Food Distribution Program on Indian Reservations: Disqualification Penalties for Intentional Program Violations

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 253 and 254

RIN 0584-AC65

Food Distribution Program on Indian Reservations:

Disqualification Penalties for Intentional Program Violations

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: The Food and Nutrition Service is amending Food Distribution

Program regulations in response to an audit recommendation by the

Department of Agriculture's Office of Inspector General. The changes

are intended to improve program integrity and promote consistency with

the Food Stamp Program. This rule defines intentional program

violations, establishes penalties for them, and requires Indian Tribal

Organizations and State agencies that administer the Food Distribution

Program to take appropriate action on suspected cases of intentional

program violations. It also addresses the establishment and collection

of claims against households for overissuances under the Food

Distribution Program, and makes technical changes to correct erroneous

regulatory references.

EFFECTIVE DATE: This rule is effective February 28, 2000.

FOR FURTHER INFORMATION CONTACT: Lillie F. Ragan, Assistant Branch

Chief, Household Programs Branch, Food Distribution Division, Food and

Nutrition Service, U.S. Department of Agriculture, Room 510, 3101 Park

Center Drive, Alexandria, Virginia 22302-1594, or by telephone at (703)

305-2662.

SUPPLEMENTARY INFORMATION:

I. Procedural Matters

II. Background and Discussion of Final Rule

I. Procedural Matters

Executive Order 12866

This rule has been determined to be not significant for purposes of

Executive Order 12866. Therefore, it has not been reviewed by the

Office of Management and Budget.

Public Law 104-4

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public

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

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

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

Food and Nutrition Service generally must prepare a written statement,

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

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

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

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

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

Nutrition Service to identify and consider a reasonable number of

regulatory alternatives and adopt the least costly, most cost-

effective, or least burdensome alternative that achieves the objectives

of the rule.

This rule contains no Federal mandates (under the regulatory

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

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

year. Therefore, this rule is not subject to the requirements of

Sections 202 and 205 of the UMRA.

Executive Order 12372

The programs addressed in this action are listed in the Catalog of

Federal Domestic Assistance under Nos. 10.550 and 10.570, and for the

reasons set forth in the final rule in 7 CFR 3015, Subpart V, and

related Notice (48 FR 29115), are included in the scope of Executive

Order 12372, which requires intergovernmental consultation with State

and local officials.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). The

Administrator of the Food and Nutrition Service has certified that this

action will not have a significant impact on a substantial number of

small entities. Indian Tribal Organizations and State agencies that

administer the Food Distribution Program, and program participants will

be affected by this rulemaking, but the economic effect will not be

significant.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil

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

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

conflict with its provisions, or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect.

Prior to any judicial challenge to the provisions of this rule or the

application of its provisions, all applicable administrative procedures

must be exhausted.

Paperwork Reduction Act

This rule does not contain information collection requirements

subject to approval by the Office of Management and Budget under the

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

II. Background and Discussion of the Final Rule

On July 22, 1999, the Food and Nutrition Service (FNS) published a

rule at 64 FR 39432 proposing amendments to the regulations for the

Food Distribution Program at 7 CFR Parts 253 and 254. These proposed

changes would have defined intentional program violations (IPV),

established penalties for them, and required Indian Tribal

Organizations (ITOs) and State agencies that administer the Food

Distribution Program to take appropriate action on suspected cases of

IPV. This proposed rule was prompted, in part, by an audit

recommendation by the Department of Agriculture's Office of Inspector

General. Please refer to the proposed rule for a discussion of the

audit and its findings.

Comments were solicited through September 20, 1999, on the

provisions of the proposed rulemaking. FNS received two comment

letters, which are discussed in detail below. For a full understanding

of the provisions of this

[[Page 73382]]

final rule, the reader should refer to the preamble of the proposed

rule.

In preparing the final rule, we identified several areas discussed

in the proposed rule that needed further explanation to ensure that the

Department's position is clear. We wish to emphasize that these changes

to the final rule are made for the purposes of clarification, and that

the Department's position with regard to the necessity of the proposed

changes has not altered.

In the discussion and regulatory text below, we have used the term

``State agency,'' as defined at 7 CFR 253.2 and 254.2, to include ITOs

authorized to administer the Food Distribution Program.

1. Initiating Administrative Disqualification Procedures

Section 253.8(a) of the proposed rule would define IPV, in part, as

an act committed by an individual who willingly, knowingly and with

deceitful intent misrepresents the household's circumstances or

withholds facts in order to obtain benefits that the household is not

entitled to receive. In preparing the final rule, we realized that

there may be some confusion relating to the use of the term

``individual'' in the proposed rule. By ``individual'' we meant the

individual household member. We wanted to differentiate between the

individual household member and the household as a whole. Since

``household'' is a term defined in the Food Distribution Program

regulations, we believe the use of the term ``household member,''

rather than the term ``individual,'' is preferable for the purposes of

this rule. Therefore, we are revising the final rule to remove the term

``individual'' and replace it with the term ``household member''

throughout the regulatory text pertaining to IPVs.

2. Referral to Authorities for Prosecution

Section 253.8(e)(7) of the proposed rule would require State

agencies to refer all substantiated cases of intentional program

violations to Federal, State, or local authorities for prosecution

under applicable statutes. It was our intent that the term ``local''

include Tribal authorities. However, in preparing the final rule we

realized that ``local'' is commonly used to refer to County-level

entities. Some readers may not associate ``Tribal authorities'' with

the term ``local authorities.'' To avoid such confusion, we are

revising the final rule to specifically include the term ``Tribal,'' as

appropriate, throughout regulatory text.

3. Notification Requirements

Section 253.8(e)(2) of the proposed rule would require State

agencies to inform households in writing of the disqualification

penalties for intentional program violation each time they apply for

benefits (including recertifications). This notice is intended to

advise the household of the consequences of committing an intentional

program violation. One of those consequences may be prosecution by

Tribal, Federal, State, or local authorities. In preparing the final

rule we realized that the notification requirements did not clearly

specify that households be informed of the possibility of prosecution.

To ensure that households are properly informed of all the consequences

of committing an intentional program violation, we are revising section

253.8(e)(2) to require State agencies to include a statement in the

notice informing households of the possibility of prosecution by

authorities.

4. Application of the Disqualification Penalties

We wish to clarify that the procedures proposed at section 253.8(h)

would require imposition of the disqualification penalties without

regard to the household member's current eligibility status. Because of

an oversight, this policy was not stated correctly in one section of

the preamble to the proposed rule that concerns fair hearing notices.

However, it was stated correctly elsewhere in the preamble and the

regulatory text. We apologize for any confusion caused by this

oversight. Although there is no change to the final rule, we wish to

confirm that the State agency must proceed with imposition of the

disqualification penalty, even if the household member is not certified

to participate in the Food Distribution Program at the time the

disqualification is to begin.

5. Claims Against Households

One commenter suggested that we allow households to repay an

overissuance claim by voluntarily taking less commodities than they are

entitled to receive. The value of the commodities not taken each month

would be applied to the outstanding claim.

Current policy on the collection of overissuance claims is

addressed in FNS Handbook 501, Chapter V, Section 6, State Agency

Claims Procedures Against Households. Subsection 5670 prohibits the

recovery of benefits from households through a reduction in the amount

of commodities the household would otherwise receive. We do not feel

that this policy should be changed by this action. Such a change would

place an undue burden on State agencies. They would be required to

determine the value of each commodity not selected by the household

each month. They would also be required to track the ``payments'' until

the claim is paid in full. We are reluctant to impose a new burden on

State agencies and make a change in policy without first providing an

opportunity for public comment. Therefore, we are not incorporating the

commenter's proposal in the final rule.

Another commenter, who expressed strong support for administrative

disqualification penalties for intentional program violations,

recommended stronger penalties against households that fail to repay

overissuance claims. The procedures for the collection of overissuance

claims and actions to be taken against households that fail to repay

claims are addressed in FNS Handbook 501, Chapter V, Section 6, State

Agency Claims Procedures Against Households. We are reluctant to change

these procedures by instituting a new penalty without first providing

an opportunity for public comment. Therefore, we are not incorporating

the commenter's recommendation in the final rule.

List of Subjects

7 CFR Part 253

Administrative practice and procedure, Food assistance programs,

Grant programs, Social programs, Indians, Reporting and recordkeeping

requirements, Surplus agricultural commodities.

7 CFR Part 254

Administrative practice and procedure, Food assistance programs,

Grant programs, Social programs, Indians, Reporting and recordkeeping

requirements, Surplus agricultural commodities.

Accordingly, 7 CFR parts 253 and 254 are amended as follows:

PART 253--ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR

HOUSEHOLDS ON INDIAN RESERVATIONS

1. The authority citation for part 253 is revised to read as

follows:

Authority: 91 Stat. 958 (7 U.S.C. 2011-2036).

2. In Sec. 253.2, redesignate paragraphs (f) through (i) as

paragraphs (g) through (j), respectively, and add new paragraph (f) as

follows:

Sec. 253.2 Definitions.

* * * * *

(f) Overissuance means the dollar value of commodities issued to a

[[Page 73383]]

household that exceeds the dollar value of commodities it was eligible

to receive.

* * * * *

Sec. 253.5 [Amended]

3. In Sec. 253.5:

a. Amend paragraph (a)(1) by removing the reference ``Sec. 253.9''

and adding, in its place, the reference ``part 250 of this chapter'';

b. Amend paragraph (a)(2)(vii) by removing the reference ``part 283

of this subchapter'' and adding, in its place, the words ``this part'';

c. Amend paragraph (d)(1) by removing the references

``Sec. 283.7(a)(2) and (b)(3)'' and adding, in its place, the

references ``Sec. 253.7(a)(2) and (b)(3)'', and by removing the

reference ``Sec. 283.7(c)'' and adding, in its place, the reference

``Sec. 253.7(c)'';

d. Amend paragraph (k)(1) by removing the reference ``Sec. 283.9(g)

of this part'' and adding, in its place, the reference

``Sec. 253.11(g)'';

e. Amend paragraph (k)(2) by removing the reference ``Sec. 283.4''

and adding, in its place, the reference ``Sec. 253.4'';

f. Amend paragraph (l)(1)(iii) by removing the reference

``Sec. 283.5(k) or Sec. 283.9(g)'' and adding, in its place, the

reference ``paragraph (k) of this section or Sec. 253.11(g)''; and

g. Amend paragraph (l)(3)(i) by removing the reference

``Sec. 283.4(d)(2)'' and adding, in its place, the reference

``paragraph (m) of this section'', and removing the reference

``Sec. 283.5'' and adding, in its place, the reference

``Sec. 253.4(e)(2)''.

Sec. 253.6 [Amended]

4. In Sec. 253.6:

a. Amend paragraph (a)(3) by removing the reference

``Sec. 283.7(a)(10)(i) and Sec. 283.7(a)(10)(ii)'' and adding, in its

place, the reference ``Sec. 253.7(a)(10)(i) and

Sec. 253.7(a)(10)(ii)'';

b. Amend paragraph (b)(2) by removing the reference

``Sec. 283.6(a)(3)(iv)'' and adding, in its place, the reference

``paragraph (a)(2)(iv) of this section'';

c. Amend paragraph (c)(1) by removing the reference

``Sec. 283.6(a)(2)(ii)'' and adding, in its place, the reference

``paragraph (a)(2)(ii) of this section'';

d. Amend paragraph (d)(2)(iii) by removing the reference

``Sec. 283.7(b)(1)(iii)'' and adding, in its place, the reference

``Sec. 253.7(b)(1)(iii)'';

e. Amend paragraph (e)(1)(i) by removing the reference

``Sec. 283.6(a)(2)(ii)'' and adding, in its place, the reference

``paragraph (a)(2)(ii) of this section'', and removing the reference

``Sec. 283.6(c)'' and adding, in its place, the reference ``paragraph

(c) of this section'';

f. Amend paragraph (e)(2)(ii)(F) by removing the reference

``Sec. 283.7'' and adding, in its place, the reference ``Sec. 253.7'';

and

g. Amend paragraph (e)(3)(ix) by removing the reference

``Sec. 283.7(b)(1)(iii)'' and adding, in its place, the reference

``Sec. 253.7(b)(1)(iii)''.

5. In Sec. 253.7:

a. Amend paragraph (a)(2) by removing the reference

``Sec. 283.7(f)'' and adding, in its place, the words ``paragraph (g)

of this section'';

b. Amend paragraph (a)(5) by removing the reference

``Sec. 283.7(a)(7) or Sec. 283.7(a)(9)'' and adding, in its place, the

reference ``paragraphs (a)(7) and (a)(9) of this section'';

c. Add two new sentences to the end of paragraph (b)(3)(iii)(A);

d. Amend the second sentence of paragraph (b)(3)(iii)(B) by

removing the words ``and no more than 20'', and by removing the word

``mailed'' and adding, in its place, the word ``issued'';

e. Revise paragraph (b)(3)(iii)(C);

f. Add new paragraph (b)(3)(iii)(E);

g. Amend paragraph (c)(1) by removing the reference

``Sec. 283.6(e)(1)'' and adding, in its place, the reference

``Sec. 253.6(e)(1)'';

h. Remove paragraph (e)(3);

i. Redesignate paragraphs (f) and (g) as paragraphs (g) and (h),

respectively, and add a new paragraph (f);

j. Amend newly redesignated paragraph (g)(1) by removing the

reference ``Sec. 283.6(c)(2)'' and adding, in its place, the reference

``Sec. 253.6(c)(2)'';

k. Amend newly redesignated paragraph (g)(2) by removing the

reference ``Sec. 283.7(a)(7) and Sec. 283.7(a)(9)'' and adding, in its

place, the reference ``paragraphs (a)(7) and (a)(9) of this section'';

l. Revise newly redesignated paragraph (h)(2)(i);

m. Revise newly redesignated paragraph (h)(11)(iii); and

n. Add new paragraph (h)(11)(iv).

The revisions and additions read as follows:

Sec. 253.7 Certification of households.

* * * * *

(b) Eligibility determinations. * * *

(3) Certification notices. * * *

(iii) Notice of adverse action.

(A) * * * The notice must be issued within 10 days of determining

that an adverse action is warranted. The adverse action must take

effect with the next scheduled distribution of commodities that follows

the expiration of the advance notice period, unless the household

requests a fair hearing.

* * * * *

(C) The notice of adverse action must include the following in

easily understandable language:

(1) The reason for the adverse action;

(2) The date the adverse action will take effect;

(3) The household's right to request a fair hearing and continue to

receive benefits pending the outcome of the fair hearing;

(4) The date by which the household must request the fair hearing;

(5) The liability of the household for any overissuances received

while awaiting the outcome of the fair hearing, if the fair hearing

official's decision is adverse to the household;

(6) The telephone number and address of someone to contact for

additional information; and

(7) The telephone number and address of an individual or

organization that provides free legal representation, if available.

* * * * *

(E) If the State agency determines that a household received more

USDA commodities than it was entitled to receive, it must establish a

claim against the household in accordance with Sec. 253.9. The initial

demand letter for repayment must be provided to the household at the

same time the notice of adverse action is issued. It may be combined

with the notice of adverse action.

* * * * *

(f) Treatment of disqualified household members. (1) The following

are not eligible to participate in the Food Distribution Program:

(i) Household members disqualified from the Food Distribution

Program for an intentional program violation under Sec. 253.8. These

household members may participate, if otherwise eligible, in the Food

Distribution Program once the period of disqualification has ended.

(ii) Household members disqualified from the Food Stamp Program for

an intentional program violation under Sec. 273.16 of this chapter.

These household members may participate, if otherwise eligible, in the

Food Distribution Program once the period of disqualification under the

Food Stamp Program has ended. The State agency must, in cooperation

with the appropriate food stamp agency, develop a procedure that

ensures that these household members are identified.

(iii) Households disqualified from the Food Distribution Program

for failure to pay an overissuance claim. The circumstances under which

a disqualification is allowed for such failure are specified in FNS

Handbook 501.

[[Page 73384]]

(2) During the time a household member is disqualified, the

eligibility and food distribution benefits of any remaining household

members will be determined as follows:

(i) Resources. The resources of the disqualified member will

continue to count in their entirety to the remaining household members.

(ii) Income. A pro rata share of the income of the disqualified

member will be counted as income to the remaining members. This pro

rata share is calculated by dividing the disqualified member's earned

(less the 20 percent earned income deduction) and unearned income

evenly among all household members, including the disqualified member.

All but the disqualified member's share is counted as income to the

remaining household members.

(iii) Eligibility and benefits. The disqualified member will not be

included when determining the household's size for purposes of

assigning food distribution benefits to the household or for purposes

of comparing the household's net monthly income with the income

eligibility standards.

* * * * *

(h) Fair hearing. * *

(2) Timely action on hearings--(i) Time frames for the State

agency. The State agency must conduct the hearing, arrive at a

decision, and notify the household of the decision within 60 days of

receipt of a request for a fair hearing. The fair hearing decision may

result in a change in the household's eligibility or the amount of

commodities issued to the household based on household size. The State

agency must implement these changes to be effective for the next

scheduled distribution of commodities following the date of the fair

hearing decision. If the commodities are normally made available to the

household within a specific period of time (for example, from the first

day of the month through the tenth day of the month), the effective

date of the disqualification will be the first day of that period.

* * * * *

(11) Hearing decisions. * * *

(iii) Within 10 days of the date the fair hearing decision is

issued, the State agency must issue a notice to the household advising

it of the decision.

(A) If the decision upheld the adverse action by the State agency,

the notice must advise the household of the right to pursue judicial

review.

(B) If the decision upheld a disqualification, the notice must also

include the reason for the decision, the date the disqualification will

take effect, and the duration of the disqualification (that is, 12

months; 24 months; or permanent). The State agency must also advise any

remaining household members if the household's benefits will change, or

if the household is no longer eligible as a result of the

disqualification.

(iv) The State agency must revise the demand letter for repayment

issued previously to the household to include the value of all

overissued commodities provided to the household during the appeal

process, unless the fair hearing decision specifically requires the

cancellation of the claim. The State agency must also advise the

household that collection action on the claim will continue, in

accordance with FNS Handbook 501, unless suspension is warranted.

* * * * *

Sec. 253.8 [Redesignated as Sec. 253.10 and Amended]

6. Sec. 253.8 is redesignated as Sec. 253.10 and amended as

follows:

a. Amend paragraph (c)(12) by removing the reference

``Sec. 283.7(b)(9)'' and adding, in its place, the reference

``Sec. 253.7(a)(9)'';

b. Amend paragraph (e) by removing the words ``the State agency's

agreement with the Department under Sec. 250.6(b) of part 250 of this

chapter and the requirements of Sec. 250.6(l) of this same chapter''

and adding, in its place, the reference ``Sec. 250.13 and Sec. 250.15

of this chapter''; and

c. Amend paragraph (f) by removing the reference ``Sec. 250.7 of

part 250'' and adding, in its place, the reference ``Sec. 250.13(f)''.

7. Add new Sec. 253.8 to read as follows:

Sec. 253.8 Administrative disqualification procedures for intentional

program violation.

(a) What is an intentional program violation? An intentional

program violation is considered to have occurred when a household

member knowingly, willingly, and with deceitful intent:

(1) Makes a false or misleading statement, or misrepresents,

conceals, or withholds facts in order to obtain Food Distribution

Program benefits which the household is not entitled to receive; or

(2) Commits any act that violates a Federal statute or regulation

relating to the acquisition or use of Food Distribution Program

commodities.

(b) What are the disqualification penalties for an intentional

program violation? Household members determined by the State agency to

have committed an intentional program violation will be ineligible to

participate in the program:

(1) For a period of 12 months for the first violation;

(2) For a period of 24 months for the second violation; and

(3) Permanently for the third violation.

(c) Who can be disqualified? Only the household member determined

to have committed the intentional program violation can be

disqualified. However, the disqualification may affect the eligibility

of the household as a whole, as addressed under paragraphs (e)(5) and

(h) of this section.

(d) Can the disqualification be appealed? Household members

determined by the State agency to have committed an intentional program

violation may appeal the disqualification, as provided under

Sec. 253.7(h)(1).

(e) What are the State agency's responsibilities?

(1) Each State agency must implement administrative

disqualification procedures for intentional program violations that

conform to this section.

(2) The State agency must inform households in writing of the

disqualification penalties for intentional program violations each time

they apply for benefits, including recertifications. This notice must

also advise households that an intentional program violation may be

referred to authorities for prosecution.

(3) The State agency must attempt to substantiate all suspected

cases of intentional program violation. An intentional program

violation is considered to be substantiated when the State agency has

clear and convincing evidence demonstrating that a household member

committed one or more acts of intentional program violation, as defined

in paragraph (a) of this section.

(4) Within 10 days of substantiating that a household member has

committed an intentional program violation, the State agency must

provide the household member with a notice of disqualification, as

described in paragraph (f) of this section. A notice must still be

issued in instances where the household member is not currently

eligible or participating in the program.

(5) The State agency must advise any remaining household members if

the household's benefits will change or if the household will no longer

be eligible as a result of the disqualification.

(6) The State agency must provide the household member to be

disqualified with an opportunity to appeal the disqualification through

a fair hearing, as required by Sec. 253.7(h).

(7) The State agency must refer all substantiated cases of

intentional

[[Page 73385]]

program violations to Tribal, Federal, State, or local authorities for

prosecution under applicable statutes. However, a State agency that has

conferred with its legal counsel and prosecutors to determine the

criteria for acceptance for possible prosecution is not required to

refer cases that do not meet the prosecutors' criteria.

(8) The State agency must establish claims, and pursue collection

as appropriate, on all substantiated cases of intentional program

violation in accordance with Sec. 253.9.

(f) What are the requirements for the notice of disqualification?

(1) Within 10 days of substantiating the intentional program

violation, the State agency must issue to the household member a notice

of disqualification. The notice must allow an advance notice period of

at least 10 days. The disqualification must begin with the next

scheduled distribution of commodities that follows the expiration of

the advance notice period, unless the household member requests a fair

hearing. A notice must still be issued in instances where the household

member is not currently eligible or participating in the program.

(2) The notice must conform to the requirements of

Sec. 253.7(b)(3)(iii)(C) for notices of adverse action.

(g) What are the appeal procedures for administrative

disqualifications?

(1) Appeal rights. The household member has the right to request a

fair hearing to appeal the disqualification in accordance with the

procedures at Sec. 253.7(h).

(2) Notification of hearing. The State agency must provide the

household member with a notification of the time and place of the fair

hearing as described in Sec. 253.7(h)(7). The notice must also include:

(i) A warning that if the household member fails to appear at the

hearing, the hearing decision will be based solely on the information

provided by the State agency; and

(ii) A statement that the hearing does not prevent the Tribal,

Federal, State, or local government from prosecuting the household

member in a civil or criminal court action, or from collecting any

overissuance(s).

(h) What are the procedures for applying disqualification

penalties?

(1) If the household member did not request a fair hearing, the

disqualification must begin with the next scheduled distribution of

commodities that follows the expiration of the advance notice period of

the notice of adverse action. If the commodities are normally made

available to the household within a specific period of time (for

example, from the first day of the month through the tenth day of the

month), the effective date of the disqualification will be the first

day of that period. The State agency must apply the disqualification

period (that is, 12 months, 24 months, or permanent) specified in the

notice of disqualification. The State agency must advise any remaining

household members if the household's benefits will change or if the

household is no longer eligible as a result of the disqualification.

(2) If the household member requested a fair hearing and the

disqualification was upheld by the fair hearing official, the

disqualification must begin with the next scheduled distribution of

commodities that follows the date the hearing decision is issued. If

the commodities are normally made available to the household within a

specific period of time (for example, from the first day of the month

through the tenth day of the month), the effective date of the

disqualification will be the first day of that period. The State agency

must apply the disqualification period (that is, 12 months, 24 months,

or permanent) specified in the notice of disqualification. No further

administrative appeal procedure exists after an adverse fair hearing

decision. The decision by a fair hearing official is binding on the

State agency. The household member, however, may seek relief in a court

having appropriate jurisdiction. As provided under

Sec. 253.7(h)(11)(iii)(B), the State agency must advise any remaining

household members if the household's benefits will change, or if the

household is no longer eligible as a result of the disqualification.

(3) Once a disqualification has begun, it must continue

uninterrupted for the duration of the penalty period (that is, 12

months; 24 months; or permanent). Changes in the eligibility of the

disqualified household member's household will not interrupt or shorten

the disqualification period.

(4) The same act of intentional program violation continued over a

period of time will not be separated so that more than one penalty can

be imposed. For example, a household intentionally fails to report that

a household member left the household, resulting in an overissuance of

benefits for 5 months. Although the violation occurred over a period of

5 months, only one penalty will apply to this single act of intentional

program violation.

(5) If the case was referred for Tribal, Federal, State, or local

prosecution and the court of appropriate jurisdiction imposed a

disqualification penalty, the State agency must follow the court order.

Sec. 253.9 [Redesignated as Sec. 253.11]

8. Redesignate Sec. 253.9 as Sec. 253.11.

9. Add new Sec. 253.9 to read as follows:

Sec. 253.9 Claims against households.

(a) What are the procedures for establishing a claim against a

household for an overissuance?

(1) The State agency must establish a claim against any household

that has received more Food Distribution Program commodities than it

was entitled to receive.

(2) The procedures for establishing and collecting claims against

households are specified in FNS Handbook 501, The Food Distribution

Program on Indian Reservations.

(b) Who is responsible for repaying a household overissuance claim?

(1) All adult household members are jointly and separately liable

for the repayment of the value of any overissuance of Food Distribution

Program benefits to the household.

(2) Responsibility for repayment continues even in instances where

the household becomes ineligible or is not participating in the

program.

PART 254-ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR INDIAN

HOUSEHOLDS IN OKLAHOMA

1. The authority citation for part 254 continues to read as

follows:

Authority: Pub. L. 97-98, sec. 1338; Pub. L. 95-113.

2. In Sec. 254.2, redesignate paragraphs (f) and (g) as paragraphs

(g) and (h), respectively, and add new paragraph (f) to read as

follows:

Sec. 254.2 Definitions.

* * * * *

(f) Overissuance means the dollar value of commodities issued to a

household that exceeds the dollar value of commodities it was eligible

to receive.

* * * * *

Dated: December 23, 1999.

Samuel Chambers, Jr.,

Administrator, Food and Nutrition Service.

[FR Doc. 99-33932 Filed 12-29-99; 8:45 am]

BILLING CODE 3410-30-P