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

SUMMARY: The Food and Nutrition Service (FNS) proposes to amend its

regulations to implement several work-related provisions of the

Personal Responsibility and Work Opportunity Reconciliation Act of 1996

(PRWORA). This proposed rule makes significant changes to current work

rules, including requirements for the Food Stamp Employment and

Training Program and the optional workfare program. These changes

streamline Food Stamp Program work requirements, simplify the

disqualification requirements for failure to comply with work rules,

and provide greater flexibility for States to operate their employment

and training programs.

DATES: Send your comments to reach us by February 22, 2000.

ADDRESSES: You may mail comments to Food Stamp Program, Food and

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

22302, attention Program Design Branch. You may FAX comments to us at

(703) 305-2486, attention Program Design Branch. You may also hand-

deliver comments to us on the 7th floor at the above address. For

information about filing comments electronically, see the SUPPLEMENTARY

INFORMATION section under Electronic access and filing address.

FOR FURTHER INFORMATION CONTACT: John Knaus, Chief, Program Design

Branch, Program Development Division, Food Stamp Program, FNS, at (703)

305-2519. Individuals who use a telecommunications device for the deaf

(TDD) may call the Federal Information Relay Service at 1-800-877-8339

between 8:00 a.m. and 4:00 p.m. Eastern time, Monday through Friday,

excluding Federal holidays.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures

Electronic Access and Filing Address

You may view and download an electronic version of this proposed

rule at http://www.fns.usda.gov/fsp/. You may also comment via the

Internet at the same address. Please include ``Attention: RIN 0584-

AC45'' and your name and return address in your Internet message. If

you do not receive a confirmation from the system that we have received

your message, contact us directly at (703) 305-2519.

Written Comments

Written comments on the proposed rule should be specific, should be

confined to issues pertinent to the proposed rule, and should explain

the reason for any change you recommend. Where possible, you should

reference the specific section of paragraph of the proposed rule you

are addressing. We may not consider or include in the Administrative

Record for the final rule comments that we receive after the close of

the comment period or comments delivered to an address other than those

listed above. We will make all comments, including names, street

addresses, and other contact information of respondents, available for

public inspection on the 7th floor, 3101 Park Center Drive, Alexandria,

Virginia 22302 between 8:30 a.m. and 5:00 p.m. Eastern time, Monday

through Friday, excluding Federal holidays. We will also post all

comments on the Internet at http://www.usda.gov/fsp at the end of the

comment period. Individual respondents may request confidentiality. If

you wish to request that we consider withholding your name, street

address, or other contact information from public review or from

disclosure under the Freedom of Information Act, you must state this

prominently at the beginning of your comment. We will honor requests

for confidentiality on a case-by-case basis to the extent allowed by

law. We will make available for public inspection in their entirety all

submissions from organizations or businesses, and from individuals

identifying themselves as representatives or officials of organizations

or businesses.

II. Background

Since 1971, able-bodied food stamp recipients have been required to

register for work and accept suitable jobs as a condition for receiving

benefits. In 1982 Congress passed legislation creating workfare, a food

stamp work-for-benefits program. States and local jurisdictions were

afforded the option of requiring most able-bodied recipients to work in

public service jobs in exchange for their food stamps. In 1987 States

implemented the Food Stamp Employment and Training (E&T) Program,

designed to improve food stamp recipients' ability to gain employment,

increase earnings, and reduce their dependency on public assistance.

In August 1996, President Clinton signed into law ``The Personal

Responsibility and Work Opportunity Reconciliation Act of 1996,'' or

PRWORA (Pub. L. 104-193). PRWORA--popularly known as ``welfare

reform''--contained several Food Stamp Program (FSP) work-related

provisions that strengthen work requirements, promote personal

responsibility, streamline E&T requirements, and greatly increase State

flexibility.

Section 815 of PRWORA revised FSP work requirements by amending

section 6(d)(1) of the Food Stamp Act of 1977 (the Act) (7 U.S.C.

2015(d)(1)). It dealt with disqualification for noncompliance with FSP

work requirements. It added to the list of ineligible individuals at

section 6(d)(1)(A) those who: (1) refuse without good cause to provide

sufficient information to allow a determination of their employment

status or job availability; (2) voluntarily and without good cause quit

their job (previously limited to heads of households); (3) voluntarily

and without good cause reduce their work effort and, after the

reduction, work less than 30 hours a week; and (4) fail to comply with

the workfare rules in section 20 of the Act (7 U.S.C. 2029). Section

815 deleted, as an explicit good cause for refusal to accept an offer

of employment, the lack of adequate child care for children above age

five and under age 12. The provision removed the requirement that the

entire food stamp household be disqualified if the head of the

household is disqualified. Instead, it provided States the option to

disqualify the entire household if the head of the household is

disqualified. Section 815 established new mandatory minimum

disqualification periods for individuals who fail to comply with work

requirements. It required the Secretary of Agriculture (the Secretary)

to determine the meanings of good cause, voluntary quit, and reduction

of work effort. It required States to determine: (1) the meaning of

other terms related to FSP work requirements; (2) the procedures for

determining compliance with work requirements; and (3) whether an

individual is actually complying with work requirements. Lastly,

Section 815 specified that States may not use meanings, procedures, or

determinations that are less restrictive on food stamp recipients than

comparable meanings, procedures, or determinations are on recipients of

assistance under State programs funded

[[Page 72197]]

under part A of title IV of the Social Security Act (title IV-A), 42

U.S.C. 601 et seq.

Section 817 of PRWORA amended Act language at section 6(d)(4)

relating to the E&T Program. It streamlined administrative requirements

for States by: (1) requiring E&T components to be delivered through a

statewide workforce development system, if available; (2) expanding the

existing State option to apply E&T requirements to applicants

(previously limited to job search); (3) eliminating the requirement

that job search components be comparable with those operated under

title IV-A; (4) removing requirements for work experience components

that mandated they serve a useful public service and that they use a

participant's prior training, experience, and skills; (5) removing

specific Federal rules as to States' authority to exempt categories of

individuals and individuals from E&T requirements, as well as removing

the requirement that such exemptions be evaluated no less often than at

each certification or recertification of the affected food stamp case;

(6) deleting outdated language concerning applications by States to

provide priority service to volunteer E&T participants; (7) removing

the requirement that States permit, to the greatest practicable extent,

work registrants exempted from E&T, as well as E&T participants who

comply with or are in the process of complying with program

requirements, to participate in E&T, while maintaining the States'

option to permit voluntary participation; (8) removing the requirement

for conciliation procedures to resolve disputes involving participation

in E&T; (9) removing the requirement that States' limits for payments

or reimbursements of dependent care expenses to E&T participants must

be at least as high as the FSP dependent care deduction cap; (10)

removing the requirements for E&T performance standards; (11) adding

the provision that the amount of funds States use to provide E&T

services to participants receiving benefits under a State program

funded under title IV-A cannot exceed the amount of funds, if any,

States used in fiscal year 1995 to provide E&T services to participants

who were receiving benefits under title IV-A; and (12) removing the

Secretary's authority to withhold funds from States for failure to

comply without good cause with E&T requirements.

PRWORA also contained major changes in the requirements for Federal

financial participation in the E&T program. Subsequently, the Balanced

Budget Act of 1997 (Pub. L. 105-33) further amended those requirements.

Federal financial participation is addressed in a separate rulemaking.

Three other PRWORA provisions added new language to the Act.

Section 816 permitted certain States to lower the age at which a child

exempts a parent/caretaker from food stamp work rules. Section 849

provided States the option of using a household's food stamp benefits

to subsidize a job for a household member participating in a work

supplementation program. Section 852 permitted qualifying States to

provide certain households with cash in lieu of food stamps.

Additionally, PRWORA made significant changes to the workfare

provisions at section 20 of the Act. It removed the States' ability to

comply with section 20 by operating a workfare program under title IV-

A. It removed the provision that permitted States to combine the value

of a household's food stamp allotment with the value of assistance

received by the household from a program under title IV-A in order to

determine the number of monthly hours of participation required of

those households in a title IV-A community work experience program.

Lastly, it eliminated disqualification provisions specific to the

optional workfare program and incorporated noncompliance with workfare

into the disqualification provisions governing noncompliance with FSP

work requirements.

Lastly, as part of the Department's ongoing regulation streamlining

and reform initiative, this rule proposes to consolidate the workfare

regulations at 7 CFR 273.22 with FSP work requirements contained in 7

CFR 273.7.

III. Discussion of Proposed Rule

Program Work Requirements

Current regulations at 7 CFR 273.7 require that all physically and

mentally fit food stamp recipients over the age of 15 and under the age

of 60 who are not otherwise exempted be registered for work by the

State agency at the time of application and once every 12 months

thereafter. Work registrants are required to participate in an E&T

program if assigned by the State agency, provide information regarding

employment status and availability for work, report to an employer if

referred, and accept a bona fide offer of suitable employment at a wage

no less than the applicable State or Federal minimum wage, whichever is

highest.

Failure to meet these requirements without good cause results in a

two-month disqualification. If the noncompliant individual is the head

of the household, the entire household is disqualified for two months.

Otherwise, only the individual is disqualified.

Additionally, if the head of the household voluntarily quits a job

of 20 or more hours a week without good cause 60 days or less prior to

applying for food stamps, or at any time thereafter, the entire

household is disqualified for 90 days.

Eligibility may be reestablished by the household during a

disqualification period if the head of the household becomes exempt

from the work registration requirement, is no longer a member of the

household, or complies with the requirement in question. Disqualified

individuals may reestablish eligibility by becoming exempt from the

work registration requirement or by complying with the requirement in

question.

Certain food stamp recipients are exempt from work registration

requirements. Among these exempt individuals are those currently

subject to and complying with a work registration requirement under

title IV-A or the Federal-State unemployment compensation system. If

these individuals fail to comply with any work requirement to which

they are subject that is comparable to a FSP work requirement, they are

subject to disqualification.

In accordance with section 815 of PRWORA, which contains amendments

to section 6(d)(1) of the Act, this rulemaking proposes the following

changes to current regulations.

Work Registrant Requirements

The current regulation at 7 CFR 273.7(a) contains the work

registration requirement for nonexempt food stamp household members.

Current regulations at 7 CFR 273.7(e) list the responsibilities and

requirements for work registrants.

Section 815 of PRWORA amended section 6(d)(1) of the Act by adding

to the list of reasons for disqualification the refusal without good

cause by an individual to provide a State agency with sufficient

information to determine his or her employment status or job

availability. Note, however, that 7 CFR 273.7(e) already contains the

requirement that a work registrant respond to a request from the State

agency or its designee for supplemental information regarding

employment status or availability for work. Therefore, no action is

required to amend current regulations in this regard.

Current regulations at 7 CFR 273.22 contain FSP workfare

participation requirements for households. 7 CFR

[[Page 72198]]

273.22(f)(6) provides for penalties for failure to comply with workfare

requirements.

Section 815 aligned workfare penalties with other work penalties.

It amended section 20 of the Act by removing workfare disqualification

provisions, and further amended section 6(d)(1) by including refusal

without good cause to comply with section 20 of the Act as a reason for

disqualification.

Therefore, this rule proposes to amend 7 CFR 273.22(f) by removing

paragraph (6), Failure to Comply, and to amend 7 CFR 273.7(e) by adding

as a work registrant requirement participation in a workfare program if

assigned.

This rule further proposes to incorporate the work registrant

requirements listed in 7 CFR 273.7(e) into 7 CFR 273.7(a), which will

be redesignated 7 CFR 273.7(a)(1) and renamed work requirements.

This rule also proposes to incorporate the participation

requirements for strikers listed in 7 CFR 273.7(j); the requirements

for registration of certain PA, GA, and refugee households listed in 7

CFR 273.7(k); and the provisions for applicants applying for SSI and

food stamps under Sec. 273.2(k)(1)(i), listed in 7 CFR 273.7(l), into 7

CFR 273.7(a). They will be redesignated 7 CFR 273.7(a)(4), (a)(5), and

(a)(6) respectively.

Lastly, this rule proposes to make the following changes to 7 CFR

273.7: (1) the current provisions at 7 CFR 273.7(f), (g), (h), (i),

(m), and (n) will be redesignated 7 CFR 273.7(e), (f), (g), (h), (i),

and (j) respectively; (2) the current provisions at 7 CFR 273.7(o) and

(p) will be deleted and new provisions, designated 7 CFR 273.7(k) and

(l) will be added; (3) the provisions for the optional workfare program

at 273.22 will be redesignated 7 CFR 273.7(m); and (4) 7 CFR 273.22

will be removed.

Administrative Responsibilities

Current regulations at 7 CFR 273.7(m) assign to State agencies the

responsibility for determining the existence of good cause in instances

when an individual fails or refuses to comply with FSP work

requirements. 7 CFR 273.7(n) assigns to State agencies the

responsibility for determining whether or not a voluntary quit

occurred.

Section 815 of PRWORA amended the Act by adding a new provision,

section 6(d)(1)(D), Administration. While assigning to the Secretary

responsibility for determining the meanings of good cause, voluntary

quit, and reduction of work effort, section 6(d)(1)(D) assigns to State

agencies the responsibility for determining: (1) the meaning of all

other terms relating to work requirements; (2) the procedures for

determining whether an individual is in compliance with work

requirements; and (3) whether an individual is actually in compliance

with work requirements.

However, section 6(d)(1)(D) prohibits State agencies from assigning

a meaning, procedure, or determination that is less restrictive on food

stamp recipients than a comparable meaning, procedure, or determination

under a State program funded under title IV-A.

This rule proposes to amend 7 CFR 273.7(a) by assigning to the

State agency responsibility for determining the meaning of all terms

related to FSP work requirements (other than good cause, voluntary

quitting, and reducing work effort); for establishing the procedures

for determining whether an individual is in compliance with FSP work

requirements; and for determining whether an individual is in actual

compliance with FSP work requirements. The State agency may not use a

meaning, procedure, or determination that is less restrictive on food

stamp recipients than a comparable meaning, procedure, or determination

is on recipients of a State program funded under title IV-A. These

provisions will be incorporated in a new paragraph, 7 CFR 273.7(a)(2).

Household Ineligibility

Current regulations at 7 CFR 273.7(g)(1) require that an

individual, other than the head of household, who fails or refuses

without good cause to comply with FSP work requirements be disqualified

from FSP participation. However, if the head of household fails or

refuses without good cause to comply, the entire household must be

disqualified.

Section 815 of PRWORA amended section 6(d)(1)(B) of the Act by

removing the requirement that the entire household be disqualified if

the head of the household fails or refuses without good cause to

comply. Instead, section 815 provided State agencies the option to

disqualify the entire household if the head of household fails or

refuses without good cause to comply with FSP work requirements. It

limited the length of such an optional household disqualification to

the duration of the disqualification period applied to the individual

or 180 days, whichever is shorter.

This rule proposes to amend redesignated 7 CFR 273.7(f) by

eliminating the requirement in paragraph (1) that the entire household

be disqualified if the head of the household fails to comply, and by

adding a new paragraph (4), Household Ineligibility. 7 CFR 273.7(f)(4)

will provide that a State agency has the option to disqualify the

entire household if the head of the household becomes ineligible to

participate in the FSP for failure to comply with work requirements. If

the State agency chooses this option, it may disqualify the household

for the duration of ineligibility of the head of the household, or for

180 days, whichever is less.

Disqualification Periods

Current regulations at 7 CFR 273.7(g)(1) establish a two-month

disqualification period to be imposed for failure or refusal without

good cause to comply with FSP work requirements.

Section 815 of PRWORA amended sections 6(d)(1) (a) and (b) of the

Act to establish mandatory disqualification periods--based on the

frequency of the violation--for individuals who fail to comply with FSP

work requirements. For the first violation, the individual is

disqualified until he or she complies with the requirement, one month,

or, at State agency option, up to three months, whichever is later. For

the second violation, until the later of the date the individual

complies, two months, or a period--determined by the State agency--not

to exceed six months. For the third or subsequent violation, until the

later of the date the individual complies with the requirement; six

months; a date determined by the State agency; or, at the option of the

State agency, permanently.

This rule proposes to amend redesignated 7 CFR 273.7(f) by deleting

reference to a 2-month disqualification period and by inserting a new

paragraph, 7 CFR 273.7(f)(2), Disqualification Periods. The new

paragraph (2) will provide for minimum mandatory disqualification

periods for individuals who fail or refuse without good cause to comply

with FSP work requirements. State agencies are free to elect which

disqualification period they institute for each level of noncompliance.

However, each State agency must apply its disqualification policy

uniformly, statewide.

We further propose to add a new paragraph (d)(xiii) under 7 CFR

272.2, Plan of operation. Paragraph (d)(xiii) will contain the

requirement for each State agency's disqualification policies.

Ending Disqualification

Current regulations at 7 CFR 273.7(h) provide that, at the end of

the 2-month disqualification period, participation may resume if the

disqualified individual or household reapplies for benefits and is

determined eligible.

[[Page 72199]]

Eligibility may be reestablished by a household during the

disqualification period if the head of household becomes exempt from

the work registration requirement, is no longer a member of the

household, or complies with the appropriate work requirement. A

disqualified individual may resume participation during the

disqualification period by becoming exempt from work registration or by

complying with the appropriate requirement.

As discussed previously, section 815 of PRWORA assigned to State

agencies responsibility for establishing the procedures for determining

whether an individual is in compliance with work requirements, as well

as the actual determination of compliance.

The Department believes that Congress intended for State agencies

to have maximum flexibility in implementing and administering their

disqualification policies. Thus, when determining whether a

disqualified individual or household has complied with the FSP work

requirement in question, a State agency may use its established

procedures, as long as these procedures are no less restrictive than

the State agency's title IV-A process.

Since section 815 of PRWORA called for mandatory disqualification

periods (the later of the date of compliance or end of

disqualification), a disqualified individual will no longer be able to

comply with the requirement during the disqualification period and end

or ``cure'' the disqualification early.

Congress clearly intended to end this practice of curing of a

disqualification. Section 815 amended section 6(d)(1)(B)(ii) of the Act

by deleting the following provision: ``Any period of ineligibility for

violations under this paragraph shall end when the household member who

committed the violation complies with the requirement that has been

violated.''

Thus, PRWORA removed a policy that provoked criticism in the past:

the possibility of reestablishing eligibility during a disqualification

by complying with a work requirement. This ability to cure a

disqualification was viewed as providing a ``revolving door'' through

which noncompliant participants could continuously reenter the FSP to

avoid serious penalty.

In light of this prohibition against curing a disqualification,

several State agencies have asked whether PRWORA also changed the

previous policy of ending a disqualification when, during the

disqualification period, a disqualified individual became exempt from

FSP work requirements. This policy is unchanged.

Section 6(d)(2) of the Act provides that a person who must

otherwise comply with the FSP work requirements in section 6(d)(1), and

who is subject to the penalties for noncompliance, is exempt from those

requirements if he or she is: (1) subject to and complying with a title

IV-A or Federal-State unemployment compensation work requirement; (2) a

parent or other household member caring for a dependent child under age

six or an incapacitated person; (3) a student; (4) a regular

participant in a drug addiction or alcoholic treatment and

rehabilitation program; (5) working 30 hours a week or earning the

minimum wage equivalent; or (6) between the age of 16 and 18 and not

head of a household, or between 16 and 18 and attending school or

training on a half-time basis. Also exempt are those under 16 or 60 and

over and those who are physically or mentally unfit.

In the Department's view, the language of section 6(d)(2) must be

interpreted to include disqualified individuals who meet one of the

exemption criteria. In such cases, that individual is no longer subject

to the work requirements or to the attendant penalties for

noncompliance. For instance, if a disqualified individual gains

responsibility for the care of a dependent child under six during his

or her disqualification period, that individual is no longer subject to

FSP work requirements. The disqualification must terminate and the

individual, if otherwise eligible, must be allowed to resume

participation.

Therefore, this rule proposes to amend redesignated 7 CFR 273.7(g)

by deleting reference to a 2-month disqualification period and by

providing that, at the end of the applicable minimum mandatory

disqualification period (except in cases of permanent

disqualification), participation may resume if the disqualified

individual reapplies for food stamps and is determined by the State

agency to be in compliance with work requirements. This rule proposes

to further amend redesignated 7 CFR 273.7(g) by removing the provision

for curing a disqualification.

Good Cause

The current regulations at 7 CFR 273.7(m) assign to State agencies

responsibility for determining good cause when an individual fails to

comply with FSP work registration, E&T, and voluntary quit

requirements. The regulations include as good cause circumstances

beyond the individual's control. One example cited is the lack of

adequate child care for children ages 6 to 12.

The current regulations at 7 CFR 273.7(n)(3) contain the good cause

requirements specifically concerning voluntary quit, as well as the

procedures for verifying questionable information concerning voluntary

quit.

Section 815 of PRWORA amended section 6(d)(1) of the Act by

deleting language that included the lack of adequate child care for

children between 6 and 12 as good cause for refusing to accept an offer

of employment, and by assigning to the Secretary specific authority to

define the meaning of good cause. We believe that Congress did not

intend to eliminate lack of adequate child care as a valid good cause

reason, thereby forcing parents to choose between the well-being of

their children and the demands of FSP work requirements. Instead, by

deleting this reference to a very specific, single instance of

noncompliance, we believe Congress intended to eliminate any confusion

about applying good cause criteria equitably across-the-board to all

FSP work requirements. Therefore, lack of adequate child care remains

as a good cause reason for noncompliance.

Although current good cause regulations remain basically unchanged,

we propose to take this opportunity to amend redesignated 7 CFR

273.7(i) and redesignated 7 CFR 273.7(j) by combining the provisions

under the specific heading ``Good Cause'' at redesignated 7 CFR

273.7(i). We also propose to add language to redesignated 7 CFR

273.7(i) reminding State agencies that it is not possible for the

Department to enumerate each individual circumstance that should or

should not be considered good cause. State agencies must consider all

facts and circumstances in each individual case concerning the

determination of good cause.

Voluntary Quit

Current regulations at 7 CFR 273.7(n) contain the procedures for

disqualifying a household whose head voluntarily quits a job without

good cause 60 days or less before applying for food stamps, or at any

time thereafter. For purposes of establishing voluntary quit, a ``job''

is considered employment of 20 or more hours per week, or employment

that provides weekly earnings at least equivalent to the Federal

minimum wage multiplied by 20 hours. A Federal, State or local

government employee dismissed from employment because of participation

in a strike is considered to have voluntarily quit without good cause.

[[Page 72200]]

In the case of applicant households, if the State agency determines

that a voluntary quit by the head of household was without good cause,

the household's application for benefits will be denied and it will not

be eligible for benefits for 90 days, starting with the date of the

quit.

In the case of participating households, if the State agency

determines that a head of household voluntarily quit a job while

participating in the FSP, or discovers that a quit occurred within 60

days prior to application or between application and certification, the

household will be disqualified from participation for 90 days,

beginning with the first of the month after all normal adverse action

procedures are completed.

Following the end of a voluntary quit disqualification, a household

may reapply and, if otherwise eligible, begin participation in the FSP.

Eligibility may be reestablished during a disqualification period and

the household may, if otherwise eligible, resume participation if the

head of household secures new employment comparable to the job that was

quit, or leaves the household. Eligibility may also be reestablished if

the head of household becomes exempt from work registration. If the

disqualified household splits, the disqualification follows the head of

household. If that individual becomes head of a new household, that

household must serve out the balance of the disqualification period.

If a disqualified household applies for participation in the third

month of its disqualification, it does not have to reapply in the next

month. The State agency must use the same application to deny benefits

in the remaining month of disqualification and to certify the household

for any subsequent month(s) if it is otherwise eligible.

Section 815 of PRWORA amended section 6(d)(1) of the Act by

removing the requirement that only the head of household is subject to

voluntary quit. As with all the other sanctionable actions listed in

section 6(d)(1)(A), each individual household member was made subject

to disqualification for a voluntary quit. The State agency was afforded

the option of disqualifying the entire household if the quitter is the

head of household.

Section 6(d)(1) was further amended by eliminating the 90-day

disqualification period for voluntary quit. Penalties for voluntary

quit are based on the minimum mandatory disqualification provisions

contained in PRWORA.

Lastly, section 815 of PRWORA amended section 6(d)(1) by adding the

provision that an individual who voluntarily and without good cause

reduces work effort and, after the reduction, works less than 30 hours

per week, must be disqualified.

We propose to retain the 60-day pre-application period for

establishing voluntary quit and to apply the same standard when

determining reduction of work effort for applicants. The voluntary quit

and reduction in work effort provisions aim to deter individuals with

reasonable income from intentionally ending or reducing that income to

qualify for food stamps or to increase coupon allotments. We believe

that 60 days is a reasonable time span to use to gauge intent.

We also propose to increase the 20 hour/equivalent Federal minimum

wage figure used in defining voluntary quit to 30 hours. Increasing the

number of hours to 30 provides a logical connection between voluntary

quit and the reduction of work effort threshold mandated by Congress.

The 30 hour figure also conforms to the number of hours of work

required to exempt an employed recipient from Program work

requirements. The Department welcomes comments on this issue.

Lastly, Congress clearly stated that any reduction in hours of

employment to less than 30 hours a week without good cause must be

penalized. We do not believe Congress intended that a minimum wage

equivalent of 30 hours be considered when establishing voluntary

reduction in work hours. The Department proposes to make this clear in

the rule. We also propose to incorporate good cause for reduction of

work effort into the good cause provision at redesignated 7 CFR

273.7(i).

Accordingly, the following amendments to redesignated 7 CFR

273.7(j) are proposed. Any individual who, 60 days or less before

applying for food stamps, or at any time after application, without

good cause quits a job of 30 hours or more a week or a job that

provides weekly earnings at least equivalent to the Federal minimum

wage multiplied by 30 hours, or who is employed 30 or more hours per

week but without good cause reduces his or her work effort to less than

30 hours, must be disqualified for a period specified by the State

agency's minimum mandatory disqualification provisions. The

disqualified individual must be considered an ineligible household

member. The individual's income and resources must continue to be

counted to determine eligibility and level of benefits for the

remaining household members. If the individual who voluntarily quit his

or her job, or who reduced his or her work effort without good cause,

is the head of household the State agency may, at its option,

disqualify the entire household. Because the ability to cure a

disqualification was eliminated, the provision for reestablishing

eligibility during a disqualification if the individual secures new,

comparable employment is removed.

Failure To Comply With a Title IV-A or Unemployment Compensation Work

Requirement

Current regulations at 7 CFR 273.7(g)(2) provide that an individual

who is exempt from FSP work requirements because he or she is

registered for work under title IV-A or unemployment compensation but

fails to comply with a title IV-A or unemployment compensation

requirement comparable to a food stamp work requirement must be treated

as though the individual failed to comply with the corresponding food

stamp requirement. Comparability exists if the title IV-A or

unemployment compensation requirement places responsibilities on the

individual similar to food stamp work requirements.

In the past, this comparability issue created controversy and

confusion among State agencies. How can a requirement in one program be

``comparable'' to one in another program with different rules,

different caseloads, and different operating procedures? The ``similar

responsibilities'' explanation only added to the confusion. If a title

IV-A work program contained a training component not available to food

stamp work registrants, did this mean that participation in that

component placed a greater responsibility on the title IV-A household

than on the food stamp household, even if the food stamp household had

another component available; one that, while not the same, provided

opportunities for training?

A conforming amendment to section 819 of PRWORA deleted the

comparability language in section 6(d)(2)(A) of the Act relating to

failure to comply with a title IV-A or unemployment compensation work

requirement.

With the striking of the comparability requirement, State agencies

are now able to impose FSP disqualifications on individuals (and-

optionally-households) who fail to comply with title IV-A or

unemployment compensation work requirements, without regard to the

existence of ``similar responsibilities'' among programs.

[[Page 72201]]

The regulation continues to make it clear that the noncomplying

individual will not be subject to FSP disqualification if he or she

meets one of the other exemption criteria listed at 7 CFR 273.7(b)

(excluding participation in title IV-A work activities or receipt of

unemployment compensation). For example, an individual responsible for

the care of a child under six who is disqualified under a title IV-A

program for failure to comply with its work requirements would not be

subject to a FSP disqualification because that individual remains

exempt under another FSP criteria.

Note: Section 819 of PRWORA, titled ``Comparable Treatment for

Disqualification,'' added a new paragraph (i) to section 6 of the

Act. Section 6(i) provided that, if a food stamp recipient is

disqualified for failure to comply with a requirement of a Federal,

State, or local means-tested public assistance program, the State

agency may opt to impose the same disqualification on the recipient

under the FSP. Thus, in the example above, the State agency could,

under the comparable disqualification provision of section 6(i),

disqualify the individual who is responsible for the care of a child

under six, using title IV-A rules and procedures. It is important to

note that the language of section 6(i) specifically limits this

option to individuals. Therefore, State agencies may not impose

comparable treatment for disqualification on the entire household.

The Department is proposing to amend redesignated 7 CFR 273.7(f)(6)

accordingly by deleting the comparability requirement for imposing FSP

disqualifications on individuals who are not otherwise exempt FSP work

requirements and who fail to comply with the work registration

requirements of title IV-A or of the Federal-State unemployment

compensation system. The Department further proposes to add the option

of allowing State agencies to disqualify individuals who meet other FSP

exemption criteria by using the same rules and procedures that apply

under title IV-A for failure to comply with a title IV-A work

requirement. Such a disqualification must be in accordance with the

comparable disqualification provisions at 7 CFR 273.11(l).

Caretaker Exemption

Current regulations at 7 CFR 273.7(b)(iv), pursuant to section

6(d)(2)(B) of the Act, exempt from FSP work requirements a parent or

other household member who is responsible for the care of a dependent

child under six. Prior to the enactment of PRWORA, Eight State agencies

had submitted requests to waive this regulation to require caretakers

of children less than six years old to participate in their proposed

welfare reform demonstration projects. The purpose of these waivers was

to conform FSP and title IV-A work requirements in order to provide the

State agencies maximum flexibility in the operation of their

demonstrations. The Department believed that the States' requests

violated section 17(b) of the Act, which prohibited the approval of a

waiver that would lower or further restrict the benefit levels of food

stamp recipients. The Department concluded that the approval of these

waivers would subject food stamp recipients to work requirements and

possible sanctions that they would not be subject to under regular

program rules. Therefore, the waivers were denied.

Section 816 of PRWORA amended section 6(d)(2) of the Act by adding

an option to allow State agencies that previously requested a waiver to

lower the age of the qualifying dependent child to less than six. Under

this option, State agencies that had requested such a waiver, but were

denied before August 1, 1996, may lower the age of a qualifying

dependent child to between one and six years. This option may be

exercised for a period of not more than three years.

This rule proposes to amend 7 CFR 273.7(b)(iv) to include a

provision offering this option to the State agencies of Alabama,

Kansas, Maryland, Michigan, North Dakota, Virginia, Wisconsin, and

Wyoming. According to FNS records, these were the State agencies that

were denied the exemption waivers before August 1, 1996. These State

agencies, upon submission of written notification to the Department,

may, for a maximum of three years, lower the age of a dependent child

that qualifies a parent or other household member for an exemption to

between one and six.

Employment and Training Program

Since April 1987 State agencies have been required to operate a

Food Stamp Employment and Training Program. The E&T program seeks to

improve food stamp recipients' ability to obtain regular employment,

increase earnings, and reduce their dependency on public assistance.

State agencies may choose to operate one or more of a variety of

E&T components. The components may vary from State to State, and may

include job search, job search training, workfare, work experience,

self-employment activities, and vocational and basic education

components. Job search has by far been the most prevalent activity,

because of its relatively low cost.

The Department funds the E&T Program in three categories. An annual

100% Federal grant is allocated to State agencies to operate their

programs. The Department matches allowable operational E&T costs that

exceed the 100% Federal grant. USDA also matches 50% of the costs

incurred by participants in fulfilling their E&T obligations by

contributing half of the costs for dependent care (within certain

limits), and half of up to $25 per month for transportation and other

costs. All funding passes from USDA directly to State agencies.

Prior to the enactment of PRWORA, the Department allocated an

annual 100% Federal grant of $75 million to State agencies. In

accordance with section 16(h) of the Act, $60 million was distributed

according to each State's proportion of work registrants nationwide,

and the remaining $15 million was distributed based on State agency

performance in placing people into E&T activities.

The Food Security Act of 1985 (Pub. L. 99-198), which created the

E&T Program, mandated that the Department establish performance

standards requiring State agencies to place at least 50 percent of

their mandatory participants into E&T programs. Mandatory participants

are work registrants not exempted from E&T by a State agency. Congress

lowered the 50 percent performance requirement to 10 percent, effective

FY 1992, to encourage State agencies to begin utilizing more

substantive interventions or to target service to certain groups.

Each State agency must have in place conciliation procedures for

the resolution of disputes involving the participation of individuals

in the E&T Program.

In accordance with section 817 of PRWORA, which contains amendments

to section 6(d)(4) of the Act, this rulemaking proposes the following

changes to current regulations.

Statewide Workforce Development System

Section 817 of PRWORA amended section 6(d)(4) of the Act to require

that each component of a State agency's E&T program be delivered

through a statewide workforce development system, unless the component

is not available locally through such a system.

A statewide workforce development system is an interconnected

strategy for providing comprehensive labor market and occupational

information to jobseekers, employers, providers of one-stop delivery of

core services, providers of other workforce employment activities, and

providers of workforce education activities.

[[Page 72202]]

This rule proposes to add, at 7 CFR 273.7(c), a new paragraph (5),

which will contain the requirement that each component of a State

agency's E&T program be delivered through its statewide workforce

development system. If the component is not available locally through

such a system, the State agency may use another source.

Acceptable Level of Effort of E&T Components

Current regulations at 7 CFR 273.7(f)(1) require that any E&T

component offered by a State agency entail a certain level of effort on

the part of participants. The Department established a minimum level of

effort that is comparable to spending 12 hours a month for two months

(or less in workfare or work experience components) making job

contacts. The Department based this level on the pre-E&T food stamp job

search requirement that a participant contact 24 employers in an eight-

week period in an effort to locate suitable employment. The Department

intends to maintain this level as the acceptable level of component

effort.

Section 824 of PRWORA established a new work requirement under

which nonexempt ABAWDs become ineligible if, during a 36-month period,

they receive benefits for three months in which they do not meet

specific conditions. One such condition is participation for 20 or more

hours a week in a work program, such as E&T--excluding job search or

job search training activities. The 20-hour requirement does not apply

to workfare or work experience components of E&T programs.

Participation in those components is limited to the number of monthly

hours equal to the result obtained by dividing a household's food stamp

allotment by the higher of the applicable Federal or State minimum

wage.

The Department urges State agencies to plan their E&T component

participation requirements with the ABAWD provisions in mind. By

establishing sufficient levels of effort for their non-work, non-job

search/job search training E&T program components, or by judicious

scheduling of simultaneous participation in a combination of components

to meet the ABAWD provisions, State agencies can contribute

significant--and valuable--resources to permit ABAWDs to maintain their

food stamp eligibility. State agencies must keep in mind, however, the

maximum individual or household participation requirements specified in

section 6(d)(4)(F) of the Act. The total monthly work hours in an E&T

program required of a household, together with the hours of work in a

optional workfare program, may not exceed the number of hours equal to

the household's food stamp allotment divided by the higher of the

applicable Federal or State minimum wage. The total hours of individual

participation in E&T, together with any hours worked for compensation

in cash or in kind (including workfare), cannot exceed 120 hours per

month.

Applicant Work Requirements

Current regulations at 7 CFR 273.7(f)(1) allow a State agency to

require an individual to conduct a job search from the time an

application is filed for an initial period of up to eight consecutive

weeks. This State agency option was provided to conform FSP policy with

title IV-A applicant job search requirements.

Section 817 of PRWORA amended section 6(d)(4) of the Act by

expanding this existing State agency option. In addition to job search,

a State agency may require non-exempt food stamp applicants to

participate in any of its E&T program components as a condition of

eligibility.

This rulemaking proposes to amend redesignated 7 CFR 273.7(e)(1) to

authorize a State agency to require FSP applicants, at its option, to

participate in and comply with any component it offers in its E&T

program for an initial period beginning at the time of application. In

order to assure the maximum success of applicant participation, the

Department further proposes to remove the eight-week time limit for

this initial period of applicant participation. Thus, a State agency

may require applicant participation for any initial period it

determines to be adequate to meet program goals. However it was not the

intent of Congress to permit State agencies to delay the determination

of an individual's eligibility for benefits or the issuing of benefits

to an otherwise eligible household until initial participation is

completed. Therefore, the Department proposes to maintain the

requirement at redesignated 7 CFR 273.7(e)(1)(i) that, as long as the

applicant is complying with the E&T requirement, the State agency not

delay the determination of the individual's eligibility for benefits or

the issuance of benefits to an otherwise eligible household pending

completion of an applicant E&T requirement.

Job Search

Current regulations at 7 CFR 273.7(f)(1)(i) authorize a State

agency to offer a job search component comparable to that required of a

program under title IV-A. Aside from the initial applicant job search

period, discussed above, the work registrant can be required to conduct

a job search of up to eight weeks (or an equivalent period) in any

consecutive 12-month period. The first such 12-month period begins at

any time following the close of the initial period.

Section 817 of PRWORA amended section 6(d)(4)(B) of the Act by

deleting the title IV-A comparability requirement for job search.

Therefore, we propose to amend redesignated 7 CFR 273.7(e)(1)(i) by

deleting the requirement that a State agency's E&T job search component

must be comparable to its title IV-A job search component.

The legislative history of the Act indicates that, while Congress

did not place a minimum or maximum limit on job search, it did expect

the Department to develop and implement reasonable requirements. The

only limitation Congress placed on the Department was that it not

initiate a mandatory continual job search. Congress did not intend that

work registrants actively engage in a systematic and sustained effort

to obtain work every month and provide tangible evidence to the State

agency of such effort. It feared that such a system would create

administratively complex and cumbersome reporting systems that would

flood State agency offices with paperwork, but would not produce jobs.

At the time of the publication of the original job search rule in

January 1981, the Department chose the eight-week job search period to

conform with the requirements of the Aid to Families with Dependent

Children (AFDC) Program. Job search under AFDC's Work Incentive Program

(WIN) was mandated to be no more than eight weeks a year.

In keeping with the State agency flexibility offered under PRWORA,

the Department further proposes to amend redesignated 7 CFR

273.7(e)(1)(i) by removing the annual eight week job search limitation.

Each State agency will be free to conform its E&T job search to that of

its title IV-A work program, or to establish job search requirements

that, in the State agency's estimation, will provide participants a

reasonable opportunity to find suitable employment. However, the

Department believes that Congress' initial concern about the length of

job search still applies. If a reasonable period of job search does not

result in employment, placing the individual in a training or education

component to improve job skills will likely be more productive.

[[Page 72203]]

The Department welcomes comments on this issue.

Lastly, the Department proposes to amend redesignated 7 CFR

273.7(e)(1)(i) by adding that, in accordance with section 6(o)(1)(A) of

the Act and 7 CFR 273.24 of the regulations, a job search program

operated as a component of a State's E&T program does not meet the

definition of work program relating to the participation requirements

necessary to maintain food stamp eligibility for able-bodied adults.

This same notice will be added at redesignated 7 CFR 273.7(e)(1)(ii),

which describes job search training programs. These additions will also

specify that the prohibitions against E&T job search and job search

training do not apply to such programs operated under title I of the

Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.) (the WIA), or

under section 236 of the Trade Act of 1974 (19 U.S.C. 2296) (the Trade

Act). Further, we propose to amend redesignated 7 CFR 273.7(e)(1) to

add that job search or job search training activities, when offered as

part of other E&T program components, are acceptable as long as those

activities comprise less than half the required time spent in the other

components.

Workfare

Current regulations at 7 CFR 273.7(f)(1)(iii) authorize assignment

to workfare components operated in accordance with section 20 of the

Act and 7 CFR 273.22. As part of a workfare program, the Act permits

operating agencies to establish a job search period of up to 30 days

following certification prior to making a workfare assignment. During

this period, the participant is expected to look for a job. The job

search period may only be conducted at certification, not at

recertification. This job search activity is part of the workfare

assignment and not a job search ``program.'' Therefore, participants

are to be considered as participating in and complying with the

requirements of workfare, thereby satisfying the ABAWD work

requirement.

We propose to amend redesignated 7 CFR 273.7(e)(1)(iii) to include

a statement that makes clear that the job search period authorized by

State agencies for workfare components does meet the work requirement

for able-bodied adults.

Work Experience Programs

Current regulations at 7 CFR 273.7(f)(1)(iv) authorize assignment

to a work experience component to improve the employability of

participants through training and/or actual work experience. In

accordance with sections 6(d)(4)(B)(i)(I) and (II) of the Act,

assignments are limited to ones that serve a useful public purpose in

fields such as health, social service, environmental protection, urban

and rural development and redevelopment, welfare, recreation, public

facilities, public safety, and day care. Additionally, assignments are

to use, to the greatest extent possible, a participant's prior

training, experience, and skills.

Section 817 of PRWORA amended section 6(d)(4) by deleting the above

limitations imposed on work experience assignments. In taking this

action, the Department believes that Congress meant to expand State

agency flexibility to place individuals not only in public or private

non-profit assignments, but also in work experience positions with

private sector, for-profit employers. However, the Act and other

Federal laws--including the Fair Labor Standards Act of 1938, as

amended (29 U.S.C. 201, et seq.)--govern the rights of participants

assigned to positions with for-profit employers as well as those in

non-profit positions. State agencies must exercise great caution to

comply with those laws and to ensure those rights when establishing and

operating private sector work experience components.

This flexibility does not extend to workfare assignments, in which

participants are required to work off the value of their household's

monthly food stamp allotment. Workfare assignments may only be in

public or private non-profit agencies.

We propose to amend redesignated 7 CFR 273.7(e)(1)(iv) by deleting

the requirements that work experience assignments serve a useful public

purpose, and that they use, to the greatest extent possible, a

participant's prior training, experience, and skills. Thus, assignments

can be made to any available public or private non-profit project, as

well as with any private, for-profit employer, regardless of prior

training, experience, or skills, as long as such assignments, pursuant

to section 6(d)(4)(B)(iv), do not serve to replace a worker not

participating in the program; and as long as they provide the same

benefits and working conditions to E&T participants as those provided

to regular employees performing comparable work for comparable hours.

``Other Programs, Projects, and Experiments''

In accordance with section 16(h)(4) of the Act, the Federal 100

percent E&T grant may only be used by State agencies to operate an E&T

program under section 6(d)(4). Section 6(d)(4)(B)(vii) of the Act

includes as an allowable component of an E&T program other employment,

educational and training programs, projects, and experiments aimed at

accomplishing the purpose of the E&T program. Such components must be

approved by the Secretary, or by the State under regulations issued by

the Secretary. These components include work programs under section 824

of PRWORA that allow ABAWDs to maintain eligibility for food stamps.

These work programs are defined as (1) a program under the WIA; (2) a

program under section 236 of the Trade Act; and (3) a program of

employment and training operated or supervised by a State or political

subdivision of a State that meets standards approved by the Governor of

the State, including a program under subsection (d)(4), other than a

job search program or a job search training program. Therefore, in

order to qualify for Federal financial participation, all WIA, Trade

Act and State/local employment and training programs must be fully

described in the State E&T plan; must guarantee all the rights and meet

all the requirements of regular E&T program components; and must be

approved by the Secretary.

Exemptions

Current regulations at 7 CFR 273.7(f)(2) permit State agencies,

subject to approval by the Department, to exempt from E&T certain

individual work registrants or categories of work registrants for which

participation is impracticable. Factors listed which may lead to the

impracticability of participation in some geographic areas, for some

groups of work registrants, include availability of job opportunities

and the cost-effectiveness of participation. For individuals, personal

circumstance such as lack of job readiness, the remote location of work

opportunities, physical condition, and the unavailability of dependent

care are listed. Additionally, with approval from the Secretary,

persons who have participated in the FSP for 30 days or less may be

exempted from participation.

Although State agencies are afforded a certain amount of

flexibility in determining who will or will not participate in E&T,

they are required to justify proposed exemptions in their E&T State

plans. The Department can accept or reject the proposed exemptions,

based on the validity of the State agency's claim.

Individual exemptions must be reevaluated at each recertification.

[[Page 72204]]

Categorical exemptions should be reviewed no less frequently than

annually to determine whether they remain valid.

Current regulations at 7 CFR 273.7(c)(4) detail the State agency's

responsibilities for preparing and submitting an E&T plan. Paragraph

(c)(4)(iii) requires the State agency to list the categories and types

of individuals it seeks to exempt from E&T participation, the basis

used to determine these exemptions, including any cost information, and

the estimated percentages of work registrants the State plans to

exempt.

Section 817 of PRWORA amended section 6(d)(4)(D) of the Act to

remove the requirements that: (1) individual and categorical exemptions

from E&T be based on impracticability; (2) State agencies require the

approval of the Secretary to exempt household members that have

participated in the FSP for 30 days or less; and (3) individual

exemptions be reevaluated no less often than at each certification or

recertification.

Accordingly, the Department proposes to amend redesignated 7 CFR

273.7(e)(2) by removing restrictions on State agency flexibility in

determining E&T exemptions. The State agency may, at its discretion,

exempt individual work registrants and categories of work registrants.

Although the validity of exemptions must be periodically reevaluated,

each State agency may establish the frequency of its evaluation.

The Department also proposes to amend 7 CFR 273.7(c)(6)(iii) by

removing the requirement that the State agency list the basis,

including cost information, it uses to determine its exemptions; and by

adding the requirement that it include the frequency with which it

plans to reevaluate the validity of its exemptions.

Voluntary Participation

Current regulations at 7 CFR 273.7(f)(4) contain two provisions for

volunteers. First, that a State agency ``may operate program components

in which individuals elect to participate.'' Second, a State agency

``shall permit, to the extent it deems practicable, persons exempt from

the work registration or employment and training requirements,'' as

well as those who have complied or are in the process of complying with

E&T requirements, to participate in any E&T component it offers.

While the purpose of the two provisions appears to be similar but

contradictory--one is an option, the other a mandate--they were based

on Congressional intent to provide for two different circumstances.

The term volunteer must first be defined. A volunteer is an

individual who is exempt from FSP work requirements or who is a work

registrant exempted by the State agency from participation who elects

to participate in E&T. A mandatory participant who elects to

participate in an E&T component while or after completing a required

component is considered a volunteer in the subsequent component.

In the first instance, Congress, recognizing its potential

effectiveness, permitted State agencies to allow any individual food

stamp recipient who elected to participate to volunteer. For example,

persons with a child under 6--and therefore exempt from work

registration--who wished to receive training and assistance in finding

a full-time job would benefit, and long term Federal costs might be

lowered.

In the second instance, Congress required State agencies to allow,

to the greatest practicable extent, work registrants exempted from E&T,

as well as E&T participants who had complied with or were in the

process of complying with program requirements, access to any E&T

program component available.

Section 817 of PRWORA amended section 6(d)(4)(G) by removing the

requirement that State agencies shall--to the extent deemed

practicable--permit both exempt and nonexempt work registrants to

participate in any E&T component offered. State agencies retain,

however, the option to operate E&T components in which individuals

volunteer to participate.

This rule proposes to amend redesignated 7 CFR 273.7(e)(4) by

removing the requirement placed on State agencies to permit exempt work

registrants and participants to take part in any component offered.

While the Department encourages and supports such participation in E&T

activities, it believes State agencies should be afforded maximum

flexibility in determining who may participate in their programs and to

what degree. State agencies continue to have the option to offer E&T

components in which volunteers may participate. We do not believe,

however, that volunteers should be subjected to the same penalties for

noncompliance as mandatory participants. We also do not believe that a

distinction should be drawn between volunteer and regular E&T

participants concerning maximum hour restrictions on participation.

Accordingly, the Department proposes that the current regulatory

requirements concerning disqualification and hours of work or

participation for volunteers continue to apply.

Conciliation

Current regulations at 7 CFR 273.7(g)(ii) contain requirements for

a State agency to establish conciliation procedures to be used when an

individual fails to comply with an E&T Program requirement. The purpose

of the conciliation effort is to determine the reason(s) the work

registrant did not comply with the E&T requirement and provide him or

her with an opportunity to comply prior to issuing a notice of adverse

action. The conciliation period begins the day after the State agency

learns of the noncompliance and continues for at least 30 days. In this

time the State agency is expected to contact the noncompliant

individual to determine the reason for the noncompliance, establish

whether good cause exists, and advise the individual on what actions

need to be taken to avoid disqualification. The noncompliant individual

must perform a verifiable act of compliance within the 30-day period to

avoid receiving a notice of adverse action.

Current regulations at 7 CFR 273.7(g)(iv) and (v) detail the

adverse action procedures that a State agency must follow as soon as it

learns about an act of noncompliance with a FSP work requirement other

than an E&T Program requirement. First, the State agency must establish

if good cause for the noncompliance exists. Then, within 10 days of

establishing that good cause does not exist, the State agency must

issue the noncompliant individual a notice of adverse action.

The notice of adverse action details the particular act of

noncompliance committed and the proposed period of disqualification.

The notice must also specify that the individual may reapply at the end

of the disqualification period. Information must be included on or with

the notice describing the action that can be taken to avoid the

sanction. The disqualification period begins the first month following

the expiration of the 10-day adverse notice period, unless a fair

hearing is requested.

Section 817 of PRWORA amended section 6(d)(4)(H) of the Act by

deleting the conciliation requirement.

Accordingly, we propose to amend redesignated 7 CFR 273.7(f) by

removing the requirements imposed on State agencies to establish and

operate a conciliation procedure for the resolution of disputes

involving the participation of an individual in E&T. However, a State

agency may opt to incorporate an informal conciliation process into its

E&T program. In such cases the State

[[Page 72205]]

agency must comply with the adverse action procedures at the end of the

conciliation period.

Performance Standards and State Compliance With Employment and Training

Requirements

Current regulations at 7 CFR 273.7(o) set forth the requirements

for State agencies to meet an annual performance standard for the

minimum number of participants that a State agency must place in its

E&T program. Since FY 1992 the performance standard has been set at 10

percent of a State agency's mandatory E&T participants plus volunteers.

In order to calculate its performance standard at the end of the

fiscal year, a State agency is required to collect information on its

total work registrants, the number of work registrants it exempts from

E&T, and the number of non-exempt work registrants (mandatory

participants) and volunteers it places in E&T components during the

fiscal year.

The current regulation at 7 CFR 273.7(p)(2) provides that if a

State agency fails to meet the required performance standard without

good cause, the Department may disallow administrative funding for the

State agency's E&T program, as well as withholding the State agency's

performance-based allocation. Further, the current regulation at 7 CFR

273.7(p)(1) applies the provisions of Sec. 276.1(a)(4) to State

agencies that fail to efficiently and effectively administer their E&T

programs. That regulation authorizes FNS to seek injunctive relief and/

or suspension or disallowance of the Federal share of a State agency's

administrative funds if the State agency fails to efficiently and

effectively administer any part of the Food Stamp Program, including

E&T.

Section 817 of PRWORA amended section 6(d) of the Act by removing

paragraph (K), which directed the Secretary to establish performance

standards to measure the extent of State implementation of E&T. Section

817 further amended section 6(d) by removing paragraph (L)(ii), which

authorized the Secretary--in cases where a State agency fails, without

good cause, to comply with E&T requirements, including failing to meet

performance standards--to withhold administrative funding, including

the 100 percent Federal E&T grant.

Accordingly, we propose to amend 7 CFR 273.7 by removing paragraph

(o), Performance Standards. It is possible that Congress will, in the

future, mandate some type of performance measurement system--either

process or outcome based--for the E&T Program. In the interim, State

agencies are free to use the resources of their E&T programs to serve

their at-risk populations in the most effective manner possible.

We also propose to amend 7 CFR 273.7 by deleting paragraph (p),

State noncompliance with Employment and Training requirements. The

former paragraph (p)(1), which, as explained above, details the

consequences of States not complying with E&T requirements, will be

redesignated as paragraph (c)(14).

Federal Financial Participation

Current regulations at 7 CFR 273.7(d) require the Department to

allocate an annual 100 percent Federal E&T grant to States, based in

part on the number of work registrants in each State compared to the

number of work registrants nationwide; and in part on each State

agency's program performance. Each State agency must receive at least

$50,000 in unmatched Federal funds. The State agency is required to use

the E&T grant to fund the administrative costs of planning,

implementing and operating its E&T program. The Department will pay 50

percent of all other administrative costs above those covered by the

100 percent Federal grant that the State agency incurs in operating its

E&T program.

The Department matches half the amount State agencies spend to

reimburse E&T participants for the actual costs of transportation and

other costs (excluding dependent care) that are determined by the State

agency to be necessary and directly related to E&T participation, up to

$25 per month. Thus, the Department will pay up to $12.50 a month of

each participant's costs. The State agency may supplement this amount,

but without Federal matching funds.

State agencies must also provide payments or reimbursements to E&T

participants for dependent care expenditures, up to a statewide limit

set by the State agency. This statewide limit may not be less than the

limit set for the dependent care deduction at 7 CFR 273.9(d)(4), that

is, $200 per month for each dependent under age 2 and $175 per month

for each other dependent. However, the reimbursement may not exceed the

applicable local market rate as determined by procedures consistent

with the JOBS Program. Thus, the State agency must reimburse actual

costs of dependent care up to either the local market rate or the

statewide limit set by the State agency, whichever is lower. The

Department matches State agency expenditures for reimbursements at the

50 percent level.

Section 817 of PRWORA amended sections 6(d)(4) and 16(h) of the Act

concerning the funding of, and Federal financial participation in, the

E&T Program. Subsequently, the Balanced Budget Act of 1997 (Pub. L.

105-33) substantially amended those requirements. Therefore, the

majority of amendments dealing with funding are addressed in a separate

rule. However, section 817 amended section 6(d)(4) of the Act in two

significant areas that will be addressed in this proposed rule.

Section 817 of PRWORA amended section 6(d)(4) of the Act by

removing the requirement that reimbursements for dependent care

expenses incurred due to participation in E&T must equal at least the

amount of the dependent care deduction established for determining

household eligibility and benefit amounts. We propose to amend 7 CFR

273.7(c), State agency responsibilities, by removing the provision that

requires State agencies, in their State plans, to include a statewide

limit for dependent care reimbursements established by the State agency

that must not be less than the dependent care deduction amounts

specified under Sec. 273.9(d)(4).

Section 817 of PRWORA further amended section 6(d) of the Act by

adding the provision that limits the amount of money State agencies may

spend to provide E&T program services to food stamp recipients who also

receive benefits under a State program funded under title IV-A. The

limit is the amount of Federal E&T funds the State agency spent on E&T

services for the same category of recipients in fiscal year 1995. This

rule proposes, therefore, to add, at 7 CFR 273.7(d)(1)(i)(F), the

provision that, notwithstanding any other provision of the paragraph,

the amount of E&T funds, including participant and dependent care

reimbursements, a State agency uses to serve participants who are

receiving benefits under a State program funded under title IV-A may

not exceed the amount of funds the State agency used in FY 1995 to

serve participants who were receiving benefits under a State program

funded under title IV-A.

Based on information provided by each State agency, the Department

established claimed Federal E&T expenditures on this category of

recipients in fiscal year 1995 for the State agencies of Colorado

($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin

($10,999,773). These State agencies may spend a like amount each fiscal

year to serve food stamp recipients who also receive title IV-A

assistance, if they choose. Other State agencies are prohibited from

expending

[[Page 72206]]

any Federal E&T funds on title IV-A recipients.

Employment Initiatives Program

Section 852 of PRWORA amended section 17 of the Act (7 U.S.C. 2026)

to add provisions for an employment initiatives program under which an

eligible household in a qualifying State may elect to receive the cash

equivalent of its food stamp coupon allotment.

This rule proposes to add, at 7 CFR 273.7, a new paragraph (k),

containing the following requirements for the employment initiatives

program.

A State agency qualifies to operate an employment initiatives

program if, during the summer of 1993, at least half of its food stamp

households also received benefits from a State program funded under

title IV-A. Qualified State agencies are Alaska, California,

Connecticut, the District of Columbia, Massachusetts, Michigan,

Minnesota, New Jersey, West Virginia, and Wisconsin.

A food stamp household in one of the 10 qualified State agencies

may receive cash benefits if it elects to participate and an adult

member of the household (1) has worked in regular (i.e., unsubsidized)

employment for the last 90 days, earning a minimum of $350 per month;

(2) is receiving cash benefits under a State program funded under title

IV-A; or (3) was receiving cash benefits from the State program but,

while participating in the employment initiatives program, became

ineligible because of earnings and continues to earn at least $350 a

month from unsubsidized employment.

As required by section 852, A qualifying State agency operating an

employment initiatives program must agree to pay for an increase in

cash benefits to compensate participating households for any State or

local sales taxes on food purchases.

Also as required by section 852, a State agency that operates an

employment initiatives program for two years must evaluate the impact

of providing cash assistance in lieu of a food stamp coupon allotment

to participating households. The State agency must provide the

Department with a written report of its evaluation findings. The State

agency, with the concurrence of the Department, will determine the

content of the evaluation. The Department expects the evaluation to

address, at a minimum, questions concerning the effects of providing

cash assistance on household food expenditures, food use, and nutrient

availability. Additionally, related issues such as households'

experiences in running out of food and expenditure shifts from food to

other goods and services should be addressed.

Work Supplementation Program

Section 849 of PRWORA amended section 16(b) of the Act (7 U.S.C.

2025(b)) to give State agencies the option to implement work

supplementation (or support) programs. In these programs the cash value

of public assistance benefits, plus FSP benefits, is provided to an

employer as a wage subsidy to be used for hiring and employing public

assistance recipients. The goal of work supplementation is to promote

self-sufficiency by providing public assistance recipients with work

experience to help them move into non-subsidized jobs.

Prior to the enactment of PRWORA, about a dozen States were

approved to operate demonstration projects in local jurisdictions that

included a work supplementation component. In July 1997, FNS sent a

letter to all States about the work supplementation program including a

set of questions and answers. These guidelines were provided to

facilitate the implementation of these programs under PRWORA. These

guidelines placed no requirements on States beyond those of federal law

and other federal regulations governing reporting on and accounting for

financial and participation data. Because of the limited experience

with the work supplementation programs, the Department does not intend

to propose additional requirements or restrictions. The Department

hopes that this flexibility encourages more States to develop

partnerships with private employers in an environment that supports

innovation and experimentation within the limits of the law.

This rule proposes to add, at 7 CFR 273.7, a new paragraph (l),

containing the following requirements for the work supplementation or

support program.

We further propose to add a new paragraph (d)(1)(xiv) under 7 CFR

272.2, Plan of operation. Paragraph (d)(1)(xiv) will contain the

requirement for a planning document from each State agency that

operates a work supplementation program.

A State agency that proposes to implement a work supplementation

program must submit its plan for FNS approval. This plan must address

the requirements for a work supplementation or support program listed

this proposed rule. Once its plan is approved, FNS will provide the

State agency with the cash value of recipients' food stamp benefits to

be used as wage subsidies for work supplementation programs and to

reimburse the State for related administrative costs.

PRWORA established the following parameters for work

supplementation programs:

The individual must be receiving public assistance, but

must not be employed by the employer at the time the individual enters

the work supplementation program.

The wage subsidy received under the work supplementation

program must be excluded from household income and resources during the

time the individual is participating in work supplementation.

The household must not receive a separate food stamp

allotment while participating in the work supplementation program.

An individual participating in a work supplementation

program must be excused from meeting any other work requirements.

The work supplementation program must not displace any

persons currently employed who are not supplemented or supported.

The wage subsidy must not be considered income or

resources under any Federal, State, or local laws, including, but not

limited to, laws relating to taxation, welfare, or public assistance

programs, and the household's food stamp allotment must not be

effectively decreased due to taxation or any other reason because of

its use as a wage subsidy.

The earned income deduction must not be applied to the

subsidized portion of wages earned in a work supplementation program.

State agencies must specify how public assistance

recipients in the proposed work supplementation and support program

will, within a specified period of time, be moved from supplemented or

supported employment to employment that is not supplemented or

supported.

The Department solicits comments in the following areas that are

not mandated by PRWORA but are necessary to comply with other laws or

for accounting and reporting purposes.

States must ensure that work supplemented or supported

employees are treated the same as other non-subsidized employees and

that all subsidized positions comply with the Fair Labor Standards Act.

States must outline State agency, employer and recipient

obligations and responsibilities in the proposed work supplementation

program. They must also describe procedures for providing wage

subsidies to participating employers and for monitoring the use of the

funds.

[[Page 72207]]

At the same time the plan is submitted for approval, the

State must also submit an operating budget for the proposed program.

Additionally, before the plan is approved, the State must agree to

comply with certain reporting and monitoring requirements. State

agencies operating work supplementation and support programs are

required to comply with all FNS reporting requirements, including

reporting the amount of benefits contributed to all employers as a wage

subsidy on the FNS 388. State Issuance and Participation Estimates;

FNS-388A, Participation and Issuance Project Area; FNS-46. Issuance

Reconciliation Report; and SF-269, Addendum Financial Status Report.

State agencies are also required to report administrative costs

associated with work supplementation programs on the FNS-366A, Budget

Projection and SF-269, Financial Status Report. Special codes for work

supplementation programs will be assigned for reporting purposes.

The proposed rule asks States to include in their plan

amendments whether food stamp allotments and public assistance grants

will be frozen at the time a recipient begins a subsidized job. The

Department is particularly interested in public comments on the

desirability of a Federal standard for issuing supplemental allotments

when earnings unexpectedly fall and, secondly, whether there should be

a time limit on freezing benefit levels (i.e., not counting any

unsubsidized wages from the employer).

Once the work supplementation program plan is approved,

the State agency must incorporate it into the State Plan of Operation

and include its operating budget in the State agency budget. After

approval, the Department will pay the cash value of a recipient's food

stamp benefits to the State agency so they may be paid directly to an

employer as a wage subsidy. The State agency will also be reimbursed

for administrative costs related to the operation of the work

supplementation program as provided by Section 16 of the Food Stamp

Act.

For Quality Control purposes, cases in which a household

member is participating in a work supplementation program will be coded

as not subject to review.

Workfare

Since 1982 the Department has afforded State agencies and political

subdivisions the option to establish a workfare program. In Workfare,

nonexempt food stamp household members are required to accept public

service job offers and work in return for the household's food stamp

allotment. The number of hours of work required of household member is

calculated by dividing the household's monthly benefit by the higher of

the applicable Federal or State minimum wage. Workfare helps ensure

that only those who are willing to work receive benefits; it provides

useful public services; and it provides valuable work experience.

Under current rules, household members subject to the work

registration requirements of 7 CFR 273.7(a) are also subject to

workfare. Additionally, recipients of benefits under title IV-A are

subject to workfare if they are currently involved less than 20 hours a

week in title IV-A work activities and are not otherwise exempt.

Applicants for, or recipients of, unemployment compensation are also

subject to workfare.

Workfare is a household responsibility. Legislative history

(Conference Report No. 97-290 on the Agriculture & Food Act of 1981,

December 10, 1981, page 226) established Congressional intent that the

household's workfare responsibility be shared by all nonexempt members:

``Upon a household member's failure to comply with workfare

requirements, the household would be ineligible for food stamps * * *,

unless someone in the household satisfies all outstanding workfare

obligations. * * *'' Failure of a household to comply with workfare

requirements without good cause results in the disqualification of the

entire household until the workfare obligation is met, or for two

months, whichever is less.

The workfare provisions of section 20 (7 U.S.C. 2029) of the Act

entitle a political subdivision operating a workfare program to share

in the benefit reductions that occur when a workfare participant begins

employment while engaged in workfare for the first time, or within 30

days of ending the first participation in workfare. This provision is

available only for workfare programs operated under section 20.

Workfare may also be offered as a component of a State agency's E&T

program. However, workfare savings are not available for E&T workfare

components.

State agencies and political subdivisions may also operate workfare

programs in which participation by food stamp recipients is voluntary.

In a voluntary program, disqualification for failure to comply does not

apply. The number of hours of work will be negotiated between the

volunteer household and the agency operating the workfare program.

Section 815 of PRWORA amended section 20 of the Act to: (1)

eliminate the requirement for conformance with workfare programs under

title IV-A ; (2) eliminate the provision for combining the food stamp

and title IV-A assistance grants to determine the number of hours a

title IV-A food stamp household can be required to participate in a

community work experience program established under section 409 of the

Social Security Act (42 U.S.C. 609); and (3) conform disqualification

penalties for failure to comply with workfare requirements with those

under section 6(d)(1) of the Act. Thus, while still a household

responsibility, State agencies have the option of disqualifying the

individual or, if the individual is a head of household, the entire

household.

This rulemaking proposes to amend 7 CFR 273.22 to incorporate

PRWORA changes as well as making other technical corrections. Lastly,

in keeping with the Department's ongoing regulation streamlining and

reform initiative, and to create a more logical union of food stamp

work requirements and the optional workfare program, we propose to move

the amended 7 CFR 273.22 to 7 CFR 273.7, Work provisions, and to

designate it paragraph (m), Optional workfare program.

Comparable Workfare

Section 824 of PRWORA established the provision that non-exempt

individuals will become ineligible if, in the preceding 36-month

period, they receive food stamps for three months during which they do

not meet a required work or training obligation. One of the qualifying

activities is to ``participate in and comply with the requirements of a

[workfare] program under section 20 or a comparable program established

by a State or political subdivision of a State * * *''

Several State agencies are operating--or have expressed an interest

in operating--programs that, while comparable to workfare in that they

require the participant to work for his or her household's food stamp

allotment, vary greatly from the requirements of workfare under section

20 of the Act. The purpose of these comparable programs is to assist

ABAWDs in fulfilling their work requirement and maintaining eligibility

for benefits. Although there are variations, these comparable programs,

for the most part, provide that the ABAWDs voluntarily participate and

find their own public service placements. They are also responsible for

arranging to have their participation reported to their

[[Page 72208]]

caseworkers and for verifying their workfare hours. Participation

requirements range from three hours a week to 25 hours per month.

Additionally, these ``self-inititated'' programs may or may not offer

reimbursement for transportation or other costs of participation. The

work site is responsible for providing work benefits and/or

protections.

The Department initially determined that, since self-initiated

programs do not meet the requirements of section 20 of the Act, they

are not eligible for Federal financial participation. However, the

Balanced Budget Act of 1997 contained a ``use of funds'' requirement

for 100 percent Federal E&T grant allocations. State agencies must use

at least 80 percent of their E&T grants to serve nonexempt ABAWDs who

are placed in and comply with the requirements of an approved work

program, a workfare program under section 20 or a comparable workfare

program established by a State or political subdivision. Thus

comparable self-initiated workfare programs are now eligible for

Federal financial participation.

This rule proposes to add a new paragraph (10) to the newly

designated paragraph 273.7(m). The new paragraph, (m)(10), will contain

the provisions relating to comparable workfare programs.

IV. Procedural Matters

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 is listed in the Catalog of Federal Domestic

Assistance under No. 10.551. For the reasons set forth in the final

rule in 7 CFR part 3105, subpart V and related Notice to (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 12988

This rule has been reviewed under Executive Order 12988, Civil

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

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

conflict with its provisions or that would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

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

rule. 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 Watkins,

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

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

a substantial number of small entities. The changes will affect food

stamp applicants and recipients who are subject to FSP work

requirements. The rulemaking also affects State and local welfare

agencies that administer the Food Stamp Program.

Unfunded Mandate Analysis

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

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

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

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

Department generally must prepare a written statement, including a cost

benefit analysis, for proposed and final rules with ``Federal

mandates'' that may result in expenditures to State, local, or tribal

governments, in the aggregate, or to the private sector, of $100

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

rule, section 205 of the UMRA generally requires the Department to

identify and consider a reasonable number of regulatory alternatives

and adopt the least costly, more cost-effective or least burdensome

alternative that achieves the objectives of the rule.

This rule contains no Federal mandates (under the regulatory

provisions of Title II of the UMRA) which impose costs on State, local,

or tribal governments or to the private sector of $100 million or more

in any one year. Thus this rule is not subject to the requirements of

section 202 and 205 of the UMRA.

Regulatory Impact Analysis

Need for Action

This action is needed to implement the work provisions of Pub. L.

104-193, the Personal Responsibility and Work Opportunity

Reconciliation Act of 1996 (PRWORA). These provisions would: (1)

establish new disqualification penalties for noncompliance with Food

Stamp Program work requirements; (2) permit certain States to lower the

age at which a child exempts a parent or caretaker from food stamp work

rules; (3) revise and streamline the Food Stamp Employment and Training

(E&T) Program; (4) provide States the option of using a household's

food stamp benefits to subsidize a job for a household member

participating in a work supplementation or support program; and (5)

permit qualifying States to provide certain households with cash in

lieu of food stamps.

Benefits

State agencies will benefit from the provisions of this rule

because they streamline Food Stamp Program work requirements, simplify

the disqualification requirements for failure to comply with work

rules, and provide greater flexibility for State agencies to operate

their employment and training programs.

Costs

Changes brought about by this rule will reduce Program costs for

the five-year period FY 99 through FY 03 by approximately $101.7

million. The savings are realized from section 815, disqualification.

They are the result of new disqualification penalties for noncompliance

with Food Stamp Program work requirements. For FY 1999-2003, the

estimated yearly dollar savings (in millions) are $30.9, $25.9, $19.5,

$13.3, and $12.1 respectively. The costs/savings of the other four

provisions cannot be determined because they either do not affect

eligibility for food stamps or their effect on eligibility cannot be

determined. They will not be discussed in this analysis.

Section 815--Disqualification. This provision deals with

disqualification for noncompliance with Food Stamp Program work

requirements. It adds to the list of ineligible individuals those who

refuse without good cause to provide sufficient information to allow a

determination of their employment status or job availability;

voluntarily and without good cause quit their job (previously limited

to heads of households); voluntarily and without good cause reduce

their work effort to less than 30 hours a week; and fail to comply with

the workfare rules in section 20 of the Food Stamp Act.

The disqualification provision deletes the lack of adequate child

care for children above age five and under age 12 as an explicit good

cause for refusal to accept a job offer and removes the requirement

that the entire food stamp household be disqualified if the head of

[[Page 72209]]

the household is disqualified. Instead, if the head of the household is

disqualified, States have the option of disqualifying the entire

household for the duration of the head of the household's

disqualification, or for 180 days, whichever is less.

The provision establishes new mandatory minimum disqualification

periods for individuals who fail to comply with work requirements. The

length of the disqualification is based on the frequency of the

occurrence. The State agency has the option to choose the length for

each occurrence: (1) for the first violation, one to three months; (2)

for the second violation, two to six months; and (3) for the third or

subsequent violation, six months, a date determined by the State

agency, or--at State agency option--permanently. In each instance, the

individual must complete the disqualification period before he or she

is allowed to comply with the work requirement and establish

eligibility.

The disqualification provision requires the Secretary to determine

the meaning of: (1) good cause; (2) voluntarily quitting; and (3)

reducing work effort; requires States to determine: (1) The meaning of

other terms; (2) the procedures for establishing compliance; and (3)

whether individuals are complying; and requires that none of such

determinations be less restrictive than comparable determinations under

title IV-A of the Social Security Act.

This provision affects participants who fail to comply with Program

work requirements by requiring minimum disqualification periods, with

no provision to ``cure'' or end the disqualification by complying. It

affects households whose heads fail to comply, if the State agency opts

to disqualify the entire household. It also affects households in which

a member is disqualified because the disqualified individual's income

is considered available to the household in calculating household

benefits.

We estimate FY 99 savings to be $30.9 million and the five-year

savings for FY 99 through FY 03 to be $101.7 million. The provisions in

this section vary only slightly from the work requirements that PRWORA

imposed on ABAWDs (for example, age ranges varied only slightly--from

16-60 as opposed to the 18-50 year old range specified for ABAWDs). We

derived our estimates using a percentage of FSP participants (mostly

ABAWDs) who may be required to meet PRWORA work requirements but who

would turn down qualifying work or training opportunities and be

sanctioned. We estimate that 22,000 persons will be sanctioned in FY 99

for refusing a work opportunity of some sort. We multiplied this number

by the average monthly food stamp benefit level for this group

(estimated to be $118.68 in 1999) times 12.

Paperwork Reduction Act

Sections 272.2 and 273.7 contain information collection

requirements. As required by the Paperwork Reduction Act of 1995 (44

U.S.C. 3507(d)), the Food and Nutrition Service is submitting a copy of

this section to the Office of Management and Budget (OMB) for its

review.

Collection of Information: Operating Guidelines, Forms, and

Waivers.

The regulations at 7 CFR 272.2 require that State agencies plan and

budget program operations and establish objectives for each year.

Section 273.7 contains requirements for the State Employment and

Training (E&T) Plan, one of the required planning documents. In the

interest of State flexibility, the PRWORA provisions addressed in this

rule deleted State E&T planning requirements for describing the

intensity of E&T services, conciliation procedures, and Statewide

limits for dependent care reimbursements, while adding the requirement

that State agencies provide a description of their mandatory

disqualification procedures and periods for noncompliance with Food

Stamp Program work requirements.

The respondents are 53 State agencies and they are required to

respond once a year. It is estimated that the total annual reporting

burden is 3,768 hours.

The PRWORA provisions addressed in this rule deleted reporting

burdens in the interest of State flexibility, while adding a new burden

associated with each State agency's mandatory disqualification

procedures. Thus, the overall reporting and recordkeeping burden for

this proposed information collection is unchanged.

PRWORA provided State agencies the option of implementing work

supplementation or support programs. In these programs the cash value

of public assistance benefits, plus food stamps, is provided to an

employer as a wage subsidy to be used for hiring and employing public

assistance recipients. This rule proposes to add the work

supplementation or support plan, as required at Sec. 273.7(l)(1), to

the planning requirements at 7 CFR 272.2.

The potential respondents are any of the 53 State agencies that may

opt to initiate a work supplementation or support program. The one-time

burden associated with a State agency creating a plan for a work

supplementation or support program is estimated to be 100 hours.

However, since no State agency has opted to initiate a work

supplementation or support program since the enactment of PRWORA, it is

anticipated that this provision will not change the burden associated

with this information collection.

Organizations and individuals desiring to submit comments on the

information collection requirements should direct them to the Office of

Information and Regulatory Affairs, OMB, Room 10235, New Executive

Office Building, Washington, D.C. 20503; Attention Desk Officer for the

Food and Nutrition Service.

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; (c) ways to enhance

the quality, usefulness, and clarity of the information to be

collected; and (d) ways to minimize the burden of the collection of

information on those who are to respond, including through the use of

appropriate automated, electronic, mechanical, or other technological

collection techniques or other forms of information technology.

OMB is required to make a decision concerning the collection of

information contained in these proposed regulations between 30 and 60

days after publication of this document in the Federal Register.

Therefore, a comment to OMB is best assured of having its full effect

if OMB receives it within 30 days of publication. This does not affect

the deadline for the public to comment to the Department on the

proposed regulations.

List of Subjects

7 CFR Part 271

Administrative practice and procedures, Food stamps, Grant

programs-social programs.

7 CFR Part 272

Administrative practice and procedures, Food stamps, Grant

programs-social programs.

7 CFR Part 273

Administrative practice and procedures, Food stamps, Grant

programs-social programs, Penalties, Reporting and recordkeeping.

Accordingly, 7 CFR Parts 271, 272, and 273 are proposed to be

amended as follows:

[[Page 72210]]

1. The authority citation for parts 271, 272, and 273 continues to

read as follows:

Authority: 7 U.S.C. 2011-2036.

PART 271--GENERAL INFORMATION AND DEFINITIONS

2. In Sec. 271.2:

a. Remove the definition of ``Base of eligibles''.

b. Amend the definition of ``Exempted'' by removing the reference

to ``Sec. 273.7(f)'' and adding in its place a reference to

``Sec. 273.7(e)''.

c. Revise the definition of ``Placed in an employment and training

(E&T) program'' to read as follows:

Sec. 271.2 Definitions.

* * * * *

Placed in an employment and training (E&T) program means a State

agency may count a person as ``placed'' in an E&T program when the

individual commences a component.

* * * * *

PART 272-REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

3. In Sec. 272.2, new paragraphs (d)(1)(xiii) and (d)(1)(xiv) are

added to read as follows:

Sec. 272.2 Plan of operation.

* * * * *

(d) Planning documents. * * *

(1) * * *

(xiii) The State agency's disqualification plan, in accordance with

Sec. 273.7(f)(3) of this chapter.

(xiv) If the State agency chooses to implement the provisions for a

work supplementation or support program, the work supplementation or

support program plan, in accordance with Sec. 273.7(l)(1) of this

chapter.

* * * * *

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

4. Revise Sec. 273.7 to read as follows:

Sec. 273.7 Work Provisions.

(a) Work requirements. (1) As a condition of eligibility for food

stamps, each household member not exempt under paragraph (b)(1) of this

section must comply with the following Food Stamp Program work

requirements:

(i) Register for work or be registered by the State agency at the

time of application and every 12 months after initial registration. The

registration form need not be completed by the member required to

register.

(ii) Participate in an employment and training (E&T) program if

assigned by the State agency, to the extent required by the State

agency;

(iii) Participate in a workfare program if assigned by the State

agency, to the extent required by the State agency;

(iv) Provide the State agency or its designee with sufficient

information regarding employment status or availability for work;

(v) Report to an employer to whom referred by the State agency or

its designee if the potential employment meets the suitability

requirements described in paragraph (h) of this section;

(vi) Accept a bona fide offer of suitable employment, as defined in

paragraph (h) of this section, at a site or plant not subject to a

strike or lockout, at a wage equal to the higher of the Federal or

State minimum wage or 80 percent of the wage that would have governed

had the minimum hourly rate under section 6(a)(1) of the Fair Labor

Standards Act of 1938 (U.S.C. 206(a)(1)) been applicable to the offer

of employment.

(vii) Do not voluntarily and without good cause quit a job of 30 or

more hours a week or reduce work effort to less than 30 hours a week.

(2) The Food and Nutrition Service (FNS) will determine the meaning

of ``good cause,'' ``voluntary quit,'' and ``reduction of work effort''

as used in paragraph (a)(1) of this section.

(3) Each State agency will determine the meaning of any other terms

used in paragraph (a)(1) of this section; the procedures for

establishing compliance with Food Stamp Program work requirements; and

whether an individual is complying with Food Stamp Program work

requirements. A State agency must not use a meaning, procedure, or

determination that is less restrictive on food stamp recipients than is

a comparable meaning, procedure required to comply with, or

determination under the State agency's program funded under title IV-A

of the Social Security Act.

(4) Strikers whose households are eligible under the criteria in

Sec. 273.1(g) are subject to Food Stamp Program work requirements

unless they are exempt under paragraph (b)(1) of this section at the

time of application.

(5) State agencies may request approval from FNS to substitute

State or local procedures for work registration for PA households not

subject to the work requirements under title IV of the Social Security

Act or for GA households. However, the failure of a household member to

comply with State or local work requirements that exceed the

requirements listed in this section must not be considered grounds for

disqualification. Work requirements imposed on refugees participating

in refugee resettlement programs may also be substituted, with FNS

approval.

(6) Household members who are applying for SSI and for food stamps

under Sec. 273.2(k)(1)(i) will have Food Stamp Program work

requirements waived until they are determined eligible for SSI and

become exempt from Food Stamp Program work requirements, or until they

are determined ineligible for SSI, at which time their exemptions from

Food Stamp Program work requirements will be reevaluated.

(b) Exemptions from work requirements. (1) The following persons

are exempt from Food Stamp Program work requirements:

(i) A person younger than 16 years of age or a person 60 years of

age or older. A person age 16 or 17 who is not the head of a household

or who is attending school, or is enrolled in an employment training

program, on at least a half-time-basis, is exempt. If the person turns

16 (or 18 under the preceding sentence) during a certification period,

the State agency must register the person as part of the next scheduled

recertification process, unless the person qualifies for another

exemption.

(ii) A person physically or mentally unfit for employment. For the

purposes of this paragraph (b), a State agency will define physical and

mental fitness; establish procedures for verifying; and will verify

claimed physical or mental unfitness when necessary. However, the State

agency must not use a definition, procedure for verification, or

verification that is less restrictive on food stamp recipients than a

comparable meaning, procedure, or determination under the State

agency's program funded under title IV-A of the Social Security Act.

(iii) A person subject to and complying with any work requirement

under title IV of the Social Security Act. If the exemption claimed is

questionable, the State agency is responsible for verifying the

exemption.

(iv) (A) A parent or other household member responsible for the

care of a dependent child under 6 or an incapacitated person. If the

child has its 6th birthday during a certification period, the State

agency must work register the individual responsible for the care of

the child as part of the next scheduled recertification process, unless

the individual qualifies for another exemption.

(B) The State agencies of Alabama, Kansas, Maryland, Michigan,

North Dakota, Virginia, Wisconsin, and Wyoming may opt to lower the age

of

[[Page 72211]]

a dependent child that qualifies a parent or other household member for

an exemption to between 1 and 6. The age may be lowered for a maximum

three-year period. The eligible State agencies must notify FNS, in

writing, when they decide to initiate their option. Only the State

agencies listed are authorized this option.

(v) A person receiving unemployment compensation. A person who has

applied for, but is not yet receiving, unemployment compensation is

also exempt if that person is complying with work requirements that are

part of the Federal-State unemployment compensation application

process. If the exemption claimed is questionable, the State agency is

be responsible for verifying the exemption with the appropriate office

of the State employment services agency.

(vi) A regular participant in a drug addiction or alcoholic

treatment and rehabilitation program.

(vii) An employed or self-employed person working a minimum of 30

hours weekly or earning weekly wages at least equal to the Federal

minimum wage multiplied by 30 hours. This includes migrant and seasonal

farmworkers under contract or similar agreement with an employer or

crew chief to begin employment within 30 days (although this will not

prevent individuals from seeking additional services from the State

employment services agency). For work registration purposes, a person

residing in areas of Alaska designated in Sec. 274.10(a)(4)(iii) of

this chapter, who subsistence hunts and/or fishes a minimum of 30 hours

weekly (averaged over the certification period) is considered exempt as

self-employed. An employed or self-employed person who voluntarily and

without good cause reduces his or her work effort and, after the

reduction, is working less than 30 hours per week, is ineligible to

participate in the Food Stamp Program under paragraph (j) of this

section.

(viii) A student enrolled at least half time in any recognized

school, training program, or institution of higher education. Students

enrolled at least half time in an institution of higher education must

meet the student eligibility requirements listed in Sec. 273.5. A

student will remain exempt during normal periods of class attendance,

vacation, and recess. If the student graduates, enrolls less than half

time, is suspended or expelled, drops out, or does not intend to

register for the next normal school term (excluding summer), the State

agency must work register the individual, unless the individual

qualifies for another exemption.

(2)(i) Persons losing exemption status due to any changes in

circumstances that are subject to the reporting requirements of

Sec. 273.12 (such as loss of employment that also results in a loss of

income of more than $25 a month, or departure from the household of the

sole dependent child for whom an otherwise nonexempt household member

was caring) must register for employment when the change is reported.

If the State agency does not use a work registration form, it must

annotate the change to the member's exemption status. If a work

registration form is used, the State agency is responsible for

providing the participant with a work registration form when the change

is reported. Participants are responsible for returning the form to the

State agency within 10 calendar days from the date the form was handed

to the household member reporting the change in person, or the date the

State agency mailed the form. If the participant fails to return the

form, the State agency must issue a notice of adverse action stating

that the participant is being terminated and why, but that the

termination can be avoided by returning the form.

(ii) Those persons who lose their exemption due to a change in

circumstances that is not subject to the reporting requirements of

Sec. 273.12 must register for employment at their household's next

recertification.

(c) State agency responsibilities. (1) The State agency must

register for work each household member not exempted by the provisions

of paragraph (b)(1) of this section. As part of the work registration

process, the State agency must explain to the individual the pertinent

work requirements, the rights and responsibilities of work registered

household members, and the consequences of failure to comply. The State

agency must provide a written statement of the above to each individual

in the household who is registered for work. A notice must also be

provided when a previously exempt individual or new household member

becomes subject to a work requirement, and at recertification. The

State agency must permit the applicant to complete a record or form for

each household member required to register for employment in accordance

with paragraph (a)(1)(i) of this section. Household members are

considered to have registered when an identifiable work registration

form is submitted to the State agency or when the registration is

otherwise annotated or recorded by the State agency.

(2) The State agency is responsible for screening each work

registrant to determine whether or not it is appropriate, based on the

State agency's criteria, to refer the individual to an E&T program, and

if appropriate, referring the individual to an E&T program component.

Upon entry into each component, the State agency must inform the

participant, either orally or in writing, of the requirements of the

component, what will constitute noncompliance and the sanctions for

noncompliance. A State agency may, with FNS approval, use intake and

sanction systems that are compatible with its title IV-A work program.

Such systems must be proposed and explained in the State agency's E&T

State Plan.

(3) The State agency must issue a notice of adverse action to an

individual, or to a household if appropriate, within 10 days after

learning of the individual's noncompliance with Food Stamp Program work

requirements. The notice of adverse action must meet the timeliness and

adequacy requirements of Sec. 273.13. If the individual complies before

the end of the advance notice period, the State agency will cancel the

adverse action. If the State agency offers a conciliation process as

part of its E&T program, it must issue the notice of adverse action no

later than the end of the conciliation period.

(4) The State agency must design and operate an E&T program that

may consist of one or more or a combination of employment and/or

training components as described in paragraph (e)(1) of this section.

The State agency must ensure that it is notified by the agency or

agencies operating its E&T components within 10 days if an E&T

mandatory participant fails to comply with E&T requirements.

(5) Each component of a State agency's E&T program must be

delivered through a statewide workforce development system, unless the

component is not available locally through such a system.

(6) In accordance with Sec. 272.2(e)(9) of this chapter, each State

agency must prepare and submit an Employment and Training Plan to its

appropriate FNS Regional Office and to the FNS National Office. The E&T

Plan must be available for public inspection at the State agency

headquarters. In its E&T Plan, the State agency will detail the

following:

(i) The nature of the E&T components the State agency plans to

offer and the reasons for such components, including cost information.

The methodology for State agency reimbursement for education components

must be specifically addressed;

[[Page 72212]]

(ii) An operating budget for the Federal fiscal year with an

estimate of the cost of operation for one full year. Any State agency

that requests 50 percent Federal reimbursement for State agency E&T

administrative costs, other than for participant reimbursements, must

include in its plan, or amendments to its plan, an itemized list of all

activities and costs for which those Federal funds will be claimed,

including the costs for case management and casework to facilitate the

transition from economic dependency to self-sufficiency through work.

Costs in excess of the Federal grant will be allowed only with the

prior approval of FNS and must be adequately documented to assure that

they are necessary, reasonable and properly allocated;

(iii) The categories and types of individuals the State agency

intends to exempt from E&T participation, the estimated percentage of

work registrants the State plans to exempt, and the frequency with

which the State agency plans to reevaluate the validity of its

exemptions;

(iv) The characteristics of the population the State agency intends

to place in E&T;

(v) The estimated number of volunteers the State agency expects to

place in E&T;

(vi) The geographic areas covered and not covered by the E&T Plan

and why, and the type and location of services to be offered;

(vii) The method the State agency uses to count all work

registrants the first month of each fiscal year;

(viii) The method the State agency uses to report work registrant

information on the quarterly Form FNS-583.

(ix) The method the State agency uses to prevent work registrants

from being counted twice within a Federal fiscal year. If the State

agency universally work registers all food stamp applicants, this

method must specify how the State agency excludes those exempt from

work registration under paragraph (b)(1) of this section. If the State

agency work registers nonexempt participants whenever a new application

is submitted, this method must also specify how the State agency

excludes those participants who may have already been registered within

the past 12 months as specified under paragraph (a)(1)(i) of this

section.

(x) The organizational relationship between the units responsible

for certification and the units operating the E&T components, including

units of the Statewide workforce development system, if available. FNS

is specifically concerned that the lines of communication be efficient

and that noncompliance be reported to the certification unit within 10

working days after the noncompliance occurs;

(xi) The relationship between the State agency and other

organizations it plans to coordinate with for the provision of

services, including organizations in the Statewide workforce

development system, if available. Copies of contracts must be available

for inspection;

(xii) The availability, if appropriate, of E&T programs for Indians

living on reservations.

(xiii) If an informal conciliation process is planned, the

procedures that will be used when an individual fails to comply with an

E&T program requirement. Include the length of the conciliation period.

(xiv) The payment rates for child care established in accordance

with the Child Care and Development Block Grant provisions of 45 CFR

98.43, which require the State agency to ensure that eligible children

receive child care services equal to the services provided to children

not funded through Block Grant assistance or through child care

assistance under any other Federal, State, or Tribal programs.

(7) State agencies will submit E&T Plans biennially, at least 45

days before the start of the Federal fiscal year. State agencies must

submit plan revisions to the appropriate FNS regional office for

approval if they plan to alter the nature or location of their

components or the number or characteristics of persons served. The

proposed changes must be submitted for approval at least 30 days prior

to planned implementation.

(8) The State agency will submit quarterly reports to FNS no later

than 45 days after the end of each Federal fiscal quarter containing

monthly figures for the number of:

(i) Participants newly work registered;

(ii) Work registrants exempted by the State agency from

participation in E&T;

(iii) Participants who volunteer for and commence participation in

an approved E&T component;

(iv) E&T mandatory participants who commence an approved E&T

component, including Food Stamp Program applicants if the State agency

chooses to operate a component for applicants.

(9) State agencies will submit annually, on their first quarterly

report, the number of work registered persons in that State in October

of the new fiscal year.

(10) State agencies will submit annually, on their final quarterly

report, the following information:

(i) The number of work registrants exempted from E&T participation

as part of a category of persons during the course of the year

separated by the specific reasons for the exemptions.

(ii) The number of mandatory and volunteer participants placed in

each E&T component offered by the State agency.

(11) Additional information may be required of individual State

agencies on an as needed basis depending on the contents of the State

agency's E&T Plan regarding the type of components offered and the

characteristics of persons served.

(12) State agencies must ensure, to the maximum extent practicable,

that E&T programs are provided for Indians living on reservations.

(13) If a benefit overissuance is discovered for a month or months

in which a mandatory E & T participant has already fulfilled a work

component requirement, the State agency must follow the procedure

specified in paragraph (m)(6)(v) of this section for a workfare

overissuance.

(14) If a State agency fails to efficiently and effectively

administer its E&T program, the provisions of Sec. 276.1(a)(4) of this

chapter will apply.

(d) Federal financial participation. (1) Employment and training

grants. (i) Each State agency will receive an E&T program grant for

each fiscal year to operate an E&T program. The grant requires no State

matching. The grant will remain available until expended.

(A) No State agency will receive less than $50,000 in Federal 100

percent funds in a fiscal year.

(B) If a State agency will not expend all of the funds allocated to

it for a fiscal year, FNS will reallocate the unexpended funds to other

State agencies during the fiscal year or the subsequent fiscal year.

(C) State agencies must use E&T program grants to fund the

administrative costs of planning, implementing and operating food stamp

E&T programs in accordance with approved State agency E&T plans. E&T

grants may not be used for the process of determining whether an

individual must be work registered, the work registration process, or

any further screening performed during the certification process, nor

for sanction activity that takes place after the operator of an E&T

component reports noncompliance without good cause. For purposes of

this paragraph (d), the certification process is considered ended when

an individual is referred to an E&T component for assessment or

participation. E&T grants may also not be used to subsidize the wages

of

[[Page 72213]]

participants, or to reimburse participants under paragraph (d)(1)(ii)

of this section.

(D) A State agency's receipt of the E&T program grant as allocated

under paragraph (d)(1)(i)(A) or (d)(1)(i)(B) of this section is

contingent on FNS's approval of the State agency's E&T plan. If an

adequate plan is not submitted, FNS may reallocate a State agency's

grant among other State agencies with approved plans. Non-receipt of an

E&T program grant does not release a State agency from its

responsibility under paragraph (c)(4) of this section to operate an E&T

program.

(E) Federal funds made available to a State agency to operate a

component under paragraph (e)(1)(vi) of this section must not be used

to supplant nonfederal funds for existing educational services and

activities that promote the purposes of this component. Education

expenses are approvable to the extent that E&T component costs exceed

the normal cost of services provided to persons not participating in an

E&T program.

(F) In accordance with section 6(d)(4)(K) of the Food Stamp Act,

and notwithstanding any other provision of this paragraph (d), the

amount of Federal E&T funds, including participant and dependent care

reimbursements, a State agency uses to serve participants who are

receiving benefits under a State program funded under part A of title

IV of the Social Security Act must not exceed the amount of Federal E&T

funds the State agency used in FY 1995 to serve participants who were

receiving benefits under a State program funded under part A of title

IV of the Social Security Act.

(1) Based on information provided by each State agency, FNS

established claimed Federal E&T expenditures on this category of

recipients in fiscal year 1995 for the State agencies of Colorado

($318,613), Utah ($10,200), Vermont ($1,484,913), and Wisconsin

($10,999,773). These State agencies may spend up to a like amount each

fiscal year to serve food stamp recipients who also receive title IV

assistance.

(2) All other State agencies are prohibited from expending any

Federal E&T funds on title IV recipients.

(ii) Participant reimbursements. The State agency must provide

payments to participants in its E&T program, including applicants and

volunteers, for expenses that are reasonably necessary and directly

related to participation in the E&T program. These payments may be

provided as a reimbursement for expenses incurred or in advance as

payment for anticipated expenses in the coming month. The State agency

must inform each E&T participant that allowable expenses up to the

amounts specified in paragraphs (d)(1)(ii)(A) and (d)(1)(ii)(B) of this

section will be reimbursed by the State agency upon presentation of

appropriate documentation. Reimbursable costs may include, but are not

limited to, dependent care costs, transportation, and other work,

training or education related expenses such as uniforms, personal

safety items or other necessary equipment, and books or training

manuals. These costs must not include the cost of meals away from home.

If applicable, any allowable costs incurred by a noncompliant E&T

participant after the expiration of the noncompliant participant's

minimum mandatory disqualification period, as established by the State

agency, that are reasonably necessary and directly related to

reestablishing eligibility, as defined by the State agency, are

reimbursable under paragraphs (d)(1)(ii)(A) and (d)(1)(ii)(B) of this

section. The State agency may reimburse participants for expenses

beyond the amounts specified in paragraphs (d)(1)(ii)(A) and

(d)(1)(ii)(B) of this section, however, only costs that are up to but

not in excess of those amounts are subject to Federal cost sharing.

Reimbursement must not be provided from E&T grants allocated under

paragraph (d)(1)(i) of this section. Any expense covered by a

reimbursement under this section is not deductible under

Sec. 273.10(d)(1)(i). Reimbursements will be provided as follows:

(A) The costs of dependent care determined by the State agency to

be necessary for the participation of a household member in the E&T

program up to the actual cost of dependent care, or the applicable

payment rate for child care, whichever is lowest. The payment rate for

child care is determined in accordance with the Child Care and

Development Block Grant provisions of 45 CFR 98.43, which require the

State agency to ensure that eligible children receive child care

services equal to the services provided to children not funded through

Block Grant assistance or through child care assistance under any other

Federal, State, or Tribal programs. The State agency will provide a

dependent care reimbursement to an E&T participant for all dependents

requiring care unless otherwise prohibited by this section. The State

agency will not provide a reimbursement for a dependent age 13 or older

unless the dependent is physically and/or mentally incapable of caring

for himself or herself or under court supervision. The State agency

must provide a reimbursement for all dependents who are physically and/

or mentally incapable of caring for themselves or who are under court

supervision, regardless of age, if dependent care is necessary for the

participation of a household member in the E&T program. The State

agency will obtain verification of the physical and/or mental

incapacity for dependents age 13 or older if the physical and/or mental

incapacity is questionable. Also, the State agency will verify a court

imposed requirement for the supervision of a dependent age 13 or older

if the need for dependent care is questionable. If more than one

household member is required to participate in an E&T program, the

State agency will reimburse the actual cost of dependent care, the

applicable payment rate for child care, or the Statewide limit,

whichever is lowest, for each dependent in the household, regardless of

the number of household members participating in the E&T program. An

individual who is the caretaker relative of a dependent in a family

receiving benefits under title IV-A of the Social Security Act in a

local area where an employment, training, or education program under

title IV-A is in operation is not eligible for such reimbursement. An

E&T participant is not entitled to the dependent care reimbursement if

a member of the E&T participant's food stamp household provides the

dependent care services. The State agency must verify the participant's

need for dependent care and the cost of the dependent care prior to the

issuance of the reimbursement. The verification must include the name

and address of the dependent care provider, the cost and the hours of

service, e.g., five hours per day, five days per week for two weeks. A

participant may not be reimbursed for dependent care services beyond

that which is required for participation in the E&T program. In lieu of

providing reimbursements for dependent care expenses, a State agency

may arrange for dependent care through providers by the use of purchase

of service contracts, by providing vouchers to the household or by

other means. A State agency may require that dependent care provided or

arranged by the State agency meet all applicable standards of State and

local law, including requirements designed to ensure basic health and

safety protections, e.g., fire safety. An E&T participant may refuse

available appropriate dependent care as provided or arranged by the

State agency, if the participant can arrange other dependent care or

can show that such refusal will not prevent or interfere with

[[Page 72214]]

participation in the E&T program as required by the State agency. A

State agency may claim 50 percent of actual costs for dependent care

services provided or arranged for by the State agency up to the actual

cost of dependent care, the applicable payment rate for child care, or

the Statewide limit, whichever is lowest.

(B) The actual costs of transportation and other costs (excluding

dependent care costs) that are determined by the State agency to be

necessary and directly related to participation in the E&T program up

to $25 per participant per month. Such costs are the actual costs of

participation unless the State agency has a method approved in its E&T

Plan for providing allowances to participants to reflect approximate

costs of participation. If a State agency has an approved method to

provide allowances rather than reimbursements, it must provide

participants an opportunity to claim actual expenses that exceed the

standard, up to $25 or such other maximum level of reimbursements

established by the State agency.

(C) No participant cost that has been reimbursed under a workfare

program under paragraph (m)(7)(i) of this section, title IV of the

Social Security Act or other work program will be reimbursed under this

section.

(D) Any portion of dependent care costs that are reimbursed under

this section may not be claimed as an expense and used in calculating

the dependent care deduction under Sec. 273.9(d)(4) for determining

benefits.

(E) The State agency must inform all mandatory E&T participants

that they may be exempted from E&T participation if their monthly

expenses that are reasonably necessary and directly related to

participation in the E&T program exceed the allowable reimbursement

amount. Persons for whom allowable monthly expenses in an E&T component

exceed the amounts specified under paragraphs (d)(1)(ii)(A) and

(d)(1)(ii)(B) of this section are not required to participate in that

component. These individuals will be placed, if possible, in another

suitable component in which the individual's monthly E&T expenses would

not exceed the allowable reimbursable amount paid by the State agency.

If a suitable component is not available, these individuals will be

exempt from E&T participation until a suitable component is available

or the individual's circumstances change and his/her monthly expenses

do not exceed the allowable reimbursable amount paid by the State

agency. Dependent care expenses incurred that are otherwise allowable

but not reimbursed because they exceed the reimbursable amount

specified under paragraph (d)(1)(ii)(B) of this section will be

considered in determining a dependent care deduction under

Sec. 273.9(d)(4).

(iii) Fifty percent of all other administrative costs incurred by

State agencies in operating E&T programs, above the costs referenced in

paragraph (d)(1)(i) of this section, will be funded by the Federal

government.

(iv) Enhanced cost-sharing due to placement of workfare

participants in paid employment is available only for workfare programs

funded under paragraph (m)(7)(iv) of this section at the 50 percent

reimbursement level and reported as such.

(2) Funding mechanism. E&T program funding will be disbursed

through States' Letters of Credit in accordance with Sec. 277.5 of this

chapter. The State agency must ensure that records are maintained that

support the financial claims being made to FNS.

(3) Fiscal recordkeeping and reporting requirements. Total E&T

expenditures are reported on the Financial Status Report (SF-269) in

the column containing ``other'' expenses. E&T expenditures are also

separately identified in an attachment to the SF-269 to show, as

provided in instructions, total State and Federal E&T expenditures;

expenditures funded with the unmatched Federal grants; State and

Federal expenditures for participant reimbursements; State and Federal

expenditures for E&T costs at the 50 percent reimbursement level; and

State and Federal expenditures for optional workfare program costs,

operated under section 20 of the Food Stamp Act and paragraph (m)(7) of

this section. Claims for enhanced funding for placements of

participants in employment after their initial participation in the

optional workfare program will be submitted in accordance with

paragraph (m)(7)(iv) of this section.

(e) Employment and training programs. Work registrants not

otherwise exempted by the State agency are subject to the E&T program

participation requirements imposed by the State agency. Such

individuals are referred to in this section as E&T mandatory

participants. Requirements may vary among participants. Failure to

comply without good cause with the requirements imposed by the State

agency will result in disqualification as specified in paragraph (f)(2)

of this section.

(1) Components. To be considered acceptable by FNS, any component

offered by a State agency must entail a certain level of effort by the

participants. The level of effort should be comparable to spending

approximately 12 hours a month for two months (or less in workfare or

work experience components if the household's benefit divided by the

minimum wage is less than this amount) making job contacts; however,

FNS may approve components which do not meet this guideline which it

determines will advance program goals. An initial screening by an

eligibility worker to determine whom to place in an E&T program does

not constitute a component. The State agency may require Food Stamp

Program applicants to participate in any component it offers in its E&T

program at the time of application. The State agency must not impose

requirements that would delay the determination of an individual's

eligibility for benefits or in issuing benefits to any household that

is otherwise eligible. In accordance with section 6(o)(1)(A) of the

Food Stamp Act and Sec. 273.24 of these regulations, job search and job

search training, when offered as components of an E&T program do not

meet the definition of work program relating to the participation

requirements necessary to maintain food stamp eligibility for able-

bodied adults. However, job search or job search training activities,

when offered as part of other E&T program components, are acceptable as

long as those activities comprise less than half the required time

spent in the other components. An E&T program offered by a State agency

must include one or more of the following components:

(i) A job search program. The State agency may require an

individual to participate in job search from the time an application is

filed for an initial period established by the State agency. Following

this initial period (which may extend beyond the date when eligibility

is determined) the State agency may require an additional job search

period in any period of 12 consecutive months. The first such period of

12 consecutive months will begin at any time following the close of the

initial period. The State agency may establish a job search period,

that in its estimation, will provide participants a reasonable

opportunity to find suitable employment. The State agency should not,

however, establish a continuous, year-round job search requirement. In

accordance with section 6(o)(1)(A) of the Food Stamp Act and

Sec. 273.24 of these regulations, a job search program does not meet

the definition of work program relating to the participation

requirements necessary to maintain food stamp eligibility for able-

bodied adults. However, such a program, when

[[Page 72215]]

operated under title I of the Workforce Investment Act of 1998 (29

U.S.C. 2801 et seq.), or under section 236 of the Trade Act of 1974 (19

U.S.C. 2296) does meet the definition of work program.

(ii) A job search training program that includes reasonable job

search training and support activities. Such a program may consist of

job skills assessments, job finding clubs, training in techniques for

employability, job placement services, or other direct training or

support activities, including educational programs determined by the

State agency to expand the job search abilities or employability of

those subject to the program. Job search training activities are

approvable if they directly enhance the employability of the

participants. A direct link between the job search training activities

and job-readiness must be established for a component to be approved.

In accordance with section 6(o)(1) and (2) of the Food Stamp Act and

Sec. 273.24 of these regulations, a job search program does not meet

the definition of work program relating to the participation

requirements necessary to maintain food stamp eligibility for able-

bodied adults. However, such a program, when operated under title I of

the Workforce Investment Act of 1998 (29 U.S.C. 2801 et seq.), or under

section 236 of the Trade Act of 1974 (19 U.S.C. 2296) does meet the

definition of work program.

(iii) A workfare program as described in paragraph (m) of this

section. In accordance with section 20(e) of the Food Stamp Act and

paragraph (m)(6)(ii) of this section, the State agency may establish a

job search period of up to 30 days following certification prior to

making a workfare assignment. This job search activity is part of the

workfare assignment, and not a job search ``program.'' Participants are

considered to be participating in and complying with the requirements

of workfare, thereby meeting the work requirement for able-bodied

adults.

(iv) A program designed to improve the employability of household

members through actual work experience or training, or both, and to

enable individuals employed or trained under such programs to move

promptly into regular public or private employment. Such an employment

or training experience must:

(A) Not provide any work that has the effect of replacing the

employment of an individual not participating in the employment or

training experience program; and

(B) Provide the same benefits and working conditions that are

provided at the job site to employees performing comparable work for

comparable hours.

(v) A project, program or experiment such as a supported work

program, or a WIA or State or local program aimed at accomplishing the

purpose of the E&T program.

(vi) Educational programs or activities to improve basic skills or

otherwise improve employability including educational programs

determined by the State agency to expand the job search abilities or

employability of those subject to the program. Allowable educational

activities may include, but are not limited to, high school or

equivalent educational programs, remedial education programs to achieve

a basic literacy level, and instructional programs in English as a

second language. Only educational components that directly enhance the

employability of the participants are allowable. A direct link between

the education and job-readiness must be established for a component to

be approved.

(vii) A program designed to improve the self-sufficiency of

recipients through self-employment. Included are programs that provide

instruction for self-employment ventures.

(2) Exemptions. Each State agency may, at its discretion, exempt

individual work registrants and categories of work registrants from E&T

participation. Each State agency must periodically reevaluate its

individual and categorical exemptions to determine whether they remain

valid. Each State agency will establish the frequency of its periodic

evaluation.

(3) Time spent in an employment and training program. (i) Each

State agency will determine the length of time a participant spends in

any E&T component it offers. The State agency may also determine the

number of successive components in which a participant may be placed.

(ii) The time spent by the members of a household collectively each

month in an E&T work program including, but not limited to those

carried out under paragraphs (e)(1)(iii) and (e)(1)(iv) of this

section, combined with any hours worked that month in a workfare

program under paragraph (m) of this section must not exceed the number

of hours equal to the household's allotment for that month divided by

the higher of the applicable State or Federal minimum wage. The total

hours of participation in an E&T component for any household member

individually in any month, together with any hours worked in a workfare

program under paragraph (m) of this section and any hours worked for

compensation (in cash or in kind), must not exceed 120.

(4) Voluntary participation. (i) A State agency may operate program

components in which individuals elect to participate.

(ii) A State agency must not disqualify voluntary participants in

an E&T component for failure to comply with E&T requirements.

(iii) The hours of participation or work of a volunteer may not

exceed the hours required of E&T mandatory participants, as specified

in paragraph (e)(3) of this section.

(f) Failure to comply. (1) Ineligibility for failure to comply. A

nonexempt individual who refuses or fails without good cause, as

defined in paragraphs (i)(2) and (i)(3) of this section, to comply with

the Food Stamp Program work requirements listed under paragraph (a)(1)

of this section; or who, in accordance with paragraph (j) of this

section, voluntarily and without good cause quits a job or reduces work

effort and, after the reduction, is working less than 30 hours per

week, is ineligible to participate in the Food Stamp Program, and will

be considered an ineligible household member, pursuant to

Sec. 273.1(b)(2).

(i) As soon as the State agency learns of the individual's

noncompliance it must determine whether good cause for the

noncompliance exists, as discussed in paragraph (i) of this section.

Within 10 days of establishing that the noncompliance was without good

cause, the State agency must provide the individual with a notice of

adverse action, as specified in Sec. 273.13. If the State agency offers

a conciliation process as part of its E&T program, it must issue the

notice of adverse action no later than the end of the conciliation

period.

(ii) The notice of adverse action must contain the particular act

of noncompliance committed and the proposed period of disqualification.

The notice must also specify that the individual may, if appropriate,

reapply at the end of the disqualification period. Information must be

included on or with the notice describing the action that can be taken

to avoid the sanction. The disqualification period must begin with the

first month following the expiration of the 10-day adverse notice

period, unless a fair hearing is requested.

(2) Disqualification periods. The following disqualification

periods will be imposed:

(i) For the first occurrence of noncompliance, the individual will

be disqualified until the later of:

(A) The date the individual complies, as determined by the State

agency;

(B) One month; or

(C) Up to three months, at State agency option.

[[Page 72216]]

(ii) For the second occurrence, until the later of:

(A) The date the individual complies, as determined by the State

agency;

(B) Three months; or

(C) Up to six months, at State agency option.

(iii) For the third or subsequent occurrence, until the later of:

(A) The date the individual complies, as determined by the State

agency;

(B) Six months;

(C) A date determined by the State agency; or

(D) At the option of the State agency, permanently.

(3) Disqualification plan. In accordance with

Sec. 272.2(d)(1)(xiii) of this chapter, each State agency must prepare

and submit a plan detailing its disqualification policies. The plan

must include the length of disqualification to be enforced for each

occurrence of noncompliance, how compliance is determined by the State

agency, and the State agency's household disqualification policy.

(4) Household ineligibility. (i) If the individual who becomes

ineligible to participate under paragraph (f)(1) of this section is the

head of a household, the State agency, at its option, may disqualify

the entire household from Food Stamp Program participation.

(ii) The State agency may disqualify the household for a period

that does not exceed the lesser of:

(A) The duration of the ineligibility of the noncompliant

individual under paragraph (f)(2) of this section; or

(B) 180 days.

(iii) A household disqualified under this provision may reestablish

eligibility if:

(A) The head of the household leaves the household; or

(B) A new and eligible person joins the household as the head of

the household, as defined in Sec. 273.1(d)(2).

(iv) If the head of the household joins another household as its

head, that household will be disqualified from participating in the

Food Stamp Program for the remaining period of ineligibility.

(5) Fair hearings. Each individual or household has the right to

request a fair hearing, in accordance with Sec. 273.15, to appeal a

denial, reduction, or termination of benefits due to a determination of

nonexempt status, or a State agency determination of failure to comply

with Food Stamp Program work requirements. Individuals or households

may appeal State agency actions such as exemption status, the type of

requirement imposed, or State agency refusal to make a finding of good

cause if the individual or household believes that a finding of failure

to comply has resulted from improper decisions on these matters. The

State agency or its designee operating the relevant component must

receive sufficient advance notice to either permit the attendance of a

representative or ensure that a representative will be available for

questioning over the phone during the hearing. A representative of the

appropriate agency must be available through one of these means. A

household must be allowed to examine its E&T component casefile at a

reasonable time before the date of the fair hearing, except for

confidential information (that may include test results) that the

agency determines should be protected from release. Confidential

information not released to a household may not be used by either party

at the hearing. The results of the fair hearing are binding on the

State agency.

(6) Failure to comply with a work requirement under title IV of the

Social Security Act, or an unemployment compensation work requirement.

An individual exempt from Food Stamp Program work requirements by

paragraphs (b)(1)(iii) or (b)(1)(v) of this section because he or she

is subject to work requirements under title IV-A or unemployment

compensation who fails to comply with a title IV-A or unemployment

compensation work requirement will be treated as though he or she

failed to comply with the Food Stamp Program work requirement.

(i) When a food stamp household reports the loss or denial of title

IV-A or unemployment compensation benefits, or if the State agency

otherwise learns of a loss or denial, the State agency must determine

whether the loss or denial resulted when a household member refused or

failed without good cause to comply with a title IV-A or unemployment

compensation work requirement.

(ii) If the State agency determines that the loss or denial of

benefits resulted from an individual's refusal or failure without good

cause to comply with a title IV or unemployment compensation

requirement, the individual (or household if applicable under paragraph

(f)(4) of this section) must be disqualified in accordance with the

applicable provisions of this paragraph (f). However, if the

noncomplying individual meets one of the work registration exemptions

provided in paragraph (b)(1) of this section (other than the exemptions

provided in paragraphs (b)(1)(iii) and (b)(1)(v) of this section) the

individual (or household if applicable under paragraph (f)(4) of this

section) will not be disqualified.

(iii) If the State agency determination of noncompliance with a

title IV-A or unemployment compensation work requirement leads to a

denial or termination of the individuals or household's food stamp

benefits, the individual or household has a right to appeal the

decision in accordance with the provisions of paragraph (f)(1) of this

section.

(iv) In cases where the individual is disqualified from the title

IV-A program for refusal or failure to comply with a title IV-A work

requirement, but the individual meets one of the work registration

exemptions provided in paragraph (b)(1) of this section other than the

exemptions provided in paragraphs (b)(1)(iii) and (b)(1)(v) of this

section, the State agency may, at its option, apply the identical title

IV-A disqualification on the individual under the Food Stamp Program.

The State agency must impose such optional disqualifications in

accordance with section 6(i) of the Food Stamp Act and with the

provisions of Sec. 273.11(l) of these regulations.

(g) Ending disqualification. Except in cases of permanent

disqualification, at the end of the applicable mandatory

disqualification period for noncompliance with Food Stamp Program work

requirements, participation may resume if the disqualified individual

applies again and is determined by the State agency to be in compliance

with work requirements. A disqualified individual may be permitted to

resume participation during the disqualification period (if otherwise

eligible) by becoming exempt from work requirements.

(h) Suitable employment. (1) In addition to any criteria

established by State agencies, employment will be considered unsuitable

if:

(i) The wage offered is less than the highest of the applicable

Federal minimum wage, the applicable State minimum wage, or eighty

percent (80%) of the Federal minimum wage if neither the Federal nor

State minimum wage is applicable.

(ii) The employment offered is on a piece-rate basis and the

average hourly yield the employee can reasonably be expected to earn is

less than the applicable hourly wages specified under paragraph

(h)(1)(i) of this section.

(iii) The household member, as a condition of employment or

continuing employment, is required to join, resign from, or refrain

from joining any legitimate labor organization.

(iv) The work offered is at a site subject to a strike or lockout

at the time of the offer unless the strike has been

[[Page 72217]]

enjoined under section 208 of the Labor-Management Relations Act (29

U.S.C. 78) (commonly known as the Taft-Hartley Act), or unless an

injunction has been issued under section 10 of the Railway Labor Act

(45 U.S.C. 160).

(2) In addition, employment will be considered suitable unless the

household member involved can demonstrate or the State agency otherwise

becomes aware that:

(i) The degree of risk to health and safety is unreasonable.

(ii) The member is physically or mentally unfit to perform the

employment, as documented by medical evidence or by reliable

information from other sources.

(iii) The employment offered within the first 30 days of

registration is not in the member's major field of experience.

(iv) The distance from the member's home to the place of employment

is unreasonable considering the expected wage and the time and cost of

commuting. Employment will not be considered suitable if daily

commuting time exceeds 2 hours per day, not including the transporting

of a child to and from a child care facility. Nor will employment be

considered suitable if the distance to the place of employment

prohibits walking and neither public nor private transportation is

available to transport the member to the jobsite.

(v) The working hours or nature of the employment interferes with

the member's religious observances, convictions, or beliefs. For

example, a Sabbatarian could refuse to work on the Sabbath.

(i) Good cause. (1) The State agency is responsible for determining

good cause when a food stamp recipient fails or refuses to comply with

FSP work requirements. Since it is not possible for the Department to

enumerate each individual situation that should or should not be

considered good cause, the State agency must take into account the

facts and circumstances, including information submitted by the

household member involved and the employer, in determining whether or

not good cause exists.

(2) Good cause includes circumstances beyond the member's control,

such as, but not limited to, illness, illness of another household

member requiring the presence of the member, a household emergency, the

unavailability of transportation, or the lack of adequate child care

for children who have reached age six but are under age 12.

(3) Good cause for leaving employment includes the good cause

provisions found in paragraph (i)(2) of this section, and resigning

from a job that does not meet the suitability criteria specified in

paragraphs (h)(1) and (h)(2) of this section. Good cause for leaving

employment also includes:

(i) Discrimination by an employer based on age, race, sex, color,

handicap, religious beliefs, national origin or political beliefs;

(ii) Work demands or conditions that render continued employment

unreasonable, such as working without being paid on schedule;

(iii) Acceptance of employment by the individual, or enrollment by

the individual in any recognized school, training program or

institution of higher education on at least a half time basis, that

requires the individual to leave employment;

(iv) Acceptance by any other household member of employment or

enrollment at least half-time in any recognized school, training

program or institution of higher education in another county or similar

political subdivision that requires the household to move and thereby

requires the individual to leave employment;

(v) Resignations by persons under the age of 60 which are

recognized by the employer as retirement;

(vi) Employment that becomes unsuitable by not meeting the criteria

specified in paragraphs (h)(1) and (h)(2) of this section after the

acceptance of such employment;

(vii) Acceptance of a bona fide offer of employment of more than 20

hours a week or in which the weekly earnings are equivalent to the

Federal minimum wage multiplied by 20 hours that, because of

circumstances beyond the individual's control, subsequently either does

not materialize or results in employment of less than 20 hours a week

or weekly earnings of less than the Federal minimum wage multiplied by

20 hours; and

(viii) Leaving a job in connection with patterns of employment in

which workers frequently move from one employer to another such as

migrant farm labor or construction work. There may be some

circumstances where households will apply for food stamp benefits

between jobs particularly in cases where work may not yet be available

at the new job site. Even though employment at the new site has not

actually begun, the quitting of the previous employment must be

considered as with good cause if it is part of the pattern of that type

of employment.

(4) Verification. To the extent that the information given by the

household is questionable, as defined in Sec. 273.2(f)(2), State

agencies must request verification of the household's statements. The

primary responsibility for providing verification, as provided in

Sec. 273.2(f)(5), rests with the household.

(j) Voluntary quit and reduction of work effort. (1) Individual

ineligibility. An individual is ineligible to participate in the Food

Stamp Program if, in the 60 days before applying for food stamp

benefits or at any time thereafter, the individual:

(i) Voluntarily and without good cause quits a job of 30 hours a

week or more; or

(ii) Reduces his or her work effort voluntarily and without good

cause and, after the reduction, is working less than 30 hours per week.

(2) Determining whether a voluntary quit or reduction of work

effort occurred and application processing. (i) When a household files

an application for participation, or when a participating household

reports the loss of a source of income or a reduction in household

earnings, the State agency must determine whether any household member

voluntarily quit his or her job or reduced his or her work effort.

Benefits must not be delayed beyond the normal processing times

specified in Sec. 273.2 pending the outcome of this determination.

(ii) The voluntary quit provision applies if the employment

involved 30 hours or more per week or provided weekly earnings at least

equivalent to the Federal minimum wage multiplied by 30 hours; the quit

occurred within 60 days prior to the date of application or anytime

thereafter; and the quit was without good cause. Changes in employment

status that result from terminating a self-employment enterprise or

resigning from a job at the demand of the employer will not be

considered a voluntary quit for purposes of this paragraph (j). An

employee of the Federal Government, or of a State or local government

who participates in a strike against such government, and is dismissed

from his or her job because of participation in the strike, will be

considered to have voluntarily quit his or her job without good cause.

If an individual quits a job, secures new employment at comparable

wages or hours and is then laid off or, through no fault of his own,

loses the new job, the individual must not be disqualified for the

earlier quit.

(iii) The reduction of work effort provision applies if, before the

reduction, the individual was employed 30 hours or more per week; the

reduction occurred within 60 days prior to the date of application or

anytime thereafter; and the reduction was voluntary and without good

cause. The minimum wage equivalency does not

[[Page 72218]]

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