Food Stamp Program, Regulatory Review; Alaska, the Commonwealth of the Northern Mariana Islands, Puerto Rico, and Demonstration Projects

SUMMARY: This rule amends Food Stamp Program rules affecting Alaska,

the Commonwealth of the Northern Mariana Islands, Puerto Rico, and

demonstration projects. This action is a result of a comprehensive,

page-by-page review, of all existing Food Stamp Program regulations

which was conducted in response to the President's efforts to reform

the Federal regulatory system. This rule eliminates prescriptive

detailed processes and empowers States to set their own procedures for

case management and customer service; eliminates outdated and redundant

regulatory requirements; and emphasizes recipient responsibility for

applying and reporting their circumstances properly.

DATES: This final rule is effective December 26, 1996, and must be

implemented May 27, 1997.

FOR FURTHER INFORMATION CONTACT: Judith M. Seymour, Chief,

Certification Policy Branch, Program Development Division, Food and

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

22302, (703) 305-2520.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This rule has been determined to be not significant for the

purposes of Executive Order 12866 and therefore was not reviewed by the

Office of Management and Budget.

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 Part 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). William E.

Ludwig, Administrator, Food and Consumer Service, has certified that

this final rule will 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

Sections 272.7(b) and (i) of this rulemaking require submission to

FCS of amendments to the Alaska State Plan of Operation. The

information collection burden associated with amendments to a State

agency's Plan of Operation is currently approved by the Office of

Management and Budget (OMB) under OMB Number 0584-00830. This

rulemaking does not alter the burden estimates as currently approved.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.

3507), FCS solicited comments through an April 1, 1996 publication in

the Federal Register (61 FR 14287, 14288) of a notice on the current

information collection requirements related to the State Plan of

Operation. The comment period ended on May 31, 1996. There were no

comments received on that portion of the notice which describes the

burden associated with the State Plan of Operation. The proposed

collection will be submitted to OMB for review and at that time the

Department will publish a notice which will provide an additional

opportunity to comment. The reporting burden in Sec. 285.3 related to

the Puerto Rico State Plan of Operation affects only the Puerto Rico

State agency. Under the Paperwork Reduction Act, burden is not required

to be assessed and submitted to OMB for review if the number of

respondents is less than nine.

Executive Order 12778

This rule has been reviewed under Executive Order 12778, Civil

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

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

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

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

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

rule or the application of its provisions, all applicable

administrative procedures must be exhausted. In the Food Stamp Program

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

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

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

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

rules related to non-quality control (QC) liabilities) or Part 283 (for

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

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

set out at 7 CFR 278.8.

Background

This rule is the first revision of the regulations governing the

Food Stamp Program issued in response to the President's Regulatory

Reform Initiative. For a detailed description of the analysis of the

initiative and its application by this Department, readers are referred

to the proposed rule published on January 24, 1996 at 61 FR 1849.

In this rule, we are amending food stamp regulations affecting

Alaska, Puerto Rico, the Commonwealth of the Northern Mariana Islands,

and demonstration projects. The amendments streamline administration of

the program in these areas, offer greater flexibility to State agencies

in enacting policy, and improve customer service.

[[Page 60010]]

We received a comment letter from the Alaska Department of Health

and Social Services (the State agency), addressing technical changes to

three of the provisions regarding the administration of the program in

the State of Alaska. With the exception of minor changes, to the

proposed regulations suggested by this comment, which are discussed in

the following paragraphs, the provisions of the proposed rule are being

adopted without change. For a detailed description of these provisions

readers are referred to the proposed rule.

Section 272.7, of the proposed rule described special procedures

for administration of the Food Stamp Program in Alaska. Section

272.7(a), the introductory paragraph to Sec. 272.7, specified that FCS

had developed additional regulations to accommodate the unique

demographic and climatic characteristics of certain areas in rural

Alaska. The paragraph further specified that, with the exception of

paragraph (f) which contains provisions regarding the treatment of

resources, the special procedures described in Sec. 272.7 would be

limited to the designated rural areas of Alaska.

Section 272.7(c) of the proposed rule defined ``fee agent'' and

described the duties of such agents. In its comment letter, the State

agency requested that we amend Sec. 273.7(a) so that fee agents may be

used in urban areas. Under section 11(m) of the Food Stamp Act of 1977,

as amended, (7 U.S.C. 2020(m)) the Secretary is directed to provide for

the use of fee agents in rural Alaska. In view of the explicit

statutory language limiting the use of fee agents to only rural areas

of Alaska, the Department does not have the authority to expand the use

of fee agents to urban areas. We would, however, consider granting

waivers allowing for the use of fee agents in urban areas of Alaska on

a limited basis.

Under the proposed rule at Sec. 272.7(b)(4), the State agency may,

in consultation with FCS, change the designation of any Alaska

subdivision to reflect changes in demographics or the cost of food

within the subdivision. The State agency requested clarification of how

it may initiate changes in the designation of areas as rural or urban.

Since the designation of which areas are urban or rural is included in

the State Plan of Operation, described at 7 CFR 272.2, changes in the

Plan would be made pursuant to the procedures at 7 CFR 272.2(f).

In response to the State agency's request, we are also changing the

title of proposed Sec. 272.7(f) from ``Resources'' to ``Vehicles''

since that section refers only to the treatment of vehicles as a

resource.

Implementation

The provisions of this rulemaking are effective no later than 30

days after publication of the final rule. State agencies shall

implement the provisions no later than 180 days after that date.

List of Subjects

7 CFR Part 271

Administrative practice and procedure, Food stamps, Grant

programs--social programs.

7 CFR Part 272

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

Reporting and recordkeeping requirements.

7 CFR Part 282

Food stamps, Governmental contracts, Grant programs--social

programs, Research.

7 CFR Part 284

Administrative practice and procedure, Food assistance programs,

Grant programs--social programs, Health, Nutrition.

7 CFR Part 285

Accounting, Food assistance programs, Grant programs--agricultural,

Grant programs--social programs, Intergovernmental relations, Puerto

Rico, Technical assistance, Reporting and recordkeeping requirements.

Accordingly, 7 CFR parts 271, 272, 282, 284, and 285 are amended as

follows:

1. The authority citation for 7 CFR parts 271, 272, 282, 284, and

285 continue to read as follows:

Authority: 7 U.S.C. 2011-2034.

PART 271--GENERAL INFORMATION AND DEFINITIONS

Sec. 271.2 [Amended]

2. In Sec. 271.2, the definition of ``State'' is amended by

removing the words ``the Northern Mariana Islands,''.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

3. In Sec. 272.1, paragraph (g)(152) is added to read as follows:

Sec. 272.1 General terms and conditions.

* * * * *

(g) Implementation * * *

(152) Amendment No. 361 The provisions of Amendment No. 361 are

effective December 26, 1996, and must be implemented May 27, 1997. 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 7 CFR

275.12(d)(2)(vii). The provision must be implemented for all households

that newly apply for Program benefits on or after the required

implementation date. The current caseload shall be converted to these

provisions 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 of application whichever is

later.

If for any reason a State agency fails to implement on 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.

Sec. 272.4 [Amended]

4. In Sec. 272.4, the third sentence of paragraph (a)(2) is amended

by adding the words ``, Sec. 272.7(d) for households residing in rural

Alaska,'' before the words ``and part 280 for disaster victims.''

5. Section 272.7 is revised to read as follows:

Sec. 272.7 Procedures for program administration in Alaska.

(a) Purpose. To achieve the efficient and effective administration

of the Food Stamp Program in rural areas of Alaska, FCS has determined

that it is necessary to develop additional regulations which are

specifically designed to accommodate the unique demographic and

climatic characteristics which exist in these rural areas. The

regulations established in this section, except for paragraph (f) of

this section, shall apply only in those areas of Alaska designated as

``rural'' in paragraph (b) of this section. All regulations not

specifically modified by this section shall remain in effect.

(b) Area Designations. (1) Rural I Alaska TFP refers to a Thrifty

Food Plan (TFP) that is the higher of the TFP that was in effect in

each area on October 1, 1985, or 28.52 percent higher than the

Anchorage TFP, as calculated by FCS, with rounding and other reductions

that are appropriate. It is to be used in the following areas: In all

places in Kodiak Island Borough with the exception of Kodiak; in all

places in the Kenai Peninsula Borough that are west of Cook

[[Page 60011]]

Inlet (including Tyonek, Kustatan, Kalgin Island, Iliamna, Chenik, and

Augustine Island) and Chugach Island, English Bay, Port Graham,

Portlock, Pt. Gore, Pye Island, and Seldovia. In the Yukon-Koyukuk

Census Area, the city of Nenana; and Skwentna in the Matanuska-Susitna

Borough. In the Valdez-Cordova Census Area, all places except Dayville

and Valdez; and in the Southeast Fairbanks Census Area all places

except Big Delta, Delta Junction, and Fort Greely. In the Skagway-

Yakutat-Angoon Census Area, all places except Skagway; in Sitka Borough

all places except Sitka; in the Wrangell-Petersburg Census Area, all

places except Wrangell and Petersburg; in the Ketchikan Gateway

Borough, all places except Ketchikan, Saxman, and Ward Cove; in the

Prince of Wales-Outer Ketchikan Census Area, all places except Craig,

Hyder, and Metlakatla.

(2) Rural II Alaska TFP refers to a TFP that is 56.42 percent

higher than the Anchorage TFP, as calculated by FCS, with rounding and

other reductions that are appropriate. It is to be used in the

following areas: North Slope Borough; Kobuk Census Area; Nome Census

Area; Yukon-Koyukuk Census Area except for the city of Nenana; Wade

Hampton Census Area; Bethel Census Area; Denali in the Matanuska-

Susitna Borough; Dillingham-Bristol Bay Borough; and in all places in

the Aleutian Islands except for Cold Bay and Adak.

(3) Urban Alaska TFP refers to a TFP that is the higher of the TFP

that was in effect in each area on October 1, 1985, or .79 percent

higher than the Anchorage TFP, as calculated by FCS, with rounding and

other reductions that are appropriate. It is to be used in the

following areas: Cold Bay and Adak in the Aleutian Islands; Kodiak in

Kodiak Island Borough; Valdez and Dayville in the Valdez-Cordova Census

Area; all places in Kenai Peninsula Borough that are on the Kenai

Peninsula except for those specifically designated as Rural I; the

entire Anchorage Borough; the entire Matanuska-Susitna Borough except

for Denali and Skwentna; the entire Fairbanks-North Star Borough; the

entire Juneau Borough; the entire Haines Borough; Sitka in the Sitka

Borough; Skagway in the Skagway-Yakutat-Angoon Census Area; Wrangell

and Petersburg in the Wrangell-Petersburg Census Area; Ketchikan,

Saxman, and Ward Cove in the Ketchikan-Gateway Borough; Craig, Hyder,

and Metlakatla in the Prince of Wales-Outer Ketchikan Census Area; and

Big Delta, Delta Junction, and Fort Greely in the Southeast-Fairbanks

Census Area.

(4) The State agency may, in consultation with FCS, change the

designation of any Alaska subdivision contained in the Plan of

Operation to reflect changes in demographics or the cost of food within

the subdivision.

(c) Fee agents. ``Fee agent'' means a paid agent who, on behalf of

the State, is authorized to make applications available to low-income

households, assist in the completion of applications, conduct required

interviews, secure required verification, forward completed

applications and supporting documentation to the State agency, and

provide other services as required by the State agency. Such services

shall not include making final decisions on household eligibility or

benefit levels.

(d) Application processing. The State agency may modify the

application processing requirements in Sec. 273.2 of this chapter as

necessary to insure prompt delivery of services to eligible households.

The following restrictions apply:

(1) Fee agent processing. If the signed application is first

submitted by a household to a fee agent, the fee agent shall mail the

application to the State agency within 5 days of receipt. The fee agent

shall give the household the maximum amount of time to provide needed

verification as long as the five-day processing period is met.

(2) Application filing date. An application is considered filed for

purposes of timely processing when it is received by an office of the

State agency.

(3) Application processing timeframes. Eligible households must be

provided an opportunity to participate as soon as possible but no later

than 30 days after the application is received by an office of the

State agency.

(4) Expedited service. (i) If the signed application is first

submitted by a household to a fee agent, the fee agent shall mail the

application to the State agency within 5 days of receipt. If the

household is eligible for expedited service, the State agency will mail

the coupons no later than the close of business of the second working

day following the date the application was received by the State

agency.

(ii) If the signed application is submitted directly to the State

agency in person by a rural resident or its authorized representative

or by mail, the State agency shall process the application and issue

coupons to households eligible for expedited service in accordance with

the time standards contained in Sec. 273.2(i)(3) of this chapter.

(iii) If an incomplete application is submitted directly to the

State agency by mail, the State agency shall conduct the interview by

the first working day following the date the application was received

if the fee agent can contact the household or the household can be

reached by telephone or radio-phone and does not object to this method

of interviewing on grounds of privacy. Based on information obtained

during the interview, the State agency shall complete the application

and process the case. Because of the mailing time in rural areas, the

State agency shall not return the completed application to the

household for signature. The processing standard shall be calculated

from the date the application was filed.

(5) SSI Joint Processing. SSA workers shall mail all jointly

processed applications to the appropriate State agency office within 5

days of receipt of the application. A jointly processed application

shall be considered filed for purposes of timely processing when it is

received by an office of the State agency. The household, if determined

eligible, shall receive benefits retroactive to the first day of the

month in which the jointly processed application was received by the

SSA worker.

(6) Interviews. The State agency shall interview applicant

households in the most efficient manner possible, either by face-to-

face contact, telephone, radiophone, or other means of correspondence

including written correspondence. In instances in which an interview

cannot be conducted, the State agency may postpone the interview until

after the household is certified.

(e) Determining household eligibility and benefit level. If a

household submits its application to a fee agent, it shall, if

eligible, receive benefits retroactive to the date the application is

received by the fee agent. If a household submits its application

directly to a State agency office, it shall, if determined eligible,

receive benefits retroactive to the date the application is received by

the State agency.

(f) Vehicles. In areas of the State where there are no licensing

requirements, snowmobiles and boats used by the household for basic

transportation shall be evaluated in accordance with Sec. 273.8(h) of

this chapter even though they are unlicensed. Vehicles necessary for

subsistence hunting and fishing shall not be counted as a household

resource.

(g) Reporting changes. The State agency shall allow the household

to choose to report changes either directly to the State agency or to

the fee agent. If the household reports the change to the fee agent,

the fee agent will mail the change report to the State agency office

within two working days of the date of

[[Page 60012]]

receipt. The household's obligation to report the change will have been

met if it submits the change to the fee agent within 10 days of the

date the change becomes known to the household. However, for purposes

of State agency action for increasing or decreasing benefits, the

change will be considered to have been reported when it is received by

a State agency office.

(h) Fair hearings, fraud hearings, and agency conferences. The

State agency shall conduct fair hearings, administrative fraud

hearings, and agency conferences with households that wish to contest

denial of expedited service in the most efficient manner possible,

either by face-to-face contact, telephone, radiophone, or other means

of correspondence including written correspondence, in order to meet

the respective time standards contained in Sec. 273.15 and Sec. 273.16

of this chapter.

(i) Issuance services. With the approval of FCS, coupons may be

mailed on a quarterly or semiannual basis to certain rural areas of

Alaska when provisions are not available on a monthly basis. The

decision to allow the distribution of coupons in this manner will be

made on an annual basis. These areas shall be listed in the State's

Plan of Operation. The State agency shall advise households that live

in rural areas where quarterly or semiannual allotments are authorized.

If, as the result of the issuance of quarterly or semiannual

allotments, food coupons are overissued or underissued, the State

agency shall process claim determinations and restore lost benefits.

PART 282--DEMONSTRATION, RESEARCH, AND EVALUATION PROJECTS

6. Section 282.1 is revised to read as follows:

Sec. 282.1 Legislative authority and notice requirements.

(a) Legislative authority. Section 17 of the Act authorizes the

Secretary to conduct demonstration, research, and evaluation projects.

In conducting such projects, the Secretary may waive all or part of the

requirements of the Act and implementing regulations necessary to

conduct such projects, except that no project, other than a project

involving the payment of the average value of allotments by household

size in the form of cash to eligible households or a project conducted

to test improved consistency or coordination between the food stamp

employment and training program and the Job Opportunities and Basic

Skills program under Title IV of the Social Security Act, may be

undertaken which would lower or further restrict the established income

and resource standards or benefit levels.

(b) Notices. At least 30 days prior to the initiation of a

demonstration project, FCS shall publish a General Notice in the

Federal Register if the demonstration project will likely have a

significant impact on the public. The notice shall set forth the

specific operational procedures and shall explain the basis and purpose

of the demonstration project. If significant comments are received in

response to this General Notice, the Department will take such action

as may be appropriate prior to implementing the project. If the

operational procedures contained in the General Notice described above

are significantly changed because of comments, an amended General

Notice will be published in the Federal Register at least 30 days prior

to the initiation of the demonstration project, except where good cause

exists supporting a shorter effective date. The explanation for the

determination of good cause will be published with the amended General

Notice. The amended General Notice will also explain the basis and

purpose of the change.

Secs. 282.2 through 282.19 [Removed]

7. Sections 282.2 through 282.19 are removed.

8. A new Sec. 282.2 is added to read as follows:

Sec. 282.2 Funding.

Federal financial participation may be made available to

demonstration, research, and evaluation projects awarded by FCS through

grants and contracts. Funds may not be transferred from one project to

another. FCS will pay all costs incurred during the project, up to the

level established in the grant, or in the terms and conditions of the

contract. FCS may grant time extensions of the project upon approval.

Funding for additional costs is subject to existing Federal grant and

contract procedures.

PART 284--PROVISION OF A NUTRITION ASSISTANCE PROGRAM FOR THE

COMMONWEALTH OF THE NORTHERN MARIANA ISLANDS (CNMI) [REMOVED AND

RESERVED]

9. Part 284 is removed and reserved.

PART 285--PROVISION OF A NUTRITION ASSISTANCE GRANT FOR THE

COMMONWEALTH OF PUERTO RICO

Sec. 285.2 [Amended]

10. In Sec. 285.2, the first sentence of paragraph (b) is amended

by removing the citations ``Secs. 285.4 and 285.7 in this part'' and

adding ``Secs. 285.3 and 285.5'' in their place.

11. In Sec. 285.3:

a. The second sentence of paragraph (a) is removed.

b. The third sentence of paragraph (a) is amended by removing the

word ``subsequent''.

c. Paragraph (b)(3)(iii) is removed.

d. New paragraphs (d), (e), (f), (g), and (h) are added.

The additions read as follows:

Sec. 285.3 Plan of operation.

* * * * *

(d) FCS shall approve or disapprove any plan of operation no later

than August 1 of the year of its submission. FCS approval of the plan

of operation shall be based on an assessment that the nutrition

assistance program, as defined in the plan of operation, is:

(1) Sufficient to permit analysis and review;

(2) Reasonably targeted to the most needy persons as defined in the

plan of operation;

(3) Supported by an assessment of the food and nutrition needs of

needy persons;

(4) Reasonable in terms of the funds requested;

(5) Structured to include safeguards to prevent fraud, waste, and

abuse in the use of grant funds; and

(6) Consistent with all applicable Federal laws.

(e) FCS shall approve or disapprove any amendments to those

provisions of the plan of operation specified in paragraph (b) of this

section. If FCS fails either to approve or deny the amendment, or to

request additional information within 30 days, the amendment to the

plan of operation is approved. If additional information is requested,

the Commonwealth of Puerto Rico shall provide this as soon as possible,

and FCS shall approve or deny the amendment to the plan of operation.

Payment schedules and other program operations may not be altered until

an amendment to the plan of operation is approved. The Commonwealth of

Puerto Rico shall, for informational purposes, submit to FCS any

amendments to those provisions of the plan of operation not specified

in paragraph (b) of this section. Such submittal shall be made at least

30 days prior to the effective date of the amendment. If circumstances

warrant a waiver of the 30-day requirement, the Commonwealth of Puerto

Rico shall submit a waiver request to FCS for consideration. Should FCS

determine that such an amendment relates to the provisions of paragraph

(b) of this section, FCS approval as established above will be

necessary for the amendment to be implemented.

[[Page 60013]]

(f) FCS may approve part of any plan of operation or amendment

submitted by the Commonwealth of Puerto Rico contingent on appropriate

action by the Commonwealth of Puerto Rico with respect to the problem

areas in the plan of operation.

(g) If all or part of the plan of operation is disapproved, FCS

shall notify the appropriate agency in the Commonwealth of Puerto Rico

of the problem area(s) in the plan of operation and the actions

necessary to secure approval.

(h) In accordance with the provisions of Sec. 285.5, funds may be

withheld or denied when all or part of a plan of operation is

disapproved.

Secs. 285.4 and 285.5 [Removed]

12. Sections 285.4 and 285.5 are removed.

Sec. 285.6 [Redesignated as Sec. 285.4]

13. Section 285.6 is redesignated Sec. 285.4.

Sec. 285.7 [Redesignated as Sec. 285.5 and amended]

14. In Sec. 285.7:

a. The section is redesignated Sec. 285.5.

b. The first sentence of paragraph (a) is amended by removing the

citation ``Sec. 285.6'' and adding ``Sec. 285.4'' in its place.

c. The first sentence of paragraph (b) is amended by removing the

citation ``Sec. 285.6'' and adding ``Sec. 285.4'' in its place.

Secs. 285.8 through 285.10 [Removed]

15. Sections 285.8 through 285.10 are removed.

Dated: October 4, 1996.

William E. Ludwig,

Administrator, Food and Consumer Service.

[FR Doc. 96-30133 Filed 11-25-96; 8:45 am]

BILLING CODE 3410-30-P