Special Supplemental Nutrition Program for Women, Infants and Children (WIC): Implementation of WIC Mandates of Public Law 103-448, the Healthy Meals for Healthy Americans Act of 1994 and Public Law 103- 227, the Pro-Children Act of 1994

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 246

RIN 0584-ACO2

Special Supplemental Nutrition Program for Women, Infants and

Children (WIC): Implementation of WIC Mandates of Public Law 103-448,

the Healthy Meals for Healthy Americans Act of 1994 and Public Law 103-

227, the Pro-Children Act of 1994

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends regulations governing the Special

Supplemental Nutrition Program for Women, Infants and Children (WIC) to

incorporate certain nondiscretionary provisions of the Healthy Meals

for Healthy Americans Act of 1994, enacted on November 2,1994, the Pro-

Children Act of 1994, enacted on August 31, 1994, the Cash Management

Improvement Act of 1990, enacted on October 24, 1990, and the Personal

Work Responsibility and Reconciliation Act of 1996, enacted on August

22, 1996. The provisions in this final rule include: prohibiting

smoking in WIC facilities; increasing by one the family size of an

otherwise income ineligible pregnant woman for purposes of determining

WIC eligibility; allowing State agencies to deem income eligible

pregnant women presumptively eligible (for a period not to exceed 60

days) without a determination of nutritional risk; increasing the

national breastfeeding promotion and support expenditure; and providing

WIC services at more Community and Migrant Health Centers and Indian

Health Service facilities. These provisions are intended to strengthen

services to participants, increase State agency flexibility and promote

good health practices.

DATES: This rule is effective January 19, 1999.

FOR FURTHER INFORMATION CONTACT: Barbara Hallman, Supplemental Food

Programs Division, Food and Nutrition Service, USDA, 3101 Park Center

Drive, Room 542, Alexandria, Virginia 22302, (703) 305-2730.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This final rule has been determined to be significant and was

reviewed by the Office of Management and Budget (OMB) under Executive

Order 12866.

Regulatory Flexibility Act

This final rule has been reviewed with regard to the requirements

of the Regulatory Flexibility Act (5 U.S.C. 601-612). Pursuant to that

review, Shirley R. Watkins, Under Secretary for Food, Nutrition and

Consumer Services, has certified that this rule will not have a

significant economic impact on a substantial number of small entities.

This rule provides State and local agencies with greater flexibility:

(1) in a certification process, (2) in the use of funds recovered as a

result of violations in the food delivery system, and (3) the

administration of their infant formula rebate contracts and management

of their food funds. However, the economic impact on program operations

will not be significant.

Paperwork Reduction Act

This final rule imposes no new reporting or recordkeeping

requirements that are subject to OMB for review in accordance with the

Paperwork Reduction Act of 1995 (44 U.S.C. 3507). The information

collection burden for this final rule was previously approved under OMB

#0584-0043.

Executive Order 12372

The Special Supplemental Nutrition Program for Women, Infants and

Children (WIC) is listed in the Catalog of Federal Domestic Assistance

Programs under 10.557 and is subject to Executive Order 12372, which

requires intergovernmental consultation with State and local officials

(7 CFR part 3015, subpart V, and 48 FR 29114 June 24, 1983).

Executive Order 12988

This final rule has been reviewed under Executive Order 12988,

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 DATES paragraph of this preamble. Prior to

any judicial challenge to the application of the provisions of this

rule, all applicable administrative procedures must be exhausted.

Public Law 104-4

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub.L.

104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, the

Food and Nutrition Service generally must prepare a written statement,

including a cost-benefit analysis, for proposed and final rules with

``Federal mandates'' that may result in expenditures to State, local,

or tribal governments, in the aggregate, or to the private sector of

$100 million or more in any one year. When such a statement is needed

for a rule, section 205 of the UMRA generally requires the Food and

Nutrition Service to identify and consider a reasonable number of

regulatory alternatives and adopt the least costly, more cost-effective

or least burdensome alternative that achieves the objectives of the

rule.

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) for State, local, and tribal

governments or the private sector of $100 million or more in any one

year. Thus today's rule is not subject to the requirements of sections

202 and 205 of the UMRA.

Background

Section 204 of Public Law 103-448, the Healthy Meals for Healthy

Americans Act of 1994, enacted on November 2, 1994, reauthorized the

Special Supplemental Nutrition Program for Women, Infants and Children

(WIC). The statutory authorities for a wide range of WIC Program

functions in areas such as income eligibility determinations,

[[Page 63970]]

program outreach, referral and access, coordination, breastfeeding

promotion, program operations, and cost containment were amended by

section 204. In addition, section 1043 of Pub.L. 103-227, the Pro-

Children Act of 1994, enacted on August 31, 1994, prohibits smoking

within any indoor facility owned or leased or contracted for by an

entity that receives Federal funds for the provision of regular or

routine health care or day care, or early childhood development (Head

Start) services. WIC Program clinics are included among the services

covered by this legislation. These provisions serve the interests of

the President and Congress by improving coordination among programs,

promoting positive pregnancy outcomes and healthy babies, and reducing

administrative burdens for State and local agencies. In addition,

section 724(e)(1)(B)(i) of Pub.L. 104-193, the Personal Responsibility

and Work Opportunity Reconciliation Act of 1996, made a further

amendment regarding coordination with other programs and section 4 of

Pub.L. 101-453, the Cash Management Improvement Act of 1990, made a

change requiring States to pay the United States interest on advances

of Federal funds. These provisions are all nondiscretionary. Further,

State agencies have already been informed that these provisions may be

implemented prior to the issuance of amendments to the program

regulations. For these reasons, the Under Secretary for Food, Nutrition

and Consumer Services has determined that, in accordance with 5 U.S.C.

553 prior notice and comment is unnecessary and contrary to the public

interest. Since this rule merely codifies the cited statutory

provisions, it also constitutes an interpretive rule for which notice

and comment are not required by 5 U.S.C. 553.

1. Definition of Nutritional Risk--246.2

Section 204(a) of Public Law 103-448 amended section 17(b)(8)(B) of

the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)(8)(B)) (CNA) to

change the legislative categorization of alcoholism and drug abuse from

predisposing nutritional risk conditions to conditions that directly

affect the nutritional health of a person. This reclassification is

consistent with new nutrition and health knowledge, and better

represents the classification of these conditions currently used by

States. As a result, homelessness and migrancy now become the only

specific legislative examples of conditions that predispose persons to

inadequate dietary patterns or nutritionally related medical conditions

in the CNA. Accordingly, the definition of nutritional risk in Section

246.2 has been revised to reflect these changes.

2. Prohibition on Smoking in WIC Clinics Provision--246.6(b)(4)

Sections 1043 (b) and (d) of Pub. L. 103-227, the Pro-Children Act

of 1994, require that after December 26, 1994, smoking shall not be

permitted in any indoor facility, or portion thereof, that is owned,

leased, or contracted for by any person that receives Federal funds for

children's services funded under certain programs administered by the

U.S. Department of Health and Human Services, the U.S. Department of

Education, and the U.S. Department of Agriculture. Section 1042(2) of

the Act defines ``children's services'' as: the provision on a routine

or regular basis of health, day care, education, or library services;

WIC clinics are specifically identified in the Act as ``children's

services''. The definition of ``person'' includes State and local

agencies as well as corporations and individuals. Additionally, fiscal

year 1996, 1995 and 1994 appropriations acts for the WIC Program

contained provisions prohibiting the use of appropriated funds to pay

administrative expenses of WIC clinics that had no announced policy

prohibiting smoking within the space used to carry out the Program. The

no-smoking provision in Pub. L. 103-227 is intended to protect children

under the age of 18 from exposure to environmental tobacco smoke while

they are receiving education, library, day care, health care, and early

childhood development services in indoor facilities. The

Administration's goal in implementing this legislative requirement

reflects a strong health protection policy regarding smoking and

environmental tobacco smoke exposure.

In response to the legislative provisions contained in Pub. L. 103-

227, section 246.6 is amended to require all local agency agreements to

contain a provision prohibiting smoking in the space used to carry out

the WIC Program during the time any aspect of WIC services are

performed. The smoking prohibition applies to the portion of the

facility used for WIC Program services. If that portion of the building

is simultaneously used for other purposes, such as community activities

or privately sponsored events, smoking must be prohibited at these

other events as well. This change to the regulations merely formalizes

the current policy directive, which all State agencies have been

operating under since fiscal year 1994. That directive prohibits the

allocation of nutrition service and administrative funds to any WIC

clinic that does not prohibit smoking within the space used for WIC

services during the time the services are being performed. This

regulation therefore merely codifies the current policy, and places no

additional burden on State or local agencies.

3. Service to Pregnant Women Provisions--246.7(d)(1)(iv),

246.7(d)(1)(v), 246.7(d)(2)(vii), 246.7(e)(1)(iii)

a. Family Size Provision

Section 204(c)(1) of Pub. L. 103-448 amended Section 17(d) of the

CNA to add a new subparagraph section 17(d)(2)(C), which extends WIC

eligibility for certain pregnant women. The provision stipulates that

an income-ineligible pregnant woman satisfies income guidelines if the

guidelines would be met by increasing the number of individuals in her

family by one individual. Although the law states that the family size

of the pregnant woman is to be increased by ``one,'' we do not believe,

in cases where the pregnant woman is expecting multiple births, that

Congress intended to totally preclude counting such multiple births. As

such, section 246.7(d)(2)(vii) is amended to allow the family size of a

pregnant woman to be increased by the number of embryos or fetuses in

utero. This provision allows the WIC Program to use the same definition

of family size currently used by the Department of Health and Human

Services' (DHHS) Medicaid Bureau, thereby improving coordination

between the WIC and Medicaid Programs. It also results in certain women

having access to the health benefits of WIC during pregnancy who

previously would have had to wait for the birth of their babies to be

eligible.

The legislation does not specifically address whether the same

income eligibility determination process can be used for the pregnant

woman's other family members, who may also apply for WIC services.

However, it is impractical and administratively burdensome to require

two different income-screening procedures, based on categorical status,

for one family. To do so forces a WIC local agency to activate the

adjunctive eligibility process unnecessarily because the local agency

would have to first refer the family members to the Medicaid Program

for certification, and then ask the family members to return to the WIC

Program so that they may be determined as adjunctively income eligible

for WIC. Therefore, in situations where the family size has been

increased for a

[[Page 63971]]

pregnant woman, the same increased family size may also be used for any

of her categorically eligible family members.

In rare instances, the consideration of unborn children in this

manner may conflict with an applicant's cultural, personal, or

religious beliefs. In recognition of these issues, the regulation

requires State agencies to allow such applicants to waive the automatic

increase in family size.

b. Certification Prior to Documentation of Nutritional Risk

Program regulations permit categorically eligible applicants to be

certified for WIC benefits only if, in addition to meeting residency

and income requirements, they are determined to be at nutritional risk.

In order to determine nutritional risk, height, weight, and bloodwork

must be obtained. Many State agencies have expressed concerns regarding

the availability of bloodwork data for pregnant women at the time of

their application. In some cases, State or local agencies may not have

the essential equipment or staff onsite to perform the bloodwork

assessment. In these situations, the agencies usually have to contract

out for that service, or refer the women to health centers and/or

providers to obtain the necessary data. State agencies also reported

that the bloodwork data requirement has resulted in barriers to

participation for pregnant women. They also reported that this

requirement could, in fact, be an impediment to enrollment of eligible

pregnant women early in pregnancy. Early enrollment is an important

program objective, as well as a legislative requirement.

In response to concerns related to improved and expedited access to

program benefits for pregnant women, section 204(c)(2) of Pub.L. 103-

448, amended section 17(d)(3)(B) of the CNA to allow State agencies to

consider pregnant women who are income eligible for the WIC Program to

be presumed to be nutritionally at risk and thus eligible to

participate in the program. These women may be certified immediately

without the results of a nutritional risk evaluation. The law requires

that a nutritional risk evaluation be completed, however, not later

than 60 days from the date the pregnant woman is certified for

participation. The law stipulates that, if the subsequent assessment

determines that the woman does not meet nutritional risk criteria, her

certification terminate on the date of the determination. The joint

statement of explanation accompanying S.1614 (Congressional Record,

October 6, 1994, S14454) clarifies the positions of the Senate

Committee on Agriculture, Nutrition and Forestry and the House

Committee on Education and Labor on this provision concerning

presumptive eligibility for pregnant women. The Committees expressed

their view that the dietary risk assessment be performed before--or as

soon as possible after--the presumptively eligible pregnant woman

begins receiving WIC benefits. Local agencies thus should strive to

complete the dietary assessment at certification. Ideally, local

agencies should complete the full nutrition risk assessment at

certification or at the earliest possible date thereafter. This allows

the WIC staff to begin to offer appropriate counseling on program

nutrition and diet, as well as complete, appropriate health care

referrals at the earliest opportunity. This information also is

invaluable in developing an appropriate food package.

While the law uses the word ``terminate'' in connection with the

necessary action when a pregnant woman is later found not to meet the

nutritional risk criteria, what is really happening is that the

pregnant woman is being found ineligible for the program. Accordingly,

this action will be treated like an initial determination. That is,

while the pregnant woman must be given an opportunity to appeal the

action, as required under section 246.7(j)(5), there is no requirement

of 15 days notice of the action as for suspensions and most

disqualifications (under section 246.7(j)(6)) and for the expiration of

certification periods (under section 246.7(j)(8)). Nor will the

pregnant woman be able to receive benefits while awaiting the fair

hearing decision. Section 246.9(g) will continue to require benefits

pending resolution of the fair hearing only for those participants who

timely appeal an action under section 246.7(j)(6).

Further, if the nutritional risk evaluation is not completed within

the 60-day timeframe, the pregnant woman's participation may not be

extended beyond the initial 60-day certification period. However, as

set forth in section 246.7(j)(8) for all cases of the expiration of a

certification period, the pregnant woman must be notified not less than

15 days before the expiration of the period that the certification

period is about to expire. Similarly, pregnant women who appeal the

expiration of their certification may not receive WIC benefits while

awaiting the fair hearing decision. The regulations are amended at

section 246.7(e)(1)(iii) to reflect these legislative provisions.

4. Coordination of WIC and Medicaid Program Provisions--246.4(a)(8)

Section 204(e) of Pub.L. 103-448 amended section 17(f)(1)(C)(iii)

of the CNA to require coordination between the WIC Program and State

Medicaid Programs, including Medicaid programs that use coordinated

care providers under a contract entered into under section 1903(m) or a

waiver granted under section 1915 (b) of the Social Security Act (42

U.S.C. 1396 b(m) or 1396n(b)).

Soon after enactment of Pub.L. 103-448, section 729(e)(1)(B)(i) of

Pub.L. 104-193, the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996 (Pub.L. 104-193), amended section

17(f)(1)(C)(iii) of the CNA to replace the listing of specific programs

with which WIC must coordinate with a plan to coordinate WIC operations

with other services or program that may benefit participants in, or

applicants for, the program. As such, the State agency now determines

which services or programs it will coordinate with to meet the specific

needs of its participants and applicants. Section at 246.4(a)(8) is

amended to reflect this later change. Although no longer required by

law, the Department strongly encourages State agencies to continue to

coordinate with Medicaid managed-care providers to ensure that WIC

participants have access to medical benefits, thereby improving their

health status.

5. WIC Services at Community and Migrant Health Centers--

246.4(a)(8) and 246.7(b)(3)

Section 204(u) of Pub.L. 103-448 amended section 17(j) of the CNA

to require that the Secretary of Agriculture and the Secretary of the

Department of Health and Human Services establish and carry out an

initiative to provide WIC services at substantially more community and

migrant health centers. The legislation stipulates that the initiative

shall include: (1) Activities to improve the coordination of WIC and

health care services at facilities funded by the Indian Health Service

(IHS); and (2) the development and implementation of strategies to

ensure that, to the maximum extent feasible, new community and migrant

health centers and other federally-supported health care facilities

established in medically underserved areas provide WIC services. The

law further stipulates that the initiative may also include: (1)

Outreach and technical assistance for State and local agencies and the

facilities named above; (2)

[[Page 63972]]

demonstration projects in selected States or local areas; and (3) other

activities as the Secretaries find appropriate.

This mandate also reinforces opportunities for the WIC Program,

community and migrant health centers and IHS facilities to further

implement mutual objectives that are consistent with this legislation.

The objectives are: (1) To increase coordination and co-location of WIC

with Community and Migrant Health Centers and with IHS facilities; (2)

to ensure that newly constructed, federally supported health facilities

are coordinated with WIC State agencies to maximize service

integration; improve access to health care for participants of all

three programs, especially underserved, vulnerable, and hard-to-reach

potential eligibles; and (3) to enlist the support of primary care

personnel at health centers and IHS clinics and WIC personnel to

reinforce health messages such as breastfeeding promotion, immunization

screening and delivery, drug abuse education and referrals. The WIC

Program will benefit from this initiative through improved access to

health care for WIC participants as well as by expansion of

opportunities for newly co-located clinic sites to accommodate rapidly

increasing WIC participation levels. Projected participation levels are

more likely to be met with increased facility infrastructure capacity

for WIC. In addition, community and migrant health centers and IHS

facilities may benefit from increased co-location and coordination with

WIC by enhancing service utilization by clients seeking a one-stop,

health care shopping opportunity. In compliance with this legislative

provision, this rule amends section 246.7(b)(3) to require that, where

feasible, State agencies provide WIC services at community and migrant

health centers, Indian Health Services facilities, and other federally

supported health care facilities established in medically underserved

areas.

These changes are intended to improve access to health care for WIC

participants, and will make WIC more accessible to high-risk

populations served at community and migrant health centers, IHS

facilities and other federally supported health care facilities

established in medically underserved areas provide supplemental foods

and nutrition education under the special supplemental nutrition

program. The Department will supplement these regulatory requirements

with numerous other promotional activities designed to facilitate

increased co-location and coordination between WIC and these service

providers. These efforts include a cataloging of site locations, the

development of a best practices guide, and continued provision of

infrastructure and other funding and support that facilitate improved

WIC access to eligible persons also being served in IHS facilities,

community and migrant health centers, and other federally health care

supported facilities established in medically underserved areas provide

supplemental foods and nutrition education under the special

supplemental nutrition program.

6. Income Eligibility Guidelines Provision Section--

246.7(d)(1)(iii)

Section 204(g) of Pub.L. 103-448 amended Section 17(f)(18) of the

CNA to allow State agencies to implement annual WIC income eligibility

guidelines concurrently with the implementation of annual income

eligibility guidelines under the Medicaid Program established under

Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.). Section

17(f)(18) was subsequently redesignated as section 17(f)(17) by section

729(e)(10) of Pub.L. 104-193. Congress' purpose in allowing this

concurrent implementation is to facilitate closer coordination between

the programs and ease Program access for applicants. Section

246.7(d)(1)(iii) is amended accordingly. State agencies that choose not

to coordinate implementation with the Medicaid guidelines must

implement the amended WIC income eligibility guidelines not later than

July 1 of each year.

7. Priority Consideration for Migrant Populations--

246.7(f)(2)(iii)(A)

Section 204(f) of Pub.L. 103-448 amended section 17(f)(3) of the

CNA to require State agencies to ensure local agencies provide priority

consideration to serving migrant participants who are residing in the

State for a limited period of time. Current WIC regulations already

address this legislative change at section 246.7(f)(2)(iii)(A).

8. Breastfeeding Promotion and Support Activities--246.14(c)(1)

Section 123(a)(6) of Pub.L. 101-147 amended section 17(h)(3) of the

CNA to earmark $8 million annually in State agency Nutrition Services

and Administration (NSA) grants for the promotion and support of

breastfeeding among WIC mothers. Section 204(l) of Pub.L. 103-448

further amended section 17(h)(3) to establish a new formula for

determining the minimum national breastfeeding promotion and support

expenditure. The new formula increased the national annual minimum

expenditure from $8 million to an amount equal to $21 per pregnant and

breastfeeding woman participating in the WIC Program nationwide, based

on the average number of pregnant women and breastfeeding women

participating during the last three months for which the Department has

final data. Beginning on October 1, 1996, and each October 1

thereafter, this per participant amount will be adjusted for inflation

using the same index that is used for NSA funds. The Department

applauds Congress' support for breastfeeding as the optimal method of

infant feeding.

To ease transition in fiscal year 1995, section 17(h)(3)(F)

provided that State agencies could spend the same amount it expended

for breastfeeding promotion and support expenditures in fiscal year

1994, in lieu of meeting the $21 per pregnant and breastfeeding woman

minimum. This provision allowed those State agencies that were unable

to meet the $21 per pregnant and breastfeeding woman target immediately

to gradually move in that direction.

Section 17(h)(3)(G) provided a similar allowance for fiscal year

1996, except that the State agency must expend more than the amount

expended in fiscal year 1995 for breastfeeding promotion and support

and must have the Secretary's approval. All State agencies were

required to expend the minimum $21 per pregnant and breastfeeding woman

for breastfeeding promotion and support expenditure beginning in fiscal

year 1997. Because the transition period is now past and the new

formula is mandatory, this final rule only reflects the new formula and

not the transition period exceptions for fiscal years 1995 and 1996.

This rule amends section 246.14(c)(1) to reflect the new formula.

9. Standards for the Collection of Breastfeeding Data--246.25(b)(3)

Section 204(m) of Pub.L. 103-448 and section 729(g)(1)(A) of Pub.L.

104-193 amended section 17(h)(4) of the CNA to require the development

of standards for the collection of breastfeeding data. The legislation

requires that not later than 1 year after the date of enactment, the

Secretary must develop uniform requirements for collection of data

regarding the incidence and duration of breastfeeding among

participants in the program. The Department, after consulting with the

National Association of WIC Directors, has developed the breastfeeding

data specifications. This information will be collected as part of the

biennial reporting in section 246.25(b)(3).

[[Page 63973]]

10. Use of Recovered Program Funds in Year Collected--246.14(e)

Section 246.14(e) of the WIC regulations allows the State agency to

retain funds collected through (a) the recovery of claims assessed

against food vendors or (b) funds not paid to food vendors as a result

of reviews of food instruments prior to payment. However, Federal

guidelines on refunds limited State agencies in their use and retention

of vendor collections (Title 7, section 5.4.B.1., of the General

Accounting Office's Manual for the Guidance of Federal Agencies). This

guidance provides that ``unless otherwise authorized by law, refunds

should be deposited to the credit of the appropriation account

initially charged with the overpayment.'' This prohibition from using

vendor collections to offset food costs in a year other than the year

of the initial obligation was problematic. State agencies reported that

they frequently did not receive funds collected from vendors until

after closeout of the year in which the initial obligation of funds

occurred. As a result, they were required to remit most of their vendor

collections to FNS for reallocation rather than receiving the

opportunity to use these funds to offset their own WIC Program's food

costs. Section 204(h) of Pub.L. 103-448 amended section 17(f) of the

CNA of 1966 to provide that ``a State agency may use funds recovered as

a result of violations in the food delivery system in the year in which

the funds are collected for the purpose of carrying out the program.''

This legislative provision overrides the General Accounting Office's

guidance, and permits State agencies to use vendor collections received

after the source fiscal year is closed out to offset program

expenditures from the year in which collected. In addition, the

legislation expands the purposes for which vendor collections may be

used to include any program cost, rather than being restricted to food

costs. Regulations at 246.14(e) are amended to reflect these

legislative changes.

11. Prohibition on Interest Liability to Federal Government on

Rebate Funds--246.15(a)

Section 4 of the Cash Management Improvement Act of 1990 (CMIA)

(Pub.L. 101-453) amended 31 U.S.C. 6503(c) to require States to pay the

United States interest on advances of Federal funds. This change became

effective November 1992. Section 6503(d) of Title 31 of the U.S. Code

and implementing regulations at 31 CFR Part 205 require an annual

reconciliation of interest earned by States on advances of Federal

funds and interest lost to States as a result of being forced to use

their own funds in anticipation of receiving Federal funds. Congress,

through Pub.L. 103-448, has provided an exception to this requirement,

however, for receipts earned by WIC State agencies for rebates from

infant formula and other foods. Section 204(p) of Pub.L. 103-448

amended section 17(h)(8)(J) of the CNA to stipulate that State agencies

shall not incur any interest liability to the Federal government on

rebate funds from infant formula and other foods, provided that all

interest earned by the State is used for program purposes. Section

246.15(a) is revised to conform with the applicable provisions of the

CMIA, and the specific WIC exemptions of the Pub.L. 103-448.

12. Funds for Technical Assistance and Research Evaluation

Projects--246.16(a)(6)

Section 17(g)(5) of the CNA, as reflected at section 246.16(a)(6)

of the WIC regulations, states that up to one-half of 1 percent of the

sums appropriated for each fiscal year, not to exceed $5,000,000, shall

be available to the Secretary for evaluating program performance,

evaluating health benefits, providing technical assistance to improve

State agency administrative systems, preparing the biennial

Participation Report to Congress described in section 246.25(b)(3), and

administering pilot projects, including projects designed to meet the

special needs of migrants, Indians, and rural populations. Section

204(k) of Pub.L. 103-448 amended 17(g)(5) of the CNA to expand the

purposes to include technical assistance and research projects of the

programs under section 17. The effect of adding the reference to

``programs under this section'' was to extend the permissible use of

these funds to listed activities as they relate to the WIC Farmers'

Market Nutrition Program authorized under section 17(m) of the CNA.

Section 246.16(a)(6) is amended accordingly to reflect this legislative

change.

13. Spendback Funds--246.16(b)(3)(i)

Section 246.16(b)(3)(i) of the WIC regulations reflects the

provision in section 17(i)(3)(A)(i) of the CNA that not more than 1

percent of the funds allocated to a State agency for food costs

incurred in any fiscal year may be expended by the State agency for

food costs incurred in the preceding fiscal year. Section 204(s) of

Pub.L. 103-448 amended sections 17(i)(3)(A)(i) and 17(i)(3)(H) of the

CNA to increase the maximum spendback authority from 1 percent of the

total food funds to 3 percent of the total food funds, with the

Secretary's approval. A State agency may be permitted to expend not

more than 3 percent of the amount of funds allocated to a State for

supplemental foods for a fiscal year for expenses incurred for

supplemental foods during the preceding fiscal year, if the Secretary

determines that there was a significant reduction in the State's infant

formula cost containment savings that resulted in the State not being

able to at least maintain its level of participation. Section

246.16(b)(3)(i) is amended to reflect the increase in the percentage of

spendback authority as per this provision.

List of Subjects in 7 CFR Part 246

Administrative practice and procedure, Civil rights, Food

assistance programs, Food donations, Grant programs--health, Grant

programs--social programs, Indians, Infants and children, Maternal and

child health, Nutrition, Nutrition education, Penalties, Public

assistance programs, Reporting and recordkeeping requirements, WIC,

Women.

For reasons set forth in the preamble, 7 CFR part 246 is amended as

follows:

PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN,

INFANTS, AND CHILDREN

1. The authority citation for Part 246 continues to read as

follows:

Authority: 42 U.S.C. 1786.

2. In Sec. 246.2, the definition of Nutritional risk is revised to

read as follows:

Sec. 246.2 Definitions.

* * * * *

Nutritional risk means:

(a) Detrimental or abnormal nutritional conditions detectable by

biochemical or anthropometric measurements;

(b) Other documented nutritionally related medical conditions;

(c) Dietary deficiencies that impair or endanger health;

(d) Conditions that directly affect the nutritional health of a

person, including alcoholism or drug abuse; or

(e) Conditions that predispose persons to inadequate nutritional

patterns or nutritionally related medical conditions, including, but

not limited to, homelessness and migrancy.

* * * * *

3. In Sec. 246.4, paragraph (a)(8) is revised to read as follows:

Sec. 246.4 State Plan.

(a) * * *

[[Page 63974]]

(8) A description of how the State agency plans to coordinate

program operations with other services or programs that may benefit

participants in, or applicants for, the program.

* * * * *

4. In Sec. 246.6, paragraphs (b)(4) through (b)(9) are redesignated

as (b)(5) through (b)(10). A new paragraph (b)(4) is added to read as

follows:

Sec. 246.6 Agreements with local agencies.

* * * * *

(b) * * *

(4) Prohibits smoking in the space used to carry out the WIC

Program during the time any aspect of WIC services are performed.

* * * * *

5. In Sec. 246.7:

a. Paragraphs (b)(3) through (b)(5) are redesignated as paragraphs

(b)(4) through (b)(6), and a new paragraph (b)(3) is added;

b. Paragraph (d)(1)(iii) is revised;

c. Paragraphs (d)(2)(vii) and (d)(2)(viii) are redesignated as

paragraphs (d)(2)(viii) and (d)(2)(ix), and a new paragraph (d)(2)(vii)

is added;

d. Paragraph (e)(1)(iii) is redesignated as paragraph (e)(1)(iv),

and a new paragraph (e)(1)(iii) is added.

The revisions and additions read as follows:

Sec. 246.7 Certification of participants.

* * * * *

(b) * * *

(3) State agencies shall provide WIC services at community and

migrant health centers, Indian Health Services facilities, and other

federally health care supported facilities established in medically

underserved areas to the extent feasible.

* * * * *

(d) * * *

(1) * * *

(iii) Implementation of the income guidelines. On or before July 1

each year, each State agency shall announce and transmit to each local

agency the State agency's family size income guidelines, unless changes

in the poverty income guidelines issued by the Department of Health and

Human Services do not necessitate changes in the State or local

agency's income guidelines. The State agency may implement revised

guidelines concurrently with the implementation of income guidelines

under the Medicaid program established under Title XIX of the Social

Security Act (42 U.S.C. 1396 of et seq.). The State agency shall ensure

that conforming adjustments are made, if necessary, in local agency

income guidelines. The local agency shall implement (revised)

guidelines not later than July 1 of each year for which such guidelines

are issued by the State.

(2) * * *

(vii) Income eligibility of pregnant women. A pregnant woman who is

ineligible for participation in the program because she does not meet

income guidelines shall be considered to have satisfied the income

guidelines if the guidelines would be met by increasing the number of

individuals in her family by the number of embryos or fetuses in utero.

The same increased family size may also be used for any of the pregnant

woman's categorically eligible family members. The State agency shall

allow applicants to waive this increase in family size.

* * * * *

(e) * * *

(1) * * *

(iii) A pregnant woman who meets income eligibility standards may

be considered presumptively eligible to participate in the program, and

may be certified immediately without an evaluation of nutritional risk

for a period up to 60 days. A nutritional risk evaluation of such woman

shall be completed not later than 60 days after the woman is certified

for participation. Under this subsequent determination process, if the

woman does not meet nutritional risk criteria, the woman shall be

determined ineligible and may not participate in the program after the

date of the determination. Notification of the ineligibility

determination shall be given in accordance with paragraph (j)(5) of

this section. In addition, if the nutritional risk evaluation is not

completed within the 60 day timeframe, the woman's participation shall

end when her initial certification period expires. As set forth in

paragraph (j)(8) of this section, notification must be given prior to

any expiration of the certification period.

* * * * *

6. In Sec. 246.14:

a. The second through the fifth sentences of the introductory text

of paragraph (c)(1) are revised, the sixth through the ninth sentences

are removed, and a new sixth sentence is added;

b. Paragraph (e) is revised.

The revisions read as follows:

Sec. 246.14 Program costs.

* * * * *

(c) * * *

(1) * * * During each fiscal year, each State agency shall expend,

for nutrition education activities and breastfeeding promotion and

support activities, an aggregate amount that is not less than the sum

of one-sixth of the amount expended by the State agency for costs of

NSA and an amount equal to its proportionate share of the national

minimum expenditure for breastfeeding promotion and support activities.

The amount to be spent on nutrition education shall be computed by

taking one-sixth of the total fiscal year NSA expenditures. The amount

to be spent by a State agency on breastfeeding promotion and support

activities shall be an amount that is equal to at least its

proportionate share of the national minimum breastfeeding promotion

expenditure as specified in paragraph (c)(1) of this section. The

national minimum expenditure for breastfeeding promotion and support

activities shall be equal to $21 multiplied by the number of pregnant

and breastfeeding women in the Program, based on the average of the

last three months for which the Department has final data. On October

1, 1996 and each October 1 thereafter, the $21 will be adjusted

annually using the same inflation percentage used to determine the

national administrative grant per person. * * *

* * * * *

(e) Recovery of vendor claims. The State agency may retain funds

collected through the recovery of claims assessed against food vendors

or funds not paid to food vendors as a result of reviews of food

instruments prior to payment. The State agency may use funds recovered

from vendors for food and/or nutrition services and administration

costs. Funds recovered as a result of violations in the food delivery

system of the program may be used for costs incurred in the year in

which the funds are collected, or in the year in which the initial

obligation of funds incurred. The State agency shall not credit any

vendor recoveries until after the vendor has had full opportunity to

correct or justify the error or apparent overcharge in accordance with

Sec. 246.12(r)(5)(iii). The State agency shall report vendor

collections to FNS through routine reporting procedures. The State

agency shall maintain documentation to support the amount and use of

funds retained under this paragraph by the State agency.

7. In Sec. 246.15, paragraph (a) is revised to read as follows:

Sec. 246.15 Program income other than grants.

(a) Interest earned on advances. Interest earned on advances of

Program funds at the State and local levels shall be treated in

accordance with the provisions of 31 CFR Part 205, which

[[Page 63975]]

implement the requirements of the Cash Management Improvement Act of

1990. However, State agencies will not incur an interest liability to

the Federal government on rebate funds for infant formula or other

foods, provided that all interest earned on such funds is used for

program purposes.

* * * * *

8. In Sec. 246.16, paragraphs (a)(6) and (b)(3)(i) are revised to

read as follows:

Sec. 246.16 Distribution of funds.

(a) * * *

(6) Up to one-half of 1 percent of the sums appropriated for each

fiscal year, not to exceed $5,000,000 shall be available to the

Secretary for the purpose of evaluating program performance, evaluating

health benefits, providing technical assistance to improve State agency

administrative systems preparing the biennial Participation Report to

Congress described in Sec. 246.25(b)(3), and administering pilot

projects, including projects designed to meet the special needs of

migrants, Indians, rural populations, and to carry out technical

assistance and research evaluation projects of this program and the WIC

Farmers' Market Nutrition Program.

(b) * * *

(3) * * *

(i) Not more than 1 percent of the amount of funds allocated to a

State agency for supplemental foods for a fiscal year may be expended

by the State agency for food costs incurred in the preceding fiscal

year. FNS may authorize a State agency to expend not more than 3

percent of the amount of funds allocated to the State agency for

supplemental foods for a fiscal year for expenses incurred for

supplemental foods during the preceding fiscal year, if FNS determines

that there has been a significant reduction in infant formula cost

containment savings that affected the State agency's ability to at

least maintain its participation level;

* * * * *

Dated: November 14, 1998.

Shirley R. Watkins,

Under Secretary for Food, Nutrition, and Consumer Services.

[FR Doc. 98-30753 Filed 11-17-98; 8:45 am]

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