[Federal Register Volume 61, Number 202 (Thursday, October 17, 1996)]
[Rules and Regulations]
[Pages 54270-54282]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26072]
[[Page 54269]]
_______________________________________________________________________
Part II
Department of Agriculture
_______________________________________________________________________
Food and Consumer Service
_______________________________________________________________________
7 CFR Parts 271, et al.
Food Stamp Program: Leland Childhood Hunger Relief Act Certification
Provisions; Child Support Deduction; Educational and Training
Assistance Treatment; 1994 Improvements Act Reservations Provision
Monthly Reporting; and Program Rules Simplification; Final Rules
Federal Register / Vol. 61, No. 202 / Thursday, October 17, 1996 /
Rules and Regulations
[[Page 54270]]
DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 271, 272 and 273
[Amendment No. 375]
RIN 0584-AB76
Food Stamp Program: Certification Provisions of the Mickey Leland
Childhood Hunger Relief Act
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule amends Food Stamp Program regulations to implement
nine provisions of the Mickey Leland Childhood Hunger Relief Act,
finalizing a proposed rule published in the Federal Register on August
30, 1994. This rule will: (1) simplify the household definition; (2)
establish eligibility for children who live with their food stamp
eligible parents in a drug or alcohol rehabilitation center; (3)
exclude from resources the value of vehicles used to transport fuel or
water; (4) increase the fair market value exclusion of vehicles for
determining a household's resource limit; (5) exclude certain General
Assistance (GA) vendor payments; (6) exclude the earnings of elementary
and secondary students under age 22 who live with their parents; (7)
increase the maximum amount of the dependent care deduction; (8)
eliminate the current federally-imposed limit and (9) require State
agencies to establish a Statewide limit on the dependent care
reimbursement paid to participants in the Food Stamp Employment and
Training Program (E&T); and require proration of food stamp benefits
only after a break of more than one month in certification.
DATES: This rule is effective December 16, 1996.
FOR FURTHER INFORMATION CONTACT: Margaret Werts Batko, Assistant Chief,
Certification Policy Branch, Program Development Division, Food and
Consumer Service, 3101 Park Center Drive, Alexandria, VA 22302 or by
telephone at (703) 305-2520.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be economically significant
and was reviewed by the Office of Management and Budget (OMB) under
Executive Order 12866.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance Programs under No. 10.551. For the reasons set forth in the
final rule and related notices of 7 CFR Part 3015, Subpart V (48 FR
29115), this Program is excluded from the scope of Executive Order
12372, which requires intergovernmental consultation with State and
local officials.
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This final rule is not intended to have retroactive
effect unless so specified in the Effective Dates paragraph of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions, all applicable
administrative procedures must be exhausted. In the Food Stamp Program,
the administrative procedures are as follows: (1) for Program benefit
recipients--State administrative procedures issued to 7 U.S.C.
2020(e)(10) and 7 CFR 273.15; (2) for State agencies--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for
rules related to non-quality control (QC) liabilities) or part 283 (for
rules related to QC liabilities); (3) for Program retailers and
wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023
set out at 7 CFR 278.8.
Regulatory Flexibility Act
The Department has also reviewed this final rule in relation to the
requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354,
94 Stat. 1164, September 19, 1980). Ellen Haas, Under Secretary for
Food, Nutrition, and Consumer Services, has certified that this rule
does not have a significant economic impact on a substantial number of
small entities. The rule will affect food stamp applicants and
recipients and the State and local agencies that administer the
Program. Eligibility criteria will be simplified and some currently
participating households will realize an increase in Program benefits.
Paperwork Reduction Act
This final rule does not contain reporting or recordkeeping
requirements subject to approval by the Office of Management and Budget
under the Paperwork Reduction Act of 1995 (Pub. L. 104-13). The
information collection requirements associated with application,
certification and ongoing eligiblity of food stamp households is
approved under OMB No. 0584-0064. This rule affects the determination
of eligibility and benefit levels only; it does not affect the current
information collection requirements for making such determination.
Regulatory Impact Analysis
Need for Action
This action is required as a result of Title XIII, Chapter 3,
Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, the Mickey
Leland Childhood Hunger Relief Act (Leland Act), amendments to the Food
Stamp Act of 1977, as amended, 7 U.S.C. 2011-2032. The Leland Act
amendments: (1) simplify the household definition; (2) establish
eligibility for children who live with their food stamp eligible
parents in a drug or alcohol rehabilitation center; (3) exclude from
resources the value of vehicles used to transport fuel or water; (4)
increase the fair market value exclusion of vehicles for determining a
household's resource limit; (5) exclude certain General Assistance
vendor payments; (6) exclude the earnings of elementary and secondary
school students under age 22 who live with their parents; (7) increase
the maximum amount of the dependent care deduction; (8) eliminate the
current federally-imposed limit and require State agencies to establish
a Statewide limit on the dependent care reimbursement paid to
participants in the Food Stamp Employment and Training Program; and (9)
require proration of benefits only in the initial month of
certification.
Benefits
This action will increase the number of potentially eligible food
stamp recipients and will increase the benefit level of certain
households that are affected by these provisions.
Costs
It is estimated that this action will increase the cost of the Food
Stamp Program by approximately $7 million in Fiscal Year 1994; $107
million in Fiscal Year 1995; $132 million in Fiscal Year 1996; $187
million in Fiscal Year 1997; and $207 million in Fiscal Year 1998.
Background
On August 30, 1994, the Department published a proposed rule at 59
FR 44866 to implement amendments to the Food Stamp Act of 1977, as
amended, 7 U.S.C. 2011-2032, (Food Stamp Act) made by the Mickey Leland
Childhood Hunger Relief Act. Title XIII, Chapter 3,
[[Page 54271]]
Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66, (Leland
Act).
Comments were solicited on the provisions of the proposed
rulemaking through October 31, 1994. The Department received 26 comment
letters from State and local welfare agencies and public interest
groups. All comments received were reviewed and considered, and those
which raised relevant issues or questions are addressed below by
subject. Comments which were unclear or not pertinent to this
rulemaking are not addressed in this preamble. For a full understanding
of the provisions of this final rule, the reader should refer to the
preamble of the proposed rule.
By the time this rule is published, subsequent legislation will
have modified some of its provisions. The Department will be amending
these regulations to reflect those legislative changes.
Simplifying the Household Definition for Households With Children and
Others
Section 13931 of the Leland Act amended section 3(i) of the Food
Stamp Act to simplify the household definition provisions and to
support families that live together to share housing expenses but
maintain individual households. With certain enumerated exceptions, the
simplified household definition allows persons who live together and
purchase food and prepare meals separately to participate in the
Program as separate food stamp households. Those presumed to be groups
of individuals who customarily purchase and prepare meals together even
if they do not do so are: (1) spouses who live together; (2) parents
and their children 21 years of age or younger (who are not themselves
parents living with their children or married and living with their
spouses); and (3) children (excluding foster children) under 18 years
of age who live with and are under the parental control of a person
other than their parent together with the person exercising parental
control. The Leland Act left intact the separate household status of
individuals (and their spouses) who live with others, are 60 years of
age or older, and are unable to purchase food and prepare meals due to
a disability or disabling infirmity, as long as the other household
members' income (excluding that of the spouse) does not exceed 165% of
the poverty line.
The Department proposed to amend 7 CFR 273.1(a) to mirror section
13931 of the Leland Act with one addition. The Leland provision did not
address whether a child under 18 who is living with a non-parent adult
can be a separate household from that adult when the child is married
and living with his or her spouse or living with his or her own child.
To provide the same treatment for a child living with a non-parent
adult that is provided for a child living with a natural, adoptive, or
stepparent, the Department proposed changing the definition of parental
control to specify that children who live with their own children or
who are married and live with their spouses are not considered to be
under parental control for purposes of the section. Several commenters,
including State welfare agencies and public interest groups, strongly
supported the proposal because it simplifies the household
determination by making the purchase and preparation of food the basis
for membership in a household with only a few simple exceptions.
The Department also proposed two conforming amendments to implement
section 13931 of the Leland Act. As described in greater detail above,
the Leland Act preserved the separate household status permitted for
elderly individuals who are so disabled that they cannot purchase and
prepare food for themselves. The Department proposed amending the
provision that implements this exception, 7 CFR 273.1(a)(2)(ii), to
update its references to the new portions of 7 CFR 273.1(a)(2)(i)
regarding spouses and children. The Department proposed a second
conforming amendment to remove the requirement of 7 CFR 273.10(f)(2)
that mandates certification periods of up to six months for households
meeting the parent/child or sibling provisions of 7 CFR 273.1(a)(2)(i)
(C) and (D) because the Leland Act amended the parent/child provisions
and removed the sibling provisions.
No adverse comments were received on the amendment removing the
six-month certification requirement for households consisting of an
individual and his/her minor children living with the individual's
parent or sibling, and so it will not be changed in this final
rulemaking. The other proposed conforming amendment is discussed below.
Two State welfare agencies requested clarification on how section
13931 of the Leland Act and the Department's proposed rule changed 7
CFR 273.1(a)(2)(ii), which allows individuals who are elderly and so
disabled that they cannot purchase and prepare food for themselves to
be separate households (in certain circumstances) from the others with
whom they live. In the proposed rule, the Department updated the
references in the elderly and disabled provision to correspond to the
proposed rule's household definition. Under that proposal, an elderly
and disabled person would be combined into one household with his or
her spouse, his or her natural, adopted or stepchildren under age 22,
and those children under 18 over whom the elderly and disabled
individual exercised parental control. This makes the provision
needlessly complex. This special rule for elderly and disabled people
was created to discourage these individuals from being
institutionalized, and to encourage people to take care of them by
allowing them to be separate food stamp households. To continue to
subject this exception to the other household provisions regarding
children is also a departure from the legislation, which only requires
that the elderly and disabled individual be included in the same food
stamp household as his or her spouse. For these reasons, the Department
is amending 7 CFR 273.1(a)(2)(ii) to follow the statutory language more
directly.
One commenter asked whether there was a minimum age for children
who can, by default, have their own household under this elderly and
disabled exception. Section 5(i) of the Food Stamp Act, as amended by
the Leland Act, provides that ``[n]otwithstanding the preceding
sentences, [the household definition provision] an individual who lives
with others, who is sixty years of age or older, and who is unable to
purchase food and prepare meals because such individual suffers * * *
from a disability * * * shall be considered, together with any of the
others who is the spouse of such individual, an individual household,
without regard to the purchase of food and preparation of meals if the
income * * * of the others, excluding the spouse, does not exceed the
poverty line * * * by more than 65 per centum.'' This statutory
language requires that the elderly and disabled individual be combined
with his or her spouse, but does not address children that may also be
in the household. It would be rare for an elderly person who is so
disabled that he or she cannot purchase and prepare food to be living
alone in a household with a minor child. Because this circumstance is
not very likely to occur and the Food Stamp Act does not address
children, the Department has decided not to set an arbitrary minimum
age, and instead will follow the language of the Food Stamp Act.
With respect to the proposal as a whole, one commenter thought it
was confusing that the household definition establishes different ages
(18 and 21) depending on the child's relationship
[[Page 54272]]
with the people with whom the child lives. Because these ages were
statutorily mandated, the Department does not have the authority to
change them. Several commenters requested that the Department continue
to grant separate household status to minor children who live with an
elderly or disabled parent or sibling. However, section 13931 of the
Leland Act amended the household definition, eliminating the sibling
provision in favor of a more simplified definition. The Department
cannot override the Leland Act by restoring this provision. One
commenter asked whether an individual can have a separate food stamp
household the month he or she turns 22 (or 18 if the individual lives
under the parental control of a non-parent), or the month after. The
household composition analysis is not analogous to other age-driven
provisions because it is also based on whether the individual purchases
and prepares food separately from the others in the household. Separate
household status is not granted automatically; an individual must meet
the requirements that apply to all applicants, including the
requirement to purchase and prepare food separately.
Two commenters asked whether the provisions of 7 CFR 273.1(c)(1)
regarding boarders should be changed in light of the Leland Act changes
and the legislative intent behind those changes. Current regulations at
7 CFR 273.1(c)(1) preclude children, even adult children, from being
granted boarder status in their parents' home. According to 7 CFR
273.1(c)(5), a boarder's income and resources are excluded from the
income and resources of the household providing boarder services.
Allowing adult children to be boarders in their parents' homes might
encourage parents to allow children to remain at home until they are
self-sufficient. The commenters thought a rule change would be
necessary to remove the prohibition against children being boarders in
their parents' homes. However, the current boarder provision, 7 CFR
273.1(c)(1), incorporates the new household definition by reference and
denies boarder status only to those ``* * * individuals or groups of
individuals described in paragraph (a)(2) [of 7 CFR 273.1] * * *.''
Paragraph 273.1(a)(2) is being amended by this rule to describe
children under age 22 living with their natural, adoptive, or
stepparents, and children under 18 living under the parental control of
a non-parent adult. Therefore, children age 22 and over are no longer
prohibited by 7 CFR 273.1(c)(1) from being considered boarders in their
parents' homes, and children 18 and over living with non-parent adults
are not prohibited from being considered boarders in the adult's home.
The Department received many comments on its proposal to amend the
definition of parental control. The current definition is contained in
Food Stamp Program Policy Memo 3-93-6, dated March 26, 1993, which
states that children under parental control for food stamp eligibility
purposes are ``minors who are dependents--financial or otherwise--of
the household as opposed to independent units.'' The proposed rule
retained the ``dependents or otherwise'' clause of the old definition,
and added that ``[c]hildren who are living with their children or who
are married and living with their spouse are considered to be
independent units and not under parental control.'' The Department
proposed to change the definition so that children living with non-
parent adults would be treated the same as children living with their
natural, adoptive, or stepparents.
Four State welfare agencies objected to the proposal that children
with children of their own should be separate households from the
parents or adults with whom they live only if the children purchase and
prepare food separately. One commenter also objected to this granting
of separate status to children who are married and living with their
spouse when they purchase and prepare food separately from the adults
with whom they live. This treatment is statutorily mandated with
respect to children under age 22 who live with their natural, adoptive,
or stepparents. The Department's only discretion in implementing this
particular provision was to extend this treatment to those children
under 18 who are living with non-parent adults. Several public interest
groups commended the Department's decision to extend the parent/child
and spousal exceptions mandated for natural, adopted, or stepchildren
under age 22 who live with their parents to children under 18 who live
with non-parent adults. No comments were received that objected to
treating these two groups of children (those who live with their
natural, adoptive, or stepparents and those under 18 who live with a
non- parent adult) the same. Therefore, the Department's proposal to
amend 7 CFR 273.1(a) to define as independent those children who are
either married and living with their spouses, or living with their own
children, is retained in this final rulemaking.
One State welfare agency requested more time to implement the
extension of the parent/child and spousal exceptions to children under
18 living with non-parent adults because it was not statutorily
mandated, and so not included in the implementing instructions provided
by the Department. The Department recognizes that implementing new
provisions places an administrative burden on State welfare agencies,
especially those with separate rulemaking procedures. Therefore, the
Department is making one exception to the September 1, 1994,
implementation date for the provisions of this rule. State agencies
must implement the provision allowing separate household status to
children under 18 who are living with their spouse or children in the
home of a non-parent adult no later than 90 days after publication of
this rule.
Several commenters requested guidance on what constitutes parental
control with respect to a minor who is ``financially or otherwise''
dependent on other household members. Some commenters argued that the
definition is vague and can result in inconsistent treatment. Although
the Department recognizes that this definition may be subject to
interpretation, the Department drafted this definition (in Food Stamp
Program Policy Memo 3-93-6) to provide a consistent measure that would
be broad enough to be compatible with State laws, which vary widely on
issues of parental control. The Department is also reluctant to provide
finite lists of dependencies which would be indicative of parental
control. The Department feels that this determination should be left to
the eligibility worker, who is in the best position to evaluate a
particular child's relationship with the adults in his or her
household. The Department believes that a more specific definition of
parental control would limit the eligibility worker's flexibility to
make these determinations. For these reasons, the Department has
decided to adopt the proposed revision to 7 CFR 273.1(a)(2)(i)(B)
(designated 273.1(a)(2)(i)(C) in this rule) with one minor language
clarification suggested by a commenter that makes the provision easier
to understand.
One commenter was concerned that the Department's definition of
parental control can hurt children who leave their parents' homes
because of abuse or neglect and who move in with neighbors, relatives,
or parents of schoolmates. The commenter noted that defining parental
control to include financial dependence often prevents these children
from having their own food stamp households, and therefore makes it
more difficult for families to afford to take in these children. The
[[Page 54273]]
commenter requested that a household's affidavit stating that a child
is not under parental control be accepted to conclusively establish
that child's independence. If in fact a child is under parental control
according to Program rules, those facts are not changed merely because
the household provides a statement otherwise. The facts of a given
situation, as determined by the eligibility worker, would govern the
certification of a child or children as a separate household.
The commenter's other suggestion was to expand the definition of
foster children to include children who live with others outside of the
formal foster care system. However, even if these children were
included as foster children, they would not be entitled to separate
household status because foster children are considered boarders under
7 CFR 273.1(c)(6). As boarders, these children could not have their own
household, but could be included in the food stamp household of the
household providing boarder services at its request. This option
results in an outcome identical to the situation first presented by the
commenter, in which the child cannot have his or her own household, but
can be included in the household of others. Although the Department
understands the difficulties these children and the families that take
them in face, the Department has elected not to change the definition
of parental control for the reasons discussed above.
In summary, the Department is adopting the changes to 7 CFR
273.1(a)(2)(i) as proposed, with a minor change in language. The
proposed change to 7 CFR 273.1(a)(2)(ii) was revised to clarify that
only the spouse of an elderly and disabled household member must be
included in the household of the elderly and disabled person. The
proposed change to 7 CFR 273.10(f) is adopted without change.
Eligibility of Children of Parents Participating in Drug or Alcohol
Treatment Programs
Section 13932 of the Leland Act amended the Food Stamp Act to
authorize Program eligibility for children living with their otherwise
eligible parent(s) in a drug or alcohol treatment center. Under this
provision, the children would be included in the parent's household. To
implement this provision, the Department proposed to amend 7 CFR
273.1(e)(1)(ii) to extend food stamp eligibility to children of
narcotic addicts or alcoholics who are residents of drug or alcohol
treatment centers. Conforming language was also proposed to 7 CFR
273.1(f)(2), and to the definition of ``eligible foods'' in 7 CFR
271.2.
Two public interest groups commented on this provision, and both
raised the same issue. Although the commenters generally supported the
provision, both requested that State welfare agencies be given the
option to allow narcotic addict or alcoholic parents and their children
who live with them in the treatment center to be separate households.
This issue was addressed in the preamble to the proposed rule. The
Department has considered this issue again, but continues to believe
that the household definition in the Food Stamp Act, as amended by the
Leland Act, prohibits allowing separate household status to children
under 22 living with their parents in a treatment center. Therefore,
the Department is adopting with minor technical change the amendments
to 7 CFR 273.1(e)(1)(ii) and 7 CFR 273.1(f)(2) contained in the
proposed rule.
Vehicles Necessary To Carry Fuel or Water
Section 13924 of the Leland Act amended section 5(g)(2) of the Food
Stamp Act to exclude from household resources the value of a vehicle
that a household depends upon to carry fuel for heating or water for
home use when such transported fuel or water is the household's primary
source for fuel or water. The Department proposed to amend 7 CFR
273.8(h)(1) to add the new vehicle exclusion as paragraph (vi). The
language of the Department's proposed rule mirrors the statutory
language, and the Department is adopting as final the language of the
provision in the proposed rulemaking. However, in response to several
issues raised by commenters, the Department would like to clarify its
rationale for adopting this provision.
One commenter objected to adding another vehicle exclusion to an
already complicated provision, but because this provision is
statutorily mandated, the Department does not have the discretion to
omit this exclusion.
In this final rulemaking, the Department is continuing its
commitment to providing State agencies with enough flexibility so that
they can implement this rule to address their specific situations. For
example, the Alaska State agency has the flexibility to determine
whether a boat or other vehicle would meet the requirements of this
provision because the Department has not defined the term ``vehicle.''
Several commenters commended the Department for this position, and it
has not been changed in this rulemaking.
The Department wishes to clarify its position on one policy
expressed in the preamble to the proposed rule in light of comments
received. The Department indicated in the preamble to the proposed rule
at 59 FR 44869, that access to public utilities would not preclude a
household from using this exclusion as long as the household actually
used the vehicle as provided in section 13924 of the Leland Act. This
statement was based on the Department's view that a household may not
be able to afford the fuel that is piped into the home, or may choose
not to use the fuel for other reasons. The Department believed that
these households should be entitled to the exclusion.
Although the Department stated in the preamble to the proposed rule
that the provision could apply where the household was unable to use
its utilities ``for whatever reason, such as non- payment of utility
bill[s],'' the Department did not intend to indicate that this resource
exclusion could be extended to cover temporary conditions. This policy
was intended to address those situations in which a household was using
its vehicle to transport fuel or water for sustained periods of time.
This interpretation is supported by both the legislative history and
the language of the statute. The Conference Report indicates that
Congress intended this exclusion to apply only when households did not
have fuel or water ``piped into their homes.'' (House Conference Report
No. 213, 103rd Cong., 1st Session 927 (1993)). Further, the language of
the statute allows a resource exclusion for ``a vehicle that a
household depends on * * * when such transported fuel or water is the
primary source * * * for the household * * *'' (emphasis added). This
language implies something more permanent than a temporary condition
like a utility being off because of non-payment of the bill. The two
State welfare agencies that commented on this aspect of the vehicle
exclusion did not support the provision. One agency wondered how its
eligibility workers could know how long to apply the exclusion if a
household told the worker it was using the vehicle because the
electricity had been turned off for non- payment. Such cases would be
labor intensive for the caseworker in order to ensure that the
exclusion ended when utilities were restored. Both State agency
commenters suggested that allowing it to apply in this situation would
be error-prone and administratively difficult to implement.
This vehicle exclusion extends eligibility to households that would
not otherwise be eligible because of the
[[Page 54274]]
excluded vehicle. Allowing the exclusion when a household has
temporarily had its utilities turned off for non-payment of its utility
bills also presents the incongruous situation of addressing a
household's inability to pay a utility bill with temporary eligibility
for food stamps.
The Department recognizes that there may be times when a
household's utilities will be off for an extended period of time, or
that there may be rural areas or other areas with sporadic or
unreliable access to water or fuel. There may also be occasions where a
household's access to drinking water is interrupted for an extended
period of time such that the exclusion would be appropriate. To balance
the need for administrative ease in determining entitlement to the
exclusion with an appropriate response to a household's circumstances,
the Department is modifying the language of the final rule to allow the
vehicle exclusion if it is anticipated that the transported fuel or
water will be the household's primary source of fuel or water during
the certification period. This gives eligibility workers the
flexibility to evaluate each situation and apply the provision with
common sense and good judgment.
The legislative history of the provision indicates that Congress
intended to apply the exclusion without requiring the household to meet
any ``additional tests concerning the nature, capabilities, or other
uses of the vehicle.'' (House Conference Report No. 213, 103rd Cong.,
1st Session 927 (1993); House Report No. 111, 103rd Cong., 1st Session
33 (1993)). The Department drafted its proposed rule to reflect this
statutory intent, and no adverse comments were received on this
provision. However, some commenters mistakenly thought this was a
verification provision. This language is intended merely to prevent a
household that meets the fuel/water vehicle exclusion from having to
further justify excluding the vehicle. It is very possible that a
vehicle excluded under this provision would have value far in excess of
the fair market value vehicle exclusion (discussed below), and this
language would preclude the household from having to meet the fuel/
water vehicle exclusion test first, and then having to meet a fair
market value test.
In the preamble to the proposed rule, the Department requested
comments on how this exclusion could be verified. By asking for these
comments, the Department did not mean to indicate that it was departing
in any way from its normal verification requirements and procedures.
Several public interest groups urged that an applicant household's
assertion that it depends on a vehicle to transport its fuel or water
should conclusively establish its entitlement to the exclusion. The
Department sees no reason to exempt this vehicle exclusion from the
normal verification requirements by allowing self-declaration. Several
commenters supported including a question in the food stamp
application, or checking with someone outside the household who is
familiar with the household's circumstances. With the exception of the
documentation requirement contained in the proposed rule, the
Department is not adopting any specific verification requirements for
this exclusion. No adverse comments were received regarding the
Department's requirement that no documentation be required unless the
exclusion was questionable, so it is adopted as final.
No comments were received on the proposed technical amendment to
the summary of the vehicle provisions at 7 CFR 273.8(h)(6). Therefore,
the proposed revisions to 7 CFR 273.8(h)(1) and 7 CFR 273.8(h)(6) are
adopted as final.
Vehicles Needed To Seek and Continue Employment and for Household
Transportation
Current regulations at 7 CFR 273.8(h)(3), in accordance with
section 5(g) of the Food Stamp Act, require that all licensed vehicles
be evaluated to determine their fair market value for purposes of
determining a household's resource eligibility for the Program. Section
13923 of the Leland Act amended section 5(g)(2) of the Food Stamp Act
to increase the fair market value resource exclusion of vehicles by $50
on September 1, 1994, and by an additional $50 on October 1, 1995.
Beginning on October 1, 1996, the fair market value resource exclusion
will be adjusted annually, using a base of $5,000, to reflect changes
in the Consumer Price Index (CPI).
In order to implement section 13923 of the Leland Act, the
Department proposed to amend 7 CFR 273.8(h)(3) to conform to the
timetable and values mandated by section 13923. The Department received
three comments on this provision, each one requesting a departure from
the values or timetable provided by the Leland Act. Two of the
commenters suggested that the participant's equity value should be
evaluated, which would provide a more realistic measure of the
vehicle's value to the household. One commenter suggested increasing
the exclusion directly to $4,600 without the intermediate steps. The
Department has no discretion in this area. Section 13923 of the Leland
Act is itself a compromise position. As indicated in the House
Conference Report, the exclusion was originally going to be raised to
$5,500 in 1994, and adjusted annually to the CPI thereafter. (House
Conference Report No. 213, 103rd Cong., 1st Session, 927 (1993)). Given
this clear legislative mandate, the Department cannot unilaterally
raise the fair market value exclusion or change the Leland Act's
timetable. The Department is therefore adopting the provision as
proposed.
After the proposed rule was published, the Department realized that
a conforming amendment was needed at 7 CFR 273.8(i)(4), involving the
transfer of resources. That provision contains an example which
includes the old dollar figure of $4,500 for the vehicle exclusion.
Because the exclusion has changed and will become variable starting in
1996, the example in 7 CFR 273.8(i)(4) has been deleted.
General Assistance (GA) Vendor Payments
Section 13915 of the Leland Act amended section 5(k)(1)(B) of the
Food Stamp Act to change the treatment of third-party payments made to
recipients from GA programs. To implement this provision, the
Department proposed to amend and reorganize 7 CFR 273.9(c)(1). Three
commenters supported the proposed language as a significant improvement
over the previous, more complex provision. One commenter supported the
provision, but requested that GA vendor payments for utilities
assistance also be excluded from income under the provision. Under the
proposed language, 7 CFR 273.9(c)(1)(ii)(A) does exclude ``assistance
provided for utility costs'' from income. Because no adverse comments
were received, the Department is adopting the complete revision of 7
CFR 273.9(c)(1) contained in the proposed rulemaking.
Student Earned Income Exclusion
Section 13911 of the Leland Act amended section 5(d)(7) of the Food
Stamp Act to exclude ``income earned by a child who is a member of the
household, who is an elementary or secondary school student, and who is
21 years of age or younger * * *.'' Current regulations at 7 CFR
273.9(c)(7) exclude the earned income of children who are under age 18,
members of the household, under the parental control of another
household member, and students at least half-time. Under the current
regulations, the exclusion does not apply if the student has formed a
separate household. The legislative
[[Page 54275]]
history of section 13911 indicates that the provision was intended to
assist students that are still in high school and living with their
parents beyond age 18, but not to change the law regarding students who
live away from home and have separate food stamp households (House
Report No. 111, 103rd Cong., 1st Session 28 (1993)).
To implement this provision and address issues that had arisen
under the current student earned income exclusion, the Department
proposed to amend 7 CFR 273.9(c)(7) to exclude the earned income of ``a
student under age 22 who attends elementary or secondary school or
classes to obtain a General Equivalency Diploma at least half-time and
lives with a natural, adoptive or stepparent, is under the control of a
household member other than a parent, or is certified in a separate
food stamp household but lives with a natural, adoptive or
stepparent.'' The proposed rule included some provisions not directly
mandated by the statutory language, but that were either carried over
from the current provision or included in the proposed rule to
implement the legislative intent of the provision. Issues raised in the
comments to the proposed rulemaking are addressed below.
Living Arrangement
Thirteen commenters strongly opposed limiting the student earnings
exclusion to students living with their parents or under the parental
control of another household member. There were no comments that
supported the limitation. Commenters argued that a student's living
arrangements should have no bearing on the student's entitlement to the
exclusion. Several commenters argued that the First Circuit's decision
in Dion v. Commissioner, Maine Department of Human Services, 933 F.2d
13 (1st Cir. 1991), discussed in the preamble to the proposed rule
would specifically prohibit this limitation. Several commenters argued
that even if the legislative history supported the limitation,
statutory construction rules would prohibit looking to it because of
the clear language of the statute. Several commenters thought the
limitation was inconsistent with the Department's and Congress' intent
to encourage students to stay in school. Some State welfare agencies
also commented that the requirement would be burdensome and error-
prone.
The Department maintains its position that the language of the
statute and its legislative history support limiting the exclusion to
students living with their parents. It is appropriate and necessary for
the Department to look to the legislative history of this provision in
order to develop implementing regulations. This exclusion was passed
after the First Circuit's decision in Dion and so the Department
considered the provision's legislative history to determine whether,
and to what extent, Congress intended the provision to address issues
raised in that litigation. The Department disagrees with one
commenter's assertion that the Supreme Court's decision in Chevron USA
v. Natural Resources Defense Council, 467 U.S. 837 (1984), would
preclude looking to the legislative history to interpret this
provision. Even the Dion court looked to the legislative history to
interpret the statutory language of the pre-Leland provision. That
court concluded, based on the language of the statute and its
legislative history, that Congress had not intended to limit the
exclusion to students living with their parents. Dion, 933 F.2d at 19.
It is also the Department's position that its proposal does not violate
the holding in Dion. The decision in that case was based in part on the
lack of ``evidence that Congress considered the policy implications of
either extending the exclusion to all student-earners or limiting it to
those within their parents' household.'' (emphasis added) Dion, 933
F.2d at 17. Now Congress has clearly indicated its intent to limit this
exclusion only to students living with their parents. (House Report No.
111, 103rd Cong., 1st Session 28 (1993)).
Contrary to some commenters' assertions, the Department believes
the limitation best addresses Congressional intent. The House Report
states that the provision was intended ``to encourage those students
who are living with their parents to pursue their education * * *.''
(emphasis added) (House Report No. 111, 103rd Cong., 1st Session 28
(1993)). Congress clearly did not intend the exclusion to apply to all
students, but created the exclusion to address situations where
students' earnings could have a negative impact on the students'
families. There is also no reason that this limitation will be
administratively burdensome or error-prone because the information will
already have been collected and analyzed for the household
determination.
In order to reflect the realities of today's diverse household
situations and be consistent with the amended household definition
provisions of 7 CFR 273.1(a)(2)(i)(B), the Department will include
students who are living under the parental control of an adult
household member other than a parent. The Department continues to
believe that this is a reasonable interpretation of the statutory
language and intent that otherwise eligible students living with
parents (or with others acting in that role) should have their earned
income excluded.
The Department has therefore decided to retain the requirement in
the proposed rule that students must live with a natural, adoptive, or
stepparent, or be living under the parental control of a household
member other than a parent, to be eligible for this exclusion.
One commenter requested more time to implement the student income
exclusion because of the limitations regarding a student's living
arrangements. The Department may not extend the implementation beyond
the statutorily mandated date of September 1, 1994.
Status as Head of Household
The Department also received several comments arguing that the
exclusion should apply regardless of the student's status as head of
household. In its proposal, the Department extended the exclusion to
students who are certified in separate food stamp households, but who
live with their parents. Under the proposal, any (otherwise eligible)
student who lives with his or her natural, adoptive or stepparent is
entitled to the exclusion, regardless of that student's status in the
food stamp household.
The plaintiff in Dion, a 17 year-old girl who was the head of her
own food stamp household and who also lived with her parents, would be
eligible for the exclusion under the proposal. A student who lives with
someone other than his or her natural, adoptive, or stepparents, and
who forms a separate food stamp household would not be eligible for the
exclusion. The Department does not agree with the commenter who argued
that whether a student like Ms. Dion is living with her parents or
living on her own would not be relevant in this inquiry. Congress
specifically stated that the new student provision was not intended to
change ``current law regarding those students who live away from home
and have formed a separate household.'' (emphasis added) (House Report
No. 111, 103rd Cong., 1st Session 28 (1993)). Such students are
currently ineligible for the income exclusion, and so Congress
specifically intended for those students to remain ineligible for the
exclusion.
The Department is therefore retaining the proposal's extension of
the exclusion to students who have been certified in a separate food
stamp household, as long as that student is
[[Page 54276]]
living with a natural, adoptive or step-parent.
Half-Time Attendance
Another issue raised by several commenters was whether the
Department could require that students attend school at least half-time
to be eligible for the exclusion. The legislative history of section
13911 of the Leland Act did not address this issue. Because of concerns
that the increased scope of the exclusion (increasing the eligible age
from 18 to 21) would dramatically increase its cost, the Department
believed that the exclusion should be limited to students seriously
pursuing a high school diploma or General Equivalency Diploma (GED).
Seven commenters strongly objected to the proposal's half-time
requirement. One commenter, although recognizing the Department's
desire to limit costs with a fair and simple rule, agreed with other
commenters that the half-time requirement was arbitrary. Another
commenter suggested that students with learning disabilities, health
problems, difficult family situations, or other circumstances might not
be able to attend classes half-time. Commenters also argued that
restricting the exclusion to students who attended school for a
specified period of time each day was contrary to Congressional intent
to help students who need more time to finish school. (House Report No.
111, 103rd Cong., 1st Session 28 (1993)). Several State agencies
remarked that verification would be difficult and the requirement would
be error-prone.
The Department understands the concerns regarding the half-time
requirement. However, the Department is reluctant to exclude the income
of every student. To illustrate, although the Department is extending
the exclusion to GED students, we do not believe that this exclusion
should apply to a person working full-time and studying for the GED for
a few hours a week on his or her own.
One commenter made a suggestion that provides some limit, but is
not arbitrary. The commenter suggested that as long as a person attends
school for enough time for that person's state or local school district
to consider the person a ``student,'' then the exclusion should apply,
regardless of the time the person spends in class. The Department has
chosen to adopt this practical and reasonable approach to the problem
of school attendance. This approach also resolves a separate issue
raised by two commenters, who requested that home-schooled students
also be eligible for the exclusion. The Department has amended 7 CFR
273.9(c)(7) to provide that as long as the otherwise eligible person is
either (1) attending elementary or secondary school, or (2) attending
GED or home-school classes recognized, operated, or supervised by the
student's state or local school district, then the student's earned
income will be excluded. The Department also believes that this
approach will be less administratively burdensome and error-prone.
GED Classes
One commenter objected to the Department's decision to include
students attending classes to obtain a GED among those students who are
eligible for this exclusion. The commenter believed that adding GED
students would make the exclusion too difficult to implement because of
the half-time attendance requirement. Two commenters supported the
inclusion of GED students. The Department has eliminated the half-time
requirement, and believes that the new provision will not be difficult
to apply to GED students. Although the Leland Act did not directly
address GED students, the legislative history reflects support for
those who are working to obtain a high school diploma, (House Report
No. 111, 103rd Session 28 (1993)), and the Department sees no reason
not to include those pursuing a diploma in a GED program recognized,
supervised, or operated by the student's state or local school
district. The Department believes that earning a high school diploma is
a significant step towards self- sufficiency, and that extending this
exclusion to include students pursuing a GED in a reputable program
will encourage them to continue. Therefore, the proposed provision to
allow the earned income exclusion for students attending GED classes is
retained in this final rule.
Case Adjustment When Student Becomes 22
Another issue addressed in the proposal is the point at which a
student's earnings must be counted when the student turns 22 during the
certification period. To make the requirements for applicant and
ongoing households and prospective and retrospective budgeting
procedures the same, the Department proposed to add a new paragraph (E)
to 7 CFR 273.10(e)(2)(i) to provide that for prospective eligibility
and benefit determination, the earned income of a high school or
elementary school student shall be counted beginning with the month
following the month in which the student turns 22. To address
retrospectively budgeted households, the Department proposed to amend 7
CFR 273.21(j)(1)(vii) to specify that the income of an elementary or
secondary student shall be counted beginning with the budget month
after the month in which the student turns 22. The Department's
proposal did not change the current regulations regarding the
continuation of the exclusion during temporary interruptions in school
attendance and the proration of income when the child's share cannot be
differentiated. Two commenters commended the Department's proposal as a
simple and fair handling of the issue.
One commenter suggested that the income be included beginning with
the certification period after the student turns 22 or graduates.
Similarly, one commenter suggested that certification periods be set to
correspond with these events. Although the Department encourages State
agencies to set certification dates as suggested by the commenter to
ease the administrative burden of making the adjustment, the Department
will not complicate the provision by requiring that certification
periods be so set. In addition, because the effects of the income
exclusion are so sweeping, the Department believes it would be too
costly to extend a student's earned income exclusion until the next
recertification. The Department is therefore adopting the language of
these proposals with one clarification in the context of retrospective
budgeting.
The Department is clarifying 7 CFR 273.21(j)(1)(vii), which
addresses retrospective eligibility and budgeting, because of a comment
we received which demonstrated that our proposal was not clear. The new
language specifies that the income of an elementary or secondary
student shall be counted beginning with the budget month after the
budget month in which the student turns 22. To illustrate: a student in
a retrospective budgeting jurisdiction (which budgets from the 15th of
the month to the 14th of the next month) turns 22 on September 14.
Under the provision, the student's income would be included the budget
month after the budget month in which the student turned 22. The
student turned 22 in the budget month of August 15-September 14, so the
student's income would be included beginning the budget month of
September 15-October 14.
With this change in wording for retrospectively budgeted cases, the
revisions to 7 CFR 273.10(e)(2)(i) and 7 CFR 273.21(j)(1)(vii) are
adopted as proposed.
[[Page 54277]]
JTPA Earnings
One commenter asked for clarification on whether earnings received
pursuant to the Job Training and Partnership Act (JTPA) could be
excluded from income under this provision. Under the language in this
final rulemaking, JTPA earnings can be excluded under the student
income exclusion. Current regulations at 7 CFR 273.9(b)(1)(v) provide
that JTPA earnings are earned income to the recipient. The student
income exclusion of 7 CFR 273.9(c)(7) excludes earned income of
students who meet its requirements. The two provisions do not conflict;
one defines JTPA earnings as ``earned income,'' and the other excludes
all ``earned income'' of those individuals who meet its requirements.
Summary
In summary, the Department is amending 7 CFR 273.9(c)(7) to exclude
the earned income of any household member who is an elementary or
secondary school student 21 years of age or younger who lives with his
or her natural, adoptive, or stepparents or who is living under the
parental control of a household member other than a parent. An
elementary or secondary school student is someone who attends
elementary or secondary school, or who attends GED or home-school
classes recognized, operated, or supervised by the student's state or
local school district.
Improving Access to Employment and Training Activities
Dependent Care Deduction
Section 13922 of the Leland Act amended section 5(e) of the Food
Stamp Act by increasing the maximum dependent care deduction to $200
for each dependent child under the age of two, and to $175 for all
other dependents. In its discussion on implementing the two-tiered
deduction, Congress urged that implementation be conducted in ways that
would minimize administrative burdens on State agencies. (House
Conference Report No. 213, 103rd Congress, 1st Session 926 (1993)).
The Department proposed to amend 7 CFR 273.9(d)(4) and 7 CFR
273.10(e) to replace the fixed maximum deduction with the Leland Act's
two-tiered approach. To address Congressional intent, the Department
proposed to require State welfare agencies to adjust the deduction from
$200 to $175 no later than the next regular recertification after a
dependent child's second birthday.
Several commenters supported the two-tiered approach as both
realistic and reasonable. Two commenters also supported the
Department's proposal to allow State welfare agencies flexibility
regarding when to adjust the amount of the deduction after a dependent
child's second birthday. One State welfare agency thought that allowing
the higher deduction amount to continue until the next recertification
after the child's second birthday was confusing, and suggested that the
Department require that the adjustment be made the month following the
child's second birthday. Under the language in the proposed rulemaking,
the State agency can adjust the deduction the month following the
child's second birthday if that timeframe is easier or less confusing
for the agency to implement. No other commenters objected to the
Department's decision to allow a later adjustment, and so the
Department is adopting the provision in the proposed rule requiring the
adjustment no later than the next recertification after the child's
second birthday.
The Department also proposed a conforming change to 7 CFR
273.10(d)(1)(i) to replace the term ``child care expense'' with the
term ``dependent care expense.'' No adverse comments were received on
this conforming change, and so the Department is adopting this
amendment as provided in the proposed rulemaking.
Dependent Care Reimbursement for the Food Stamp Employment and Training
Program
Section 13922 of the Leland Act amended section 6(d) of the Food
Stamp Act to replace the $160 cap on dependent care reimbursements to
participants in the Employment and Training Program with a requirement
that State agencies reimburse the actual costs of dependent care
expenses up to a limit set by the State agency. Section 13922(b) of the
Leland Act establishes a methodology for determining the relevant
limits, including a local market rate for dependent care.
One State welfare agency objected to the provision, stating that
there is no established local market rate for dependent care for
individuals over the age of 18. The Department does not see this as a
significant problem. The proposed rule would require the State agency
to establish a State limit for dependent care over the age of 18. The
State limit cannot be more than the local market rate. The lack of a
local market rate does not preclude the State welfare agency from
establishing a State limit, it simply places a cap on the State limit.
Without a local market rate, the State agency can establish a State
limit by using a reasonable estimation of the cost of service in the
area, and the amount of dependent care reimbursement payable to
households would be the established State limit or the actual cost of
dependent care, whichever is lower. Where there is a local market rate,
State welfare agencies cannot establish State limits which exceed that
rate, and the amount of the dependent care reimbursement is the lower
of the local market rate, the State limit, or actual costs. Because the
Department does not see this as a significant problem with the
provision, the Department is adopting the provision as proposed.
Proration of Benefits
Section 13916 of the Leland Act amended section 8(c)(2)(B) of the
Food Stamp Act to eliminate proration of first month's benefits if a
household is recertified for food stamps after a break in certification
of less than one month. Current regulations at 7 CFR 273.10(a)(1)(ii)
require that a household's benefit level for the initial month of
certification be based on the day of the month it applies for benefits
and that the household receive benefits from the date of application to
the end of the month.
The Department proposed to revise 7 CFR 273.10(a) (1)(ii) and
(2)(i) to prohibit the proration of first month's benefits for all
households that apply for benefits after a break in certification of
less than one month.
The Department's proposal raised several issues. Several public
interest groups commented that the final rule should make clear that
benefits should not be prorated even if a client's previous
participation was in another county. Under the language of the Leland
Act, the reason for the break in certification is not relevant when
applying the provision. The Department does not believe the provision
requires clarification on that point. Furthermore, the administrative
problems that State welfare agencies face when transferring a
household's case from one jurisdiction to another are not really
impacted by this provision. Applying this provision just means that if
the client's break in certification is one month or less, the client's
benefits are calculated from the beginning of the month, not the day
the client reapplied in the new jurisdiction.
A State welfare agency requested clarification as to the
provision's impact on the Department's reinstatement policy. This
provision does not directly affect this policy. Under that policy, a
State agency may reinstate a household without requiring a new
application if the household has had a break in
[[Page 54278]]
certification of less than one month because of a late monthly report.
The Leland provision was not meant to eliminate policies helpful to
households, but only to ensure that those households that reapply after
a short break in certification do not receive reduced benefits.
Another State welfare agency raised the issue of the interaction of
the Leland Act proration provision and the Department's combined
allotment policy contained in 7 CFR 274.2(b) (2), (3), and (4). Under
that policy, a household that is eligible for expedited service and
applies after the 15th of the month is entitled to a combined allotment
representing the prorated portion of the first month's benefit, plus
the next month's benefit. To accommodate the administrative realities
of expedited service cases, the provision, like other provisions
regarding verification for expedited service cases, allows for delayed
verification. The commenter was concerned that dishonest applicants
could continue to reapply for expedited service benefits after the 15th
of a month, and under the combined provisions of the combined allotment
rule and the new proration provision, continue to get six weeks' worth
of benefits with little verification. Section 13916 of the Leland Act
defines ``initial month'' to mean one that follows a period of more
than one month in which the household was not certified to participate.
A household that reapplies within one month of a break that is entitled
to have its benefits not prorated under this section, is not, by
definition, in its ``initial month,'' and so is not entitled to a
combined allotment because a combined allotment is only available for
``initial'' allotments.
Although this question raises a serious issue, the Department does
not believe that further analysis on this point is fruitful in the
context of this rulemaking. The commenter's question is not really
addressed to the proration or the combined allotment policies. The
question really addresses the delayed verification requirements
necessitated in expedited service cases. If the Department addresses
the expedited service regulations in the future, we will reexamine this
issue in that context.
One State welfare agency requested that States that issue benefits
prospectively on a rolling fiscal month be exempted from this
provision. The language of the Leland Act does not allow exceptions to
the proration provision; therefore, the Department has no authority to
exempt such States.
The most significant issue to arise under this provision is whether
the proration of benefits provision applies only when an identical
household reapplies after a break in certification of less than one
month. Two State welfare agencies raised this issue in their comments.
One commenter suggested that as long as at least one household
member was certified in the previous month, the household should get
the benefit of the provision and its benefits should not be prorated.
This approach effectively extends the provision, which was intended to
benefit households, to individuals. The Department does not believe
this extension would be consistent with either the statutory language
or intent of section 13916 of the Leland Act. The Department does
recognize the need, however, to address changing household membership
in the context of this provision.
To address this issue, the Department has revised 7 CFR
273.10(a)(1)(ii) to specify that a household that reapplies after a
break in certification is not considered to be the ``same'' household
if the membership of the original household has changed to the extent
that the certification worker must establish a new case for a portion
of the original household. Under this approach, when a household's
membership changes so that a new case is created, the new case's
benefits are prorated, but the original case's benefits are not
prorated.
The Department believes that this approach is consistent with the
statutory language and intent, which was to eliminate the proration
requirement for households which reapply after a break in certification
of less than one month. (House Report No. 111, 103d Cong., 1st Session
30 (1993).) It also provides a reasonable limit on the provision,
protecting the interests of the original household over the interests
of members that leave to form new households. Because State agencies
will be able to apply this provision in conjunction with established
policy for creating new cases when household membership changes, this
approach would not be unduly burdensome. The Department believes that
it is most appropriate to have this case-related decision made by the
eligibility worker, who will be most familiar with the situation.
The Department also proposed to delete 7 CFR 273.10(a)(2) (ii) and
(iii). Both provisions, which prohibit proration in the first month of
a household's new certification period, were made moot by section 13916
of the 1993 Leland Act. No adverse comments were received on this
proposal, and so those paragraphs are deleted in this final rulemaking.
With the modification addressing the problem of changing household
composition, the proposed amendments to 7 CFR 273.10(a) are adopted as
final.
Implementation
Pursuant to section 13971 of the Leland Act, the Leland Act was
effective, and States were required to implement it, September 1, 1994.
Pursuant to Public Law 104-121, the Contract with America Advancement
Act of 1996, this final rule is effective December 16, 1996; State
agencies must implement it no later than June 30, 1997. State agencies
will be required to adjust the cases of ongoing households at the next
recertification, at household request, or when the case is next
reviewed, whichever comes first. If implementation of the Leland Act or
this rule is delayed, benefits shall be restored, as appropriate, in
accordance with the Food Stamp Act. Three State welfare agencies did
not agree that restored benefits were mandated by the Leland Act. One
of those agencies suggested that Congress' decision to apply new
provisions no later than the next recertification indicated that the
Leland Act was not intended to be retroactive. As explained below, the
Department has determined that section 13951 of the Leland Act requires
that clients receive the benefits of its provisions as of September 1,
1994, and so benefits shall be restored, to the extent appropriate, in
accordance with the Food Stamp Act.
Legislative history indicates that the Leland Act provisions were
to be implemented in the Department's ``normal manner.'' (House
Conference Report No. 213, 103rd Congress, 1st Session 926 (1993)). The
Department's ``normal'' procedure is to set an implementation date
after which households are entitled to the benefits of the new
provision. If there is a statutorily mandated implementation date, the
implementation date would correspond to that date. If the State agency
cannot adjust the ongoing cases by this date, then benefits are
restored, within the restrictions provided by the Food Stamp Act, back
to the required implementation date when the case is adjusted. To help
ease the administrative burden of implementing statutory changes, the
Department does not require immediate adjustment or require State
agencies to conduct case reviews to determine which households would
benefit from legislative changes. Several public interest groups
requested that the Department require State welfare agencies to notify
ongoing
[[Page 54279]]
households of the Leland Act provisions because it would help
households realize the benefits of the legislation more quickly.
Although the Department in general encourages giving notice to
households, the Department has decided not to require that notice be
given to households because of the administrative burden and costs to
State agencies.
If for any reason a State agency fails to implement on the required
dates, restored benefits shall be provided, if appropriate under the
provisions of the Food Stamp Act, back to the relevant implementation
date or the date of application, whichever is later. In accordance with
section 13951 of the Leland Act, variances resulting from
implementation of the provisions of the final rule are excluded from
error analysis for 120 days from June 30, 1997.
List of Subjects
7 CFR 271
Administrative practice and procedure, Food stamps, Grant
programs--social programs.
7 CFR 272
Alaska, Civil rights, Food stamps, Grant programs--social programs,
Report and recordkeeping requirements.
7 CFR 273
Administrative practice and procedures, Aliens, Claims, Food
stamps, Grant programs--social programs, Penalties, Reporting and
recordkeeping requirements, Social Security, Students.
Accordingly, 7 CFR Parts 271, 272, and 273 are amended as follows:
1. The authority citation for Parts 271, 272, and 273 continues to
read as follows:
Authority: 7 U.S.C. 2011-2032.
PART 271--GENERAL INFORMATION AND DEFINITIONS
Sec. 271.2 [Amended]
2. In Sec. 271.2, in the definition of ``Eligible foods'',
paragraph (4) is amended by removing the words ``eligible households''
and adding in their place the words ``narcotic addicts or alcoholics
and their children who live with them''.
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
3. In Sec. 272.1, a new paragraph (g)(151) is added in numerical
order to read as follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(151) Amendment No. 375. Public Law 103-66, the Mickey Leland
Childhood Hunger Relief Act, was effective and required to be
implemented on September 1, 1994. The provisions of Amendment No. 375
are effective December 16, 1996, and must be implemented by June 30,
1997. The State agency shall implement the provisions of this amendment
no later than the appropriate required implementation date for all
households newly applying for Program benefits on or after such
implementation date. The current caseload shall be converted to these
provisions at household request, at the time of recertification, or
when the case is next reviewed, whichever occurs first, and the State
agency must provide restored benefits, as may be appropriate under the
Food Stamp Act, back to the appropriate required implementation date.
If for any reason a State agency fails to implement on the appropriate
implementation date, restored benefits shall be provided, if
appropriate, back to the appropriate required implementation date or
the date of application, whichever is later. Any variances resulting
from implementation of this amendment shall be excluded from quality
control error analysis for 120 days from June 30, 1997.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
4. In Sec. 273.1:
a. Paragraphs (a)(2)(i)(B) and (a)(2)(i)(C) are revised.
b. Paragraph (a)(2)(i)(D) is removed.
c. Paragraph (a)(2)(ii) is amended by removing the words ``may be a
separate household from the others based on the provisions of
paragraphs (a)(2)(i)(A) and (a)(2)(i)(B) of this section'' and adding
in their place the words ``may be considered, together with any of the
others who is the spouse of the elderly and disabled individual, an
individual household''.
d. Paragraph (e)(1)(ii) is amended by adding the words ``, and
their children who live with them'' after the words ``facility or
treatment center''.
e. Paragraph (f)(2) introductory text is amended by adding the
words ``and their children who live with them'' after the words ``on a
resident basis''.
The revisions read as follows:
Sec. 273.1 Household concept.
(a) Household definition. * * *
(2) Special definition:
(i) * * *
(B) A child under 22 years of age who is living with his or her
natural, adoptive, or stepparents, unless the child is also living with
his or her own child(ren) or spouse.
(C) A child (other than a foster child) under 18 years of age who
lives with and is under the parental control of a household member
other than his or her parent. A child is considered to be under
parental control for purposes of this provision if he or she is
financially or otherwise dependent on a member of the household, except
that a child who is living with his or her own child(ren) or spouse is
not considered to be under parental control.
* * * * *
5. In Sec. 273.7:
a. A new paragraph (c)(4)(xiv) is added.
b. A new paragraph (c)(4)(xv) is added.
c. Paragraph (d)(1)(ii)(A) is amended by revising the first,
seventh, and last sentences.
The additions and revisions read as follows:
Sec. 273.7 Work requirements.
* * * * *
(c) State agency responsibilities. * * *
(4) * * *
(xiv) The Statewide limit(s) for dependent care reimbursements as
established by the State agency. The limit(s) shall not be less than
the dependent care deduction amounts specified under Sec. 273.9(d)(4).
(xv) The local market rates of dependent care providers in the
State. State agencies shall adopt the local market rates already
established by programs under section 402(g) of the Social Security
Act. State agencies shall establish separate local market rates for
categories of care relevant to food stamp E&T which are not addressed
under section 402(g) of the Social Security Act and include such rates
in the E&T State Plan.
* * * * *
(d) Federal financial participation.
(1) Employment and training grants. * * *
(ii) Participant reimbursements. * * *
(A) The costs of such dependent care expenses that are 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, the local market rate, or the Statewide limit, whichever is
lowest. * * * If more than one household member is required to
participate in the E&T program, the
[[Page 54280]]
State agency shall provide reimbursement for the actual cost of
dependent care, the local market rate, 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. * * *
A State agency may claim 50 percent of costs for dependent care
services provided or arranged by the State agency up to the actual cost
of dependent care, the local market rate, or the Statewide limit,
whichever is lowest.
* * * * *
6. In Sec. 273.8:
a. Paragraph (h)(1) is amended by removing the period at the end of
paragraph (h)(1)(v) and adding in its place the word ``; or'' and
adding a new paragraph (h)(1)(vi).
b. Paragraph (h)(3) is revised.
c. Paragraph (h)(6) is amended by revising the first sentence of
the paragraph.
d. Paragraph (i)(4) is amended by removing the second sentence.
The additions and revisions read as follows:
Sec. 273.8 Resource eligibility standards.
* * * * *
(h) Handling of licensed vehicles. * * *
(1) * * *
(vi) Necessary to carry fuel for heating or water for home use when
such transported fuel or water is anticipated to be the primary source
of fuel or water for the household during the certification period.
Households shall receive this resource exclusion without having to meet
any additional tests concerning the nature, capabilities, or other uses
of the vehicle. Households shall not be required to furnish
documentation, as mandated by Sec. 273.2(f)(4), unless the exclusion of
the vehicle is questionable. If the basis for exclusion of the vehicle
is questionable, the State agency may require documentation from the
household, in accordance with Sec. 273.2(f)(4).
* * * * *
(3) Each licensed vehicle not excluded under paragraph (h)(1) of
this section shall be evaluated individually to determine its fair
market value resource exclusion limit, and that portion of the resource
exclusion limit which exceeds $4,500 for FY 1993, shall be attributed
in full toward the household's resource level regardless of any
encumbrances. The $4,500 fair market value resource exclusion limit for
licensed vehicles shall remain in effect through August 31, 1994. On
September 1, 1994 through September 30, 1995, the fair market value
resource exclusion limit shall be increased to $4,550. On October 1,
1995 through September 30, 1996, the fair market value resource
exclusion limit shall be increased to $4,600. On October 1, 1996 and
each October 1 thereafter, using a base of $5,000, the fair market
value resource exclusion limit for licensed vehicles shall be adjusted
to reflect changes in the new car component of the Consumer Price Index
for All Urban Consumers published by the Bureau of Labor Statistics for
the 12-month period ending on June 30 preceding the date of such
adjustment and rounded to the nearest $50. Any value in excess of the
appropriate fair market value resource exclusion limit shall be
attributed in full toward the household's resource level, regardless of
any encumbrances on the vehicle. For example, in November 1994 a
household owning an automobile with a fair market value of $5,550 shall
have $1,000 applied toward its resource exclusion level. Any value in
excess of $4,550 (the fair market value resource exclusion limit for
that time period) shall be attributed to the household's resource
level, regardless of the amount of the household's investment in the
vehicle, and regardless of whether or not the vehicle is used to
transport household members to and from employment. Each vehicle shall
be appraised individually. The fair market value resource exclusion
limit of two or more vehicles shall not be added together to reach a
total fair market value resource exclusion in excess of the fair market
value resource exclusion for the appropriate time period.
* * * * *
(6) In summary, each licensed vehicle shall be handled as follows:
First, the vehicle shall be evaluated to determine if it is an income
producer, a home, necessary to transport a disabled household member,
or necessary to carry fuel for heating or water for home use. * * *
* * * * *
7. In Sec. 273.9:
a. Paragraph (c)(1) is revised.
b. The first sentence of paragraph (c)(7) is revised, a sentence is
added after the first sentence, and the last sentence is removed.
c. Paragraph (d)(4) is amended by removing the words ``$160 per
month, per dependent'' in the last sentence and adding in their place
the words ``$200 a month for each dependent child under two (2) years
of age and $175 a month for each other dependent''.
The revisions read as follows:
Sec. 273.9 Income and deductions.
* * * * *
(c) Income exclusions. * * *
(1) Any gain or benefit which is not in the form of money payable
directly to the household, including in-kind benefits and certain
vendor payments. In-kind benefits are those for which no monetary
payment is made on behalf of the household and include meals, clothing,
housing, or produce from a garden. A vendor payment is a money payment
made on behalf of a household by a person or organization outside of
the household directly to either the household's creditors or to a
person or organization providing a service to the household. Payments
made to a third party on behalf of the household are included or
excluded as income as follows:
(i) Public assistance (PA) vendor payments. PA vendor payments are
counted as income unless they are made for:
(A) Medical assistance;
(B) Child care assistance;
(C) Energy assistance as defined in paragraph (c)(11) of this
section;
(D) Emergency assistance (including, but not limited to housing and
transportation payments) for migrant or seasonal farmworker households
while they are in the job stream;
(E) Housing assistance payments for households living in
transitional housing for the homeless;
(F) Emergency and special assistance. PA provided to a third party
on behalf of a household which is not specifically excluded from
consideration as income under the provisions of paragraphs (c)(1)(i)(A)
through (c)(1)(i)(E) of this section shall be considered for exclusion
under this provision. To be considered emergency or special assistance
and excluded under this provision, the assistance must be provided over
and above the normal PA grant or payment, or cannot normally be
provided as part of such grant or payment. If the PA program is
composed of various standards or components, the assistance would be
considered over and above the normal grant or not part of the grant if
the assistance is not included as a regular component of the PA grant
or benefit or the amount of assistance exceeds the maximum rate of
payment for the relevant component. If the PA program is not composed
of various standards or components but is designed to provide a basic
monthly grant or payment for all eligible households and provides a
larger basic grant amount for all households in a particular category,
e.g., all households with infants, the larger amount is still part of
the normal grant or benefit for such households and not an ``extra''
payment excluded under this
[[Page 54281]]
provision. On the other hand, if a fire destroyed a household item and
a PA program provides an emergency amount paid directly to a store to
purchase a replacement, such a payment is excluded under this
provision. If the PA program is not composed of various standards,
allowances, or components but is simply designed to provide assistance
on an as-needed basis rather than to provide routine, regular monthly
benefits to a client, no exclusion would be granted under this
provision because the assistance is not provided over and above the
normal grant, it is the normal grant. If it is not clear whether a
certain type of PA vendor payment is covered under this provision, the
State agency shall apply to the appropriate FCS Regional Office for a
determination of whether the PA vendor payments should be excluded. The
application for this exclusion determination must explain the emergency
or special nature of the vendor payment, the exact type of assistance
it is intended to provide, who is eligible for the assistance, how the
assistance is paid, and how the vendor payment fits into the overall PA
benefit standard. A copy of the rules, ordinances, or statutes which
create and authorize the program shall accompany the application
request.
(ii) General assistance (GA) vendor payments. Vendor payments made
under a State or local GA program or a comparable basic assistance
program are excluded from income except for some vendor payments for
housing. A housing vendor payment is counted as income unless the
payment is for:
(A) Assistance provided for utility costs;
(B) Energy assistance (as defined in paragraph (c)(11) of this
section);
(C) Housing assistance from a State or local housing authority;
(D) Emergency assistance for migrant or seasonal farmworker
households while they are in the job stream;
(E) Housing assistance for households living in transitional
housing for the homeless;
(F) Emergency or special payments (as defined in paragraph
(c)(1)(i)(F) of this section; or
(G) Assistance provided under a program in a State in which no GA
payments may be made directly to the household in the form of cash.
(iii) Department of Housing and Urban Development (HUD) vendor
payments. Rent or mortgage payments made to landlords or mortgagees by
HUD are excluded.
(iv) Educational assistance vendor payments. Educational assistance
provided to a third party on behalf of the household for living
expenses shall be treated the same as educational assistance payable
directly to the household.
(v) Vendor payments that are reimbursements. Reimbursements made in
the form of vendor payments are excluded on the same basis as
reimbursements paid directly to the household in accordance with
paragraph (c)(5) of this section.
(vi) Demonstration project vendor payments. In-kind or vendor
payments which would normally be excluded as income but are converted
in whole or in part to a direct cash payment under a federally
authorized demonstration project or waiver of provisions of Federal law
shall be excluded from income.
(vii) Other third-party payments. Other third-party payments shall
be handled as follows: moneys legally obligated and otherwise payable
to the household which are diverted by the provider of the payment to a
third party for a household expense shall be counted as income and not
excluded. If a person or organization makes a payment to a third party
on behalf of a household using funds that are not owed to the
household, the payment shall be excluded from income. This distinction
is illustrated by the following examples:
(A) A friend or relative uses his or her own money to pay the
household's rent directly to the landlord. This vendor payment shall be
excluded.
(B) A household member earns wages. However, the wages are
garnished or diverted by the employer and paid to a third party for a
household expense, such as rent. This vendor payment is counted as
income. However, if the employer pays a household's rent directly to
the landlord in addition to paying the household its regular wages, the
rent payment shall be excluded from income. Similarly, if the employer
provides housing to an employee in addition to wages, the value of the
housing shall not be counted as income.
(C) A household receives court-ordered monthly support payments in
the amount of $400. Later, $200 is diverted by the provider and paid
directly to a creditor for a household expense. The payment is counted
as income. Money deducted or diverted from a court-ordered support or
alimony payment (or other binding written support or alimony agreement)
to a third party for a household's expense shall be included as income
because the payment is taken from money that is owed to the household.
However, payments specified by a court order or other legally binding
agreement to go directly to a third party rather than the household are
excluded from income because they are not otherwise payable to the
household. For example, a court awards support payments in the amount
of $400 a month and in addition orders $200 to be paid directly to a
bank for repayment of a loan. The $400 payment is counted as income and
the $200 payment is excluded from income. Support payments not required
by a court order or other legally binding agreement (including payments
in excess of the amount specified in a court order or written
agreement) which are paid to a third party on the household's behalf
shall be excluded from income.
* * * * *
(7) The earned income (as defined in paragraph (b)(1) of this
section) of any household member who is under age 22, who is an
elementary or secondary school student, and who lives with a natural,
adoptive, or stepparent or under the parental control of a household
member other than a parent. For purposes of this provision, an
elementary or secondary school student is someone who attends
elementary or secondary school, or who attends classes to obtain a
General Equivalency Diploma that are recognized, operated, or
supervised by the student's state or local school district, or who
attends elementary or secondary classes through a home-school program
recognized or supervised by the student's state or local school
district. * * *
* * * * *
8. In Sec. 273.10:
a. The third sentence of paragraph (a)(1)(ii) is amended by adding
the words ``of more than one month, fiscal or calendar depending on the
State's issuance cycle,'' after the words ``following any period'',
replacing the comma after the words ``not certified for participation''
with a period, and removing the remainder of the sentence.
b. The fourth sentence of paragraph (a)(1)(ii) is removed and a new
sentence is added in its place.
c. Paragraphs (a)(2)(ii) and (a)(2)(iii) are removed, and the
designation for paragraph (a)(2)(i) is removed.
d. Newly redesignated paragraph (a)(2) is further amended by adding
the words ``more than one month'' after the words ``If an application
for recertification is submitted'' in the third sentence.
e. The sixth sentence of paragraph (d)(1)(i) is amended by removing
the word ``child'' the first time it appears and adding ``dependent''
in its place.
f. A sentence is added to the end of paragraph (d)(4).
g. Paragraph (e)(1)(i)(E) is amended by removing the words
``maximum amount
[[Page 54282]]
of $160 per dependent'' and adding in their place the words ``maximum
amount as specified under Sec. 273.9(d)(4) for each dependent''.
h. A new paragraph (e)(2)(i)(E) is added.
i. Paragraph (f)(2) is removed and reserved.
The additions read as follows:
Sec. 273.10 Determining household eligibility and benefit levels.
(a) Month of application.
(1) Determination of eligibility and benefit levels. * * *
(ii) * * * For purposes of this provision, a household is not
considered to be the same household as the previously participating
household if the certification worker has established a new food stamp
case for the household because of a significant change in the
membership of the previously participating household. * * *
* * * * *
(d) Determining deductions. * * *
(4) Anticipating expenses. * * * If a child in the household
reaches his or her second birthday during the certification period, the
$200 maximum dependent care deduction defined in Sec. 273.9(d)(4) shall
be adjusted in accordance with this section not later than the
household's next regularly scheduled recertification.
* * * * *
(e) Calculating net income and benefit levels. * * *
(2) Eligibility and benefits.
(i) * * *
(E) If a household contains a student whose income is excluded in
accordance with Sec. 273.9(c)(7) and the student becomes 22 during the
month of application, the State agency shall exclude the student's
earnings in the month of application and count the student's earnings
in the following month. If the student becomes 22 during the
certification period, the student's income shall be excluded until the
month following the month in which the student turns 22.
* * * * *
9. In Sec. 273.21, the first sentence of paragraph (j)(1)(vii)(A)
is revised and a new sentence is added after the first sentence to read
as follows:
Sec. 273.21 Monthly Reporting and Retrospective Budgeting (MRRB)
* * * * *
(j) State agency action on reports.
(1) Processing. * * *
(vii) * * *
(A) Earned and unearned income received in the corresponding budget
month, including income that has been averaged in accordance with
paragraph (f) of this section. The earned income of an elementary or
secondary school student excluded in accordance with Sec. 273.9(c)(7)
shall be excluded until the budget month following the budget month in
which the student turns 22. * * *
* * * * *
Dated: September 27, 1996.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 96-26072 Filed 10-16-96; 8:45 am]
BILLING CODE 3410-30-U
