for Food,

Nutrition, and Consumer Services, has determined that, in accordance

with 5 U.S.C. 553(b)(3)(B), good cause exists for publishing the

technical amendments without taking public comment.

Background

On January 11, 1995, the Department published a proposed rule at 60

FR 2703 in which it proposed 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 proposed to amend the regulations to incorporate guidance we

had already provided to State agencies. In other instances, we proposed

to modify Program rules to provide more consistency with requirements

in the Aid to Families with Dependent Children (AFDC) Program. Comments

were solicited on the provisions of the proposed rule through March 13,

1995, and a total of 26 comments were received. This final action

addresses the commenters' concerns. Readers are referred to the

proposed rule for a more complete understanding of this final action.

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

In the January 11, 1995 rule, the Department proposed changes to

the regulations on issuance of combined allotments. At the time the

proposed rule was published, the regulations at 7 CFR 274.2(b)(3)

provided that eligible households applying after the 15th of the month

that qualify for expedited service would receive a combined allotment

(prorated benefits for the application month and full benefits for the

subsequent month) if they supplied all required verification within the

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

required verification within the expedited service timeframe, the

household received 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. In the January 11, 1995 rule, the Department proposed to

amend the regulations to require that if an eligible household applies

for food stamps after the 15th of the month and is entitled to

expedited service, it would receive the prorated initial month's

allotment and the full allotment for the second month within the

expedited timeframe. Additional verification requirements would be

postponed until the end of the second month. The proposed amendments

would bring the regulations into conformance with current food stamp

policy on combined allotments, as announced in a June 16, 1993, policy

memorandum issued to FCS regional Food Stamp Program directors.

The Department also proposed to reorganize the regulations on

combined allotments. At the time the proposed rule was published, the

regulations on issuance of a combined allotment were contained at 7 CFR

274.2(b)(2), (3), and (4). The Department proposed to move those

combined allotment requirements out of 7 CFR 274.2(b) and into 7 CFR

273.2(i)(4). In 7 CFR 274.2, the Department proposed 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 proposed to add two sentences to the end of redesignated

paragraph (b) which would contain the requirements for issuing benefits

to expedited service households. The Department also proposed to add a

new paragraph (c) which would contain the provision of former paragraph

(b)(2) concerning the State agency option to issue the combined

benefits in one allotment or two, as long as they are provided at the

same time and reference the combined allotment regulations at 7 CFR

273.2.

The above proposed organizational changes, with the exception of

moving the combined allotment requirements formerly contained at 7 CFR

274.2(b)(2), (3), and (4) into 7 CFR 273.2, have already been finalized

in the Food Stamp Program's Benefit Delivery Rule, published on April

25, 1995 at 60 FR 20178. In this rule, therefore, the Department is

only finalizing the provisions moving the requirements formerly

contained in 7 CFR 274.2(b) to 7 CFR 273.2.

In the January 11, 1995 rule, the Department proposed to revise the

regulations at 7 CFR 273.2(i)(4)(iii)(C), and to add two new

paragraphs, 273.2(i)(4)(iii)(D) and (E). The proposed regulations at 7

CFR 273.2(i)(4)(iii)(C) contained the requirements formerly contained

at 7 CFR 274.2(b)(2), which concerned combined issuance for households

certified under normal processing timeframes. The proposed regulations

at 7 CFR 273.2(i)(4)(iii)(D) contained 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. In these cases,

any unsatisfied verification requirement would be postponed until the

end of the first full month. The proposed regulations at 7 CFR

273.2(i)(4)(iii)(E) contained the requirements formerly contained at 7

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

allotments.

The Department received three comments on the proposed changes. One

commenter opposed the proposed relocation of the combined allotment

requirements from 7 CFR 274.2(b) to 273.2(i). The commenter believed

that the relocation only promoted confusion. As noted above, however,

the proposal to remove the combined allotment requirements from 7 CFR

274.2(b) was finalized in the Benefit Delivery Rule. However, we now

believe it is preferable to separate the combined allotment provisions

for households processed under the normal 30-day processing standard

from those for households certified under the expedited service

provisions of 7 CFR 273.2(i). Therefore, we are adding a new paragraph

to 7 CFR 273.2(g), Normal processing standard, to include the

provisions of proposed Sec. 273.2(i)(4)(iii)(C) and former 7 CFR

274.2(b)(2) concerning combined allotments for households processed

under the 30-day requirement. This paragraph is titled Combined

allotments and is designated Sec. 273.2(g)(2). Current paragraph (g)(2)

is redesignated as paragraph (g)(3). Proposed paragraphs

273.2(i)(4)(iii)(D) and (E) are paragraphs 273.2(i)(4)(iii)(C) and (D)

in this final rule.

The second commenter asked that the regulations at 7 CFR 273.2(b)

and 274.2(b) specify that combined allotments apply only for those

households initially applying for food stamps for which proration is a

factor. As noted above, the regulations at 7 CFR 274.2 no longer

provide detailed requirement for use of combined allotments. The

regulations at 7 CFR 273.2(b) do not address combined allotments;

however, the Department believes that the commenter meant 7 CFR

273.2(i). The Department believes that the proposed regulations at 7

CFR 273.2(i)(4)(iii)(D) are very specific as to when a combined

allotment can be issued. Therefore, the Department is not adopting the

commenter's suggestion and is adopting the proposed provisions as

final.

Another commenter thought that in relocating instructions on

combined

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allotments from 7 CFR 274.2(b) to 7 CFR 273.2(i), the Department

deleted the provision that the combined allotment may be in the form of

two allotments issued at the same time. As indicated above, the Benefit

Delivery rule moved this provision from 7 CFR 274.2(b) to new paragraph

274.2(c). In this rule, we are including a reference to 7 CFR 274.2(c)

in revised paragraph 273.2(i)(4)(iii)(C) and new paragraph 273.2(g)(2).

In the January 11, 1995 rule, the Department proposed additional

changes to the regulations at 7 CFR 273.2(i)(4) to bring those

regulations into conformance with the new combined allotment

requirements. The regulations at 7 CFR 273.2(i)(4)(iii)(B) currently

require that a household which applies after the 15th of the month and

is assigned a certification period 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 15th 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 issuance of 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 proposed to broaden the requirement to

make it mandatory for all households which apply after the 15th of the

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

The Department proposed to amend 7 CFR 273.2(i)(4)(iii)(B) accordingly.

The Department also proposed to make a conforming amendment to 7 CFR

273.10(a)(1)(iv), which contains a verification requirement similar to

that currently contained in 7 CFR 273.2(i)(4)(iii)(B). The Department

received no comments on the proposed changes and is adopting them as

final.

Under current regulations at 7 CFR 273.2(i)(4)(iii)(B), when

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

the required postponed verification, the State agency is required to

issue the second month's benefits within 5 working days from receipt of

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

whichever is later. Since the proposed changes in combined allotment

procedures required that households be issued the prorated initial

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

the expedited timeframe, the requirement at 7 CFR 273.2(i)(4)(iii)(B)

is no longer applicable and the Department proposed to remove it in the

January 11, 1995 rule. The Department received no comments on the

proposal and is adopting it as final.

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 15th 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 an allotment

for the third month of participation in a staggered issuance system,

the Department proposed to retain that issuance requirement at 7 CFR

273.2(i)(4)(iii)(C) for the third month of benefits. The Department

proposed to add a new paragraph 7 CFR 273.2(i)(4)(iii)(F) which

required 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 would employ

their normal issuance mechanisms.

The proposal that households be issued their third allotment by the

first working day of the third calendar month received a substantial

number of negative comments. Twelve commenters wrote to oppose the

provision. The commenters felt that the provision would impose a

tremendous administrative burden on State agencies. These commenters

claimed that the proposed change would require costly computer

reprogramming or necessitate a manual system for issuing benefits in

the third month that would increase workloads and be error prone. In

addition, commenters believed that households would be better served if

they received their third month's allotments on the normal issuance

date rather than on the first of the month. Early issuance in the third

month could mean that the household would have to wait as long as six

or seven weeks before receiving benefits for its fourth month of

participation. One commenter did support the proposed provision, on the

grounds that it promotes consistency with current policy for migrants.

The Department accepts the arguments raised by the 12 commenters

who opposed the proposed provision at 7 CFR 273.2(i)(4)(iii)(F) and is

deleting it from this final rule. A household that receives a combined

allotment and resides in a State with a staggered issuance system will,

at some point during its certification period, have to stretch its

benefits to cover a period longer than one month. The proposed

procedure would not have prevented that, but would have imposed an

unnecessary administrative burden on State agencies. Therefore, the

Department is not adopting the proposed provision.

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

households entitled to expedited service furnish an 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 participate

only if they satisfy the good cause requirements specified in 7 CFR

273.6(d).

Because of the change in combined allotment policy, eligible

households that apply after the 15th of the month and are entitled to

expedited service can receive their second month's benefits without

having to furnish an SSN. In the preamble of the proposed rule, the

Department stated its intention 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 15th of the month furnish an SSN for each

person prior to the third month of participation. The Department

received no negative comments on the proposal. One commenter, however,

did note that the proposed change to 7 CFR 273.2(i)(4)(i)(B) discussed

in the preamble was not accompanied by the proposed new regulatory

language. The Department apologizes for the omission, but believes the

public was given sufficient notice of the Department's intent.

Therefore, the Department is adopting the proposed change to 7 CFR

273.2(i)(4)(i)(B) discussed in the preamble to the proposed rule as

final in this rule.

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

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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

proposed to eliminate this deficiency in the January 11, 1995 rule 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. The Department

received no comments on these proposals and is adopting them as final.

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. Believing that current regulations do not allow for this

procedure, the Department proposed 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.

Several commenters wrote to point out that the text of the proposed

regulatory change to 7 CFR 273.10(a)(2)(i) did not appear in the

proposed rule. The proposed change was inadvertently omitted, and the

Department apologizes for any confusion the omission may have caused.

Three commenters objected to the proposed procedure as described in

the preamble. One thought it was unclear whether the proposed provision

was tied to the State option of requesting the applicant for expedited

service applying after the 15th of the month to submit a second

application when verification is postponed, or if it would be

appropriate for all recertifications. The commenter thought that if it

applied to all cases, it could prove to be an administrative problem.

Two commenters were concerned that the information on the application,

if kept pending too long, would be outdated. One asked if a household

certified for 12 months filed an application in its third month of

eligibility, would the State agency have to keep track of and use the

application for a certification period some 10 months later.

The Department agrees with the commenters that the proposed

language is unclear. The proposed provision was intended to be tied to

the State option of requesting that the household applying for

expedited service after the 15th of the month submit a second

application when verification is postponed. It was meant to apply only

in circumstances in which the household has been certified for only the

month of application and the subsequent month. In these circumstances,

the State agency would deny the second application for both the first

and second months and act on it for the third month, as described in

proposed section 273.2(i)(4)(iii)(F). It was not the Department's

intention that a State agency act on an application that had been

submitted more than a month and a half earlier. The Department,

therefore, is not amending 7 CFR 273.10(a)(2)(i) to include the

procedure. Since the procedure is only valid in instances in which the

household is entitled to expedited service and applies after the 15th

of the month, the Department thinks it would only promote confusion to

have a reference to the procedure in any section of the regulations

other than the section on expedited service. The Department is also

removing discussion of the second application option from 7 CFR

273.2(i)(4)(iii)(B). The procedures for acting on a second application

are already addressed in detail in 7 CFR 273.2(i)(4)(iii)(E) of this

rule and the Department sees no advantage to repeating that information

at 7 CFR 273.2(i)(4)(iii)(B).

One commenter noted that proposed regulatory language at both 7 CFR

273.2(i)(4)(iii) (A) and (B) includes the requirement that during the

certification interview, the State agency should give the household a

recertification form and schedule an appointment for a recertification

interview. The commenter thought that it was not clear that the

requirement applied only if the State agency chooses the option at 7

CFR 273.2(i)(4)(iii) to require a household entitled to expedited

service that applies after the 15th of the month to submit a second

application. The commenter felt that the requirement would be an

unnecessary burden to State agencies that do not choose to require a

second application.

The Department agrees with the commenter that the requirement as

proposed is unclear and has decided to remove the requirement from both

7 CFR 273.2(i)(4)(iii)(A) and (B). The Department believes the

requirement provides unnecessary instruction to State agencies.

The same commenter raised a question on the proposed language at 7

CFR 273.2(i)(4)(iii)(D). That section requires that combined allotments

be issued in accordance with requirements at 7 CFR 274.2(c). The

commenter thought that the benefits should be issued in accordance with

the requirements at 7 CFR 273.2(i)(3)(i), which address expedited

service processing standards. The proposed regulations at 7 CFR

273.2(i)(4)(iii)(D) address combined allotments, which have different

issuance requirements than normal expedited benefits. The issuance

requirements for combined allotments are contained at 7 CFR 274.2(c).

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. In order to increase consistency with the AFDC

program and the Adult Assistance programs under Titles I, X, XI, and

XVI of the Social Security Act, which require that applicants reside in

the State but have no project area requirement, the Department proposed

in the January 11, 1995 rulemaking 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.

Under the proposal, State agencies still retained the authority to

designate limited project areas and restrict where a given household

could apply.

The Department also proposed 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. Under the proposal, if a State

agency does not require that households apply in specified project

areas, the application processing timeframes would begin the

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day the application is received by any office.

The Department also proposed a second amendment to 7 CFR 273.3 to

clarify the requirements for transferring food stamp cases between

project areas. The Department proposed 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's 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.

We received six comments on the proposal. Five commenters wrote to

support the proposal, though one of the five felt that the new

provision might be costly to implement and may confuse State staff.

Since Statewide residency is an option for State agencies, however,

each State can determine for itself if the change in residency

requirements is beneficial.

The sixth commenter asked how the change to Statewide residency

would affect the definition of mail loss liability as it relates to

project areas in 7 CFR 276.2(b)(4)(i). The change to Statewide

residency should have no effect on State agencies' mail loss

liabilities. The Department believes that there is a clear distinction

between Statewide residency for certification purposes and Statewide

reporting of mail issuance. A State agency could opt for Statewide

residency yet retain project area designations for purposes of mail

loss liability.

No negative comments were received on the proposed amendment to 7

CFR 273.3, and the Department is adopting it as final without change.

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.

In the January 11, 1995 proposed rule, the Department proposed to

amend food stamp regulations to address the Social Security

Administration's (SSA) ``Enumeration at Birth'' (EAB) program. Under

EAB, 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. 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 an SSN, 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. In the January 11, 1995

rule, the Department proposed an amendment to 7 CFR 273.2(f)(1)(v) to

allow a completed Form SSA-2853 to be acceptable as proof of SSN

application for an infant. The Department received no negative comments

on this proposal and is adopting it as final.

Current regulations at 7 CFR 273.6(d) allow for good cause

exceptions to the SSN requirement 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. The regulations allow the household 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.

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

Department proposed 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

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

applicable.

The Department received four comments on this provision of the

proposed rule. Two commenters thought that the Department should define

``next'' recertification period. These commenters indicated that the

absence of a definition could be a potential problem when a household

reports the addition of a newborn to the State agency in the month

before the expiration of the household's certification period. One of

the commenters thought that the Department should amend the proposed

good cause provisions to allow households with a newborn whose

certification period ends in the birth month or in the month following

the birth month with the same timeframes allowed those households with

a newborn who have 10 to 12 months left in the certification period.

The Department acknowledges the difficulties associated with using

the concept of ``next certification period'' in the proposed provision.

Therefore, the Department is revising the provision to allow households

to submit an SSN or proof of application for an SSN at their next

recertification or within six months following the month in which the

baby is born, whichever is later. The Department believes that amending

the provision to include a fixed time period will ensure that all

households benefit equally from the change in procedures. The

Department also believes that six months is sufficient time for

households to acquire the necessary materials to apply for an SSN for a

newborn. Accordingly, if the household cannot provide an SSN or proof

of application at its next recertification after the birth of a new

household member or within six months of the month in which the baby is

born, the State agency shall determine if the good cause provisions of

7 CFR 273.6(d) are applicable.

Another commenter noted that AFDC does not have a good cause

provision in its SSN regulations, and that the application for a

newborn must be done by the end of the month following the month in

which the mother is released from the hospital. The Department

recognizes that the Food Stamp Program's good cause provision does not

conform with the requirements of the AFDC program. The Department

believes, however, that the provision is advantageous to participating

households, which frequently encounter difficulty obtaining certified

copies of birth certificates needed to apply for an SSN, and that this

offsets the need for conformity in this area.

Another commenter thought that the proposed change to the SSN

requirement for newborns conflicted with expedited service processing

requirements, and requested that final regulations clarify whether the

newborn

[[Page 54308]]

SSN policy supersedes that under expedited processing.

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

households entitled to expedited service furnish an SSN for each person

or apply for one for each person before the first full month of

participation. Those household members unable to provide the required

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

participation are allowed to continue to participate only if they

satisfy the good cause requirements with respect to SSNs specified in 7

CFR 273.6(d).

To avoid a conflict between the new SSN requirement for newborns

and expedited service processing requirements, the Department is

amending the expedited service requirements at 7 CFR 273.2(i)(4)(i)(B)

to allow a newborn to participate for up to six months following the

month of its birth before providing an SSN or proof of application for

an SSN.

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

Current regulations at 7 CFR 273.8(e)(2) exclude the value of one

burial plot per household member from resource consideration. In the

proposed 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.''

Accordingly, we proposed to amend 7 CFR 273.8(e)(2) 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).

Three commenters supported this provision. One commenter

misunderstood the proposal and thought that the exclusion of up to

$1,500 in a bona fide funeral agreement per household member replaced

the exclusion of one burial plot per household member currently at 7

CFR 273.8(e)(2). The funeral agreement exclusion is in addition to the

exclusion of one burial plot per household member and is not intended

to replace the burial plot exclusion. The provisions of the proposed

rule are adopted as final.

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

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

households receiving public assistance payments (PA) or 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. In the proposed rule,

it was noted that 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 proposed,

therefore, 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.

Three commenters supported the proposed provision. A fourth

commenter objected to the proposed provision being limited to income

received on a monthly or semimonthly basis, arguing that income which

is received on a weekly or biweekly basis may also be received early

(or late) because the normal payday falls on a weekend or a holiday.

The commenter thought that any type of payment schedule that is altered

due to a holiday, weekend, or vacation should not affect a household's

eligibility for food stamps.

Current regulations at 7 CFR 273.10(c)(2)(1) already address

fluctuations in income that is received on a weekly or biweekly basis.

The regulations require that whenever a full month's income is

anticipated but is received on a weekly or biweekly basis, the State

agency shall convert the income to a monthly amount. Since conversion

addresses the receipt of a fifth check (in weekly pay) or a third check

(in biweekly pay), the Department is not adopting the commenter's

suggestion. The provision is adopted as proposed.

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. The Department proposed to rectify this omission in

the proposed rule by amending 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. The Department received two comments

supporting the proposed provision, and is adopting the provision as

final.

Certification Periods--7 CFR 273.10(f)

In the January 11, 1995 publication, the Department proposed

changes in the certification period requirements at 7 CFR 273.10(f) to

allow State agencies more flexibility in aligning the food stamp

recertification and the PA/GA redetermination in joint cases. 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. The Department proposed three procedures which State agencies

could employ to align PA/GA and food stamp certification periods. Under

the first procedure, when a household is certified for food stamp

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

the State agency would

[[Page 54309]]

assign the household a food stamp certification period consistent with

the household's circumstances. When the PA/GA is approved, the State

agency would reevaluate the household's food stamp eligibility. The

household would not be required to submit a new application or undergo

another face-to-face interview. If eligibility factors remained the

same, the food stamp certification period would 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 would be sent a Notice of Expiration and would

have to be recertified before being determined eligible for further

food stamp assistance, even if the PA/GA redetermination had 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 could again employ the procedure

described above to align those certification periods.

The second procedure for aiding State agencies in aligning PA/GA

and food stamp certification periods was 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 was determined eligible to

continue receiving food stamps, its current certification period would

end and a new one would be assigned.

The third procedure for aiding State agencies in aligning PA/GA and

food stamp certification periods was to allow State agencies to assign

indeterminate certification periods to households certified for both

food stamps and PA/GA. Under this procedure, 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 for 7 months and would expire 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 5 months to align food

stamp recertification and PA/GA redetermination. In the 12th month, the

household would have to be recertified for food stamp purposes, even if

the PA redetermination had not yet been completed.

The Department received 12 comments on the proposed procedures for

aligning certification periods. Five commenters wrote in support of all

three proposed options. Three commenters suggested further changes to

those procedures. Two asked that the options for aligning food stamp

and PA/GA certification periods apply for aligning food stamp

certification periods and those of the Medicaid program and other

medical programs. One commenter suggested a fourth option in which food

stamp certification reviews could be completed at the same time as AFDC

reviews or applications. The remaining commenters raised various

questions or criticized the proposed options. One commenter objected

that the proposed changes did not address the 24-month certification

period requirement for monthly reporting households residing on Indian

reservation land. Another thought that the third option failed to

address required client notices. One commenter thought that the first

and third options appear error prone because specific criteria for

extending certification periods is not provided. Two commenters felt

that the second and third options would increase State agency workload

rather than reduce it.

The Department offered the options in order to simplify

administration of the requirement in section 3(c)(1) of the Act that

PA/GA certification periods be aligned with food stamp certification

periods. In light of the comments received on the proposed provision,

and the Department's commitment to extending flexibility to State

agencies, the Department is further simplifying the requirements at 7

CFR 273.10(f)(3). The section is revised to allow the State agency to

shorten or extend a household's food stamp certification period in

order to align the food stamp recertification date with the PA or GA

redetermination date. The household's food stamp certification period

can only be extended when the household is initially approved for PA/

GA. Although this rule offers considerable flexibility in aligning the

food stamp and PA/GA recertifications, we anticipate that an extension

of no more than 4 months will be necessary in most cases. The extension

would generally be needed because of the difference in approval dates

for food stamps and the other program in a joint PA or GA case, and

extension of the food stamp certification for a few months would allow

for alignment under normal circumstances. The food stamp certification

period may be extended up to 12 months to align the food stamp

certification period with the PA/GA redetermination period. If the

household's certification period is extended, the State agency shall

notify the household of the 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 eligible for

further food stamp assistance, even if the PA or GA redetermination is

not set to expire.

If the household's certification period is shortened, the State

agency shall send it a notice of expiration which informs the household

that its certification period will expire at the end of the month

following the month the notice of expiration is sent and that it must

reapply if it wishes to continue to participate. The notice of

expiration shall also explain to the household that its certification

period is expiring in order that it may be recertified for food stamps

at the same time that it is redetermined for PA or GA.

In response to commenters' suggestions, the Department is further

revising 7 CFR 273.10(f)(3) to offer State agencies the option of

extending or shortening certification periods as noted above in order

to align them with certification periods in Medicaid and other medical

programs. The Department is offering this as an option instead of a

requirement because the Food Stamp Act does not require that the food

stamp certification period of a household also receiving Medicaid or

other medical programs coincide with the period for which the household

is certified for those programs.

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

[[Page 54310]]

the number of boarders; or (2) the actual documented cost of providing

room and meals, if that cost exceeds the maximum allotment.

In the proposed rule, the Department proposed to revise 7 CFR

273.11(b)(1)(ii)(C) to provide State agencies with an additional option

for calculating boarder income. Under the proposal, State agencies

would have the option to use actual costs, the maximum allotment for a

household size equal to the number of boarders, or a flat amount or

fixed percentage of gross income from boarders to determine the cost of

doing business of households with boarders. The Department noted in the

proposed rule that the AFDC program used a flat percentage equal to 75

percent of the boarder-generated income (45 CFR 233.20(a)(6)(v)(B)).

We, however, did not propose a percentage limit, but requested

suggestions on an appropriate percentage from commenters.

We received 11 comments on the proposed provision. One commenter

recommended that we set the percentage of gross income at 75 percent. A

second commenter suggested that we use the same percentage limit as is

used in the AFDC program. A third commenter said that they were not

opposed to an additional method of calculating boarder income as long

as they are able to coordinate it with their AFDC program. Another

commenter said that the AFDC program in their State does not provide

for an exclusion of 75 percent of boarder-generated income. It provides

for the exclusion of the actual cost of doing business. If that cost is

not documented, or if it is below $60 a month, the State agency

excludes $60 as the cost of doing business. Another commenter suggested

not setting a percentage limit, but allowing State agencies to use a

percentage that reflects circumstances in their State.

Since there was no consensus among commenters on the percentage of

gross income from boarders that should be used to determine the cost of

doing business of households with boarders, the Department has decided

to retain the language of the proposed rule and allow State agencies to

set their own flat amount or fixed percentage of boarder-generated

income to determine the cost of doing business for households with

boarders. As in the proposed rule, the method used to determine the

flat amount or fixed percentage must be objective, justifiable, and

stated in the State's food stamp manual. If the State agency selects

the fixed percentage option to determine the cost of doing business for

households with boarders, it must give households the opportunity to

claim actual costs.

One commenter asked that the final rule clearly reflect that it is

the State agency, not the household, that chooses the options available

for the household to use as a cost of doing business. Another commenter

asked if the State agency must choose only one of the three proposed

options and apply it to all households that do not opt to use actual

business expenses, or can a household or State agency choose any of the

three options on a case-by-case basis.

The Department believes that the household should be allowed to

choose the method used to determine its boarder-generated income. The

Department is amending the proposed provision at 7 CFR 273.11(b)(1)(ii)

to clearly state this policy.

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

Under current regulations at 7 CFR 273.11(a)(4)(i), households

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

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

can document the cost of each meal. In the proposed rule, the

Department proposed to allow households who are day care providers to

use a standard amount per individual as a cost of doing business. The

Department believed that use of a standard reimbursement rate

(standard) 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 self-

employment cases of this type and reduce payment errors.

Under the proposed provision, 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 would take into account the

differences in cost for full-day and part-day care. Households that are

reimbursed for the cost of meals provided to individuals in their care,

for example through the FCS Child and Adult Care Food Program, would

not be able to claim the standard but could claim actual expenses that

exceed the amount of their reimbursement.

One commenter found the preamble of the proposed rule confusing,

noting that it begins and ends with a discussion of the cost of

providing meals by day care providers, yet in the body refers to

allowing use of a standard for ``determining self-employment

expenses,'' which the commenter interpreted to mean that all allowable

costs could be standardized if they are incurred as a cost of doing

business. The commenter asked if that is what the Department is

proposing.

The proposed standard is intended to cover only the costs of meals

and not other self-employment expenses that the household providing in-

home day care may incur. The purpose of the provision was to

incorporate into regulations a procedure found to be effective through

the Department's waiver process. As noted in the proposed rule, several

State agencies were granted 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, to cover the cost of meals provided by day care

households to individuals in their care instead of requiring the

households to document actual meal costs. Those State agencies have

reported that use of a standard benefits households by eliminating the

need for them to keep extensive records on actual meal costs. It is

also advantageous to the State agencies as it eliminates the need for

workers to verify actual meal costs.

Another commenter thought that the proposed rule was unclear as to

whether or not the standard reimbursement amount had to be established

separately for food stamps or whether a reimbursement amount approved

for use in a State public assistance (PA) program could be used without

separate approval from FCS.

It is the Department's intention that State agencies develop their

own meal cost standards. State agencies are free, therefore, to use the

same standard as is used in their PA or general assistance programs.

Furthermore, State agencies do not need to seek departmental approval

of the standard they choose to use. State agencies must, however,

inform households of their right to verify actual meal expenses and use

those actual costs if they exceed the standard amount.

Two commenters requested further clarification on the Department's

recommendation in the proposed rule that, when establishing a standard

amount, State agencies take into account the differences in cost for

full-day and part-day care. One commenter wanted to know if it meant

that the State agency should have separate standards for part-day and

full-day care. The other requested a definition of part-time.

As noted above, the Department intends for State agencies to

develop their own meal standards. The statement in the proposed rule

that State agencies consider the differences in part-day and full-day

care when setting

[[Page 54311]]

the standard was, therefore, only a recommendation, and the Department

is not requiring State agencies to differentiate between the two when

creating a standard. Consequently, the Department is not providing a

definition of part-day care, but will leave it up to State agency

discretion.

The comments received on the proposed provision requested

clarification of the preamble and not changes to the regulatory

language of the provision. Therefore, the Department is adopting the

proposed amendment to 7 CFR 273.11(b)(2) as final without change.

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 an advance notice of adverse action in

this situation. In the proposed rule, the Department suggested adding

an exemption from sending a NOAA if agency mail has been 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.

Four commenters supported the proposed provision. One commenter

noted, however, that although the cited AFDC regulation does not

require advance notice if delivery cannot be reasonably expected,

notice is still required.

The Department does not believe it is necessary to send a notice to

an address known to be incorrect. A recipient whose benefits were

reduced or terminated and who did not receive a notice would still be

entitled to a fair hearing in accordance with 7 CFR 273.15 and

restoration of benefits, as provided in 7 CFR 273.17. However, to allow

State agencies to use the same procedure for food stamps and AFDC, we

are adding a new paragraph (c) to 7 CFR 273.13 to provide that State

agencies may at their option send an adequate notice to households

whose mail has been returned with no known forwarding address.

Recertification--7 CFR 273.14

In the January 11, 1995 rule, the Department proposed several

changes to current regulations at 7 CFR 273.14 which govern

recertification procedures. The Department proposed a general

reorganization of the section in order to provide a clearer expression

of recertification requirements. The Department also proposed several

changes in recertification procedures which it believed would provide

State agencies with more flexibility when recertifying households. Each

proposed change is discussed in detail below.

The Department received two general comments on the proposed

changes to 7 CFR 273.14, one positive and one negative. One commenter

strongly supported all the proposed changes, believing that they will

simplify and improve the recertification process. The other commenter

thought that the proposed changes clearly added unfunded Federal

mandates. The commenter wrote that the discussion in the preamble

implied that States were being given options for handling the

recertification process but in the proposed regulations only a single

process which encourages the State agency to send a recertification

form, an interview appointment letter, and a statement of needed

verification with each notice of expiration was stated. The commenter

felt that the procedure was an unfunded Federal mandate and was counter

productive to any automated system based on interactive interviews. The

commenter thought that if a State was currently experiencing no

problems with the recertification process, there was no need to

complicate the process by developing an additional form to use just for

recertification or by establishing different procedures.

It was not the Department's intention in the proposed rule to

impose new recertification requirements on State agencies. The proposed

procedures, which were drawn from State agency waiver requests, were

meant only as options which State agencies can employ to simplify the

recertification process. State agencies which do not find the proposed

options beneficial should not employ them.

1. Reorganization

In the January 11, 1995 rule, the Department proposed to reorganize

7 CFR 273.14 in an attempt to provide a clearer expression of the

recertification requirements. Revised section 273.14(a) contained

general introductory statements regarding actions the household and the

State agency must take to ensure that eligible households receive

uninterrupted benefits. Revised section 273.14(b) contained the

requirements for the notice of expiration, the recertification form,

the interview and verification. Revised section 273.14(c) contained the

filing deadlines for timely applications for recertification. Current

sections 273.14(d), (e), and (f) were revised into two new sections 7

CFR 273.14 (d) and (e). New section 7 CFR 273.14(d) combined 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) addressed situations in which the household or the State

agency fail to meet processing deadlines.

The Department received no comments on the proposed structural

revision of the section and is retaining it in the final rule.

2. Recertification Forms

In the January 11, 1995 rule, the Department proposed to revise 7

CFR 273.14(b)(2) to allow State agencies the option of using a modified

application form for recertifying households. This form could be used

only for those households which apply for recertification before the

end of their current certification period. The State agency would be

required to devise its own form, and would have to include on it 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. In accordance with section 11(e)(2) of the

Act, which requires that the Department approve all deviations from the

uniform national food stamp application, all recertification forms

would have to be approved by FCS before they could be used.

The Department received three comments on the recertification form

proposal. One commenter supported the provision. Another commenter

thought that the proposed regulatory language made it mandatory for the

State agency to use a recertification form and did not allow the option

to use the regular initial application at recertification. The

Department had intended to indicate that the proposed recertification

form is meant as an option for State agencies and is not mandatory. The

Department is revising the proposed language at 7 CFR 273.14(b)(2)(i)

to clarify this.

[[Page 54312]]

The third commenter noted that if a recertification form is to be

used for joint food stamps/SSI processing in accordance with 7 CFR

273.2(k), State agencies must obtain SSA approval as well as FCS

approval before using the form. The Department agrees and is revising

the proposed language at 7 CFR 273.14(b)(2)(i) to clarify this.

2-A. Face-to-Face Interviews

Under current regulations, State agencies are required to conduct

face-to-face interviews with households applying for recertification.

In the January 11, 1995 rule, we proposed 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

also proposed 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 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.

We received nine comments on the proposed provision. One commenter

thought that the definition of ``stable households'' in the proposed

rule was unclear, and that the final rule should specify the households

for which telephone interviews may be conducted.

The Department believes that the proposed regulatory language at 7

CFR 273.14(b)(3) clearly specified those categories of households for

which the face-to-face interview could be waived. It may be waived for

those households that have no earned income and in which all members

are elderly or disabled, and it may be waived for food stamp households

also receiving PA or GA. In the latter case, a household would have to

receive at least one face- to-face interview a year.

Another commenter thought that the provision allowing State

agencies to interview by telephone any household that has no earned

income and whose members are all elderly or disabled is more

restrictive than, and contradicts, the Food Stamp Act. Section 11(e)(2)

of the Food Stamp Act, 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. The commenter apparently thought that the Department was

proposing to prohibit such waivers in the future. That is not the

Department's intent.

Current food stamp regulations at 7 CFR 273.2(e) provide for a

waiver of the face-to-face interview requirement for hardship reasons.

The Department did not propose in the January 11, 1995 rule to change

that provision, and, in fact, proposed to include a reference to it in

7 CFR 273.14(b)(3). The commenter may have been confused by the

discussion on Federal Register page 2709 of the proposed rule

concerning a suggestion made previously by State agencies to allow case

workers to determine on a case-by-case basis which households needed to

be interviewed. The Department rejected the suggestion, believing that

providing for the waiving of face-to-face interviews based on a

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

not necessary in a particular case could compromise the right to equal

treatment guaranteed all food stamp recipients under section 11(c) of

the Act, 7 U.S.C. 2020(c).

One commenter thought that the option to waive face-to-face

interviews should be extended to households subject to monthly

reporting and retrospective budgeting (MRRB). The commenter thought

that since the circumstances of these households are updated monthly, a

telephone interview should be sufficient to complete the household's

recertification determinations.

Another commenter thought that the option to waive face-to-face

interviews should also be extended to include group living arrangement

residents even if they have earned income. The commenter explained that

the resident is usually not able to complete the application process so

it is completed by the authorized representative (AR) (usually the case

manager) and all verifications are submitted by the AR. One case

manager is responsible for numerous residents, and face-to-face

interviews are very time consuming both for them and State staff. The

commenter thought that since all the information is received through

the AR for those households, a telephone interview of the AR should be

sufficient.

The Department agrees that the changes suggested by the above two

commenters have merit. However, the Department believes that such

significant changes to current regulations should be proposed in order

to give interested parties the opportunity to comment. Therefore, the

Department is not adopting either suggestion at this time, but will

consider both in future rulemakings.

Two commenters addressed the proposal to allow one face-to-face

interview a year for joint food stamp/PA households. One commenter

wrote to support the provision. The other suggested that the Department

make food stamps and PA/GA requirements even more compatible by

allowing mail-in recertifications when the household is not due for its

face-to-face interview.

The Department agrees with the commenter that it is advantageous to

both households and State agencies to have food stamp and PA

requirements align as closely as possible. Therefore, the Department is

revising 7 CFR 273.14(b)(3)(ii) to allow for mail-in recertifications

at any recertification in an annual period in which the household does

not receive a face-to-face interview for PA or GA. Telephone interviews

should be conducted with the household if any of its reported

circumstances are questionable.

The remaining three commenters objected to the proposed provision

at 7 CFR 273.14(b)(3). That provision required the State agency to

reschedule a missed interview if the interview had been scheduled

before the household had submitted a recertification form. One of the

commenters noted that under current regulations at 7 CFR 273.14(c)(2),

it is the household's responsibility to reschedule a missed interview

even if that interview was scheduled prior to the household filing a

timely application.

The Department agrees with the commenters that the proposed

provision added an additional recertification requirement, and is

therefore making no change to current requirements at 7 CFR

273.14(c)(2).

3. 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, the Department proposed in the

January 11, 1995 rule 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.

One commenter noted that there is no provision for the situation in

which the required 10-day period would extend beyond the end of the

certification period. Current regulations at 7 CFR 273.14(d)(2) require

that if a household's eligibility is not determined by the end of the

current certification

[[Page 54313]]

period because of the time period allowed for submitting missing

verification, and the household is subsequently found eligible, it must

receive an opportunity to participate within 5 working days after

submission of the required verification. The Department is revising the

proposed regulations at 7 CFR 273.14(b)(4) to include this requirement.

The Department also proposed to simplify the requirements for

verifying information at recertification. 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. State agencies are also

required to verify previously unreported medical expenses and total

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

273.2(f)(8)(i) also prohibits State agencies from verifying 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.'' The Department proposed 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.''

One commenter was concerned that as a result of the change in

wording, State agencies might interpret ``questionable'' to mean

something other than incomplete, inaccurate, inconsistent, or outdated,

and that they will not reverify information that falls in these

categories.

To avoid any possibility that incomplete, inaccurate, inconsistent,

or outdated information might not be reverified, the Department has

decided not to make the proposed change.

4. 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 proposed in the January 11, 1995 publication

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. The Department received no comments on the proposed

provision and is adopting it as final.

5. Early Denial

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.

In the January 11, 1995 rule, the Department proposed a change in

provisions for handling the recertification of households which do not

comply with the requirements for interviews or verification. We

proposed 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 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.

The Department received four comments on the proposed provision.

Two commenters support the proposal, and the other two suggested that

it apply at initial certification as well as at recertification.

The Department is not adopting the commenters' recommendation. The

commenters' suggestion goes beyond the provision of the proposed rule.

As noted earlier in this section, the Department believes that

significant changes to current regulations should be proposed in order

to provide an opportunity for public comment. Therefore, the Department

is not accepting the commenter's suggestion at this time but will

consider it for future rulemakings.

6. Proration of Benefits at Recertification

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

for recertification 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. In the

final rule, we proposed to include this new provision in revised

section 7 CFR 273.14(e)(2)(ii). The Department received no comments on

the proposed provision and is adopting it as final.

7. Expedited Service

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

agencies to provide coupons within 5 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.

In the January 11, 1995 rule, the Department proposed to eliminate

expedited service at recertification. The Department proposed to create

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

which punctually apply for recertification, or which apply late but

within the

[[Page 54314]]

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) was also proposed.

The Department received eight comments on the proposed rule. Three

commenters supported the proposed provision. Four commenters strongly

opposed granting expedited service to households that reapply in the

month immediately following the month of their last certification

period. The commenters thought that households would use the provision

to manipulate State agencies' issuance systems in order to receive

benefits earlier than usual.

The Department believes there is no substantive evidence to support

the commenters' claim that households will purposefully fail to submit

timely applications for recertification in order to receive their first

month's benefits earlier than they would under their normal issuance

cycle. Anecdotal evidence received from State agencies which have

applied for waivers of the expedited service requirement indicates

rather that households prefer to receive their allotments for the first

month of their new certification period in their normal issuance cycle.

The Department, therefore, is making no change to the proposed

provision and is adopting it as final.

The last commenter requested clarification on the interaction of

the rules on expedited service, proration, and combined allotments. At

initial application, a household eligible for expedited service must

receive such service. If the household applies before the 15th of the

month, it receives prorated benefits for the first month if eligible

(assuming it timely satisfies all application requirements). If the

household applies after the 15th of the month and is eligible for

expedited service, it must receive a prorated allotment for the first

month and a full allotment for the second month within the 5-day

expedited service timeframe with postponed verification, if necessary,

to meet the expedited timeframe.

At recertification, if the household timely reapplies for benefits

and timely satisfies all application processing requirements, it is not

eligible for expedited service, its benefit for the first month is not

prorated, and it does not receive a combined allotment. If the

household reapplies in the month after the end of its last

certification period, it must receive expedited service if eligible in

accordance with the provisions of 7 CFR 273.14(f) finalized in this

rule. In accordance with the new provisions at 7 CFR 273.14(e)(2)(ii),

the household's benefits for the first month cannot be prorated if it

satisfies all application processing requirements on a timely basis.

A household that reapplies after the 15th of the month in the month

following the end of its last certification period, is not eligible for

a combined allotment. Section 8(c)(3)(B) of the Act requires a combined

allotment when a household that is entitled to expedited service

applies after the 15th day of the month in lieu of its ``initial''

allotment and its regular allotment for the following month. Section

8(c)(2)(B) defines an initial month as one that follows any period of

more than one month in which the household was not participating in the

program. Since the month in which the household is reapplying is not an

initial month, a combined allotment would not be required. The

household, if eligible, would be entitled to a full month's allotment

for the month in which it reapplies.

8. Miscellaneous Provisions

One commenter thought that the proposed requirement at 7 CFR

273.14(d)(2) that households be notified of their eligibility or

ineligibility by the end of their current certification period places a

hardship on State agency staff. The commenter thought that, in

administering the rule, consideration must be given to weekends,

holidays, and mail time which shortens the timeframe for making an

eligibility determination. The commenter thought the regulation should

be amended to require that the eligibility determination be made by the

end of the current certification period.

The proposed provision represented no change from existing policy

as currently contained at 7 CFR 273.14(d)(2) and 273.10(g)(1)(iii). The

Department understands the difficulty State agencies may encounter when

determining household eligibility. However, the Department believes

households should be informed of their eligibility prior to the end of

their certification period to ensure that they are aware of their

eligibility or ineligibility prior to the date they expect to receive

their next allotment. The Department is adopting the proposed provision

as final.

The same commenter also suggested a change to the proposed

regulations at 7 CFR 273.14(e)(1). Those regulations state that

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. The commenter thought that the phrase

``immediate opportunity to participate'' should be replaced with a

definitive timeframe. The commenter felt that consideration must be

given to different issuance systems and the need to mail benefits so

that the phrase ``immediate opportunity'' has widely varying

interpretations.

Because issuance systems vary between States, the Department is

unsure of what timeframe would be appropriate. The Department does not

wish to impose a timeframe that would be burdensome for many State

agencies to meet, or a timeframe that is too broad and therefore

further penalizes households who have not been given an opportunity to

participate within their normal issuance cycle because of an error on

the part of the State agency. For these reasons, the Department is not

adopting the commenter's suggestion but is adopting the proposed

provision as final. This will allow the State agency more flexibility

to fit the requirement into its issuance system.

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.

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 must

anticipate prospectively which month the household will be ineligible

and suspend the household's participation for that month.

In the proposed rule, the Department proposed to amend 7 CFR

273.21(n) to grant State agencies the option of suspending households

either retrospectively or prospectively. Under retrospective

suspension, the State agency suspends 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

[[Page 54315]]

AFDC program. The proposed rule required that the option to suspend and

the method of suspension must be applied Statewide.

The Department received four comments on the proposed provision.

Two were supportive of the provision, while two requested that the

option of suspending issuance of benefits to a household that becomes

ineligible for one month, which is currently limited to retrospectively

budgeted households, be extended to prospectively budgeted households.

The Department agrees with the commenters that it is desirable to

allow suspension for prospectively budgeted households, for it would

eliminate the burden on both the household and State agency caused by

the current requirement to reapply and complete the entire application

process if eligibility is terminated for one month. Therefore, in

addition to adopting the proposed amendment to 7 CFR 273.21(n) as

final, we are also adding a provision to 7 CFR 273.12(c)(2) to allow

State agencies to suspend prospectively budgeted households that become

ineligible for one month for any reason.

Technical Amendments

In a final rule published June 9, 1994, titled ``Technical

Amendments to Various Provisions of Food Stamp Rules'', the Department

made several corrections to existing regulations. It has come to our

attention that additional changes are needed. Therefore, we are making

the following additional technical amendments:

1. Paragraphs (A) and (B) in 7 CFR 272.1(g)(74)(ii)(A) are

redesignated as paragraphs (1) and (2).

2. The comma after the word ``elderly'' is being removed from 7 CFR

273.1(e)(1)(i).

3. 7 CFR 273.20(a) is being revised to complete the removal of

references to Wisconsin, which formerly participated in the cash-out

demonstration project and to revise the heading of the section.

4. In the fourth sentence of 7 CFR 278.1(h), the spelling of the

word ``applicant'' is corrected.

5. A typographical error in the first sentence of 7 CFR 279.3(a) is

corrected.

The Department is also taking this opportunity to amend 7 CFR

273.4(a) to remove paragraphs (9) and (11). These paragraphs were added

to the regulations by a final rule published May 29, 1987 (52 FR 20058)

to implement provisions of the Immigration Reform and Control Act

(IRCA) of 1986.

Paragraph (9) provides that aliens granted lawful temporary

resident status at least 5 years prior to applying for food stamps and

who subsequently gained lawful permanent resident status would be able

to participate if otherwise eligible. The program to grant lawful

temporary resident status to certain aliens has now ended and this

paragraph is therefore obsolete. Aliens granted lawful temporary

resident status under the provision have now either been granted lawful

permanent resident status or are ineligible for benefits.

Paragraph (11) provides that an alien who is lawfully admitted for

temporary residence as an additional special agricultural worker

(Replenishment Agricultural Worker) as of October 1, 1989 through

September 30, 1993, in accordance with section 210A(a) of the

Immigration and Nationality Act, is not prohibited from participating

in the Food Stamp Program. A final rule published by the Immigration

and Naturalization Service (INS) at 59 FR 24031, May 10, 1994, amended

the INS regulations to remove provisions pertaining to the RAW program

because the program expired at the end of Fiscal Year 1993. The

preamble to the regulation indicates that in the 3 years during which

the program was in place, no immigration benefits were ever granted

through the RAW program. Since the program has now expired, the

provision is obsolete and is being removed from 7 CFR 273.4(a).

Conforming amendments are also being made to redesignate 7 CFR

273.4(a)(10) as 273.4(a)(9), to remove the reference to 7 CFR

273.4(a)(9) from 7 CFR 273.4(a)(2), and to change the reference in 7

CFR 273.2(f)(1)(ii)(A) and (D) from 7 CFR 273.4(a)(11) to 273.4(a)(9).

These technical amendments are effective 30 days after publication.

Implementation

Except for the provisions of 7 CFR 273.14(b)(2), this final rule is

effective November 18, 1996 and must be implemented no later than May

1, 1997. The provisions of 7 CFR 273.14(b)(2) allowing use of a

modified recertification form must be approved by OMB under the

Paperwork Reduction Act of 1995 before they can become effective. We

will publish a notice in the Federal Register announcing the effective

date when OMB approval is received. The provisions must be implemented

for all households that newly apply for Program benefits on or after

either the required implementation date or the date the State agency

implements the provision prior to the required implementation date. The

current caseload shall be converted to these provisions following

implementation at the household's request, at the time of

recertification, or when the case is next reviewed, whichever occurs

first. The State agency must provide restored benefits to such

households back to the required implementation date or the date the

State agency implemented the provision prior to the required

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

implement by the required implementation date, restored benefits shall

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

or the date of application whichever is later, but for no more than 12

months in accordance with Sec. 273.17(a). For quality control purposes,

any variances resulting from the implementation of the rule shall be

excluded from error analysis for 120 days from the required

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

U.S.C. 2025(c)(3)(A).

List of Subjects

7 CFR Part 272

Alaska, Civil Rights, Food Stamps, Grant programs-social programs,

Reporting and recordkeeping requirements.

7 CFR Part 273

Administrative practice and procedure, Aliens, Claims, Food stamps,

Fraud, Grant programs-social programs, Penalties, Records, Reporting

and recordkeeping requirements, Social security.

7 CFR Part 278

Administrative practice and procedure, Banks, Banking, Claims, Food

stamps, Groceries--retail, Groceries--general line and wholesaler,

Penalties.

7 CFR Part 279

Administrative practice and procedure, Food stamps, General line--

wholesalers, Groceries, Groceries--retail.

Accordingly, 7 CFR Parts 272, 273, 278, and 279 are amended as

follows:

1. The authority citation for Parts 272, 273, 278, and 279

continues to read as follows:

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

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

2. In Sec. 272.1:

a. Paragraph (g)(74) is amended by redesignating paragraphs

(g)(74)(ii)(A)(A) and (B) as (g)(74)(ii)(A)(1) and (2).

b. a new paragraph (g)(147) is added in numerical order to read as

follows:

[[Page 54316]]

Sec. 272.1 General terms and conditions.

* * * * *

(g) Implementation * * *

(147) Amendment No. 364. Except for the provisions of

Sec. 273.14(b)(2), the provisions of Amendment No. 364 are effective

November 18, 1996 and must be implemented no later than May 1, 1997.

The effective date and implementation date of the provisions of

Sec. 273.14(b)(2) will be announced in a document in the Federal

Register. The provisions must be implemented for all households that

newly apply for Program benefits on or after either the required

implementation date or the date the State agency implements the

provision prior to the required implementation date. The current

caseload shall be converted to these provisions following

implementation at the household's request, at the time of

recertification, or when the case is next reviewed, whichever occurs

first. The State agency must provide restored benefits to required

implementation date or the date the State agency implemented the

provision prior to the required implementation date. If for any reason

a State agency fails to implement by the required implementation date,

restored benefits shall be provided, if appropriate, back to the

required implementation date or the date of application whichever is

later, but for no more than 12 months in accordance with Sec. 273.17(a)

of this chapter. Any variances resulting from implementation of the

provisions of this amendment shall be excluded from error analysis for

120 days from this required implementation date in accordance with

Sec. 275.12(d)(2)(vii) of this chapter and 7 U.S.C. 2025(c)(3)(A).

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

Sec. 273.1 [Amended]

3. In Sec. 273.1, paragraph (e)(1)(i) is amended by removing the

comma after the word ``elderly''.

4. In Sec. 273.2:

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

b. Paragraph (f)(1)(ii)(A) is amended by removing the reference

``(a)(11)'' and adding the reference ``(a)(9)'' in its place.

c. Paragraph (f)(1)(ii)(D) is amended by removing the reference

``Sec. 273.4(a)(8) through (11)'' and adding in its place the reference

``Sec. 273.4(a)(8) and (a)(9)''.

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

e. Paragraph (g)(2) is redesignated as paragraph (g)(3) and a new

paragraph (g)(2) is added.

f. The third and fourth sentences of the undesignated paragraph

following paragraph (i)(4)(i)(B) are amended by removing the word

``first'' wherever it appears in both sentences and adding in its place

the word ``second''.

g. The fourth sentence of the undesignated paragraph following

paragraph (i)(4)(i)(B) is further amended by adding the words ``,

except that households with a newborn may have up to 6 months following

the month the baby was born to supply an SSN or proof of an application

for an SSN for the newborn in accordance with Sec. 273.6(b)(4)'' before

the period.

h. The third sentence of paragraph (i)(4)(iii) introductory text is

amended by adding the words ``and is certified for the month of

application and the subsequent month only'' before the words ``to

submit a second application''.

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

are revised.

j. New paragraphs (i)(4)(iii)(D) and (i)(4)(iii)(E) are added.

k. 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.

* * * * *

(g) Normal processing standard. * * *

(2) Combined allotments. Households which apply for initial month

benefits (as described in Sec. 273.10(a)) after the 15th of the month,

are processed under normal processing timeframes, have completed the

application process within 30 days of the date of application, and have

been determined eligible to receive benefits for the initial month of

application and the next subsequent month, may be issued a combined

allotment at State agency option 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.

* * * * *

(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 all verification requirements that were

postponed. For subsequent months, the household must reapply and

satisfy all verification requirements which were postponed or be

certified under normal processing standards. 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.

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.

[[Page 54317]]

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

Sec. 273.10(a)) after the 15th of the month, are entitled to expedited

service, have completed the application process, 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 shall be postponed to meet the

expedited timeframe. The benefits shall be issued in accordance with

Sec. 274.2(c) of this chapter.

(D) The provisions of paragraph (i)(4)(iii)(C) 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 which have not satisfied the postponed verification

requirements. However, households eligible for expedited service may

receive benefits for the initial month and next subsequent month under

the verification standards of paragraph (i)(4) of this section.

(E) 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 5 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 before the end of the third month, the

State agency shall terminate the household's participation and shall

issue no further benefits.

(iv) * * * The provisions of this section shall not apply at

recertification if a household reapplies before the end of its current

certification period.

* * * * *

5. 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.

Sec. 273.4 [Amended]

6. In Sec. 273.4:

a. paragraph (a)(2) is amended by removing the words ``paragraphs

(a)(8) or (a)(9)'' and adding in their place the words ``paragraph

(a)(8)''.

b. paragraphs (a)(9) and (a)(11) are removed and paragraph (a)(10)

is redesignated as paragraph (a)(9).

7. 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 its next recertification or within 6 months following

the month the baby is born, whichever is later. If the household is

unable to provide an SSN or proof of application for an SSN at its next

recertification within 6 months following the baby's birth, the State

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

this section are applicable.

* * * * *

8. 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 $1,500 in equity value, in which event

the value above $1,500 is counted. * * *

* * * * *

9. In 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. Paragraph (f)(3) is revised.

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)(i) Households in which all members are included in a single PA

or GA grant shall have their food stamp recertifications at the same

time they are redetermined for PA or GA. Definite food stamp

certification periods must be assigned to these households in

accordance with the provisions of this section, however, those periods

may be shortened or extended in order to align the food stamp

recertification date with the PA or GA redetermination date. The

household's food stamp certification period can only be extended when

the household is initially approved for PA/GA. The food stamp

certification period may be extended up to 12 months to align the food

stamp certification period with the PA/GA redetermination period. If

the household's certification period is extended, the State agency

shall notify the household of the 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

eligible for further food stamp assistance, even if the PA or GA

[[Page 54318]]

redetermination is not set to expire. If the household's certification

period is shortened, the State agency shall send it a notice of

expiration which informs the household that its certification period

will expire at the end of the month following the month the notice of

expiration is sent and that it must reapply if it wishes to continue to

participate. The notice of expiration shall also explain to the

household that its certification period is expiring in order that it

may be recertified for food stamps at the same time that it is

redetermined for PA or GA.

(ii) Households in which all members receive assistance under Title

XIX of the Social Security Act or other medical assistance program may

have their food stamp recertification at the same time they are

redetermined for assistance under Title XIX or other medical assistance

program. The State agency must follow the same requirements that apply

in paragraph (f)(3)(i) of this section.

* * * * *

10. In Sec. 273.11:

a. The heading of paragraph (b) and the heading of the introductory

text of paragraph (b)(1) are 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 read as follows:

Sec. 273.11 Action on households with special circumstances.

* * * * *

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

(1) Households 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. The amount allowed as

a cost of doing business shall not exceed the payment the household

receives from the boarder for lodging and meals. Households may elect

one of the following methods to determine the cost of doing business:

* * * * *

(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.

* * * * *

(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.

* * * * *

11. In Sec. 273.12, the text of paragraph (c)(2) is redesignated as

(c)(2)(i) and a new paragraph (c)(2)(ii) is added to read as follows:

Sec. 273.12 Reporting changes.

* * * * *

(c) State agency action on changes. * * *

(2) Decreases in benefits. * * *

(ii) The State agency may suspend a household's certification

prospectively for one month if the household becomes temporarily

ineligible because of a periodic increase in recurring income or other

change not expected to continue in the subsequent month. If the

suspended household again becomes eligible, the State agency shall

issue benefits to the household on the household's normal issuance

date. If the suspended household does not become eligible after one

month, the State agency shall terminate the household's certification.

Households are responsible for reporting changes as required by

paragraph (a) of this section during the period of suspension.

* * * * *

12. In Sec. 273.13, a new paragraph (c) is added to read as

follows:

Sec. 273.13 Notice of adverse action.

* * * * *

(c) Optional notice. The State agency may, at its option, send the

household an adequate notice as provided in paragraph (b)(3) of this

section when the household's address is unknown and mail directed to it

has been returned by the post office indicating no known forwarding

address.

13. 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 application 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;

(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.

[[Page 54319]]

(2) Application form. (i) The State agency shall provide each

household with an application form to obtain all information needed to

determine eligibility and benefits for a new certification period. The

State agency may use either its regular application as defined in

Sec. 273.2(b) or a special recertification form. The recertification

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). Recertification forms used for joint food stamps/SSI

processing must be approved by SSA in accordance with

Sec. 273.2(k)(1)(i)(B). 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),(b)(1)(ii), (b)(1)(iii), (b)(1)(iv) and (b)(1)(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

application 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 for food

stamps 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, conduct a

home visit, or recertify the household by mail.

(iii) The State agency may schedule the interview prior to the

application filing date, provided that the household's application is

not denied at that time for failure to appear for the interview. The

State agency shall schedule the interview on or after the date the

application was filed if the interview has not been previously

scheduled, or the household has failed to appear for any interviews

scheduled prior to this time and has requested another 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

Sec. 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. Any household whose eligibility is not determined by the

end of its current certification period due to the time period allowed

for submitting any missing verification shall receive an opportunity to

participate, if eligible, within 5 working days after the household

submits the missing verification.

(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 only of SSI applicants or recipients

who apply for food stamp recertification at SSA offices 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 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 timely 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

[[Page 54320]]

State agency has three options for handling such cases:

(A) Send the household a denial notice as soon as the household

either fails to appear for an interview or fails to submit verification

information within the required timeframe. If the interview is

completed, or the household provides the required 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 for recertification before the end of its current

certification period.

14. In Sec. 273.20, the section heading and paragraph (a) are

revised to read as follows:

Sec. 273.20 SSI cash-out.

(a) Ineligibility. No individual who receives supplemental security

income (SSI) benefits and/or State supplementary payments as a resident

of California is eligible to receive food stamp benefits. The Secretary

of the Department of Health and Human Services has determined that the

SSI payments in California have been specifically increased to include

the value of the food stamp allotment.

* * * * *

15. 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 278--PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD

CONCERNS AND INSURED FINANCIAL INSTITUTIONS

Sec. 278.1 [Amended]

16. In Sec. 278.1, the fourth sentence of paragraph (h) is amended

by removing the word ``appliant'' and adding the word ``applicant'' in

its place.

PART 279--ADMINISTRATIVE AND JUDICIAL REVIEW--FOOD RETAILERS AND

FOOD WHOLESALERS

Sec. 279.3 [Amended]

17. In Sec. 279.3, the introductory text of paragraph (a) is

amended by removing the word ``A'' and adding the word ``An'' in its

place.

Dated: September 27, 1996.

Ellen Haas,

Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 96-26069 Filed 10-16-96; 8:45 am]

BILLING CODE 3410-30-U