[Federal Register Volume 61, Number 85 (Wednesday, May 1, 1996)]
[Rules and Regulations]
[Pages 19155-19160]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10786]
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DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 272 and 273
[Amendment No. 369]
RIN 0584-AC08
Food Stamp Program: Failure to Comply with Federal, State, or
Local Welfare Assistance Program Requirements
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
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SUMMARY: This action amends Food Stamp Program regulations to prohibit
an increase in food stamp benefits when a household's benefit from
another
[[Page 19156]]
Federal, State or local means-tested assistance program decreases as a
result of a penalty imposed on the household for intentionally failing
to comply with a requirement of the other program. This regulatory
change is necessary to more fully implement congressional intent that
the Food Stamp Program reinforce, not mitigate, another program's
penalties.
EFFECTIVE DATE: This final action is effective May 31, 1996. State
agencies must implement no later than November 27, 1996.
FOR FURTHER INFORMATION CONTACT: Questions regarding the rulemaking
should be addressed to Margaret Batko, Supervisor, Eligibility and
Certification Regulation Section, Certification Policy Branch, Program
Development Division, Food Stamp Program, Food and Consumer Service,
USDA, 3101 Park Center Drive, Alexandria, Virginia 22302. Ms. Batko may
also be reached by telephone at (703) 305-2496.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rulemaking has been determined to be significant for purposes
of Executive Order 12866, and therefore, has been reviewed by the
Office of Management and Budget.
Executive Order 12778
This rulemaking has been reviewed under Executive Order 12778,
Civil Justice Reform. The rule is intended to have preemptive effect
with respect to any state or local laws, regulations or policies that
conflict with its provisions or that would otherwise impede its full
implementation. The 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. In the Food Stamp Program the administrative
procedures are as follows: (1) For program benefit recipients--State
administrative procedures issued pursuant 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
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule and related Notice(s) to 7 CFR part 3105, subpart V (48 FR 29115,
June 24, 1983; or 48 FR 54317, December 1, 1983, as appropriate), this
Program is excluded from the scope of Executive Order 12372 which
requires intergovernmental consultation with State and local officials.
Regulatory Flexibility Act
This rulemaking has also been reviewed with respect to the
requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354,
94 Stat. 1164, September 19, 1980). William E. Ludwig, Administrator of
the Food and Consumer Service (FCS), has certified that this action
would not have a significant economic impact on a substantial number of
small entities. The changes would affect food stamp applicants and
recipients who intentionally fail to comply with other Federal, State
or local welfare assistance program requirements. The rulemaking also
affects State and local welfare agencies which administer the Food
Stamp Program.
Paperwork Reduction Act
This rulemaking does not contain additional reporting or
recordkeeping requirements subject to approval by the Office of
Management and Budget (OMB) under the Paperwork Reduction Act of 1980
(44 U.S.C. 3507).
Background
Section 164 of the Food Stamp Act Amendments of 1982 (Pub. L. 97-
253, Title I, Subtitle E, Sept. 8, 1982) amended Section 8 of the Food
Stamp Act of 1977 (Act) to add a new paragraph (d) which prohibits an
increase in food stamp benefits due to a decrease in household income
resulting from a penalty levied by a Federal, State, or local welfare
or public assistance program for an intentional failure to comply with
the other program's requirements. 7 U.S.C. 2017(d). Currently, the
regulations at 7 CFR 273.11(k) limit the prohibition against increasing
food stamp benefits to situations in which a household's welfare or
public assistance benefits have been reduced because of agency
recoupment. If the recoupment was precipitated by a finding of an
intentional program violation, food stamp eligibility and benefit
levels are calculated without regard for the amount of the reduction in
assistance due to the recoupment. On
August 8, 1995, at 60 FR 40311, we proposed to expand the current
prohibition on increases in food stamp benefits to include all
situations in which a decrease (reduction, suspension or termination)
in assistance income occurs as a result of a penalty being imposed for
an intentional failure to comply with a Federal, State, or local
welfare or public assistance program requirement. The proposal provided
that State agencies would calculate food stamp benefits using the
benefit amount which would have been issued by the other program if no
penalty had been applied against that program's benefit amount.
Comments on the proposed rulemaking were solicited from interested
parties for 45 days. A total of 30 comment letters were received; 26
from State and local welfare agencies, three from legal aid groups, and
one from the general public. All letters which specifically addressed
the provisions of the proposed rulemaking were considered in developing
the final rule. The remaining sections of the preamble address the
significant issues raised by commenters.
State welfare agencies generally supported the proposed rule but
had varying degrees of concern relative to: the lack of a definition of
``intentional failure to comply''; what constitutes a penalty; and the
food stamp benefit calculation procedure. The legal aid groups opposed
the provision stating concern about the impact on the nutritional
levels of children and lack of due process protection for the affected
households.
Who Does the Provision Apply To?
The proposed rule specified that the expansion in the prohibition
on increases in food stamp benefits based on a reduction in income from
assistance programs would apply to acts of intentional noncompliance
with Federal, State, or local welfare or public assistance programs
which are means-tested and distribute publicly funded benefits.
Historically, we have always made a distinction between welfare or
public assistance programs and other types of Federal, State or local
programs by categorizing welfare and public assistance programs as
``means-tested'' programs. It has come to our attention that there may
be Federal, State or local programs in existence which are means-tested
but are not generally considered to be welfare or public assistance.
Therefore, it is not enough to provide that this rule affects ``means-
tested'' programs only. The final clarifies that the provision only
applies to means-test programs governed by welfare or public assistance
laws or regulations.
One commenter asked that the final provision be revised to require
that individuals who are receiving Social Security Disability Insurance
(SSDI) payments because of drug addiction and/or alcoholism and who do
not comply with Federal treatment requirements be covered by the final
rule. Since SSDI is not means-tested
[[Page 19157]]
assistance or generally considered to be welfare or public assistance,
the final rule would not apply when a reduction in SSDI benefits occurs
for failure to comply with a Federal treatment program requirement. We
believe it would not be administratively permissible to create an
exception for this particular benefit program situation without express
congressional direction.
At least one State agency and the legal aid groups recommended that
the term ``intentional'' be defined. Some of these commenters also
recommended that we require the other Federal, State and local agencies
to use clear and convincing evidence in making a determination of
intentional noncompliance or that the food stamp caseworker be required
to at least take into consideration the Food Stamp Program's ``good
cause'' provisions prior to taking action to prohibit an increase in
food stamp benefits.
As stated in the preamble of the proposed rulemaking, the Food
Stamp Program will not be involved in the determination of whether or
not an individual intentionally failed to comply with another program's
requirement and whether or not there was good cause for the
noncompliance. It should be noted, however, that a State or local
worker may be responsible for many of the other welfare or public
assistance programs. Thus, it is conceivable that such worker may be
directly/indirectly involved in the determination of intentional
failure to comply with another program's requirements. For the purpose
of determining individual food stamp benefit levels, we intend that
food stamp workers only verify if a known decrease in a household's
benefits under another welfare or public assistance program is due to a
determination by the other program of intentional failure to comply. If
the determination is not specifically identified by the other program
as an ``intentional'' failure to comply, the prohibition on increased
food stamp benefits would not apply.
One commenter recommended that the word ``intentional'' be dropped
from the final rule so that it would apply to all acts of
noncompliance. Another commenter also stated that the prohibition on
increases in food stamp benefits should apply to any act of
noncompliance provided there are appropriate opportunities to establish
good cause and to ensure that the household was aware of the obligation
before sanctions were imposed. We do not have the discretion to expand
the coverage of the prohibition to any act of noncompliance. Section
8(d) of the Act applies only to acts of intentional failure to comply
with another welfare or public assistance program's requirements. These
commenters may be interested to know that there is pending legislation
being considered by Congress that, if passed, would expand the coverage
of Section 8(d) to include any act of noncompliance.
One commenter noted that penalties for noncompliance with certain
child support enforcement provisions do not result in actual reductions
of benefits; instead, the penalty imposed is a denial of benefits. For
example, the Aid to Families with Dependent Children (AFDC) program in
some States requires that an unmarried parent identify a child's other
parent. If the applicant-parent refuses to provide the requested
information, benefits are denied. The commenter suggested that
Sec. 273.11(k) be applied to these situations. In the scenario
suggested by this commenter, household income for purposes of
determining eligibility for food stamp benefits would be the amount of
AFDC the household would have received had the household provided the
requested information.
We do not have the discretion to adopt this suggestion. The
language of section 8(d) of the Act provides that there be no increase
in food stamp benefits when benefits under another Federal, State or
local welfare or public assistance program are decreased due to
intentional noncompliance. It is clear from the statutory language that
Congress' intent was to limit the application to situations where
benefits are being received and then decreased due to an intentional
act of noncompliance. In the suggested situation benefits are never
received so they can not be decreased. However, there is pending
legislation under consideration by Congress that would make compliance
with child support enforcement requirements a condition of eligibility
for food stamp benefits.
In reviewing comments on who the provision should apply to, it came
to our attention that in the preamble of the August 8 proposed rule we
made reference to welfare assistance and public assistance
interchangeably. Yet we inadvertently failed to include a reference to
public assistance in the actual regulatory text of the proposed rule.
We are correcting this oversight in this rulemaking. In addition, the
final rule clarifies that State agencies shall define what constitutes
a welfare assistance program or a public assistance program. The only
requirement for the State agency selection of appropriate programs is
that they be means-tested and distribute public funds.
How Should the Provision Be Applied?
Household vs. Individual
One commenter noted that AFDC programs in certain States allow
State agencies to terminate cash assistance to not only an individual
who has failed to comply with program requirements, but also to other
household members. This commenter recommended that the prohibition on
increases in food stamp benefits for deceases in other types of
assistance be limited to that part of the welfare benefit decrease
representing the benefit share of the individual who intentionally
failed to comply, not the entire household's benefits. We are not
adopting this suggestion. It is clear from the language of the Act that
the prohibition on increased food stamp benefits required by Section
8(d) applies to a household and not simply individual household
members. We do not have the authority to create regulatory distinctions
in conflict with the express language of the Act.
Family Cap
Some State agencies are implementing welfare reform programs which
include a ``family cap'' requirement. The family cap requirement
provides that if an individual has another child while receiving
assistance under the program, the family will not receive an increase
in assistance for the additional child. One commenter suggested that
some State agencies may consider the act of having the additional child
to be an ``intentional failure to comply'' with the rules and
regulations of the assistance program. This commenter claimed that
under the terms of the August 8 proposed rule, an increase in food
stamp benefits for the additional member would not be allowed. This
commenter suggested that we modify the proposed rule to allow increases
in food stamp benefits in these situations regardless of State
penalties.
The commenter misinterpreted the intent and impact of the proposed
rule. In the situation noted by the commenter, the family's current
assistance would not be decreased; rather, the family would not be
entitled to increased assistance for the additional member. The
proposed rule specifically stated that the prohibition on increased
food stamp benefits would not apply in situations where the household's
benefits under another program are frozen at the current level due to
an act of intentionally failing to comply with a requirement of that
program.
[[Page 19158]]
Food Stamp Program Work Sanctions
Current rules at 7 CFR 273.7(g)(2) provide that individuals who
fail to comply, whether intentionally or not, with a work requirement
under Title IV of the Social Security Act or an unemployment
compensation work requirement, where such work requirement is
comparable to a food stamp work requirement, shall be treated as though
the individual had failed to comply with the food stamp requirement and
the client shall be subject to a food stamp penalty. One commenter
questioned if the August 8 proposed rule would take precedence over 7
CFR 273.7(g)(2). It would not. The provision at 7 CFR 273.7(g)(2)
imposes a food stamp sanction for noncompliance with certain work
requirements. The proposed changes to 7 CFR 273.11(k) would have
prevented an increase in food stamp benefits when a household was
sanctioned by another Federal, State or local means-tested welfare or
public assistance program for noncompliance. We have revised the final
rule to clarify that Sec. 273.11(k) does not apply in cases where
individuals or households are sanctioned for noncompliance with a food
stamp work requirement pursuant to 7 CFR 273.7(g)(2).
Administrative Problems
Some commenters claimed that they would not be able to comply with
Sec. 273.11(k) in situations involving intentional failures to comply
with the requirements for receiving Supplemental Security Income (SSI)
benefits because SSI benefits are not determined by the State or local
welfare agency. These commenters believe they will not receive
cooperation from SSI offices in obtaining the necessary information.
One commenter suggested exempting SSI from the programs covered by
Sec. 273.11(k). Another commenter suggested we incorporate
Sec. 273.11(k) a mandate that the necessary information be included in
the SDX data base maintained by SSA.
Section 8(d) of the Act does not provide us with the latitude to
treat SSI differently than other means-tested welfare or public
assistance programs. Further, the statute does not give us the latitude
to require adjustments in the SDX data base. States and localities will
have to work with all the associated programs to share the information
necessary to comply with the requirements of this final rule. However,
we do recognize that the other agencies may not cooperate in providing
the necessary information, or cannot do so due to information
disclosure laws. Therefore, we are amending the final rule to provide
that if a State agency is unsuccessful in obtaining information from
another program necessary to enable it to comply with this rulemaking,
the State agency will not be held responsible for such noncompliance.
Most commenters believed the requirements of the August 8 proposed
rule would be too complex to administer, would result in the need to
make costly changes to computer systems, and would be prone to error.
Alternatives suggested by commenters included: Allowing State agencies
an option to implement or not implement the provision; allowing State
agencies to implement in a manner which works best for the State--such
as allowing a State option to determine what constitutes a penalty; or
allowing a State option to use a standard amount to be deemed as food
stamp income through the duration of the penalty period imposed by the
other program; or allowing a State to impose the same penalty against
food stamp benefits as imposed against the benefits of the other
program; or allowing a State agency to freeze the amount of the
benefits under the affected program through the duration of the
penalty.
We cannot allow a State agency to choose not to implement
Sec. 273.11(k). Section 8(d) of the Act clearly mandates that there
will be no increase in food stamp benefits when a household's benefits
under another program are decreased due to an intentional failure to
comply with a requirement of that program. This rulemaking expands on
the current provision to more fully reflect congressional intent.
We also cannot adopt the suggestion of allowing a State agency to
impose the same penalty against the food stamp benefit as was imposed
against benefits under the program in which the noncompliance occurred.
The statute does not provide an option to reduce, suspend or terminate
the household's current food stamp benefit level; the statute only
prohibits an increase in food stamp benefits for noncompliance with
another program's requirements. However, pending legislation, if passed
as currently written, would provide such flexibility to a State agency.
While we cannot adopt some of the alternatives suggested by
commenters, some of the other alternatives mentioned may be more
feasible and cost-effective than our proposed procedures. In the
interest of State flexibility and our intent to eliminate prescriptive
regulations where possible, we are revising the final provision to
allow State agencies to implement the prohibition on food stamp benefit
increases in a manner which works best for that State. However, to
ensure that State agencies implement the provision within the confines
of the current statutory parameters, we are revising proposed
Sec. 273.11(k) to include the following minimum requirements:
1. State agencies shall apply Sec. 273.11(k) to prevent increases a
household's food stamp benefits when benefits under another Federal,
State or local means-tested welfare or public assistance program are
decreased (reduced, terminated, or suspended) due to a determination by
the other program of an act of intentional failure to comply with a
requirement of such program. Section 273.11(k) does not apply with
regard to cases of noncompliance which meet the requirements of 7 CFR
273.7(g)(2). If the State agency is not successful in obtaining the
necessary cooperation from the other program to enable it to comply
with the requirements of Sec. 273.11(k), the State agency shall not be
held responsible for noncompliance so long as the State agency has made
a good faith effort to obtain the information.
2. State agencies shall not reduce, suspend or terminate a
household's current food stamp benefit level when the household's
benefits under another means-tested welfare or public assistance
program have been decreased due to an intentional failure to comply
with a requirement of that program, except as provided at 7 CFR
273.7(g)(2).
3. State agencies must adjust food stamp benefits when eligible
members are added to the food stamp household regardless of whether or
not the household is prohibited from receiving benefits for the member
under another Federal, State or local means-tested welfare or public
assistance program.
4. Changes in household circumstances which are not related to a
penalty imposed by another Federal, State or local means-tested welfare
or public assistance program shall not be affected by this provision.
Cases of Recoupment and Reduction
One commenter noted that the proposed rule implied that it only
applied in situations where overissued benefits received due to
intentional noncompliance with a program requirement are being recouped
or a reduction in benefits is being applied as a fiscal penalty for
intentional noncompliance. This commenter questioned how food stamp
benefits would be calculated in situations in which a household is
subject to both a recoupment and a reduction for the same act of
intentional noncompliance.
[[Page 19159]]
As stated earlier, the final rule will allow State agencies to
implement the provision in a manner which works best for that State
agency. Thus, State agencies would establish their own procedures to
address this situation.
Notice to Clients
The legal aid groups that commented believed that households
affected by application of Sec. 273.11(k) should receive a food stamp
notice from State agencies explaining why their food stamp benefits are
not going up, and informing them that they are entitled to a hearing on
the issue of whether their program violation was intentional.
Current regulations at 7 CFR 273.13 require State agencies to
provide households with timely and adequate notice when reducing or
terminating food stamp allotments. Section 273.11(k) does not result in
a reduction, termination, or suspension of a household's current food
stamp benefit amount. Thus, State agencies are not obligated to provide
a notice of adverse action or adequate notice. However, the State
agency may provide such a notice at its option.
Additionally, a household would not be entitled to a separate and
distinct food stamp fair hearing on the issue of intent. The
determination of intentional failure must be made by the other program
for the food stamp prohibition to take affect. A separate and distinct
food stamp fair hearing to appeal another program's determination of
intent would place the Food Stamp Program in a position of second
guessing another program's determination. Of course, a State or local
worker who deals with multiple welfare or public assistance programs
may be directly or indirectly involved in the initial determination of
intent or client appeal of such determinations.
Several commenters raised concerns about how to calculate the food
stamp benefit in situations where the person's benefits from another
program are suspended or terminated due to an intentional failure to
comply, especially in cases of long periods of suspension or indefinite
termination of benefits. The commenters were particularly concerned
about cases for which benefits are terminated indefinitely and the
recipient never reapplies for those program benefits again. They felt
that it would be virtually impossible to track such cases. One
commenter suggested exempting such cases from the provision. Another
commenter recommended placing a time limit on the prohibition on
increased food stamp benefits in Sec. 273.11(k) for such cases. Still
another commenter recommended limiting the application of
Sec. 273.11(k) to the time it takes to repay the overpayment or to the
time the recipient begins to cooperate, whichever is less.
Section 8(d) of the Act clearly states that the prohibition against
increasing food stamp benefits shall apply for the duration of the
penalty imposed by the welfare or public assistance program. Therefore,
we do not have the discretion to allow State agencies to place time
restrictions on the application of Sec. 273.11(k). Moreover, we do not
agree that cases with long penalties should be exempt from the
prohibition. Generally, the more serious the act of intentional
noncompliance, the more serious the fiscal penalty and/or the longer
the penalty period. To do as the commenter has asked would result in
the more serious cases of intentional noncompliance receiving an
increase in food stamp benefits, while persons still receiving benefits
even though reduced for a much lesser degree of intentional
noncompliance could not receive an increase in food stamp benefits.
Implementation
The proposed rule provided that State agencies would be required to
implement the rule when final on the first day of the first month
beginning 120 days after publication of the final rulemaking. The 120-
day time period between publication and required implementation was
proposed to provide State agencies with sufficient lead time to
reprogram or train employees before implementing the new Program
requirement. It has come to our attention that some State agencies may
be able to implement sooner and would like to do so while other State
agencies believe the lead time is too short. We agree that State
agencies should have the flexibility to either implement soon after
publication or to have more lead time. Accordingly, this final rule
provides that State agencies must implement Sec. 273.11(k) ``no later
than'' 210 days from the date of publication in the Federal Register.
In addition, one commenter asked if we intend that Sec. 273.11(k)
apply to pending cases of intentional failure to comply with another
program's requirements. The final rule also clarifies that
Sec. 273.11(k) only affects those cases where a pertinent decrease in
the household's benefits from another program occurs on or after the
effective date of this final rulemaking.
Some State agencies commented that their computer systems are
designed to automatically update food stamp benefits when public
assistance benefits change. Until their computers can be reprogrammed,
the State agencies would have to manually bypass this automatic update
process which will increase administrative burden and result in errors.
These commenters suggested that variances in food stamp allotments due
to this regulation be excluded from the quality control error
determination. In accordance with Section 16(c)(3) of the Act,
variances resulting from implementation of a new rule change are
excluded from error analysis for 120 days from the required
implementation date of the rule change. Some State agencies may
implement earlier than the required implementation date, in such cases
the 120-day count begins on the actual date of implementation by the
State agency. We do not have the discretion to exclude variances for a
longer period of time. State agencies which plan to implement earlier
than the required date are reminded to follow the procedures at 7 CFR
275.12(d)(2)(vii)(A).
List of Subjects
7 CFR Part 272
Alaska, Civil rights, Food stamps, Grant programs--social programs,
Reporting and recordkeeping requirements.
7 CFR Part 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 272 and 273 are amended as follows:
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
1. The authority citation of Parts 272 and 273 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
2. In Sec. 272.1, a new paragraph (g)(145) is added to read as
follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(145) Amendment No. 369. The provisions of Amendment No. 369 are
effective May 31, 1996. State agencies must implement no later than
November 27, 1996. The provisions of this amendment are applicable for
determinations of intentional failure to comply made on or after the
effective date of the amendment.
[[Page 19160]]
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
Sec. 273.9 [Amended]
3. In Sec. 273.9, the second sentence of paragraph (b)(5)(i) is
amended by removing the words ``for purposes of recouping from a
household an overpayment which resulted from the household's
intentional failure to comply with the other program's requirements''.
4. In Sec. 273.11, paragraph (k) is revised to read as follows:
Sec. 273.11 Action on households with special circumstances.
* * * * *
(k) Failure to comply with another assistance program's
requirements. A State agency shall not increase food stamp benefits
when a household's benefits received under another means-tested
Federal, State or local welfare or public assistance program, which is
governed by welfare or public assistance laws or regulations and which
distributes public funds, have been decreased (reduced, suspended or
terminated) due to an intentional failure to comply with a requirement
of the program that imposed the benefit decrease. This provision does
not apply in the case of individuals or households subject to a food
stamp work sanction imposed pursuant to 7 CFR 273.7(g)(2). State agency
procedures shall adhere to the following minimum conditions:
(1) This provision must be applied to all applicable cases. If a
State agency is not successful in obtaining the necessary cooperation
from another Federal, State or local means-tested welfare or public
assistance program to enable it to comply with the requirements of this
provision, the State agency shall not be held responsible for
noncompliance as long as the State agency has made a good faith effort
to obtain the information.
(2) A State agency shall not reduce, suspend or terminate a
household's current food stamp allotment amount when the household's
benefits under another applicable assistance program have been
decreased due to an intentional failure to comply with a requirement of
that program.
(3) A State agency must adjust food stamp benefits when eligible
members are added to the food stamp household regardless of whether or
not the household is prohibited from receiving benefits for the
additional member under another Federal, State or local welfare or
public assistance means-tested program.
(4) Changes in household circumstances which are not related to a
penalty imposed by another Federal, State or local welfare or public
assistance means-tested program shall not be affected by this
provision.
Dated: April 23, 1996.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 96-10786 Filed 4-30-96; 8:45 am]
BILLING CODE 3410-30-U
