Food Stamp Program: Personal Responsibility Provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996

SUMMARY: This rulemaking proposes to amend Food Stamp Program

regulations to implement 13 specific sections of the Personal

Responsibility and Work Opportunity Reconciliation Act of 1996 that add

new eligibility requirements, increase existing penalties for failure

to comply with Program rules, and establish a time limit for food stamp

participation of three months in three years for able-bodied adults

without children who are not working. The Department's proposals would:

prohibit an increase in food stamp benefits when a household's income

is reduced because of either a penalty imposed under a Federal, State,

or local means-tested public assistance program for failure to perform

a required action or for an act of fraud; allow State agencies to

disqualify an individual from participation in the Program if the

individual is disqualified from another means-tested program for

failure to perform an action required by that program; allow State

agencies to sanction Program households if they are sanctioned under

TANF for failure to ensure their minor children attend school, or if

the adults do not have (or are not working toward attaining) a

secondary school diploma or its equivalent; make individuals convicted

of drug-related felonies ineligible for food stamps; make fleeing

felons and probation and parole violators ineligible for food stamps;

require States to provide households' addresses, social security

numbers, or photographs to law enforcement officers to assist them in

locating fugitive felons or probation or parole violators; allow States

to require food stamp recipients to cooperate with child support

agencies as a condition of food stamp eligibility; allow states to

disqualify individuals who are in arrears in court-ordered child

support payments; double the penalties for violating Program

requirements; permanently disqualify individuals convicted of

trafficking in food stamp benefits of $500 or more; make individuals

ineligible for 10 years if they misrepresent their identity or

residence in order to receive multiple Program benefits; and limit the

Program participation of most able-bodied adults without dependents to

three months in a three-year period during times the individual is not

working or participating in a work program.

DATES: Comments must be received on or before February 15, 2000 to be

assured of consideration.

ADDRESSES: Comments should be submitted to Margaret Werts Batko,

Assistant Branch Chief, Certification Policy Branch, Program

Development Division, Food and Nutrition Service, USDA, 3101 Park

Center Drive, Alexandria, Virginia 22302, (703) 305-2516. Comments may

also be faxed to the attention of Ms. Batko at (703) 305-2486. The

Internet address is: [email protected] All written comments

will be open for public inspection at the office of the Food and

Nutrition Service during regular business hours (8:30 a.m. to 5 p.m.,

Monday through Friday) at 3101 Park Center Drive, Alexandria, Virginia

22302, Room 720.

FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed

rulemaking should be addressed to Margaret Werts Batko at the above

address or by telephone at (703) 305-2516.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

This proposed rule has been determined to be economically

significant and was reviewed by the Office of Management and Budget in

conformance with Executive Order 12866.

Executive Order 12372

The Food Stamp Program (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.

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.

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). Shirley R.

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

certified that this rule will not have a significant economic impact or

affect 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

The information collection burden associated with the proposed

provisions in this rule concerning eligibility, certification, and

continued eligibility of food stamp recipients (OMB No. 0584-0064) was

published in the Federal Register for public comment on January 5,

1999, Volume 64, No. 2, Page 472. The information collection burden

associated with the request for a waiver under the food stamp time

limit is approved under OMB No. 0584-0479. The information collection

burden that is associated with proposed provisions in this rule which

affect the regulations at 7 CFR 273.16, the Demand Letter for Over

Issuance, is approved under OMB 0584-0492.

In accordance with the Paperwork Reduction Act of 1995, the Food

and Nutrition Service is submitting for public comment the change in

the information collection burden that would result from the adoption

of the proposals in the rule associated with the State Plan of

Operations.

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 the information to be collected; and (c) 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.

Send comments and requests for copies of this information

collection to Margaret Werts Batko, Assistant Branch

[[Page 70921]]

Chief, Certification Policy Branch, Program Development Division, Food

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

Virginia, 22302, (703) 305-2516. Comments may also be faxed to the

attention of Ms. Batko, at (703) 305-2486. The Internet address is

[email protected]

Comments and recommendations on the proposed information collection

must be received by February 15, 2000.

Title: State Plan of Operations.

OMB Number: 0584-0083.

Expiration Date: December 1998--Emergency reinstatement has been

requested.

Type of Request: Expired/Revision of currently approved collection.

Abstract: The regulations at 7 CFR 272.2 require that State

agencies plan and budget program operations and establish objectives

for each year. State agencies submit these plans to the regional

offices for review and approval. This rulemaking is proposing to amend

Part 7 CFR 272.2(d) of the Food Stamp Program Regulations to require

State agencies who opt to implement certain provisions of the PRWORA to

include these options in the State Plan of Operation. The optional

provisions that must be included in the State Plan of Operation are:

school attendance, secondary school diploma, comparable

disqualifications, custodial and non-custodial parents, cooperation

with child support enforcement agencies, disqualification for child

support arrears. The regulations at 7 CFR 272.2(f) require that State

agencies only have to provide FNS with changes to these plans as they

occur. Since these options are newly provided for by PRWORA, State

agencies who choose these options must include it in their State Plan

of Operations this year, and any subsequent year only if there are

changes. Four States have opted to sanction households if the adult

fails to ensure children attend school; 13 States have opted to

implement comparable disqualifications; 7 States have opted to

disqualify individuals who fail to cooperate with child support

agencies; 3 States have opted to disqualify individuals if they are in

arrears on child support; 7 States have opted to not increase benefits

if the household does not comply with requirements of other federally

means tested benefits. No State has opted to disqualify adults who have

not attained a secondary school diploma.

Number of Additional Respondents: 34.

Estimated Number of Responses per Respondent: A one time burden of

one response per State agency.

Estimate of Burden: The additional public reporting burden for this

proposed collection of information is estimated to average an

additional .25 hours per response.

Estimated Total Annual Burden on Respondents: An additional one

time burden of 8.5 hours.

Unfunded Mandate Reform Act of 1995 (UMRA) Title II of UMRA

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, FCS 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 FCS 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 notice 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 or more in any one year. This

rule is, therefore, not subject to the requirements of Sections 202 and

205 of the UMRA.

Civil Rights Impact Analysis

FNS has reviewed this proposed rule in accordance with the

Department Regulation 4300-4, ``Civil Rights Impact Analysis'' to

identify and address any major civil rights impacts the proposed rule

might have on minorities, women, and persons with disabilities. After a

careful review of the rule's intent and provisions, and the

characteristics of food stamp households and individual participants,

FNS has determined that there is no way to soften their effect on any

of the protected classes. FNS has no discretion in implementing many of

these changes. The changes required to be implemented by law have been

implemented.

All data available to FNS indicate that protected individuals have

the same opportunity to participate in the Food Stamp Program as non-

protected individuals. FNS specifically prohibits the State and local

government agencies that administer the program from engaging in

actions that discriminate based on race, color, national origin,

gender, age, disability, marital or family status. Regulations at 7 CFR

272.6 specifically state that ``State agencies shall not discriminate

against any applicant or participant in any aspect of program

administration, including, but not limited to, the certification of

households, the issuance of coupons, the conduct of fair hearings, or

the conduct of any other program service for reasons of age, race,

color, sex, handicap, religious creed, national origin, or political

beliefs. Discrimination in any aspect of program administration is

prohibited by these regulations, the Food Stamp Act, the Age

Discrimination Act of 1975 (Pub. L. 94-135), the Rehabilitation Act of

1973 (Pub. L. 93-112, section 504), and title VI of the Civil Rights

Act of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under

any applicable Federal law. Title VI complaints shall be processed in

accord with 7 CFR part 15.'' Where State agencies have options, and

they choose to implement a certain provision, they must implement it in

such a way that it complies with the regulations at 7 CFR 272.6

Regulatory Impact Analysis

Need for Action

This action is needed to implement 13 sections of the Personal

Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L.

104-193, and would: (1) prohibit an increase in food stamp benefits

when a household's income is reduced because of a penalty imposed under

a Federal, State, or local means-tested public assistance program for

failure to perform a required action; (2) prohibit an increase in food

stamp benefits when a household's income is reduced because of a

penalty imposed under a Federal, State, or local means-tested public

assistance program for an act of fraud; (3) allow states to disqualify

an individual from Program participation if the individual is

disqualified from another means-tested program for failure to perform

an action required by that program; (4) allow State agencies to

sanction households if minor children are not attending school, or if

the adults do not have (or are not working toward attaining) a

secondary school diploma or its equivalent; (5) make individuals

convicted of drug-related felonies ineligible to receive food stamps;

(6) make fleeing felons and probation and parole violators ineligible

to receive food stamps; (7) require States to provide households'

addresses, social security numbers, or photographs to law enforcement

officers to assist them in locating fugitive felons or probation or

parole violators; (8) allow States to require food stamp recipients to

cooperate with child support agencies as a condition of food stamp

eligibility;

[[Page 70922]]

(9) allow States to disqualify individuals who are in arrears in court-

ordered child support payments; (10) double existing penalties for

violating Program requirements; (11) permanently disqualify individuals

convicted of trafficking in food stamp benefits of $500 or more; (12)

make individuals ineligible for 10 years if they misrepresent their

identity or residence in order to receive multiple food stamp benefits;

and (13) limit the Program participation of most able-bodied adults

without dependents to three months in a three-year period during times

the individual is not working or participating in a work program.

Benefits

State agencies will benefit from this rule to the extent that it

allows States to implement provisions that will encourage personal

responsibility and promote self-sufficiency.

Costs

The changes in food stamp requirements made by the provisions

addressed in this rule would reduce Program costs for FY 1999-2003 by

approximately $2.090 billion. For FY 1999-2003, the estimated yearly

savings are (in millions) $615, $515, $395, $290, $275, respectively.

The majority of the savings are realized from Section 824, time limited

benefits for able-bodied adults without dependents. Smaller savings are

realized from the following provisions: Section 819, comparable

disqualifications; Section 822, cooperation with child support

agencies; Section 823, disqualifications for child support arrears; and

Section 829 and 911, no increase in benefits. The savings from the

remaining provisions in the rule are negligible, and therefore, will

not be discussed in this analysis.

Section 824--Time Limits for Able-Bodied Adults without

Dependents--This provision limits the receipt of food stamps for

certain able-bodied adults without dependents (ABAWDs) to 3-months in a

36 month period unless the individual is either working or

participating in an approved work or work training program for at least

20 hours per week. Individuals are exempt from the time limit if they

are under 18 or over 50, medically certified as physically or mentally

unfit for employment, a parent or other household member with

responsibility for a dependent child, or exempt from work registration

under 6(d)(2) of the Act, or pregnant. Individuals can regain

eligibility if they work 80 hours in a 30 day period, and they maintain

eligibility as long as they are satisfying the work requirement. If

individuals later lose their job, they can receive an additional 3

months of food stamps while not working. The additional 3 months must

be consecutive, and begins on the date the individual notifies the

State that he/she is no longer working. The law allows waivers of the

time limit for groups of individuals living in areas with an

unemployment rate of more than 10 percent or where there are not a

``sufficient number of jobs to provide employment for the

individuals.''

This provision affects participants to the extent they are able-

bodied adults without dependents and to the extent they are not

fulfilling the work requirement, exempt or covered by a waiver. We

estimate that 412,000 individuals will reach the time limit in FY 1999

due to this provision. We estimate that in FY 2000-2003 the number of

individuals reaching the time limit will be (in thousands) 331, 239,

160, and 140 respectively. We estimate that the FY 1999-2003 cost

savings from this provision will be (in millions) $585, $485, $360,

$250, $225. We estimate that the five-year cost savings for FY 1999

through FY 2003 will be $1.905 billion. These estimates do not take

into account any changes in the treatment of ABAWDs resulting from the

subsequent Balanced Budget Act of 1997 or Agricultural Research,

Extension, and Education Reform Act of 1998.

The caseload estimates were generated by identifying those

participants in the 1996 food stamp quality control data who are

ABAWDs, expressing the able-bodied population as a percentage of the

total Food Stamp caseload, and separating out to the extent possible

those participants who were exempt from the work requirements. Further

adjustments were made to account for the estimated size of the able-

bodied population living in areas that had been granted 10 percent

unemployment and insufficient jobs waivers (in 1999 approximately 35

percent of the ABAWD caseload have been estimated to live in waived

areas and are exempt from the work requirement), and the number of

able-bodied who might retain eligibility either through work or an

approved work or training program. About 315,000 people in 1999 have

been estimated to be ABAWDs who live in a waived area and will not run

into the time limit. Cost estimates were then derived by multiplying

the appropriate caseload estimates by the average benefit for a single

able-bodied Food Stamp recipient over the course of one year.

Subsequent to the passage of this law, the Balanced Budget Act of

1997 and the Agricultural Research Extension, and Education Reform Act

of 1998 (Agricultural Research Act) modified the ABAWD provisions of

PRWORA. The Balanced Budget Act increased funding to the Food Stamp

Employment and Training Program to allow states to create qualifying

work opportunities to help ABAWDs retain their Food Stamp eligibility,

and permitted states to exempt up to 15 percent of their unwaived able-

bodied caseload from the time limits. The Agricultural Research Act

further modified the level of funding for Employment and Training

Programs for ABAWDs. Taken together both of these laws will likely

mitigate the effects of the ABAWD provisions of PRWORA. The effects of

these more recent laws will be addressed in future rulemaking.

Section 822--Cooperation With Child Support Agencies--This

provision allows States to require cooperation with child support

agencies as a condition of food stamp eligibility. The provision is

optional and can be waived for the custodial parent for good cause but

not for the non-custodial parent. This provision affects participants

to the extent States choose to implement this provision and to the

extent they are a custodial or non-custodial parent with child support

responsibilities and do not cooperate with child support agencies. We

estimate the number of recipients affected by this provision in FY

1999-2003 will be (in thousands) 76, 92, 105, 119, 132 respectively. We

estimate the cost savings from this provision in FY 1999-2003 will be

(in millions) $15, $15, $15, $20, $25, respectively. We estimate the

total cost savings for the 5-year period of FY 1999-2003 will be $90

million.

Custodial Parents

We estimate that in FY 1999 approximately 4,000 custodial parents

will be disqualified due to sanctions for noncompliance and 68,000

custodial parents will have their benefits slightly reduced due to

compliance and increased child support income as a result of this

provision. We estimate the FY 1999 cost savings for the custodial

parents to be $10 million and the five-year cost savings for FY 1999

through FY 2003 to be $60 million.

Because food stamp households receiving public assistance are

already mandated to cooperate with child support agencies, the impact

of this provision is expected to be realized among food stamp-only

custodial-parent households. Based on the February 1995 FNS report,

Participation in the Child Support Enforcement Program Among Non-AFDC

Food Stamp Households,

[[Page 70923]]

food stamp-only custodial households with child support needs that are

not cooperating with the child support agencies account for roughly 2.8

percent of all participating food stamp households. According to the

report, the response of these custodial parents to this provision was

assumed to fall into three categories: (1) those that comply and

receive higher child support payments; (2) those that do not comply and

face sanctions, and; (3) those that opt to leave food stamps rather

than comply.

First, in the 1995 report, custodial parents choosing to comply

with the provision were found to account for approximately 8.5 percent

of food stamp benefits and were expected to experience a decline in

food stamp benefits of 2.0 percent as a result of higher child support

payments. Savings from this group was calculated as the proportion of

total food stamp benefits contributed to this group (8.5 percent) times

the expected decline of 2.0 percent (0.085 times 0.02 = .00170 or 0.17

percent).

Second, to estimate the cost for households which are sanctioned

for noncompliance, the report indicated that food stamp-only custodial

households accounted for 7.0 percent of all food stamp households, and

that approximately 2.1 percent of such households would choose to be

sanctioned rather than comply with the provision. The total number of

participating households was calculated by dividing a participation

projection (21,638,000 persons) by the average household size from 1996

food stamp quality control data (2.5 persons). The monthly benefit

reduction for those sanctioned and leaving food stamps rather than

comply was estimated to be the difference between the maximum allotment

for a family of four and the maximum allotment for a family of three

(difference = $87). The savings for this group was calculated as the

product of total households, the proportion which are food stamp-only

custodial households (7.0 percent), the proportion choosing to be

sanctioned rather than comply with the provision (2.1 percent), and the

annual value of the sanction (e.g., in FY 1999, 8,655 households times

7 percent times 2.1 percent times $87 times 12 months).

Third, the 1995 report indicated that of food stamp-only custodial

households, 3.8 percent were expected to leave the Food Stamp Program

rather than comply with the provision. The estimate of savings from the

group of custodial parents choosing to leave food stamps rather than

comply was calculated as the product of the number of total food stamp

households, the proportion which are food stamp-only custodial

households (7.0 percent), the proportion choosing to leave food stamps

rather than comply (3.8 percent), and the annual value of the household

benefit reduction (e.g., in FY 1999, 8,655 households times 7 percent

times 3.8 percent times $87 times 12 months).

The three group impacts were summed and the estimate was adjusted

pursuant to assumptions regarding the proportion of food stamp

recipients in States choosing to adopt this optional provision--10

percent in FY 1997 and growing to 20 percent by FY 2003. State option

data were based on the May 1998 FNS report, State Food Stamp Policy

Choices Under Welfare Reform: Findings of 1997 50-State Survey. Seven

States reported having adopted this optional provision as of the end of

calendar year 1997: Idaho, Kansas, Maine, Michigan, Mississippi, Ohio

and Wisconsin. According to 1996 food stamp quality control data, these

seven States account for approximately 10 percent of applicable food

stamp households.

The estimate of the number of custodial parents disqualified for

food stamp benefits from this provision (4,000 people) was calculated

as the total unrounded savings ($4.5 million) attributable to the

second and third groups of custodial parents--those continuing to not

cooperate with child support agencies--divided by the annual value of

their sanction ($87 times 12 months).

The estimate of the number of custodial parents receiving reduced

benefits as a result of complying with this provision and receiving

increased child support income (68,000 persons) was calculated as the

difference between the total number of custodial parents affected by

the provision (72,000 persons) and those being disqualified for

noncompliance (4,000 people). The total number of custodial parents

affected was estimated as the total target population of the

provision--2.8 percent of all households according to the 1995 report--

times the projected number of participants from the FY 1999 budget

baseline, times the State option phase-in assumptions.

Non-Custodial Parents

We estimate that approximately 4,000 non-custodial parents will be

disqualified by this provision in FY 1999. We estimate the FY 1999 cost

savings for non-custodial parents to be $5 million and the five-year

cost savings for FY 1999 through FY 2003 to be $30 million.

Estimates of the savings attributable to the non-custodial parents

in this provision are based on information from a 1995 report, Non-

custodial Fathers: Can They Afford to Pay More Child Support, by Elaine

Sorenson at the Urban Institute. Data on non-custodial parents is

extremely limited and this was the best available information. The

number of non-custodial parents not cooperating with child support was

estimated to be more than 78,000 in 1990. This estimate was based on

the reported 5.9 million fathers in 1990 who were not paying support,

adjusted by 75 percent to account for those at low-income levels, times

the proportion estimated to represent non-custodial fathers receiving

food stamps who had no child support order--a proxy for non-cooperation

(1.77 percent which is derived from the 1995 Urban Institute report)

[5.9 million times 0.75 times 0.0177 = 78,323]. The estimate of the

number of non-custodial parents not cooperating with their child

support agency was inflated by 1.5 percent annually to account for

growth in the child support system. This inflation factor is consistent

with information from the Department of Health and Human Services on

the child support system. The savings were estimated as the product of

the number of non-custodial parents not cooperating and an estimated

average food stamp benefit per person ($76.41 per month times 88,891

persons times 12 months).

The savings estimate for non-custodial parents was adjusted for the

proportion of households in States choosing to adopt this optional

provision and assumptions regarding the percent of non-cooperating non-

custodial parents States are able to identify and sanction. The State

option assumptions were based on the May 1998 FNS report, State Food

Stamp Policy Choices Under Welfare Reform: Findings of 1997 50-State

Survey. Three States reported having adopted this provision at the end

of calendar year 1997: Maine, Mississippi, and Wisconsin. According to

1996 quality control data, these three States account for roughly 5

percent of all applicable households. Therefore the savings estimate in

FY 1997 assumes only these States implement this child support

provision, thereby effecting 5 percent of all households that could be

subject to this provision, and further assumes a gradual expansion of

the States selecting this option so that 10 percent of all households

are subject to this provision by FY 2003. The estimate was adjusted

further based on the assumption that, operating at maximum

effectiveness,

[[Page 70924]]

States would only be able to correctly identify and sanction 75 percent

of applicable offenders.

The estimate of the number of non-custodial parents disqualified

for food stamp benefits from this provision was calculated as the total

unrounded savings from non-custodial parents ($3.668 million) divided

by an estimated average annual food stamp benefit ($916.92 = $76.41

times 12 months).

Summing together the estimates for both custodial and non-custodial

parents, we estimate that 8,000 people will be disqualified as a result

of complying and receiving additional income from child support in FY

1999. 68,000 custodial parents will have benefits reduced due to higher

amounts of child support income as a result of this provision. We

estimate the FY 1999 cost savings to be $15 million and the five-year

cost savings for FY 1999 through FY 2003 to be $90 million.

Section 823--Disqualification for Child Support Arrears: This

provision allows States to disqualify individuals for any month during

which they are delinquent in any court-ordered child support payment.

This provision is optional. This provision affects participants to the

extent States choose to implement this provision and to the extent they

have court-ordered child support responsibilities and they are

delinquent in their payments. We estimate that approximately 3,000

persons will be disqualified as a result of this provision in FY 1999.

We estimate the FY 1999 cost savings to be $5 million and the five-year

cost savings for FY 1999 through FY 2003 to be $25 million.

The estimate of savings for this provision was based on the 1995

report, Non-Custodial Fathers: Can They Afford to Pay More Child

Support, by Elaine Sorenson at the Urban Institute. There were an

estimated 825,000 custodial mothers participating in the child support

system (in IV-D programs) with child support orders not receiving

support in 1990. It was assumed that for every custodial mother with an

order and without support, there was a non-custodial father in arrears.

Estimating that almost 7 percent (the national average of 1 in 14

Americans receiving food stamps) of them were receiving food stamp

benefits, it was calculated that in 1990 there were more than 56,000

non-custodial fathers receiving food stamps who were in arrears for

court-ordered child support. This number was inflated by 1.5 percent

per year to reflect growth in the child support system, consistent with

information from the Department of Health and Human Services. The

estimate of savings for this provision was based on an estimated

average monthly benefit per person ($76.41). The total savings was

calculated as the product of the number of non-custodial fathers in

arrears for child support times the annual benefits they would lose due

to disqualification (64,883 people times $76.41 per month times 12

months).

This product was adjusted for assumptions regarding the proportion

of food stamp households in States choosing to implement this provision

and the State's ability to identify and sanction the appropriate

individuals. The State option assumptions were based on the May 1998

FNS report, State Food Stamp Choices Under Welfare Reform: Findings of

1997 50-State Survey, indicating that three States reported operating

this provision at the end of 1997: Ohio, Oklahoma and Wisconsin.

According to 1996 food stamp quality control data, these three States

account for approximately 5 percent of all applicable households. The

savings estimate was adjusted to reflect that 5 percent of the States

would implement this provision in FY 1997, growing to 10 percent by FY

2003. The estimate was adjusted further based on the assumption that,

operating at maximum effectiveness, States would only be able to

correctly identify and sanction 75 percent of applicable offenders. In

FY 1999, for example, the savings was calculated by taking the product

of the 5 percent state phase-in and the assumption of 75 percent

cooperation and multiplying it by the total savings. The estimate of

the number of individuals disqualified for food stamp benefits from

this provision was calculated as the total unrounded savings

($2,667,000) divided by an estimated average annual food stamp benefit

($916.92).

Section 829 and 911--No Increase for Penalties in Other Programs--

Section 829 provides that if a household's benefits are reduced under a

Federal, State, or local means-tested public assistance program for

failure to perform a required action, the household may not receive an

increased food stamp allotment as a result of the decrease in income

due to the reduced public assistance payment. This applies to both

intentional and unintentional failures to take a required action. In

addition to not increasing allotments, States may reduce the Food Stamp

allotment by up to 25 percent. Section 911 prohibits an increase in

food stamp benefits as the result of a decrease in Federal, State, or

local means-tested assistance benefits because of fraud. Participants

will be affected by these provisions to the extent their benefits are

reduced for failure to perform a required action or for fraud. The

effect of the provisions also depends on the cooperation of other

programs in notifying the food stamp agency. We estimate approximately

6,000 participants will be affected by these provisions in FY 1999. We

estimate that in FY 1999-2003 the number of recipients affected by this

provision will be (in thousands) 6,6,6,7,7 respectively. We estimate

the cost savings for FY 1999-2003 to be (in millions) $5, $5, $10, $10,

$10. We estimate the five-year cost savings for FY 1999 through FY 2003

to be $25 million.

Food stamp savings from these provisions results from two sources:

(1) a mandatory prohibition on increasing food stamp benefits when

individuals receive lower benefits in other means-tested programs for

failure to comply with a required action, and (2) an optional provision

to decrease food stamp benefits by no more than 25 percent.

The estimate for savings from the mandatory prohibition on

increasing benefits was based on the Department of Health and Human

Services' Administration for Children and Families data regarding the

average number of people sanctioned monthly from the JOBS program in

May 1994. This serves as a proxy for the number of individuals that

receive reduced benefits from a means-tested program for failure to

perform a required action or for fraud, and is the best available data.

(Data on fraud in other programs is unavailable.) There were almost

13,000 monthly first sanctions, 1,876 monthly second sanctions and 375

monthly third sanctions. First sanctions were assumed to result in

instant compliance and therefore last zero months in duration. This

assumption is based on 1994 information from the Department of Health

and Human Service, Administration on Children and Families (ACF). ACF

does not have any more recent information. Second sanctions were

assumed to have an average duration of three months and third sanctions

were assumed to have an average duration of six months. The savings

from the mandatory prohibition on increasing food stamp benefits was

calculated as the sum of the products of the number of individuals

sanctioned, the average AFDC benefit lost times the FSP benefit

reduction rate of 30 percent, and the duration of the sanction. The

average AFDC benefit reduction was taken from the average AFDC benefit

per person reported in the 1996 Green Book and inflated over time.

[(1,876 monthly second sanctions times 12 months times

[[Page 70925]]

the average AFDC benefit lost which equals $143 times 30 percent FSP

benefit reduction times 3 months) plus (375 monthly third sanctions

times 12 months times the average AFDC benefit lost which equals $143

times 30 percent FSP benefit reduction times 6 months)]

The estimate for savings from the State option to decrease food

stamp benefits by no more than 25 percent was based on an estimated

average monthly food stamp benefit per person and the JOBS sanction

data. The savings was calculated as the product of the number of

individuals sanctioned, 25 percent of the average food stamp benefit

per person and the duration of the sanction. This estimate was adjusted

to account for the proportion of food stamp households in States

expected to exercise this optional provision--10 percent in 1997 and

growing to 20 percent by 2003. This was based on information provided

in the May 1998 FNS report, State Food Stamp Policy Choices Under

Welfare Reform: Findings of 1997 50-State Survey. Seven States reported

having adopted this optional provision at the end of 1997: Connecticut,

Iowa, Kentucky, Michigan, Mississippi, Montana and Tennessee. According

to 1996 food stamp quality control data, these seven States account for

approximately 10 percent of all food stamp cash assistance households.

The savings estimates for the mandatory and optional portions of

the provisions were summed. The estimate of the number of individuals

receiving a reduction in food stamp benefits due to these provisions

was calculated as the total unrounded savings divided by an estimated

average annual food stamp benefit. [(1,876 monthly second sanctions

times 12 months times the average AFDC benefit lost which equals $143

times 30 percent FSP benefit reduction times 3 months) plus (375

monthly third sanctions times 12 months times the average AFDC benefit

lost which equals $143 times 30 percent FSP benefit reduction times 6

months) plus the sum of (1,876 times 12 months times the average FSP

benefit per AFDC household which equals $259.96 times .25 reduction

times 3 months) and (375 times the average FSP benefit per AFDC

household which equals $259.96 times .25 reduction times 6 months)]

Background

On August 26, 1996, the Personal Responsibility and Work

Opportunity Reconciliation Act of 1996, Pub. L. 104-193, (PRWORA), was

enacted. PRWORA amended the Food Stamp Act of 1977 7 U.S.C. 2011, et

seq. (The Act), by adding new Food Stamp Program (the Program)

eligibility requirements, increasing existing penalties for failure to

comply with Program rules, and establishing a time limit for Program

participation of three months in three years for able-bodied adults

without children who are not working. Thirteen sections of the PRWORA

are addressed in this rulemaking. State agencies were required to

implement most of these provisions upon enactment for applicant

households and at recertification of participant households. Some of

these provisions were required to be implemented at dates of enactment,

and those instances are discussed below. The requirements of each

provision are discussed below.

The Department is proposing to codify many of the new provisions in

7 CFR 273.11, ``Action on Households with Special Circumstances''. The

proposed new or increased penalties will amend 7 CFR 273.16. Because of

the complexity of the new food stamp time limit for able-bodied adults,

the Department is proposing to add a new regulatory section to codify

these requirements, 7 CFR 273.24. The discussion below follows this

organizational structure.

7 CFR 273.11--Action on Households with Special Circumstances

Ban on Increased Benefits for Failure to Take Required Action or

Fraud--7 CFR 273.11(k)

Current regulations at 7 CFR 273.11(k) provide that a State agency

shall not increase food stamp benefits when benefits received under

another means-tested Federal, State or local welfare or public

assistance program have been decreased due to an intentional failure to

comply with a requirement of the program that imposed the benefit

decrease. This provision does not apply in the case of individuals or

households subject to a food stamp work sanction imposed under 7 CFR

273.7(g)(2). If the other program will not cooperate in providing

information sufficient to enforce 7 CFR 273.11(k), the State agency is

not held responsible for noncompliance as long as the State agency has

made a good faith effort to obtain the information.

Section 829 of PRWORA amended Section 8(d) of the Act, 7 U.S.C.

2017(d), to provide that if the benefits of a household are reduced

under a Federal, State, or local law relating to a means-tested public

assistance program for the failure of a person to perform an action

required under the law or program the household may not receive an

increased allotment as the result of that decrease, and the State

agency may reduce the household's food stamp allotment by not more than

25 percent. This provision applies whether or not the act leading to

the decrease in benefits was intentional. The prohibition on increasing

food stamp benefits is applicable for the duration of the reduction

imposed by the other program. If the reduction is the result of a

failure to perform an action required under part A of title IV of the

Social Security Act, 42 U.S.C. 601, et seq. (Temporary Assistance for

Needy Families (TANF)), the State agency may use the rules and

procedures that apply under part A of title IV to reduce the food stamp

allotment.

The Department proposes to amend 7 CFR 273.11(k)(1) to provide that

a ``means-tested public assistance program'' for purposes of the

restriction imposed by Section 829 of PRWORA shall include any public

or assisted housing under Title I of the United States Housing Act of

1937, any State program funded under part A of Title IV of the Social

Security Act, and any program for the aged, blind, or disabled under

Titles I, X, XIV, or XVI of the Social Security Act, and State and

local general assistance as defined in 7 CFR 271.2. Title XIX was not

included because Medicaid benefits are not counted as income for food

stamp purposes. The Department also proposes that ``reduced'' will mean

decreased, suspended, or terminated.

The Department would like to point out that the requirement of the

assistance program does not have to be comparable to a food stamp

program requirement.

The Department plans to retain the current requirement at 7 CFR

273.11(k) which provides that this restriction must be applied to all

applicable cases. In addition, the Department proposes to retain the

current provision that if a State agency is not successful in obtaining

the necessary cooperation from another Federal, State or local means-

tested welfare or public assistance program to enable it to comply with

the requirements of this provision, the State agency shall not be held

responsible for noncompliance as long as the State agency has made a

good faith effort to obtain the information. However, the Department

expects the State agency to act on information that it has available,

such as information on TANF participants. The Department proposes that

the State agency obtain information about sanctions and changes in

those sanctions directly from the assistance programs and not rely on

the households to provide the information. This may be done through

computerized listings or other means. The Department

[[Page 70926]]

does not propose changing the reporting requirements for households.

The Department proposes that the restriction imposed by Section 829

only apply if assistance benefits are reduced for failure of a member

of a household to perform an action required under a Federal, State, or

local law relating to a means-tested public assistance program if the

person was receiving such assistance at the time the reduction was

imposed. In other words, the prohibition imposed by Section 829 would

not apply to a failure to take an action at the time of initial

application for an assistance program. If the person was not already

participating, benefits could not be ``reduced.'' With the following

exceptions, this provision would apply to reductions imposed during the

period benefits were originally authorized by the other program and to

reductions imposed at the time of application for continued benefits if

there is no break in participation. The Department does not consider

reaching a time limit for time-limited benefits or having a child that

is not eligible because of a family cap as failures to perform an

action required by an assistance program. The person or persons simply

no longer meet the eligibility criteria for assistance. Further, the

Department does not intend this provision to apply to purely procedural

requirements such as failure to submit a monthly report or failure to

reapply for assistance.

The Department is proposing that the household member does not have

to be certified for food stamps at the time of the failure to perform a

required action for this provision to apply. If a reduction in the

assistance benefits is in force at the time of the food stamp

application, food stamp benefits would be computed in a manner that

would prevent a higher food stamp allotment as a result of the failure

to take the required action.

The Department proposes to give States flexibility in determining

how to prevent an increase in food stamp benefits. For example, the

State may compute the exact amount of assistance the household would

have received each month but for the penalty. Or, the State may

determine the amount of the decrease at the time it was first imposed

and attribute that amount as additional assistance without regard to

other changes in household circumstances for the duration of the

penalty. For example, a household's original grant is reduced by $50.

No matter what the grant is in subsequent months, the State will

increase it by $50 to find out what the grant should have been. As an

alternative, the State agency may increase the actual assistance

received on an individual case basis by the same percentage as the

original reduction. For example, if the original grant of $100 is

reduced by 25 percent to $75, no matter what the grant is in subsequent

months, the State agency will increase it by 25 percent to find out

what the grant should have been. Finally, instead of computing each

reduction on an individual case-by-case basis, the State agency may

choose to increase the assistance grant of all households that fail to

perform a required action by the same flat percent, not to exceed 25

percent. For example, for all households that fail to perform a

required action, no matter what their actual individual percentage

decrease is, the State agency may choose to increase everyone's actual

assistance grant by 25 percent.

Section 8(d)(1)(A) of the Act, as amended by Section 829 of PRWORA,

provides that the household may not receive an increase in food stamp

benefits and Section (8)(d)(1)(B) provides that State agencies may

reduce the food stamp allotments by not more than 25 percent. The

Department interprets these sections to mean that the State agency must

prevent an increase in food stamp benefits and, in addition, it may

reduce the food stamp allotment by up to 25 percent. If the State

agency opts, under the flexibility discussed in the preceding

paragraph, to use a flat percentage to prevent an increase in food

stamp benefits for all households that contain a member who failed to

take a required action, the Department believes that that percentage

should also not be more than 25 percent.

If a percentage is computed for an individual case, the percentage

must be applied to the assistance payment before any amount is recouped

to repay a prior assistance overissuance. Likewise, if a percentage is

used as a standard measure of reduction, it must be applied to the food

stamp allotment before any amount is recouped to repay a prior food

stamp overissuance.

Section 829 of the PRWORA also amended Section 8(d)(2) of the Act

to provide that if benefits are reduced for a failure of an individual

to perform an action required under a program under Title IV-A of the

Social Security Act (TANF), the State agency may use the TANF rules and

procedures to reduce the food stamp allotments. Under the TANF program,

households are sometimes sanctioned for 30 percent of the grant. The

Department interprets the reference to use of TANF rules and procedures

to apply only to procedural aspects such as budgeting procedures and

combined notices and hearings. The Department does not interpret it as

allowing a percentage reduction greater than 25 percent even though the

TANF reduction may be more than 25 percent.

A number of States have expressed concern about indefinite and

permanent penalties. An indefinite penalty may occur, for example, when

a person is determined to be ineligible for a particular program for 2

months or until he or she complies with a certain requirement. In some

cases the person may not reapply for the other assistance program or

may not be given an opportunity to cure the violation because they may

become ineligible for some other reason, such as having children reach

the age of 18. Also, some assistance programs only keep records for a

limited time and may be unable to provide the food stamp office with

the information necessary to enable it to prohibit an increase in food

stamp benefits. The Department believes that a stricter penalty should

not be imposed for a failure to perform a required action in another

program than the penalty imposed for the first time a person commits an

intentional food stamp program violation. In most cases the penalty for

the first food stamp violation is a 1-year disqualification. Therefore,

if the other assistance program assigns a disqualification period of

longer than one year or an indefinite or permanent disqualification

period, the Department proposes that that the maximum length of the

food stamp disqualification under Section 8(d) of the Act be no more

than one year. Further, the Department proposes that the State agency

be allowed to shorten the disqualification period to less than one year

if the State becomes aware that the person would be ineligible for

assistance for some other reason.

If an individual fails to perform a required action in a State or

local assistance program, and the individual moves within the State,

the Department proposes that the disqualification goes with that

person, but that it be terminated if the person is ineligible for the

assistance program for some other reason or if the individual moves out

of State. If an individual fails to perform a required action in a

Federal program, and the individual moves, either interstate or

intrastate, the Department is proposing that the State verify the

status and continue the disqualification if appropriate.

The introductory paragraph of 7 CFR 273.11(k) currently provides in

part that the prohibition on increasing food stamp benefits does not

apply in the case of individuals or households subject to the food

stamp work sanction imposed pursuant to 7 CFR 273.7(g)(2).

[[Page 70927]]

Some State agencies have advised that this provision is confusing and

difficult to administer, especially when another program's penalty is

for a longer period of time. For example, a person could have a 2-month

food stamp disqualification and a 6-month TANF disqualification for the

same violation. The question is should the person be disqualified for

food stamp purposes for 2 months and at the same time have an amount

attributed as income as the result of the TANF reduction or should the

person be disqualified for 2 months and then have an amount attributed

as income for the remaining 4 months in order to prevent an increase in

benefits as the result of the TANF decrease. The law provides for both

a disqualification for food stamp purposes and prohibits an increase in

food stamp benefits for the duration of the reduction in the other

assistance program. Therefore, the Department is proposing that the

person be disqualified for food stamp purposes and the State agency

prohibit an increase in food stamps as the result of the reduction in

assistance for the duration of the reduction in assistance even if

there is some overlap. In the example presented, if the amount of the

TANF reduction was $20, the person could be disqualified from receiving

food stamps for June and July and $20 could be added to the household's

TANF income for June through November. The Department believes that

States should be able to take both actions against the household

simultaneously since both programs are affected by the violation. This

proposal will also simplify the program and allow the State to use TANF

procedures. Accordingly, the Department is proposing to remove the

sentence from the regulations that provides that 7 CFR 273.11(k) shall

not apply in the case of individuals or households subject to a food

stamp work sanction.

As amended by Section 829 of PRWORA, Section 8(d) of the Act

provides that food stamp benefits cannot be increased as a result of a

decrease in the another assistance program ``for the duration of the

reduction.'' The Department interprets this to mean that the

prohibition on increasing benefits must be for the same months as the

decrease in assistance to the extent possible, even if there is a break

in participation. If the penalty cannot be imposed during the first

month or months of the penalty in the other program because of notice

of adverse action time frames, the prohibition on increasing food stamp

benefits shall apply to the remainder of the assistance sanction

period. If a sanction is imposed, and the other program subsequently

lifts the sanction (for example, the person takes the required action),

the food stamp prohibition on increasing benefits must be lifted when

the food stamp office becomes aware of this.

The Department would like to emphasize that during the

disqualification the State agency must act on changes that would affect

the household's benefits which are not related to the assistance

violation. For example, if the household's earned income decreases and

the TANF grant is increased because of this, the food stamp office must

take the decrease in earned income and the increase in the assistance

payment into account for food stamp purposes.

In accordance with the above discussion, the Department is

proposing to revise 7 CFR 273.11(k) in its entirety.

The current regulations at 7 CFR 273.9(b)(5)(i) exclude from income

moneys withheld from an assistance payment, earned income or other

income source, or moneys received from any source which are voluntarily

or involuntarily returned, to repay a prior overpayment received from

that income source, provided that the overpayment was not from income

that was excludable. The Department is proposing to revise this

paragraph so that the total amount of welfare or public assistance,

rather than the total amount minus the repayment amount, is counted as

income for food stamps purposes when the overissuance was caused by the

household. To count the net amount of assistance would result in a

household getting more food stamps in the month of repayment. For

example, if the amount of the authorized assistance grant was $400, but

the household will only receive $350 because $50 is going to be

recouped to repay a prior overpayment caused by the household, food

stamp benefits would be based on $400. To base food stamp benefits on

$350 would result in an increase in food stamps for that month as the

result of a failure of a member of the household to take a required

action.

Prohibition on Increasing Benefits as the Result of Fraud

Section 911 of PRWORA provides that if an individual's benefits

under a Federal, State, or local law relating to a means-tested welfare

or a public assistance program are reduced because of an act of fraud

by the individual under the law or program, the individual may not, for

the duration of the reduction, receive increased food stamp benefits as

a result of a decrease in income attributable to such reduction. We

believes that cases of fraud will involve a failure to take a required

action in another program, e.g. failure to provide complete and

accurate information, and, therefore, it is not necessary to

distinguish between fraud and other program violations.

The provision prohibiting an increase due to fraud is similar to

the provision prohibiting an increase due to a failure to perform a

required action except that in the case of fraud the statute does not

reference the use of TANF procedures nor an additional percentage

penalty. The Department is proposing to allow the use of TANF

procedures for TANF fraud cases including the optional additional

percentage reduction to simplify the procedures and because cases of

fraud usually involve the failure of a household member to take a

required action. Accordingly, the Department proposes to incorporate

the prohibition on increasing food stamp benefits as the result of a

fraud into the revision to 7 CFR 273.11(k).

Comparable Disqualifications--7 CFR 273.11(l)

Section 819(a) of the PRWORA amended Section 6 of the Act, 7 U.S.C.

2015, to establish requirements for State agencies that want to impose

the same disqualifications under the Food Stamp Program that are

imposed under other public assistance programs. The Department's

proposals for implementing this provision are discussed below.

Section 6 (i) of the Act now provides that if a disqualification is

imposed on a member of a food stamp household for a failure of the

member to perform an action required under a Federal, State, or local

law relating to a means-tested public assistance program, the State

agency may impose the same disqualification on the member of the

household under the Food Stamp Program. Under section 6(i), the

requirement of the other program does not have to be comparable to a

Food Stamp Program requirement. The Department interprets this

provision to mean that the assistance program has to be authorized by

Federal, State or local law, but that the specific requirement does not

have to be specified in the law. For purposes of this provision, the

Department proposes that a ``means-tested public assistance program''

shall mean any public or assisted housing under Title I of the United

States Housing Act of 1937; any State temporary assistance for needy

families funded under part A of Title IV of the Social Security Act;

and any program for the aged, blind, or disabled under

[[Page 70928]]

Titles I, X, XIV, or XVI of the Social Security Act; Medicaid under

Title XX of the Social Security Act; and State and local general

assistance as defined in 7 CFR 271.2.

Since the law makes the comparable disqualification provision a

State option, the Department proposes to allow State agencies the

discretion to apply this provision to some, but not all, means-tested

public assistance programs. For example, the State agency may opt to

apply TANF disqualifications but not general assistance

disqualifications. Further, the Department proposes to allow State

agencies to choose which disqualifications within a specific program it

wants to impose for food stamp purposes. For example, the State agency

may choose to disqualify a person for food stamps who has failed to

submit to a drug test for TANF purposes but it does not have to

disqualify a member of the household for all TANF failures. State

agencies will be required to develop their own tracking system(s) for

purposes of this provision. The Department does not plan to change the

reporting requirements for households.

For purposes of this provision, the Department proposes that this

provision only apply if the person was receiving assistance at the time

the disqualification was imposed by the other program. In other words,

this provision would not apply to a failure to take an action at the

time of initial application for an assistance program. If the person

was not already participating, the person could not be

``disqualified.'' With the following exceptions, this provision would

apply to disqualifications imposed during the period benefits were

originally authorized by the other program and to disqualifications

imposed at the time of application for continued benefits if there is

no break in participation. The Department does not consider reaching a

time limit for time-limited benefits or having a child that is not

eligible because of a family cap as failures to perform an action

required by an assistance program. The person or persons simply no

longer meet the eligibility criteria for assistance. Further, the

Department does not intend this provision to apply to purely procedural

requirements such as a failure to submit a monthly report or failure to

reapply for assistance.

One State agency has interpreted Section 835 of PRWORA as allowing

a comparable disqualification for food stamps when the person is

disqualified at the time of initial application for the assistance

program. Section 835 amended Section 11(i)(2) of the Act, 7 U.S.C. 2020

(k)(2), to provide that ``except in the case of disqualification as a

penalty for failure to comply with a public assistance program rule or

regulation,'' no household shall have its food stamp application denied

nor its food stamp benefits terminated solely on the basis that its

application to participate has been denied or its benefits have been

terminated under any program for which the household filed a joint

application without a separate determination by the State agency that

the household fails to satisfy the food stamp eligibility requirements.

The Department interprets this change as only applying to joint

applications for recertification. The Department's position is that a

person must first be participating in the assistance program before he

or she can be ``disqualified.'' Some examples of disqualifications that

could affect food stamp eligibility are disqualifications imposed on

Title IV-A participants for failing to have a child immunized or

failing to cooperate.

The Department is proposing that current assistance

disqualifications be applied to food stamp applicants as well as

recipients who are already receiving food stamp benefits. For example,

if a disqualification was imposed by another assistance program while

the person was participating in that program and it is still in effect

when the person initially applies for food stamps, the disqualification

may be imposed at the time of the initial food stamp application.

Section 6(i)(2) or the Act, 7 U.S.C. 2015(i)(2), as amended by

Section 819 of PRWORA, provides that if a disqualification is imposed

on a ``member'' of a household for failure to perform a required

action, the State agency may impose the same disqualification on the

``member'' of the household under the Food Stamp Program. In some

assistance programs, if an individual fails to take a required action

the whole assistance unit may be disqualified. Some State agencies are

interpreting Section 6(i)(2), which allows use of TANF rules and

procedures for TANF cases to allow the whole assistance unit to be

disqualified for food stamp purposes when the whole assistance unit is

disqualified for TANF purposes. The Department interprets the reference

to TANF rules and procedures as authorizing the same notice and hearing

requirements and disqualifying the person for the same months that the

person is disqualified under the TANF program in a retrospective

eligibility system. For example, if TANF counts all of the person's

income while disqualified, then all of the person's income could be

counted for food stamp purposes. The Department expects these

procedures to vary from State to State. The Department does not believe

that the intent was to disqualify the whole household even in TANF

situations. Therefore, the Department is proposing that for food stamp

purposes only the individual can be disqualified, rather than the whole

household.

A number of States have expressed concern about indefinite and

permanent disqualification periods. In some cases the person may become

ineligible for some other reason, may not reapply for the other

assistance program, or may move from the State where the penalty was

imposed to another State that does not have the same requirement so the

person is unable to comply and have the disqualification lifted. Also,

some assistance programs only keep records for a certain time period

and they may be unable to provide the food stamp office with the

information necessary to disqualify the person. The Department believes

that a stricter penalty should not be imposed for a failure to perform

a required action in another program than the penalty imposed for the

first time a person commits an intentional food stamp program

violation. In most cases the penalty for the first food stamp violation

is a 1-year disqualification. Therefore, if the other assistance

program assigns a disqualification period of longer than one year or an

indefinite or permanent disqualification period, the Department

proposes that that the maximum length of the food stamp

disqualification in these circumstances be no more than one year.

Further, the Department proposes that the State agency be allowed to

shorten the food stamp disqualification period if the person becomes

ineligible to participate in the other program for some other reason

during that one-year time period.

Although Section 6(i)(2) of the Act does not specify if the food

stamp disqualification period has to be concurrent with the

disqualification period imposed by the other assistance program, the

Department proposes that the food stamp disqualification period be

limited to the same period of time to the extent possible. It may not

be possible to impose the full disqualification period because of the

requirements for a food stamp advance notice of adverse action in

accordance with 7 CFR 273.13. If the State agency does not have time to

apply the full disqualification concurrently because of notice of

adverse action requirements, the Department is proposing that the

[[Page 70929]]

State agency only apply the portion that may be imposed concurrently.

When a household member is disqualified from food stamp eligibility

under Section 6(a)(2), the Department is proposing all of the member's

resources be counted as they will continue to be available to the

household. However, since this is an optional provision, we are

proposing that State agencies be allowed the option of counting all or

a prorated share of the income and deductible expenses of the

disqualified individual. State agencies would not have the option of

excluding the person's resources or all of their income because this

could be to the household's advantage and could conflict with the

previously discussed prohibition on increasing food stamp benefits as a

result of a decrease in assistance benefits due to failure to take a

required action.

Section 6(i)(3) of the Act, as amended by Section 819 of PRWORA,

provides that if a member of a household has been disqualified under

the comparable treatment for disqualification provision, the member of

the household so disqualified may, after the disqualification period

has expired, apply for food stamp benefits and shall be treated as a

new applicant, except that a prior disqualification under Section 6(d)

of the Act regarding work requirement disqualifications shall be

considered in determining eligibility. This places the burden of

initiating an action once the disqualification period is over on the

household. The Department interprets the language regarding prior work

disqualifications to mean that if a person had a food stamp work

violation in a prior year and has a current food stamp work violation

for which an overlapping comparable disqualification is being served,

the next food stamp work violation, if any, will be considered the

third violation. If there are two or more pending disqualifications,

the Department proposes that the State agency impose them concurrently

but keep track of the number of food stamp work violations for purposes

of determining if a subsequent food stamp violation is the second or

third violation. For example, if an individual is disqualified in June

for a food stamp work violation and in June and July for a TANF

violation, after being disqualified for June and July the person will

not have to serve an additional disqualification period and the food

stamp work disqualification will have been considered served. If the

whole household is disqualified for June for a food stamp violation and

one member is disqualified for June and July for a comparable

disqualification, the household would be disqualified for June and the

individual would be disqualified for July.

The Department is proposing to add a new provision to 7 CFR

273.1(b)(2)(x) to encompass those individuals disqualified from the

Food Stamp Program based on a disqualification in another assistance

program and to add a new section 7 CFR 273.11(l) to explain the

requirements as discussed above.

Section 819 of PRWORA provides that State agencies electing to

impose comparable disqualifications, must specify in their State Plan

of Operations the guidelines the State agency will be using in carrying

out this provision. The State Plan discussion should include the

programs and disqualifications the State has selected, how information

will be obtained, time restrictions set for indefinite and permanent

disqualification, TANF procedures that will be used, and how the income

of the person will be counted. Accordingly, the Department is proposing

to add a new section 7 CFR 272.2(d)(1)(xiii) to require that the

comparable disqualification procedures be included in the State Plan of

Operation for those States electing to implement such Food Stamp

Program disqualifications.

School Attendance--7 CFR 273.11(m) and (n)

Section 103 of PRWORA amended Part A of Title IV of the Social

Security Act, 42 U.S.C. 601, et seq., to provide for block grants to

States for TANF. The title of section 404 is ``Use of Grants.'' Section

404(i) provides that a State to which a grant is made under section 403

shall not be prohibited from sanctioning a family that includes an

adult who has received assistance under the Food Stamp Program, if such

adult fails to ensure that the minor dependent children of such adult

attend school as required by the law of the State in which the minor

children reside. Section 404(j) provides that a State to which a grant

is made under section 403 shall not be prohibited from sanctioning a

family that includes an adult who is older than age 20 and younger than

age 51 and who has received assistance under the Food Stamp Program, if

such adult does not have, or is not working toward attaining, a

secondary school diploma or its recognized equivalent unless such adult

has been determined in the judgment of medical, psychiatric, or other

appropriate professionals to lack the requisite capacity to

successfully complete a course of study that would lead to a secondary

school diploma or its recognized equivalent.

We have had several questions as to whether or not these provisions

provide for separate food stamp sanctions in addition to TANF

sanctions. The Department has interpreted these provisions to pertain

to TANF sanctions only. States may not apply a separate food stamp

sanction to households based on Sections 404(i) and (j). The Department

has come to this conclusion based on the fact that these provisions are

in Title IV of the Social Security Act and are limited to States that

receive a TANF block grant. By inserting Sections 404(i) and 404(j)

into the TANF statute, Congress implied that only TANF benefits would

be affected. In addition, the paragraph only references adults

receiving food stamps; it does not reference food stamp sanctions.

Finally, Congress made no cross-references to this provision in the

Food Stamp Act.

If a food stamp household's TANF benefits are reduced under these

provisions, however, States must apply Section 8(d) of the Act, as

amended by 829 of PRWORA. Section 8(d) of the Act prevents an increase

in food stamp benefits if a member of a household fails to comply with

another Federal, State, or local means-tested benefit program. In

addition, States may apply Section 6 of the Act, as amended by section

819 of PRWORA. Section 6 of the Act provides that if a disqualification

is imposed on a member of a food stamp household for a failure of the

member to perform an action required under a Federal, State, or local

law relating to a means-tested public assistance program the State

agency may impose the same disqualification on the member of the

household under the Food Stamp Program.

Because we have had questions concerning these provisions, we are

including a reference to them in 7 CFR 273.11, Action on Households

with Special Circumstances. We clarify that these are TANF only

sanctions. However, we also clarify that, in cases where TANF benefits

are reduced or a member is disqualified under these provisions, States

must prevent an increase in food stamp benefits and, in addition, they

may reduce food stamp benefits by up to 25 percent and impose a

comparable disqualification on the member for food stamp purposes.

Overlapping Penalties

In addition to prohibiting an increase in food stamp benefits as

the result of fraud or failure to take a required action in an

assistance program, the State agency may opt to impose a comparable

disqualification period. The Department is proposing to include this

provision in the new paragraph 7 CFR 273.11(l). In some cases a failure

to take a required action may also involve a failure to

[[Page 70930]]

ensure that a minor child attend school or failure to work toward

attaining a secondary school diploma. In such latter cases, the

Department is proposing that the State agency choose under which

provision to handle the cases. These options are included in the

proposed new paragraphs 7 CFR 273.11(m) and (n).

Denial of Benefits for Drug-Related Felony Convictions--7 CFR 273.11(o)

Section 115(a) of PRWORA, 42 U.S.C. 862a, provides that an

individual convicted of a felony under either Federal State law which

has as an element the possession, use, or distribution of a controlled

substance (as defined in Section 102(6) of the Controlled Substances

Act; 21 U.S.C. 802(c)) shall not be eligible for benefits under the

Food Stamp Program. Section 115(b)(2) further provides that, although

such an individual shall not be considered a member of a household for

the purpose of determining benefits, the individual's income and

resources shall be considered available to the household.

Section 115(d) of PRWORA gives States the option, through specific

legislation enacted (by the State legislature) after the date of

enactment of PRWORA, to exempt any or all individuals residing in the

State from the application of subsection (a), i.e. ineligibility based

on conviction for a drug-related felony. A State, through legislation,

may also limit the period of ineligibility of individuals convicted of

drug-related felonies.

Section 115(c) of PRWORA mandates that State's electing to enforce

Section 115(a) must indicate in writing during the certification

process whether the applicant, or a member of the applicant's

household, has been convicted of drug-related felonies.

Pursuant to Section 116 of PRWORA, Section 115 became generally

effective July 1, 1997, unless the State opts out of its provisions as

described above. However, Section 116 further provides that in States

that submit plans under TANF, Section 115 is effective when the plan is

submitted to the Department of Health and Human Services (DHHS).

Section 115 specifically provides that in no event can an individual be

disqualified under this provision for a conviction for a crime

occurring before August 22, 1996, the date of PRWORA's enactment.

To implement the provisions of Section 115 of the PRWORA, the

Department is proposing to amend 7 CFR 273.11 by adding a new paragraph

(o), which would specifically provide that an individual convicted

(under Federal or State law) of a felony which has as an element the

possession, use, or distribution of a controlled substance (as defined

in Section 102(6) of the Controlled Substances Act) shall not be

considered a household member for Food Stamp Program purposes. The new

paragraph will further provide that the exclusion would not apply if

the State had elected to opt out of enforcing Section 115 through

legislation, or would be in effect for a limited time if the State had

elected to limit the length of the period of disqualification.

Consistent with the statutory language, the Department is also

proposing to amend 7 CFR 273.11(c)(1) to provide that the income and

resources of individuals ineligible to participate in the program as

the result of convictions for drug-related felonies shall be considered

available to the household for purposes of determining eligibility and

benefit levels. The Department is also proposing a technical amendment

to 7 CFR 273.1(b), which will specify that individuals convicted of

drug-related felonies shall not be considered household members.

We have no discretion to mitigate this provision. However, those

States that would like to pursue option of opting out or limiting the

disqualification period can contact States that have already done so

for information. The following 19 States have either opted out or

limited the disqualification time period: Louisiana, Oklahoma,

Illinois, Michigan, Minnesota, Ohio, Wisconsin, New Hampshire, New

York, Vermont, New Jersey, North Carolina, Colorado, Iowa, Utah,

Hawaii, Nevada, Oregon and Washington.

Disqualification of Fleeing Felons

Section 821 of PRWORA amended Section 6 of the Act, 7 U.S.C. 2015,

by adding a new paragraph (k) which disqualifies individuals who are

fleeing to avoid prosecution or custody for a crime, or an attempt to

commit a crime, that would be classified as a felony (or in the State

of a New Jersey, a high misdemeanor) from participating in the Food

Stamp Program. Section 6(k) of the Act as amended by Section 821 of

PRWORA, also disqualifies individuals who are violating a condition of

probation or parole under a Federal or State law.

To implement these disqualification provisions, the Department is

proposing to amend 7 CFR 273.1(b)(2), which defines the criteria for

inclusion in eligible food stamp households, by adding a new paragraph

(xi) specifically providing that individuals who are fleeing to avoid

prosecution or custody for a crime, or an attempt to commit a crime,

that would be classified as a felony (or in the State of a New Jersey,

a high misdemeanor), or who are violating a condition of probation or

parole under a Federal or State law, are not to be considered members

of households otherwise eligible to participate in the Program. The

Department is also proposing to add a similar provision through a new

paragraph (p) at 7 CFR 273.11.

The Department is proposing to mandate that State agencies verify

the status of applicants to determine if they are subject to the

provisions of 6(k) of the Act. In doing so the Department is also

proposing to provide State agencies with broad discretion regarding the

method of verifying an applicant's status since there are significant

differences between the administrative structures of State agencies

which may affect the nature of relationships between welfare agencies

and the State or local law enforcement agencies which would provide

verification of the applicants' status. One possible method of

verification would be to establish a system under which State or local

law enforcement agencies would periodically provide lists of

individuals subject to disqualification under this section for matching

by welfare agencies to determine if any applicants are subject to

disqualification. The lists would most likely be in the form of

computer tapes. Depending on the State agency's administrative

structure, the matching could be conducted at either the State or local

level. Another alternative would be to include a notice in the

application indicating that the agency may match data with law

enforcement agencies for the purposes of verification. The Department

wishes to emphasize that this is one possible method of verification

and that it is not our intent to exclude other systems or methods which

may be established by State agencies. The Department is suggesting

that, prior to providing comments in response to this proposed

rulemaking, State agencies consult with State and local law enforcement

agencies to determine the most effective method of verifying the status

of applicants to determine whether they are subject to the provisions

of Section 6(k) of the Act. To implement this provision the Department

is proposing to add a new paragraph 273.2(f)(1)(ix).

Although it is the clear intent of both the statute and this

proposed rule that Food Stamp Program participants who are subject to

disqualification under Section 6(k) of the Act be terminated from the

program as quickly as possible, State agencies may continue to allow

such individuals to participate if so

[[Page 70931]]

requested by local, State or Federal law enforcement authorities and if

such continued participation would expedite or assist in the

apprehension of individuals fleeing to avoid prosecution or custody.

Cooperation With Law Enforcement Authorities

Section 837 of PRWORA amended Section 11(e)(8) of the Act, 7 U.S.C.

2020(e)(8), to require a State agency to furnish, upon request, the

address, social security number, and, if available, photograph to any

Federal, State, or local law enforcement officer of any household

member. The officer must furnish the State agency with the name of the

member and notify the State agency that the member is fleeing to avoid

prosecution or custody for a crime, or an attempt to commit a crime,

that would be classified as a felony (or in the State of a New Jersey,

a high misdemeanor). This provision also applies if the member is

violating a condition of probation or parole imposed under a Federal or

State law, or has information necessary for the officer to conduct an

official duty related to the above-described individuals. The statute

further specifies that the request must be made in the proper exercise

of an official duty.

The Department is proposing to add a new paragraph (vii) to 7 CFR

272.1(c)(1) to specifically require State agencies to disclose to

Federal, State or local law enforcement officers the address, social

security number, and, if available, photograph of any household member

if the officer furnishes the State agency with the name of the member

and notifies the State agency that the member is fleeing to avoid

prosecution or custody for a crime, or an attempt to commit a crime,

that would be classified as a felony (or in the State of a New Jersey,

a high misdemeanor), or is violating a condition of probation or parole

imposed under a Federal or State law. The new paragraph also requires

disclosure if the information regarding the household member is

necessary for the officer to conduct an official duty related to the

above-described individuals. The Department would like to clarify that

the policy of 7 CFR 272.1(C), and will continue to be, that if an

eligibility worker (EW) believes that a Food Stamp Program applicant or

member of a participating household may be fleeing to avoid prosecution

or custody for a felony the EW shall notify the appropriate law

enforcement agency.

The Department would like to clarify that this provision in no way

requires State agencies to collect photo IDs as a condition of

eligibility. Though the regulations at 7 CFR 273.2(f) require State

agencies to verify identity, they are very clear that any document

which reasonably establishes the applicant's identity must be accepted.

The State agency may not impose a requirement for a specific type of

document such as a photo ID.

The Department would like to clarify that section 837 of PRWORA

does not supersede the confidentiality provisions of section 11(e)(8)

of the Act. State agencies may, however, verify the status of

applicants or household members to determine if they are subject to

disqualification under Section 6(k) of the Act.

Cooperation With Child Support Agencies--7 CFR 273.11(q) and (r)

Section 822 of PRWORA amended Section 6 of the Act, 7 U.S.C. 2015,

by adding a new paragraph (l). This section gives a State agency the

option to require cooperation with a Child Support Enforcement Program

established under title IV, part D of the Social Security Act, 42

U.S.C. 651, et seq., as a condition of eligibility. Separate provisions

address custodial and noncustodial parents. For custodial parents, the

requirement can be waived for good cause, but there is no good cause

exception for noncustodial (including putative) parents. The provisions

for custodial and noncustodial parents are discussed separately below.

Custodial Parent--7 CFR 273.11(q)

Section 6(e) of the Act, as amended by Section 822 of PRWORA,

allows State agencies to disqualify a natural or adoptive parent or

other individual (collectively referred to as ``the individual'') who

is living with and exercising parental control over a child under the

age of 18 if the custodial parent does not cooperate with the State

agency in establishing paternity and collecting child support without

good cause. The provision requires the Department, in consultation with

the Department of Health and Human Services (DHHS), to develop

standards for what will constitute ``good cause'' for failure of a

custodial parent to cooperate. There are two separate issues to

address: what constitutes cooperation, and what constitutes good cause.

The Department has discussed the issues of good cause and cooperation

with the DHHS staff responsible for TANF and the staff responsible for

Child Support Enforcement. In defining cooperation of the custodial

parent, the Department has based its proposal on wording already used

by DHHS. Therefore, under proposed food stamp regulations the

individual will be required to cooperate with the State agency in

identifying and locating the absent parent of the child(ren);

establishing the paternity of a child born out of wedlock; obtaining

support payments for the child or the individual and the child; and

obtaining any other payments or property due the child or the

individual and the child. We also list actions that are relevant to or

necessary for, achieving cooperation: appearing at an office of the

State or local agency or the child support agency to provide verbal or

written information; appearing as a witness at judicial or other

hearings or proceedings; supplying information in establishing

paternity; and paying to the child support agency any support payments

received from the absent father.

The Department is also proposing to adopt DHHS' provisions

concerning good cause exceptions. We list the circumstances under which

cooperation may be against the best interests of the child and would,

therefore, not be required. Establishing paternity, securing support,

or identifying and providing information could result in physical or

emotional harm to the child or the parent or caretaker relative which

could be determined good cause for not cooperating.

The concepts of cooperation with child support enforcement

agencies, and good cause for failure to cooperate, are new to the Food

Stamp Program, but DHHS has used them for some time and States are

familiar with them. The Department believes that relying on DHHS'

expertise in these areas is initially the most practical and

administratively efficient alternative. The Department is proposing to

add a new paragraph 7 CFR 273.11(q) to codify this provision.

The Department is proposing that the State agency make both the

cooperation and good cause determinations. If the State agency

determines that the custodial parent has not cooperated without good

cause, then that individual (and not the entire household) would be

ineligible to participate in the Food Stamp Program. The statutory

language did not authorize the disqualification of the entire

household, and so the Department is proposing that the disqualification

be limited to the offending custodial parent. The Department is

proposing that the disqualification period is over as soon as it is

determined that the individual is cooperating with the child support

agency. The State agency must have procedures in place to re-qualify an

individual once cooperation has been

[[Page 70932]]

established. We realize that many States already have such procedures

in place. Therefore, at this time, we would like to solicit comments on

those systems already in use.

The law did not specify how the income and resources of the

disqualified person should be treated for the remaining household

members. Since this is an optional provision, the Department is

proposing that the State agency count all of the individual's

resources, but to give State agencies the option to count all or a pro

rata share of his income. The Department is proposing to amend 7 CFR

273.11(c) and 273.1(b)(2)(xii) to reflect this policy.

Section 6(l) of the Act prohibits the payment of a fee or other

cost for services provided under a Part D, Title IV, Child Support

Enforcement Program, and so the Department is proposing to prohibit the

charging of such fees or costs.

The Department is proposing that if a State agency wants to use the

option of disqualifying an individual who refuses to cooperate without

good cause, the option must be included in its State Plan of Operation.

Accordingly, the Department is proposing to add a new section 7 CFR

272.2(d)(1)(xiv) to reflect the above-discussed requirements.

Noncustodial Parent--7 CFR 273.11(r)

Section 822 of PRWORA also amended Section 6 of the Act by adding

subsection (m) to give State agencies the option to disqualify the

noncustodial parent who refuses to cooperate in establishing the

paternity of a child and provide support for the child. This provision

requires the Department, in consultation with DHHS, to develop

standards for what will constitute cooperation on the part of the

noncustodial parent. As mentioned previously, the Department has met

with DHHS staff in developing this proposed rule, and we are proposing

to adopt DHHS' definition of cooperation as the most practical

approach, given DHHS' experience with the issue.

The Department is proposing that refusal to cooperate occurs if the

noncustodial parent refuses to appear for an interview; refuses to

furnish requested documentation; refuses DNA testing; or fails to make

payments to the Child Support Enforcement agency. As with the custodial

parent, if the State agency determines after contacting the Child

Support Enforcement agency that the noncustodial parent has refused to

cooperate, then that individual (and not the entire household) would be

ineligible to participate in the Food Stamp Program. The statutory

language did not authorize the disqualification of the entire

household, and so the Department is proposing that the disqualification

be limited to the individual. Consistent with the Department's proposed

treatment for disqualified custodial parents, it would be the option of

the State Agency to determine whether part or all of the income and the

resources of the individual refusing to cooperate would be considered

available to the rest of the noncustodial parent's household under this

proposal. In addition, the Department is proposing that the

disqualification period is over as soon as it is determined that the

individual is cooperating with the child support agency. The State

agency must have procedures in place to re-qualify an individual once

cooperation has been established. We realize that many States already

have such procedures in place. Therefore, at this time, we would like

to solicit comments on those systems already in use.

Section 6(m) of the Act does not permit a fee or other cost to be

charged the household for services of the Child Support Enforcement

agency, and the Department's proposal includes this prohibition. To

implement this provision, the Department is proposing to add a new

paragraph 7 CFR 273.11(r).

Section 6 of the Act, as amended by Section 22 of PRWORA also

requires the State agency to provide safeguards to restrict the use of

information collected by the State agency to purposes for which the

information is collected. The Department believes that this is an area

in which the State agency should have flexibility to establish the

specific safeguards. The Department is therefore proposing only to

require that safeguards be in place.

The Department is proposing that if a State agency wants to use the

option of disqualifying the noncustodial parent who refuses to

cooperate, this option must be included in its State Plan of Operation.

The Department is also proposing to add a new section 7 CFR

272.2(d)(1)(xiv) to require that the States that elect to implement

this provision include these safeguards in their Plan of Operation.

Disqualification for Child Support Arrears--7 CFR 273.11(s)

Section 823 of the PRWORA amended section 6 of the Act by adding

subsection (n) to give State agencies the option to disqualify a member

of any household during any month that the individual is delinquent in

any payment due under a court order for the support of the individual's

child. The provision also specifies that if a court is allowing the

individual to delay payment or the individual is complying with a

payment plan approved by a court or the Child Support Enforcement

agency, the individual will not be disqualified.

As with the disqualification for failure to cooperate with child

support enforcement officials, the Department is proposing that the

disqualification for child support arrears apply to the offending

individual and not to the entire household. The statutory language does

not authorize the disqualification of the entire household. However,

similar to the handling of the child support cooperation provision

concerning the custodial and noncustodial parents, the Department is

proposing that it will be the option of the State agency to determine

whether part or all of the income and resources of a disqualified

individual be considered available to the rest of that person's

household. The Department is proposing to add a new section 7 CFR

273.11(s) to implement the disqualification, and is proposing to amend

7 CFR 273.11(c)(2) and (3), and 273.1(b) to incorporate its proposed

treatment of the disqualified individual's income and resources.

Section 6(n) of the Act specifies that the individual will be

disqualified during any month that the individual is delinquent in any

payment due. Because an individual could always pay his or her child

support toward the end of the month, it will be impossible to know when

an individual is delinquent in time to disqualify him or her for that

month. Therefore, under the Department's proposal the State agency must

establish a claim against the household, in accordance with the

regulations at 7 CFR 273.18, for any month for which it later discovers

that the individual was delinquent and should have been disqualified.

The Department is proposing that if a State agency wants to use the

option of disqualification for child support arrears, this option must

be included in its Plan of Operation. Accordingly, the Department is

proposing to include this section in the new 7 CFR 272.2(d)(1)(xiv) to

reflect the addition.

7 CFR 273.16--Disqualification for Intentional Program Violation

The current regulations at 7 CFR 273.16 outline the procedures

involved with Intentional Program Violations (IPVs) and IPV-related

disqualifications. This proposed rule extensively revises this section

of the regulations. The increased and additional disqualification

penalties brought about by sections 813, 814 and 820 of PRWORA that

need to be reflected in 7 CFR 273.16 are included in this rule. In

[[Page 70933]]

addition, this proposed rule contains a change necessitated by a court

action on the imposition of disqualification periods. Clarification is

also being proposed for a number of issues, including the definition of

an IPV. Lastly, as part of an effort to streamline the regulatory

requirements and to increase State agency flexibility in the area, the

Department is proposing to remove prescriptive language and some

requirements in many discretionary areas concerning IPVs and the IPV

disqualification process.

General Administrative Responsibility--7 CFR 273.16(a)

The current regulations at 7 CFR 273.16(a) specify a State agency's

responsibility for investigating and disqualifying individuals who

commit IPVs. As part of the regulatory reorganization and streamlining

effort, the Department is proposing in this rule to eliminate much of

the prescriptive language under this section. Under this proposal at

Sec. 273.16(a), each State agency would be responsible for: (1)

effectively and efficiently investigating suspected IPVs; (2)

establishing a system for determining whether an individual has

committed an IPV; and (3) when appropriate, disqualifying the

individual from participation in the Program.

Definition of an IPV--7 CFR 273.16(c)

The current regulations at 7 CFR 273.16(c) provide a definition for

an IPV. The Department is proposing to make three changes to this

paragraph. The first change would eliminate the reference that this

definition applies only to an administrative disqualification hearing

(ADH). The Department believes that this definition should also apply

to the other bases for IPV determination, which are a signed ADH

waiver, a court finding, and a signed disqualification consent

agreement. The second change would update the definition by eliminating

the reference to ATPs (authorization to participate documents). In its

place, the Department is proposing to use the term ``authorization

card'' (which is defined in section 3(b) of the Act (7 U.S.C.

2012(b)(3))) and ``reusable documents used as part of an automated

benefit delivery system'' (access device). This definition was updated

to specifically provide for the acquisition and use of electronic

benefit transfer (EBT) cards. For the third change, the proposed rule

would specifically include trafficking in this definition. This is

being provided for clarification purposes only and does not constitute

a change in policy. The Department has historically viewed (and

continues to view) any type of trafficking as an IPV offense. Finally,

as part of the regulatory reorganization, this paragraph would be

incorporated into Sec. 273.16(b) in the proposed rule.

PRWORA Section 813--Doubled Penalties for Violating FSP Rules

As reflected in the current regulations at 7 CFR 273.16(b), a

graduated system for IPV disqualification penalties exists. Under this

system, an individual found to have committed an IPV not related to the

trading of coupons for firearms, ammunition, explosives or controlled

substances would receive a disqualification for: (a) 6 months for the

first offense; (b) 12 months for the second offense; and (c) a

permanent disqualification for the third offense. In addition, an

individual convicted of a controlled substance-related IPV would

receive a 12 month disqualification for the first offense and a

permanent disqualification for the second offense.

Section 813 of PRWORA amended section 6(b)(1) of the Act (7 U.S.C.

Sec. 2105(b)(1)) to increase the penalties twofold for the non-

permanent offenses. Specifically, unless the offense falls under a

specific category requiring a more stringent penalty, Section 6(b)(1)

now requires that an individual be disqualified for one year for a

first finding, and for two years for a second finding of IPV. The

penalty for a third finding of IPV, permanent disqualification, would

remain the same. For convictions involving the trading of controlled

substances for coupons, Section 813 of PRWORA requires that an

individual be disqualified for two years for the first offense.

Accordingly, the Department is proposing to reflect these legislative

changes in Sec. 273.16(c) of this rule.

PRWORA Section 814--Disqualification of Individuals Convicted of

Trafficking $500 or More

Section 814 of PRWORA amended Section 6(b)(1)(iii)of the Act to

introduce more stringent disqualification penalties for those

individuals who traffic food coupons. Specifically, under the new

legislation, individuals would be permanently disqualified from FSP

participation if they are convicted of a trafficking offense of $500 or

more. Individuals trafficking under $500 would continue to be subject

to the same penalties as other IPVs. Accordingly, the Department is

proposing to reflect this legislative change in Sec. 273.16(c) of this

rule.

The statutory language provides for this penalty to take effect

where there is an actual conviction. Hence, the increased trafficking

penalty would be applied when there is such a finding by a court of

appropriate jurisdiction. In addition, the Department considered

whether this increased trafficking penalty applies to violations

settled by deferred adjudication. While the Department recognizes that

the statutory language speaks of a conviction, and not of a finding or

a settlement, the Department believes that this increased penalty for

trafficking may be applied in cases of deferred adjudication.

Trafficking for an amount greater than $500 is undeniably a serious

offense. As such, if the case warrants the formal involvement or

inclusion of a Federal, state or local court process, then the State

agency should apply the increased penalty. Therefore, it is the

Department's intent in this proposed rule to allow the inclusion of

this increased penalty in signed deferred adjudications in exactly the

same manner that the existing penalties are currently included in such

agreements. Accordingly, this proposal is reflected in Sec. 273.16(c)

in this rule.

As opposed to deferred adjudication, since there is no formal

involvement or inclusion of a Federal, state or local court process in

the ADH system, the Department is proposing that the increased penalty

not apply to IPVs determined as a result of an ADH or a signed waiver

to the right to an ADH.

When PRWORA was originally published, some State agencies inquired

as to whether Section 6(b)(1)(iii)'s $500 benchmark refers to a single

trafficking transaction or to the cumulative amount trafficked. The

Department maintains a long-standing policy that a series of related

infractions may embody a single IPV. Therefore, if the cumulative

amount of the related infractions making up the IPV is greater than

$500, then the individual would be subject to the increased trafficking

penalty.

PRWORA Section 820--Ten Year Disqualification for Duplicate

Participation

Under certain circumstances, PRWORA lengthened the penalty

associated with fraudulent receipt of multiple benefits. This provision

is in section 820 of PRWORA, which amended section 6 of the Act (7

U.S.C. Sec. 2015) by adding a new paragraph ``(j)''. Paragraph (j)

provides that ``[a]n individual shall be ineligible to participate in

the food stamp program as a member of any household for a 10-year

period if the individual is found by a State agency to have made, or is

convicted in a Federal or State court of having made, a fraudulent

statement or representation with respect to the identity or place of

residence of the

[[Page 70934]]

individual in order to receive multiple benefits simultaneously under

the food stamp program.''

The increase in the penalty for fraudulent representation of

identity or residence to obtain multiple duplicate benefits reflected

in the quoted statutory language is clearly intended to be an

additional deterrence against this kind of fraud. However, the 10-year

period of disqualification associated with this provision does not

apply to all cases of duplicate participation (that is, where an

individual receives food stamps as a member of more than one

household). There are three criteria to consider in determining whether

this disqualification provision applies. First, the individual must

have been found by a State agency or court of committing a certain

unlawful act. Second, the unlawful act is ``having made, a fraudulent

statement or representation with respect to the identity or place of

residence of the individual.'' Finally, the purpose of committing this

misrepresentation must have been to receive multiple benefits under the

FSP. Section 820 does not apply unless all three of these criteria are

present.

The Department considered whether it is necessary for the

individual to be successful in obtaining multiple benefits in order for

this provision to apply. The title of section 820 of PRWORA is

``Disqualification for Receipt of Multiple Food Stamp Benefits'',

however, the language of the text is directed at the penalty for the

intentional act of misrepresenting information in order to receive

multiple benefits. The Department has found nothing in the text or

legislative history to suggest that Congress intended the penalty to be

more or less severe depending upon whether the individual was

successful in obtaining the multiple benefits. Currently, when a

household is identified as having one or more members who are already

receiving benefits as a member of another household or in another

locality, State agencies are required to investigate the cause of the

duplicate participation and when appropriate, pursue the matter through

the claims collection and/or IPV referral process (7 CFR 272.4(f)(3)).

A State agency is required to take the IPV referral route when it

believes it can prove an individual's intent to abuse the FSP by

providing false or misleading information to receive benefits for which

the individual is not entitled. Some State agencies pursue an IPV

regardless of whether the individual was successful in being certified

to receive the additional benefits. The Department believes that this

approach is consistent with an aggressive anti-fraud program and

strongly encourages those State agencies which pursue attempted (as

well as successful) fraud to continue to operate under their current

policy. The Department therefore proposes to make clear that the

coverage of Section 6(j) provision also applies to individuals who

attempt to receive multiple benefits by misrepresenting their identity

or residence.

Appropriate Penalty Determination

Prior to the enactment of PRWORA and the implementation of its

predecessor (the Mickey Leland Childhood Hunger Relief Act (Pub. L.

103-66) (Leland Act)), only one set of disqualification penalties

existed for IPVs. This set of disqualification penalties, as discussed

earlier in this preamble, applied to all IPVs and began with a

relatively short disqualification period for the first finding of IPV

and culminated with a permanent disqualification for the third IPV

finding. The Leland Act and PRWORA changed this by introducing varying

disqualification penalties for certain types of IPV-related offenses.

Pursuant to this rule making, disqualification periods based on the

particular offense and finding would be:

IPV-Related Disqualification Penalties

----------------------------------------------------------------------------------------------------------------

Disqualification type First finding Second finding Third finding

----------------------------------------------------------------------------------------------------------------

``Any'' IPV........................... 12 months.............. 24 months.............. Permanent

Controlled substances related......... 24 months.............. Permanent.............. See below \1\

Firearms, ammunition, and explosives Permanent.............. See below \1\.......... See below \1\

related.

Duplicate participation related....... 10 years............... 10 years \2\........... Permanent (same as

``any'' IPV) \2\

Trafficking $500 or greater related... Permanent.............. See below \1\.......... See below \1\

----------------------------------------------------------------------------------------------------------------

\1\ Since the prior offense (i.e., first or second) results in a permanent disqualification, the same penalty

(permanent disqualification) would be applied if, for some inexplicable reason, the individual was not already

permanently disqualified when the subsequent finding occurred.

\2\ PRWORA does not specify a graduated increase in penalty length for subsequent findings. The appropriate

disqualification period lengths for these subsequent occurrences are discussed in detail below.

The Department believes that clarification is needed to determine

which penalty takes precedence when an IPV also is included in one of

the four special disqualification categories listed above. For example,

an individual who has already committed two IPVs may be found to have

committed a third IPV and the third offense is for duplicate

participation. In this situation, the State agency would need to

determine whether the appropriate disqualification would be for 10

years (for duplicate participation) or permanently (as is the penalty

for all third IPVs). The Department believes that it is appropriate to

permanently disqualify the individual. The progressive penalty

structure and policies are key components of program integrity.

Progressive penalties deter repeat offenders by providing a framework

for clear and consistent consequences for their actions. Although

certain offenses are dealt with more severely than others, the FSA

provides for a maximum of three offenses. The penalty for a third

offense, permanent disqualification, is the ultimate redress for repeat

violators. The Department believes that it would be contrary to the Act

to apply a shorter penalty or to allow a repeat offender a fourth

opportunity to intentionally violate the Program simply because of the

nature of the offense. Further, the 10-year penalty for duplicate

participation and the 2-year penalty for the first finding involving

controlled substances are intended to deter these more serious types of

offenses. Thus, the Department intends that the 10-year and 2-year

penalties be imposed whenever they apply, except when an earlier

disqualification penalty was either as serious, more serious or the

current violation is the individual's third. A permanent or higher

disqualification would always take precedence over a lesser penalty.

These decisions are reflected in Sec. 273.16(c) in this proposed rule.

[[Page 70935]]

Applicability of PRWORA Disqualification Penalties

As previously discussed, sections 813, 814 and 820 of PRWORA

amended Section 6 of the Act to either introduce a new or increase an

existing disqualification penalty for committing an IPV. Questions have

arisen as to whether these new penalties should be applied to all ADHs,

court hearings, etc., held subsequent to enactment of the law

(regardless of when the actual offense occurred) or only to those cases

in which the actual offense occurred subsequent to State agency

implementation of the new legislation.

PRWORA set the date of enactment, August 22, 1996, as the effective

date for these provisions of the law. As a result, State agencies

needed to use their own discretion as to whether the new or increased

penalties should apply to offenses that occurred prior to State agency

implementation of the new legislation. It is therefore impractical for

the Department to introduce standards on an issue for which action has

already been taken.

Imposition of Disqualification Penalties--7 CFR 273.16(a), (e), (f),

(g) and (h)

The current regulations concerning the imposition of

disqualification periods specify that, if the individual is not

certified to participate in the FSP at the time the disqualification

period is to begin, the period shall take effect immediately after the

individual applies for and is determined eligible for benefits. A court

finding (Garcia v. Concannon and Espy, 67 F. 3d 256 (1995)) in the

Ninth Circuit has found that this interpretation is not consistent with

Section 6(b)(1) of the Act (7 U.S.C. 2015(b)(1)). The Court found that

an individual should be disqualified from the FSP immediately even

though he/she may not be eligible to participate. The Department does

not concur with this finding. However, to ensure nationwide consistency

in this policy, the Department is proposing in this rule to require

State agencies to impose a disqualification period for all IPV-related

disqualifications as soon as administratively possible, regardless of

eligibility. Under this proposal, a State agency would be required to

begin the disqualification no later than the second month which follows

the date the individual receives written notice of the

disqualification.

Notification to Applicant Households--7 CFR 273.16(d)

The current regulations at 7 CFR 273.16(d) specify that the

household shall be notified in writing of the disqualification

penalties when it applies for benefits. The Department is proposing, in

Sec. 273.16(c)(10) of this rule, to retain this requirement. However,

much of the prescriptive language would be removed.

Bases for Disqualification--7 CFR 273.16(e) through (h)

Current regulations at 7 CFR 273.16 allow any one of the following

four means as a basis for disqualification: (1) An ADH finding; (2) a

signed waiver to the right of an ADH; (3) a finding by a court; and (4)

a signed disqualification consent agreement for cases of deferred

adjudication. The Department is proposing to retain these four bases

with some streamlining revisions which are discussed elsewhere in this

preamble. In addition, as part of the regulatory reorganization, these

bases, currently found in 7 CFR 273.16(e), (f), (g) and (h), would be

consolidated into one paragraph at Sec. 273.16(d).

Administrative Disqualification Hearings--7 CFR 273.16(e)

The current regulations at 7 CFR 273.16(e)(1) discuss consolidating

an ADH with a fair hearing. The consolidation of the two hearings would

remain an option in Sec. 273.16(d)(1) in the proposed rule. In

addition, the Department, in an effort to increase State agency

flexibility, is proposing to remove prescriptive language from the

current paragraph.

The current regulations at 7 CFR 273.16(e)(2) discuss specific

procedures for conducting the ADH. The Department is proposing in this

rule to allow those State agencies which conduct ADHs to establish

their own procedures. However, a time frame for reaching and notifying

an individual of a hearing decision would still be maintained. The

current time frame is within 90 days after the individual is notified

that the hearing has been scheduled. Under this proposal, the time

frame would be within 180 days after the discovery of the suspected

violation or within 60 days of the date of the hearing, whichever is

sooner.

The current regulations at 7 CFR 273.16(e)(3) discuss the advance

notice of the ADH. The Department is proposing to remove redundant and

overly prescriptive language. The remaining language would be found in

Sec. 273.16(d)(1) in this proposed rule.

The current regulations at 7 CFR 273.16(e)(4), which discuss the

scheduling of the hearing and what constitutes timely good cause for

not attending the hearing, would be removed under the proposed rule.

This would provide a State agency with more flexibility and the ability

to determine its own good cause criteria, if any. In addition, all but

the first sentence of paragraph 7 CFR 273.16(e)(5) would be eliminated.

The paragraph containing the remaining language stating that a pending

ADH or a pending ADH decision would not affect an individual or

household's right to participate in the FSP would be contained in

Sec. 273.16(d) of the proposed rule.

The current regulations at 7 CFR 273.16(e)(6) state that the

determination of an IPV shall be based on clear and convincing

evidence. The Department is not proposing to make any change to this

evidentiary standard. However, this paragraph would be moved to

Sec. 273.16(b) in the proposed rule.

The Department is proposing in this rule to eliminate 7 CFR

273.16(e)(7). This paragraph requires the hearing authority decision to

specify the reasons, identify the supporting evidence, identify the

pertinent regulation, and respond to reasoned arguments. The Department

believes that these requirements need not be specified as they are

required by due process.

The current regulations at 7 CFR 273.16(e)(8) discuss the

imposition of disqualification penalties and specify the individual's

limited appeal rights of an ADH decision. The imposition of the

disqualification periods is addressed in depth elsewhere in this

preamble. The Department is proposing in this rule to reorganize the

paragraph containing the individual's appeal rights of an ADH decision

(7 CFR 273.16(e)(8)(ii)) into Sec. 273.16(d)(1).

The current regulations at 7 CFR 273.16(e)(9) discuss notification

of the ADH decision and related matters. The Department is proposing

only to include language from this paragraph stating that the household

is to receive written notification of the ADH decision and the

impending disqualification.

The current regulations at 7 CFR 273.16(e)(10) discuss local level

ADHs. This proposal at Sec. 273.16(d)(1) would still allow local-level

hearings. The Department is proposing to delete prescriptive language

from this section. In addition, the Department would like to clarify

that either the affected individual or local agency may appeal a local-

level decision to a State-level hearing. This is reflected in

Sec. 273.16(d)(1)(vii) of this proposed rule.

Waived ADH--7 CFR 273.16(f)

The current introductory text at 7 CFR 273.16(f) provides the State

agencies with the option of establishing procedures for allowing an

accused

[[Page 70936]]

individual to waive his/her right to an ADH. The Department is not

proposing any significant policy revisions in this area. However, under

this proposal, the introductory text would be designated as its own

paragraph at Sec. 273.16(d)(2).

Current regulations at 7 CFR 273.16(f)(1) discuss procedures for

advance notification. The proposed rule, in Sec. 273.16(d)(2), would

require that each State agency develop its own waiver form and provide

the individual written notification. In addition, the waiver/written

notification must clearly inform the affected individual that, once the

form is signed, he/she would be disqualified from the Program.

The current regulations at 7 CFR 273.16(f)(2) discuss the

imposition of disqualification penalties and the individual's limited

appeal rights after he/she signs the waiver. The imposition of the

disqualification periods is addressed in depth elsewhere in this

preamble. The Department is proposing in this rule to reorganize the

paragraph containing the individual's limited appeal rights of an ADH

decision (7 CFR 273.16(f)(2)(ii) into Sec. 273.16(d)(2)).

The current regulations at 7 CFR 273.16(f)(3) discuss notification

of disqualification and related matters. The Department is proposing

only to include a statement that the individual is to receive written

notification of the impending disqualification. This revision would be

incorporated into Sec. 273.16(c)(11) in this proposed rule.

The current regulations at 7 CFR 273.16(f)(4) discuss waivers of a

local level hearing. As part of the streamlining effort, the Department

is proposing to remove this paragraph to increase State agency

flexibility. However, a State agency would still be able to have a

local-level waiver process under the proposed rule.

Court Referrals--7 CFR 273.16(g)

The current regulations at 7 CFR 273.16(g) discuss referring

suspected IPV cases for prosecution by a court of appropriate

jurisdiction. The Department, as part of its effort to increase State

agency flexibility, is proposing to remove prescriptive language from

this paragraph. The proposed rule, in Sec. 273.16(d)(3), would provide

for court referrals as a mechanism for determining an IPV. The only

requirement, in addition to a State agency establishing its own

procedures, would be the actions the State agency must take when the

court fails to impose a disqualification period. This requirement,

proposed in Sec. 273.16(c)(7), would be the same as current FNS policy.

Deferred Adjudication--7 CFR 273.16(h)

The introductory text at 7 CFR 273.16(h) in the current regulations

provides a State agency with the option to establish procedures for

allowing an accused individual to sign a disqualification consent

agreement for cases of deferred adjudication. The Department is not

proposing any significant policy revisions in this area. However, the

introductory text, as part of the regulatory reorganization effort,

would be condensed and designated as its own paragraph under

Sec. 273.16(d)(4) in this rule.

The current regulations at 7 CFR 273.16(h)(1) discuss a number of

requirements pertaining to deferred adjudication, such as notification

and the disqualification consent agreement. The Department is proposing

in this rule to remove prescriptive language from the regulations. The

proposed rule, at Sec. 273.16(d)(4), would require the State agency to

develop its own disqualification agreement form and provide the

individual written notification of the consequences surrounding

deferred adjudication.

The current regulations at 7 CFR 273.16(h)(2) discuss the

imposition of disqualification penalties. This is addressed in detail

elsewhere in this preamble and would be consolidated into

Sec. 273.16(c)(11) in the proposed rule.

The current regulations at 7 CFR 273.16(h)(3) discuss notifying the

individual of the impending disqualification and related matters

including notifying the household and initiating collection action. The

Department is proposing only to include a statement that the household

is to receive written notification of the impending disqualification.

This revision would be incorporated into Sec. 273.16(d)(1) in this

proposed rule.

Conducting Both Court Referrals and ADHs

The current regulations at 7 CFR 273.16(a)(1) prohibit a State

agency from initiating an ADH against an individual, ``. . . whose case

is currently being referred for prosecution or subsequent to any action

taken against the accused individual by the prosecutor or court of

appropriate jurisdiction. . . .'' However, the current regulations at 7

CFR 273.16(e)(3)(iii)(H) appear to contradict this paragraph by stating

that an advance notice of an ADH shall contain language indicating that

``. . . the hearing does not preclude the State or Federal Government

from prosecuting the household member for intentional Program violation

in a civil or criminal court action.'' In an effort to eliminate this

inconsistency while allowing greater State agency flexibility and

increasing the likelihood that violators would receive the appropriate

disqualification, the Department is proposing to change the policy at 7

CFR 273.16(a)(1).

The proposal, found in Sec. 273.16(d)(5) of this rule, would

specify that a State agency may: (1) simultaneously begin and/or

conduct an ADH and court action and may proceed with a court action

whether or not a violation has been determined by the ADH; and (2)

conduct and make a determination based on an ADH for any case for which

the court has not already returned a verdict. The Department feels that

allowing the transpiration of both activities would not constitute

double jeopardy since one action is administrative while the other

action is judicial.

Reporting Requirements--7 CFR 273.16(i)

State agencies are required by 7 CFR 273.16(i) to report

information about disqualified individuals to FNS. Outside of changes

necessitated by the Garcia v. Concannon and Espy decision and the

Departmental streamlining effort, policy interpretations and changes in

this area will be addressed and proposed under a separate rulemaking.

Reversed Disqualifications--7 CFR 273.16(j)

Current regulations at 7 CFR 273.16(j) discuss actions to be taken

by the State agency on reversed disqualifications. The Department is

not proposing any change in this area other than to redesignate the

paragraph as Sec. 273.16(f).

7 CFR 273.25--Time Limit for Able-Bodied Adults Without Dependents

Section 824 of P RWORA amended Section 6 of the Act by adding a new

section (o) that limits the receipt of food stamps for certain able-

bodied adults to three months in a three-year period unless the

individual is working or participating in a work program 20 hours per

week, or is participating in a workfare program. Individuals can regain

eligibility, and may receive an additional three months of food stamps

while not working in certain circumstances. Amended Section 6(o)

creates some exceptions, and receiving food stamps while exempt does

not count towards an individual's time limit. In recognition that it

may be difficult for individuals to find work in depressed labor

markets, the statute authorizes waivers for individuals in areas in

which the unemployment rate

[[Page 70937]]

is above ten percent, or where there is a lack of sufficient jobs.

The time limit is complex and raises many issues. In order to

simplify the analysis, the preamble and regulatory language are

organized as follows: general rule, exceptions, regaining and

maintaining eligibility, eligibility for the second three countable

months, and waivers. In developing this proposed rule, the Department

has attempted to balance the competing goals of ensuring consistent

national application of these requirements, and providing State

agencies with appropriate implementation flexibility, to implement this

provision. The Department is especially interested in comments on this

balance, as well as on the practical implications of the proposed

rule's provisions. Because there are many requirements that apply only

to the time limit, the Department is proposing to codify this provision

in a new regulatory section--7 CFR 273.25.

General Rule

Under the time limit of Section 6(o), individuals are not eligible

to participate in the Food Stamp Program as a member of any household

if the individual received food stamps for more than three countable

months during any three-year period. Individuals may regain eligibility

or may be eligible for up to three additional countable months under

certain circumstances. ``Countable months'' are months during which an

individual receives food stamps and is not either exempt, covered by a

waiver, working 20 hours per week, participating in and complying with

a work program 20 hours per week (as determined by the State agency),

or participating in and complying with a workfare program. As discussed

below in the context of measuring and tracking the months, the

Department is proposing that only full benefit months be considered

``countable months.'' The provision also specifies that nothing in

Section 824 makes an individual eligible for food stamps if he or she

is not otherwise eligible for benefits. Therefore, in the discussion

below, a statement that someone is ``eligible'' simply means that the

person is eligible under the time limit. The person must still be

otherwise eligible for the Food Stamp Program in order to receive

benefits.

This general rule raises four fundamental issues: what will satisfy

the work requirement, how will the time (three months and three years)

be tracked, what will count as receiving food stamps, and what are the

other administrative requirements (e.g., verification and reporting)

that are triggered by this provision? These issues are discussed below.

The exceptions are discussed separately.

Satisfying the Work Requirement

Section 6(o) limits the receipt of food stamps for certain able-

bodied adults who are not either: working 20 hours per week (averaged

monthly), participating in and complying with a work program 20 hours

per week (as determined by the State agency), or participating in and

complying with a workfare program. These options (working or

participating in a work program 20 hours per week or participating in

workfare) will be referred to as the ``work requirement.'' As long as

an individual is satisfying the work requirement (or is exempt or

covered by a waiver), the individual's participation is not counted,

and the individual can participate as long as he or she is otherwise

eligible. Issues involving the ways that an individual can satisfy the

work requirement are discussed separately below.

The first issue that arises in this context is what is meant by

``20 hours a week averaged monthly?'' The plain meaning of ``averaged

monthly'' means averaged over the month. The month of February has 28

days, or four weeks. In this case, 20 hours a week averaged monthly

would be 80 hours (20 x 4 = 80). However, the month of March has 31

days, or approximately 4 and a half weeks. If we were to take into

consideration the additional 3 days, twenty hours a week averaged

monthly would equal more than 80 hours. The Department believes that it

would be administratively difficult for the State agency to calculate a

different number of hours for each month according to how many days

there are in the pertinent month. Also, the Department believes that it

should not require an individual to work more than 80 hours to maintain

eligibility while to regain eligibility an individual only has to work

80 hours in a 30 day period. Therefore, the Department is proposing

that ``20 hours a week averaged monthly'' mean 80 hours a month.

An individual can satisfy the work requirement by ``working'' 20

hours or more per week, averaged monthly. One issue that arises in this

context is whether the ``work'' has to be paid work (or paid at any

particular level). Neither the statutory language nor the legislative

history requires that individuals receive money in exchange for work in

order to satisfy this requirement. An individual who is being paid in

kind (for example, someone managing an apartment complex in exchange

for free rent), is clearly ``working,'' and should be considered as

such. But the question about whether unpaid work will qualify as

``working'' is less clear. The Department recognizes that it may be

difficult for individuals with few job skills or no significant job

history to obtain paid employment. In some cases, volunteer work may be

the only way for these individuals to obtain needed job skills and a

job history to make them more employable. Allowing volunteer work to

count as work raises some concerns about verification and the potential

for abuse. In order to balance these competing concerns, the Department

is proposing a definition of ``work'' that specifically includes unpaid

work under standards established by the State agency. It is the

Department's intent that volunteer work will be allowed to satisfy the

work requirement, and that State agencies shall verify it the same way

they verify paid work. Work in exchange for goods or services (``in

kind'' work) is not to be considered ``unpaid'' work for these

purposes.

Another issue that arises in this context is how much work will

satisfy the work requirement, and how to handle situations in which

someone normally meeting the work requirement falls somewhat short. The

statutory language requires someone to work ``20 hours per week,

averaged monthly.'' However, the Department recognizes that there may

be cases in which an individual usually works 20 hours per week, but

because of an emergency or other ``good cause,'' the individual falls

short of the required number of hours. In part-time employment, workers

are often not able to make up for lost hours. Someone who misses a day

of work (or even a few hours) because of a family illness or other

emergency could lose food stamp benefits for the month if he or she

could not make up the hours. (As discussed later, someone who misses

work because of his or her own illness may be exempt under the

``medically certified as physically or mentally unfit for employment''

exception.)

The Department believes that such a narrow interpretation of the

requirement that an individual work 20 hours per week ignores the

realities of working life and goes beyond the intent of the provision

to require able-bodied adults to work in order to receive food stamp

benefits. In addition, participants who are satisfying the work

requirement by participating in a work program are already covered by a

good cause provision in 7 CFR 273.7(m). A policy that includes some

practical flexibility for individuals who are participating in a work

program, but not for those who

[[Page 70938]]

are working could discourage individuals from electing to satisfy the

requirement by working. Therefore, the Department is proposing that

someone who has missed work for good cause (as determined by the State

agency) will be considered to be satisfying the work requirement as

long as the absence from work is temporary, and the individual retains

his or her job. Beyond these basic limits, the Department believes that

State agencies are in a better position to identify situations where

the good cause provision would be appropriate. The Department intends

for this good cause provision to be used sparingly, and only in

circumstances under which the individual would normally be granted

leave or time off, or when the absence would not jeopardize the

individual's employment status. The Department believes that this

proposal reasonably balances the reality of working life with Congress'

intent to make food stamp recipients who can work, work.

The second way an individual can satisfy the work requirement is by

participating in and complying with a work program for 20 hours per

week, as determined by the State agency. (The definition of ``work

program'' makes reference to the Job Training Partnership Act (JTPA)

(29 U.S.C. 1501, et seq). However, the Section 199A(c) of the Workforce

Investment Act (WIA) of 1998 (Pub. L. 105-220) provides that all

references in any other provision of law to a provision of the Job

Training Partnership Act shall be deemed to refer to the Workforce

Investment Act of 1998. Therefore in this preamble and in the

regulation text any reference to JTPA has been replaced by WIA). ``Work

program'' is defined by the statute to mean a program under the

Workforce Investment Act of 1998 (29 U.S.C. 1501, et seq.)); a program

under section 236 of the Trade Act of 1974 (19 U.S.C. 2296); or an

employment and training program, other than a job search or job search

training program, operated or supervised by a State or political

subdivision of the State that meets standards approved by the Governor

of the State. As specified in the statutory language, the State agency

may determine whether and when an individual has participated in and

complied with a work program for 20 hours per week. Existing

regulations at 7 CFR 273.7 address issues that arise in this context

(e.g., whether the individual has ``good cause'' for failing to meet

the requirements of the work program), and the Department does not

propose to change any of those regulations in this rulemaking. Only

three issues are raised that are unique to this time limit: whether a

program must be approved by FNS in order to qualify as a ``work

program,'' whether an individual can combine work and participation in

a work program to meet the 20 hour per week requirement, and whether

the employment and training program can contain job search as a

subsidiary component.

The statutory language does not require that a qualifying work

program be an FNS Employment and Training (E&T) program under 7 CFR

273.7(f). Section 6(o) only requires that a qualifying work program not

be a job search or job search training program, and that it meet

standards approved by the Governor of the State. While the Department

believes that it would be appropriate for FNS to review programs that

States are proposing to operate as work programs, it also believes it

would be administratively burdensome to do so, especially since FNS

already reviews and approves FNS E&T programs through the state plan

process. Therefore, the Department is not proposing that these plans be

reviewed and approved by FNS, but is cautioning State agencies to

scrutinize these programs carefully so that they are not later

determined through the quality control process not to meet the

requirements of the statute.

The second issue raised in this context is whether the work program

can contain job search as a subsidiary component. The Department

realizes that there are work programs that may include some job search

activity and it does not want the minor activity (such as job search)

to invalidate the bulk of the component (such as education). Therefore,

the Department is proposing that a qualifying work program may contain

job search as a subsidiary component but that the program must

emphasize the component that satisfies the work requirement and that

the job search activity be less than half of the requirement.

With respect to the question of whether work and work program hours

can be combined to meet the 20 hour per week requirement, the

Department believes allowing an individual to combine these hours would

be consistent with the intent of the provision. The Department has

therefore proposed to allow a combination of work and participation in

a work program to satisfy the 20 hour per week requirement.

Measuring and Tracking Time

Within the context of the general rule that an individual can

participate for three (countable) months during a three year period,

there are two time elements that must be tracked: the three months of

participation, and the three-year period. (In order to regain

eligibility, the statute introduces a third measure of time--``a 30-day

period''--which will be discussed later.) The Department believes that

State agencies should have maximum flexibility to measure and track

these time periods, and so is proposing only a few requirements in this

area.

With respect to the basic three months of participation, the

statute provides specifically that the months do not have to be

consecutive months. An individual could use one ``countable'' month, go

off of the Food Stamp Program for a few months (those months are not

counted because the individual is not receiving food stamps), and then

use another countable month. This example holds true even if the

individual was not participating because of a sanction. For example, if

an individual uses one countable month, and then gets a job that he or

she quits without good cause, he or she is ineligible under the

voluntary quit provision of 7 CFR 273.7(n) for six months. Six months

later, after the sanction has expired, the individual can use another

countable month if he or she is otherwise eligible. An individual could

also use one countable month, work 20 hours per week for a few months

(those months are not counted because the individual is satisfying the

work requirement), and then use another countable month. The fact that

the first three countable months do not have to be consecutive is

significant because the statutory language requires that the second

three countable months be consecutive. (Eligibility for the second

three countable months is discussed below.)

The only other substantial issue to address in the context of

measuring the basic three months of participation is whether to count

partial months. To count a partial month of benefits as a ``month''

would penalize individuals who applied toward the end of the month. It

could also result in someone getting substantially less than three full

benefit months if the individual comes on and off the Food Stamp

Program as he or she gets work and then loses it. Counting only full

benefit months will also be much easier for States to administer.

Therefore, as mentioned earlier, the Department is proposing that

partial months, i.e., months in which benefits were prorated, not be

considered ``countable months.'' These proposals involve measuring the

basic three countable months; State agencies

[[Page 70939]]

can track these months as they deem appropriate.

The second time period that must be measured (and possibly tracked)

is the three-year period. Section 6(o) of the Act provides that

individuals generally are limited to receiving food stamps for three

countable months in a three-year period. Issues that arise in this

context are whether the period will be ``rolling'' or ``fixed,'' when

the period starts, and what the three-year period cannot include. The

Department believes that a clarification will help explain the issues

and options discussed below. Conceptually, the three-year period is a

background against which an individual's countable months are measured.

Therefore, unlike the ``countable months,'' which start and stop as

appropriate, the three-year period is a continuous period. Within the

few parameters discussed below, the Department proposes to give State

agencies maximum flexibility to track the three-year period as they

deem appropriate, given their choices as to how to measure the period,

their computer systems' tracking abilities, etc.

The language of Section 6(o) provides that an individual is

ineligible if, ``during the preceding 36-month period,'' (emphasis

added), the individual participates for more than three countable

months. There are two basic ways a State agency could measure or track

the three-year period: as a ``fixed'' or a ``rolling'' period. A fixed

period has a definite start and stop date; it starts on a given date,

runs continuously for three years, stops exactly three years later, and

then a new fixed three-year period starts. Under a fixed period

approach, when a new three-year period starts, a participant's slate is

``wiped clean,'' and he or she can be eligible for another three

countable months. A rolling period does not have definite start or stop

dates; using a rolling period, the eligibility worker always ``looks

back'' three years from the date of application (but not beyond the

notification date or November 22, 1996, as discussed below) and keeps

looking back three years each ensuing month. Under the rolling period

approach, a participant must wait three years between a total of three

countable months.

The following example illustrates the different approaches. The

State agency notified recipients of this provision on November 22, 1996

that it is using a fixed three-year period beginning November 22, 1996

and ending November 21, 1999. Mary, a food stamp recipient, gave birth

to a baby in November, 1996. Mary's three-year clock started on

November 22, but because she had a baby she was exempt from the time

limit. On April 30, 1999, Mary's baby (now almost three years old)

moves in with the baby's father, causing Mary to lose her exemption

from this provision. Mary reports this change to her eligibility

worker, and because she is no longer exempt, not covered by a waiver,

and not satisfying the work requirement, she uses up her first three

countable months in May, June, and July, 1999. In August, 1999, Mary

gets a job and works 80 hours, regaining her eligibility as explained

below. When Mary loses her job at the end of August and returns to her

food stamp office on September 1, she gets her second three countable

months (also explained below) for September, October, and November,

1999. On December 1, 1999, Mary has still not found a job. Under a

fixed approach, Mary's three-year period ran from November 22, 1996 to

November 21, 1999. On November 22, 1999, Mary started a new three-year

period. If she is otherwise eligible, Mary can receive three countable

months of food stamps for December (1999), January, and February, 2000.

Under a rolling approach, on December 1, 1999, Mary's eligibility

worker will look back three years to December 1, 1996 to see if Mary

has used all of her allowable countable months. Mary's worker will find

all of Mary's allowable countable months from May through November,

1999, so Mary will not be eligible until she becomes exempt, covered by

a waiver, or until three years have elapsed between a total of three

countable months. Assuming she is not exempt, covered by a waiver, or

satisfying the work requirement, Mary will begin to be eligible in

June, 2002, as the May, 1999 countable month drops off of the rolling

period.

How can Mary be eligible in June 2002 when in fact Mary's

eligibility worker will look back and see that Mary still has used five

countable months (May dropped off the calendar, but Mary still received

food stamps in June and July, and September, October and November

1999)? The law says, ``no individual shall be eligible * * * if, during

the preceding 36-month period, the individual received food stamp

benefits for not less than 3 months (consecutive or otherwise)'' during

which he did not fulfill the work requirement, was exempt or covered by

a waiver. The law also provides individuals the opportunity to receive

an additional 3 months of food stamps if he regains eligibility by

working 80 hours in a 30 day period. Therefore, the law actually

provides an individual the opportunity to receive a total of 6 months

of food stamps in a three-year period if the two periods are

interrupted by a period of work. Given this ambiguity, the Department

believes it is appropriate to allow the State agency to issue benefits

to an individual who has used up his/her countable months, three years

after receiving his/her first countable months benefits. Therefore,

under the rolling period, as the first 3 (consecutive or otherwise)

month period falls off the calendar, the individual can become eligible

for another 3 (consecutive or otherwise) month period. In the example

above, Mary will become eligible for her first three (consecutive or

otherwise) months again in June 2002 as May 1999 falls off the

calendar. She will only become eligible for her second three

(consecutive) months in October 2002 as September 1999 falls off the

calendar.

Under either the fixed or rolling approach, the outcome is the

same; individuals who are not either exempt, covered by a waiver, or

satisfying the work requirement will not receive food stamps for more

than three months (six, under circumstances discussed below) in three

years. Neither the statutory language nor the legislative history

specifically address how to measure or track the three-year period. If

the statutory language had referred to the preceding ``36 months,''

rather than the ``36-month period'' as it did, there would be no

ambiguity, and State agencies could only measure the period as a

``rolling'' period. Allowing the use of a ``fixed'' period will not

increase Program costs, it would be consistent with the provision's

intent, and would be easier for many State agencies to administer.

Given these factors and the ambiguity in the statutory language and

legislative history, the Department believes it is appropriate to allow

State agencies to choose either approach, and is proposing to do so.

However, under the proposal, the State agency must apply its procedures

consistently, and make sure that participants who are similarly

situated are treated the same.

Under a fixed approach, there are a few areas where the State

agency will have additional flexibility. The State agency can elect to

administer separate three-year periods for individuals, or it can use

the same three-year period for everyone. If the State uses individual-

based periods, for non-exempt individuals, the periods would start on

the date of application (but, as discussed below, not before the

earlier of November 22, 1996, or the date the state notified recipients

of this provision). For someone who is exempt from the provision, the

State agency can

[[Page 70940]]

either start the three-year period at the date of application (so that

the period runs during the period of exemption) or on the date the

individual's exemption is removed. The State could also choose to use

the same three-year period for everyone. As in the example above, the

State had the same three year clock for everyone, regardless of when

they applied or lost their exemption, which ran from November 22, 1996

through November 21, 1999. On November 22, 1999, everyone's slate is

wiped clean and a new three year clock begins. Under either approach,

non-exempt individuals who are not satisfying the work requirement will

only get food stamps for three months in three years. The Department

believes that the added flexibility of determining how to track a fixed

three-year period will be useful to State agencies, who can develop

tracking policies to suit their computer systems, other welfare reform

initiatives, etc.

There is one important limitation on the three-year period which

applies under both a fixed and a rolling approach. The statute mandates

that the three-year period shall not include any time before the date

the State notifies recipients of the application of this provision (the

``notification date''), or November 22, 1996 (the date that was three

months after the date of enactment of the PRWORA), whichever is

earlier. Therefore, if the State agency chooses a fixed three-year

period, the start date cannot be before November 22, 1996, or the

notification date, whichever was earlier. If the State agency elects to

use a rolling three-year period, it cannot look back beyond either

November 22, 1996, or the notification date, whichever was earlier. The

proposed rule includes this limitation.

What Counts as ``Receiving'' Food Stamps?

Section 6(o) of the Act, subsequent to amendment by Section 824 of

PRWORA makes individuals ineligible for food stamps if during the

preceding 36-month period, the individual ``received food stamp

benefits'' for more than three months during which time the individual

was not either exempt, covered under a waiver, or satisfying the Food

Stamp Program work requirement. An individual's participation in a

particular month does not count toward the time limit unless he or she

actually received some food stamps during that month. The statute does

not require that the individual actually use his or her benefits in

order for a month to be counted; it just requires that he or she

receive them. The only significant issue that the Department must

address in this context is how to handle a situation in which an

individual was certified in error. As discussed below, the Department

is proposing that when an individual is certified in error, the stamps

be considered to have been ``received'' unless the erroneous benefits

have been repaid.

In a situation in which an individual was mistakenly certified

(e.g., a work sanction was incorrectly applied), the clear language of

the statute would require that the month be counted because the

individual received food stamps. Once a claim is established and the

overissued benefits are repaid in full, counting the erroneously issued

benefits as having been received would be inappropriate. A policy that

ignores the actual receipt of food stamps based on the possibility that

they might be repaid would be inconsistent with the intent of the

provision and the statutory language. A policy that did not count

erroneously issued benefits as having been ``received'' would be

inconsistent with efforts to discourage clients from misrepresenting

their circumstances. However, the Department recognizes the

administrative complexity involved, and is therefore proposing that the

State agencies may opt to treat benefits erroneously received as having

been ``received'' unless or until they are repaid in full.

Administrative Requirements

The statutory language and legislative history are silent as to

verification and reporting requirements, and how the income and

resources of someone made ineligible by this provision should be

handled for the rest of the household.

The statutory language of Section 6(o) is very specific as to the

number of hours required to be worked in order to satisfy the work

requirement (``20 hours per week, averaged monthly''). Because

eligibility can hinge on the actual number of hours worked, the

Department believes that it is necessary to verify an individual's work

hours when that individual is meeting the requirement of this provision

by working. None of the current mandatory verification items at 7 CFR

273.2(f)(1) would capture all work situations. Income must be verified,

so paid work hours would probably be captured as part of the

verification of income. But the Department is proposing to allow unpaid

or ``in-kind'' work to satisfy the work requirement, and those items

would not be captured in the verification of a household's income.

Because the accurate assessment of an individual's work hours is

crucial (both at initial certification and recertification) to the

eligibility determination, the Department is proposing to make

verification of work hours mandatory at certification and

recertification for certain individuals who are subject to the time

limit. The State agency should have information as to an individual's

work hours if the individual is satisfying the work requirement by

participating in a state-operated work or workfare program. Therefore,

additional verification of work hours will not be necessary in those

circumstances. However, the State agency may not have information about

an individual's work hours if the individual is participating in a work

or workfare program that is not operated by the State agency. The

Department is therefore proposing that the verification requirement

apply to individuals subject to the food stamp time limit who are

satisfying the work requirement by working, or by combining work and

work program participation, or by participating in a work or workfare

program that is not operated or supervised by the State agency.

One other verification issue is raised when an individual indicates

that he/she has participated in the food stamp program in another

State. Though no national database exists now that would capture the

number of ``countable months'' each participant has used, the

Department is in the process of exploring the feasibility of designing

one. In the meantime, the Department believes that it is not overly

burdensome to require State agencies to check other States for the

number of ``countable months'' an individual has used when the

individual indicates that he/she has participated in those other

states. Such a policy is consistent with Food Stamp procedures that

require State agencies to verify anything that appears

``questionable.'' The Department does not believe, however, that it

would make sense to require the new State to perform an independent

analysis to determine how many countable months the individual has

used. Therefore, the Department is proposing to allow a State agency to

rely on another State agency's assertion as to how many countable

months an individual has used. Verification of the number of countable

months an individual has used in another State is not necessary at

recertification, so the Department is proposing to make it mandatory

only at initial certification (and when there is an indication that the

individual participated in another state). To codify these policies,

the Department is proposing to amend regulations at 7 CFR 273.2(f)(1)

and 273.2(f)(8) to add

[[Page 70941]]

the new mandatory verification requirements.

As discussed above, the number of hours an individual works is

crucial to the eligibility determination for most individuals subject

to the time limit and satisfying the work requirement. None of the

current requirements for reporting changes that occur during a

certification period would necessarily capture changes in an

individual's work hours. Because the Department is proposing to allow

unpaid or ``in-kind'' work to satisfy the work requirement, reporting

changes in income will not necessarily capture changes in the number of

work hours. As part of its flexible approach to change reporting, the

Department published a proposed rule on December 17, 1996 (61 FR

66233), which would provide State agencies with options for requiring

changes to be reported. One of the options would require a change

report when the number of hours worked changed more than 5 hours a

week, and the change is expected to continue for more than a month.

Even this requirement will not capture a small change in the number of

hours worked, which could affect eligibility. The Department believes

that because hours worked are so critical to the eligibility

determination for individuals subject to the time limit, it must

require that changes in work hours be reported. Therefore, the

Department is proposing to require that individuals subject to the time

limit must report changes in work hours that bring the individual below

20 hours per week, averaged monthly. The Department is proposing to

amend 7 CFR 273.12(a)(1) accordingly.

Another reporting issue is whether or not a household must report

when an able-bodied adult without dependents obtains or loses

employment, thus becoming eligible or ineligible. For example, if an

individual is ineligible because he/she has used up his/her countable

months, and then gets a job and works 80 hours in a 30 day period, he/

she becomes eligible. The regulations at 273.12(a) require that a

household report changes in the source or amount of gross monthly

income and changes in household composition such as the addition or

loss of a household member. Policy memo 86-7 further addresses this

issue and states that households are required to report changes during

the certification period which affect the nonhousehold status of

members, for example, when a full-time student quits college or

increases part-time employment from 15 hours to 20 hours a week, or a

household member marries a live-in attendant or begins to purchase and

prepare food with a nonhousehold member. A household must report these

changes because they may affect the household's eligibility or

allotment. Therefore, as the regulations and current policy already

address this issue, the Department is not proposing additional

household composition reporting requirements specific to able-bodied

adult without dependents.

Another issue that arises in this context is how to handle an

unreported job. Section 6(o)(2)(A) of the Act provides that an

individual's participation counts toward the time limit during times

when the individual ``did not work 20 hours or more per week.* * *'' If

an individual was working 20 hours per week but did not report the job,

the individual may have received

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