[Federal Register Volume 62, Number 105 (Monday, June 2, 1997)]
[Rules and Regulations]
[Pages 29652-29662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-13946]
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DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 272 and 275
[Amdt. No. 366]
RIN 0584-AB75
Food Stamp Program: Quality Control Provisions of the Mickey
Leland Childhood Hunger Relief Act
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
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SUMMARY: On June 23, 1995 the Department of Agriculture published
proposed changes to Food Stamp Program regulations based on section
13951 of the Mickey Leland Childhood Hunger Relief Act. This final rule
addresses significant comments received in response to the regulatory
changes proposed in the rule published June 23, 1995, and finalizes
regulatory changes to the quality control system of the Food Stamp
Program in the following areas: timeframes for completion of all review
activity, exclusion of variances resulting from the application of new
regulations, the tolerance level for excessive error rates, the
calculation of liability amounts, interest charges on liability
amounts, good cause relief from liabilities, and the authority of the
Administrative Law Judges to determine good cause. These changes will
enhance the efficiency and equity of the quality control system.
DATES: Effective Dates: Section 13971 of the Mickey Leland Childhood
Hunger Relief Act sets effective dates for the various provisions of
the Leland Act addressed in this rule. The amendment to 7 CFR
275.12(d)(2)(vii) was effective October 1, 1992. The amendments to 7
CFR 275.23(e)(4), and newly designated (e)(5), (e)(7), (e)(9), and
(e)(10)(i) were effective October 1, 1991. The amendments to 7 CFR
272.1(g), 275.3(c) (Introductory text), 275.3(c)(1)(iii), 275.11(g),
275.23(d)(1)(iii), 275.23(e)(1), and newly designated
275.23(e)(8)(i)(D), 275.23(e)(8)(ii), 275.23(e)(8)(iii)(A),
275.23(e)(8)(iii)(B), and 275.23(e)(11)(iii) are effective July 2,
1997. The provisions of Sec. 275.3(c)(4) will become effective after
approval by OMB.
Implementation Dates: With the exception of the provisions
contained in 7 CFR 275.3(c)(4) [Arbitration], 275.23(e)(5) [State
agencies' liabilities for payment error-Fiscal Year 1992 and beyond],
and newly designated 275.23(e)(7) [Good Cause], and 275.23(e)(9)
[Timeframes], all provisions of this rule shall be implemented July 2,
1997. The provisions contained in Secs. 275.3(c)(4), 275.23(e)(5), and
newly designated 275.23(e)(7), and 275.23(e)(9) shall be implemented
after approval of the provisions of Secs. 275.3(c)(4) and newly
designated 275.23(e)(7) by OMB under the Paperwork Reduction Act of
1995.
OMB Submissions: The provisions contained in 7 CFR 275.3(c)(4), and
newly designated 275.23(e)(7) shall be submitted to the Office of
Management and Budget for approval under the Paperwork Reduction Act of
1995. FCS will publish a notice in the Federal Register announcing the
effective and implementation dates, which will be dates occurring after
the publication date of that notice. FCS can not issue billing letters
for the review periods of Fiscal Years 1992 and beyond until such time
as these provisions have been implemented by the publication of the
notice.
FOR FURTHER INFORMATION CONTACT: John H. Knaus, Chief, Quality Control
Branch, Program Accountability Division, Food and Consumer Service,
USDA, 3101 Park Center Drive, Room 904, Alexandria, Virginia 22302,
(703) 305-2472.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This rule has been determined to be significant and was reviewed by
the Office of Management and Budget under Executive Order 12866.
Executive Order 12372
The Food Stamp Program is listed in the Catalog of Federal Domestic
Assistance under No. 10.551. For the reasons set forth in the final
rule at 7 CFR 3015, Subpart V and related notice (48 FR 29115, June 24,
1983), this Program is excluded from the scope of Executive Order 12372
which requires intergovernmental consultation with State and local
officials.
Executive Order 12988
This action has been reviewed under Executive Order 12988, Civil
Justice Reform. This rule is intended to have preemptive effect with
respect to any state or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Implementation'' section of this preamble.
Prior to any judicial challenge to the provisions of this final 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 (for
rules related to non-QC liabilities) or Part 283 (for rules related to
QC liabilities); (3) for program retailers wholesalers--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 278.8.
Regulatory Flexibility Act
This action has been reviewed with regard to the requirements of
the Regulatory Flexibility Act of 1980 (5 U.S.C. Sec. 601 through 612).
William E. Ludwig, Administrator of the Food and Consumer Service, has
certified that this rule does not have a significant economic impact on
a substantial number of small entities. The requirements will affect
State and local agencies that administer the Food Stamp Program.
Paperwork Reduction Act
This final rule contains information collection requirements
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995 (Pub. L. 104-13). The reporting and
recordkeeping burden associated with the Food Stamp
[[Page 29653]]
Program Quality Control System is approved under OMB No. 0584-0303. The
burden for the Quality Control System is estimated to average 10.4
hours per response. There are 53 respondents. This is an increase of
5246 hours from the previously approved burden.
The Quality Control System contains procedures for resolving
differences in review findings between State agencies and FCS. This is
referred to as the arbitration process. Section 7 CFR 275.3(c) of this
rule modifies the current arbitration process. We believe that the
modifications made by this rule to the arbitration process do not
represent an increase in burden from current practice.
The Quality Control System contains procedures which provide relief
for State agencies from all or a part of a quality control liability
when a State agency can demonstrate that a part or all of an excessive
error rate was due to an unusual event which had an uncontrollable
impact on the State agency's payment error rate. Section 7 CFR
275.23(e)(7) of this rule modifies the current good cause process. We
believe that the modifications made by this rule to the good cause
process do not represent an increase in burden from current practice.
FCS will solicit comment on these information collections through a
separate notice published in the Federal Register.
Background
On June 23, 1995 (60 FR 32615) the Department of Agriculture (the
``Department'') proposed regulations to amend the food stamp quality
control (``QC'') system, based on mandatory changes contained in
section 13951 of the Mickey Leland Childhood Hunger Relief Act (the
``Leland Act''), Chapter 3, Title XIII of the Omnibus Budget
Reconciliation Act of 1993 (Pub. L. 103-66), which revised sections
13(a)(1), 14(a), and 16(c) of the Food Stamp Act of 1977, as amended
(the ``Act''). A full explanation of the rationale and purpose of these
regulatory changes was provided in the preamble of the proposed
rulemaking. The Department received comment letters from thirty-four
organizations concerning the proposed rule. The preamble of this final
rule deals with significant issues raised by commenters and the changes
made as a result of comments. It is recommended that the reader
reference the proposed rulemaking, as well as this final rulemaking for
a more complete understanding of the regulatory changes that the
Department is implementing.
Validation of State Agency Error Rates--Sec. 275.3(c)
Nineteen organizations provided comments on the proposed regulatory
change to Sec. 275.3(c) regarding the requirement that Food and
Consumer Service (``FCS'') Regional Offices assist State agencies in
completing active case reviews that State agencies were unable to
complete due to refusal on the part of a household to cooperate with
the State agency QC reviewer. Seventeen of the commenters supported the
proposed change making Federal assistance in completing these cases
optional. FCS Regional Offices would only assist a State agency in
attempting to complete a refusal-to-cooperate case at the request of
the State agency. One commenter opposed the proposal, stating that FCS
should either assist 100% of the time, or not at all. The commenter's
concern was the potential for bias which could be introduced into the
quality control system by allowing State agencies to pick which cases
FCS would assist the State agency in completing. One commenter was
neither in favor of, nor opposed to the proposal. This commenter
requested clarification that FCS would continue to review cases that
are dropped for refusal-to-cooperate to determine whether the case was
appropriately dropped. The commenter was concerned that some states
might use an unsupervised system of drops in a way that biases the
sample. The Department has considered the comments and decided to adopt
the provision as proposed. FCS Regional Offices will continue the
current practice of reviewing all cases disposed of by State agencies
as Not Subject to Review, or Not Completed (including those disposed of
as Not Completed due to refusal by the household to cooperate with a
State agency reviewer) in order to insure the validity of the
disposition. It is felt that the continued monitoring of ``drop'' cases
will prevent the possibility of any bias in the QC system. Only upon
the specific request of the State agency will FCS attempt to gain the
cooperation of such households.
Arbitration--Sec. 275.3(c)(4)
All thirty-four organizations submitting comments provided remarks
on the proposed regulatory change to Sec. 275.3(c)(4) regarding the
system for arbitrating differences between State agency and Federal
findings and/or disposition in quality control reviews. All the
commenters were opposed to some aspect of the proposed changes to the
system. Under current procedures, a State agency which disagrees with
the FCS review findings for an individual case has a maximum of 28
calendar days after receipt of the Federal findings to request
reevaluation of the Federal findings by a Regional arbitrator. The
Regional arbitrator has 30 days from the date of such a request to
determine the correctness of the Federal findings or to notify the
State agency of the status of the arbitration case. A State agency
which disagrees with a Regional arbitrator's review findings for an
individual case has a maximum of 28 calendar days after receipt of the
Regional arbitrator's decision to request a reevaluation of the
Regional arbitrator's decision by a National arbitrator. The National
arbitrator has no established time limit for rendering decisions on the
correctness of the Regional arbitrator's findings. Section 13951 of the
Leland Act amends the Food Stamp Act by specifying that ``not later
than 180 days after the end of the fiscal year [March 29th, or March
28th in leap years], the case review and all arbitrations of State-
Federal difference cases shall be completed.'' The Department concluded
that the deadlines mandated by the Leland Act for the completion of
arbitration for a fiscal year could not be achieved without a
restructuring of the arbitration system.
The Department proposed to replace the two-tier arbitration process
with a one-tier arbitration system which would require State agencies
to submit requests for arbitration to their appropriate FCS Regional
offices within 10 days of receipt of the Federal QC findings for a
case. The FCS Regional office QC staff would be permitted to submit to
the arbitrator(s) a response to the State agency's request either
agreeing with the State agency or explaining why the State agency's
position was incorrect. The arbitrator(s) would be allowed a maximum of
35 calendar days from the date a request is received to render a
decision regarding the accuracy of the Federal QC findings and
disposition in a case.
Thirteen commenters specifically indicated that they opposed a one-
tier system. Four commenters supported a one-tier system, although all
suggested some modification to the one-tier system that was proposed.
Six commenters indicated that a one-tier system should be at the
national level. One commenter indicated a preference for one-tier at
the Regional Office level. Ten commenters proposed an arbitration
system similar to the AFDC Program with informal resolution at the
regional level and formal arbitration by a panel at the national level.
The Department has considered these comments and decided that it must
[[Page 29654]]
adopt a one-tier system, with certain modifications as discussed in the
following paragraphs. The Department has determined that the deadlines
mandated by section 13951 of the Leland Act do not provide sufficient
time for a two-tier system of arbitration, or an arbitration panel. In
regards to the matter of whether arbitration will be conducted at the
Regional Office or National Office level, the Department has decided to
leave the language in the final regulatory change adaptable enough to
allow for one-tier arbitration at either the Regional or National
level. Recognizing that the arbitrator(s) will have a very short time
frame in which to render accurate decisions (as detailed in the
following paragraphs), the Department has determined that the
arbitration system must be structured with the maximum possible
flexibility so that it can respond to fluctuations in the number of
arbitration requests.
Thirty-three commenters expressed serious concern that 10 days was
insufficient to prepare a case for arbitration. Nineteen commenters
offered various suggestions for reducing the amount of time the
arbitrator(s) would have to render a decision, in favor of more time
for the State agency to submit its request. The Department has
considered these comments and has modified the final rules. Instead of
the 10 days contained in the proposed rule, State agencies shall have
20 days from the date of receipt of the Federal quality control
findings to submit requests for arbitration to their appropriate FCS
Regional office. Instead of the 35 days contained in the proposed rule,
the arbitrator(s) shall have 20 days to render a decision. Of the 15
day reduction in the time allotted for the arbitrator(s) to render a
decision, 10 of those days have been allotted to the State agencies as
additional time to submit an arbitration request, and 5 of those days
have been allotted as additional time for State agencies to conduct
reviews and transmit findings to the National Computer Center's (NCC)
Integrated Quality Control System (IQCS) (for details of this change
see the paragraph entitled ``Quality Control Review Reports--
Sec. 275.21''). The Department has determined that the increased time
frame for the State agencies to request arbitration would ensure the
continued accuracy of the arbitration process by providing more time to
gather facts and material pertinent to a case. In addition, the
increased time frame for the State agencies to request arbitration
would allow the continuation of the current practice of informal
resolution of differences through discussions between State agency and
FCS Regional office QC staffs. The informal resolution process offers
an alternative to the more time and resource intensive arbitration
process.
Ten commenters recommended putting into the regulations specific
time frames for completion of Federal reviews. Four commenters
recommended that FCS be required to return case records to the State
agencies at the time that Federal findings are transmitted, or that the
time frames for requesting arbitration not start until such time as the
case record is received by the State agency. The FCS-315, Federal
Quality Control Validation Review Handbook, contains specific time
frames for FCS reviewers to complete the review of sub-sampled cases.
In addition, the Handbook contains specific instructions that State
agencies records are to be returned to the State agency no later than
the time that Federal case findings are issued to the State agency. The
Department has determined that inclusion in the regulations of the time
frames for completion of the Federal reviews, and instructions on
returning State agency records, are unnecessary.
Three commenters recommended that State agencies be given the
opportunity to refute any submittal made by the FCS Regional Office to
the arbitrator(s). One commenter recommended that FCS Regional Offices
be prohibited from submitting any additional material or response to
the State agency's arbitration request. The Department has determined
that because of the shortened time frames for rendering the arbitration
decision, the arbitrator(s) will not be able to consider any additional
materials, submitted by the State agency following the arbitration
request. The State agency should ensure that arbitration requests
sufficiently explain and support the position of the State agency
without the need for additional submissions or rebuttals. Further, the
Department has determined that the accuracy of the arbitration system
would be impaired if the FCS Regional Office was prohibited from
submitting material to the arbitrator(s) which set forth the Federal
position in the case under review. For these reasons, the Department
has retained the provisions in the proposed rule that State agencies
will not be allowed to submit additional material after the arbitration
request, and that the FCS Regional Offices will be allowed to submit
material explaining the Federal position.
The Department proposed to limit requests for arbitration to those
cases where the State agency's findings or disposition, as transmitted
to the NCC's IQCS, differed from the Federal findings or disposition
transmitted to NCC. These cases are commonly referred to as ``disagree
cases''. Under the proposal State agencies would not be permitted to
arbitrate cases where the State agency's and Federal findings or
disposition were the same (``agree'' cases). Fourteen commenters
expressed concern with the proposal to exclude arbitration of agree
cases. Primarily the commenters argued in favor of being able to
arbitrate agree cases in the interest of maximum accuracy for the QC
system. The argument was that new information may become available
after the completion of both the State agency and Federal reviews which
indicates that the earlier review findings were in error. Given that
the arbitrator(s) will be facing a greatly shortened time frame for
rendering arbitration decisions, the Department has determined that the
potential workload of ``agree'' cases, in addition to the ``disagree''
cases, would adversely impact the accuracy and timeliness of the
arbitration process, and impair the quality control system's ability to
meet the deadlines mandated by section 13951 of the Leland Act. The
Department has determined that State agencies may provide the Federal
quality control reviewer with any new information which becomes
available regarding the circumstances in a case up until the time that
the Federal findings are transmitted to the State agency. In addition,
during the 20 day period following the receipt of Federal review
findings (the period in which a State agency may prepare an arbitration
request on ``disagree'' cases) a State agency may request informal
resolution of any ``agree'' cases. If the FCS Regional Office QC staff
concede through informal resolution that the Federal findings should be
changed, the case will be retransmitted to the State agency (this time
as a ``disagree'' case) which would be eligible for arbitration.
Following the 20 day period for informal resolution, FCS Regional
Offices would not be permitted to reconsider or change the Federal
findings of any ``agree'' case.
To maximize the efficiency of the arbitration system, the
Department proposed that State agencies be required to submit specific
documents to ensure that their arbitration requests were complete. Five
commenters supported the proposal for a checklist. Sixteen commenters
opposed the requirement for a specific checklist for arbitration. Many
of the commenters indicated that the state agencies are in a better
position to determine what information must be
[[Page 29655]]
submitted in order to support State findings in arbitration. The
commenters considered the checklist to be burdensome in light of the
reduced time frame for submittal of arbitration requests. The
Department is dropping the proposal to require State agencies to submit
a specific checklist of documents as a part of each arbitration
request. It should be noted that guidelines and recommendations for the
submittal of arbitration requests are contained in the FCS-310, The
Food Stamp Program Quality Control Review Handbook. As indicated in the
proposed rule, if a State agency submits an incomplete request for
arbitration the arbitrator(s) will render a decision based on the
available information. The shortened time frames for rendering the
arbitration decision will not allow for the request (by the
arbitrator(s)) or submission (by the State agency) of any additional
materials following the arbitration request. The arbitrator(s) will
make an independent judgment of the request, based upon the information
the State agency and Regional office have provided.
The Department proposed that arbitration be limited to those cases
where the State agency's findings and disposition were transmitted to
the NCC's IQCS in a timely manner. The Department maintained that State
agency reviews which were not completed and transmitted into the IQCS
in a timely manner impaired the QC system's ability to meet the
deadlines mandated by the Leland Act for the completion of all case
review and arbitration activity. Twenty-six commenters opposed the
proposal to restrict arbitration to cases which have been timely
submitted to IQCS. In general, the commenters argued in favor of being
able to arbitrate these cases in the interest of maximum accuracy for
the QC system. The commenters indicated that the cases most likely to
be in need of arbitration are the cases which take longer to complete
(due to uncooperative households, the need for follow-up investigations
or field work, or the need for intricate policy analysis) and are more
likely to be submitted to IQCS late. Based upon these comments, the
Department has modified the original proposal. State agencies may
continue to request arbitration of cases transmitted late to the IQCS.
However, the number of days that a State agency has to submit such a
request will be reduced by the number of days that the State agency was
late transmitting the case to the IQCS. As an example: If a State
agency does not submit the review findings of a case until the 100th
day after the end of the sample month for the case (5 days late), then
the State agency would have 15 days from the date of receipt of the
Federal findings (the standard 20 days provided for by this rule minus
the 5 days that the case was submitted late in the IQCS) to request
arbitration. The Department has determined that this alternative
responds to the concerns raised by the commenters, and ensures that the
quality control system's ability to meet the deadlines mandated by the
Leland Act are met. The Department has also determined that because of
the withdrawal of the proposal to limit arbitration to cases which have
been timely submitted to IQCS, there is no longer any need to exempt
certain cases from the restriction, as was considered in the proposed
rule (cases in which household members had refused to cooperate with
the quality control reviewer was the class of such cases identified in
the proposed rule).
Quality Control Review Reports--Sec. 275.21
Thirty organizations provided comments on the proposed regulatory
change to Sec. 275.21 regarding the timeframes for State agencies to
dispose of and report the findings of cases selected for QC review.
Under current procedures a State agency has 75 calendar days from the
end of a sample month to dispose of 90 percent of the cases selected
for review in that month; 100 percent of the cases must be disposed of
within 95 days of the end of the sample month. The Department proposed
to modify the deadline for State agencies to dispose of QC cases and
transmit review findings to NCC's IQCS, by requiring that 100 percent
of the cases selected for review be disposed of within 90 calendar days
of the end of the sample month for which the cases were selected for
review. The Department also proposed conforming changes to regulations
at 7 CFR 273.2(d)(2) and 7 CFR 273.2(f)(1)(ix). These sections of the
regulations specify that food stamp households which refuse to
cooperate with a quality control reviewer shall be determined
ineligible to participate in the Food Stamp Program until 95 days after
the end of the annual QC review period, or until the household
cooperates with the QC reviewer (whichever is earlier). The Department
proposed to change the period of household ineligibility from 95 to 90
days after the end of the annual review period, in order to correspond
to the proposed change to the State agencies timeframes for the
disposition of QC reviews. Twenty-five of the thirty organizations
providing comments on the proposal to reduce the timeframes for State
agencies to dispose of and report the findings of cases selected for QC
review were opposed to the proposal. The remaining five commenters
recognized that changes were necessary to meet legislatively mandated
timeframes, but expressed strong concern about the proposed reduction
in time. Six commenters remarked on the fact that the proposed
deadlines were moving away from conformity with the AFDC program, and
that this caused particular difficulties when reviews were conducted
jointly between the Food Stamp and AFDC programs. Fifteen commenters
recommended that the timeframe for the arbitrator to render a decision
be reduced, or that the federal re-reviewers be put under a strict
timeframe for the completion of the federal reviews. Fourteen
commenters indicated that the proposed timeframe would negatively
impact on review accuracy. Twelve commenters specifically indicated
that due to staffing and resource limitations it would be extremely
difficult to meet the shortened deadlines. Nine commenters recommended
that the 90 day deadline be made to apply only to the last month of the
review period. Based upon these comments, the Department has decided to
withdraw the proposal to reduce the timeframe for State agencies to
dispose of and report the findings of cases selected for QC review. The
current procedures, under which a State agency has 75 calendar days
from the end of a sample month to dispose of 90 percent of the cases
selected for review in that month, and 95 days to dispose of 100
percent of the cases will be retained. Strict adherence to the current
75/95 day deadlines and modification of the proposals regarding the
arbitration system (see the paragraph entitled ``Arbitration--
Sec. 275.3(c)(4)'' for details) will allow FCS and the State agencies
to meet the deadlines mandated by the Leland Act without shortening the
timeframe for disposing of QC reviews.
Variances Excluded From Error Analysis--Sec. 275.12(d)(2)
Eighteen organizations provided comments on the proposed regulatory
change to Sec. 275.12(d)(2) regarding the exclusion of any errors
resulting from the application of new regulations promulgated under the
Act during the first 120 days from the required implementation date.
Seventeen commenters approved of the proposed change. One commenter
offered remarks that were neither in favor of, nor opposed to the
proposal. Two commenters recommended that the time frame be extended to
180 days. The
[[Page 29656]]
Department has considered this recommendation and determined that it
cannot be adopted. The Food Stamp Act, as modified by the Leland Act,
specifies: ``The following errors may be measured for management
purposes but shall not be included in the payment error rate: (A) Any
errors resulting in the application of new regulations promulgated
under this Act during the first 120 days from the required
implementation date for such regulations'' [7 U.S.C. 2025(c)(3)]. The
Department has determined that the Act mandates a 120 day variance
exclusion period, and therefore, a 180 day variance exclusion period
cannot be considered.
Five commenters supported the proposal, but the comments clearly
indicated that the writers thought that the 120 day variance exclusion
period was to provide relief while a State agency implemented a new
regulation. The Department wishes to clarify that the 120 day variance
exclusion can only apply to State agencies which have implemented a new
regulation. The Department has concluded that an error cannot result
from the application of a new regulation (as specified in the Act) if a
State agency has not implemented the new regulation. The current
regulatory provision at 7 CFR 275.12(d)(2)(vii)(B) which specifies: ``A
State agency shall not exclude variances which occur prior to the
States implementation'' has been retained. As an example: If a State
agency does not implement a new regulation until 100 days after the
required implementation date then the State agency would have only a 20
day variance exclusion period (the 120 day exclusion period minus the
100 days that the new regulation had not been implemented), starting
with the day the new regulation is actually implemented. The Department
has determined that the provision regarding a 120 variance exclusion
period for the application of a new regulations must be adopted as
proposed.
State Agencies' Liabilities for Payment Error--Fiscal Year 1986 and
Beyond--Sec. 275.23(e)(4)
Fifteen organizations provided comments on the proposed regulatory
change to Sec. 275.23(e)(4) regarding the new system of payment error
rate goals and liabilities. The payment error rate tolerance level,
beginning in Fiscal Year 1992 and applying to Fiscal Year 1992 and all
subsequent fiscal years, is the national performance measure for the
fiscal year. The national performance measure continues to be defined
as the sum of the products of each State agency's payment error rate
times that State agency's proportion of the total value of national
allotments issued for the fiscal year using the most recent issuance
data available for that fiscal year at the time the State agency is
notified of its payment error rate. A State agency which exceeds this
tolerance level is now subject to a liability equivalent to the total
value of the allotments issued in the fiscal year by the State agency,
multiplied by a factor which is the lesser of (1) the ratio of the
amount by which the payment error rate of the State agency for the
fiscal year exceeds the national performance measure for the fiscal
year, to the national performance measure for the fiscal year, or (2)
one. This figure is then multiplied by the amount by which the payment
error rate of the State agency for the fiscal year exceeds the national
performance measure for the fiscal year. Fourteen of the commenters
approved of the proposed change. The remarks of one commenter were
unclear, and FCS was unable to determine if this commenter was in favor
of or opposed to the proposed provision. The Department has considered
the comments and determined that the provision must be adopted as
proposed. These changes have been mandated by Section 13951 of the
Leland Act.
Good Cause--Sec. 275.23(e)(6)
Eighteen organizations provided comments on the proposed regulatory
change to Sec. 275.23(e)(6) regarding relief from all or a part of a
quality control liability as established under Sec. 275.23(e)(4) when a
State agency can demonstrate that a part or all of an excessive error
rate was due to an unusual event which had an uncontrollable impact on
the State agency's payment error rate. Three commenters were in favor
of the proposed provisions concerning good cause and three others
offered remarks which were neither in favor of, nor opposed to the
proposed provisions. Twelve of the commenters were opposed to some
aspect of the proposed provisions.
The Department proposed to transfer the authority to determine good
cause, and grant waivers of liabilities, from FCS to the Departmental
Administrative Law Judges (``ALJs''). This transfer of authority was
mandated by section 13951 of the Leland Act. Ten commenters were in
favor of this transfer of authority. There were no commenters who
opposed it. Therefore the provision pertaining to the transfer of
authority to determine good cause and grant liability waivers from FCS
to the ALJs is adopted in final form as it was proposed.
Section 13951 of the Leland Act provides good cause consideration
for the following unusual events: (A) A natural disaster or civil
disorder that adversely affects Food Stamp Program operations; (B) a
strike by employees of a State agency who are necessary for the
determination of eligibility and processing of case changes under the
Food Stamp Program; (C) a significant growth in food stamp caseload in
a State prior to or during a fiscal year, such as a 15 percent growth
in caseload; (D) a change in the Food Stamp Program or other Federal or
State program that has a substantial adverse impact on the management
of the Food Stamp Program of a State; and (E) a significant
circumstance beyond the control of the State agency. The Department
proposed to codify into the regulations the unusual events specified in
the Leland Act which qualify for consideration under good cause relief.
Eight commenters specifically recommended the addition of new computer
systems as an unusual event which would qualify a State agency for good
cause relief. While the Department appreciates the difficulties that
State agencies may encounter in implementing new computer systems, the
Department is unable to adopt these comments. The statutory criteria
for determining good cause (criterion E of the Leland Act specifies
that it must be ``a significant circumstance beyond the control of the
State agency'') precludes the Department from considering a new
computer system as a circumstance which could qualify a State agency
for good cause relief.
Current regulations at Sec. 275.23(e)(6)(i) describe the criteria
and methodology under which FCS will grant good cause waivers. While
FCS will no longer be making the final determination in good cause
appeals, FCS retains the authority to establish guidelines under which
good cause is evaluated. The Department proposed that current criteria
and methodology, with certain modifications, would continue to serve as
guidelines for States, FCS, and the ALJs to assess and evaluate good
cause in conjunction with the appeals process. As under current
regulations, it was proposed that an alternate methodology would
continue to be used for certain events when a State agency provided
insufficient information to demonstrate that the unusual event had an
uncontrollable impact on the error rate. The Department proposed an
alternate methodology that would take into account both the duration of
the unusual event and the magnitude or
[[Page 29657]]
intensity of the unusual event. The proposed alternate methodologies
were also modified to include specific procedures for calculating
waiver amounts to ensure equity and consistency in these
determinations. It is recommended that the reader reference the
proposed rulemaking for a more complete understanding of the
alternative methodologies that the Department proposed.
Five commenters specifically objected to the inclusion of the
``sliding scale'' in the alternative formula for determining the amount
of relief for which a State agency would qualify in the event of
unusual caseload growth. Suggested alternatives were elimination of the
``sliding scale'' from the formula, or elimination of the formula
(meaning a State agency would qualify for total relief of any liability
claim if it could demonstrate caseload growth of 15%). The Department
has not adopted these comments. The Department must emphasize that the
formula in which the ``sliding scale'' appears is only an alternative
methodology for demonstrating the extent to which excessive error rates
can be attributed to caseload growth. If a State agency demonstrates
(as determined by the ALJ), through other means or data, the impact
that these events have had on their payment error rate, then the
formula containing the sliding scale need not be applied.
Three commenters specifically objected to the fact that the
alternative formula disregarded caseload growth in the second half
(April through September) of a fiscal year in determining whether a
State agency qualified for good cause relief. Suggested alternatives
included altering the formula to include caseload growth in the second
half of the fiscal year, and elimination of the formula altogether. The
Department has decided to modify the final rules by including up to a
possible nine months of a fiscal year in the formula. Step 2 of the
formula has been modified to provide for the consideration of any
twelve consecutive month period falling in the 15 month interval
between April of the previous fiscal year, and June of the liability
fiscal year. This will allow caseload growth in as many as nine months
(October through June) of the current fiscal year to be included in the
calculations for good cause relief. The Department continues to believe
that caseload growth in the last three months of a fiscal year would
rarely have a significant impact on the error rate for that year. In
addition, the Department again must emphasize that the formula is only
an alternative methodology for demonstrating the extent to which
excessive error rates can be attributed to caseload growth.
Two commenters specifically objected to the fact that the
alternative formula disregarded caseload growth at any geographic level
below that of the State as a whole. One commenter emphasized that some
geographic areas (counties, districts, regions, etc.) within the larger
states issue more benefits and serve more recipients than an entire
smaller state. A suggested alternative was the modification of the
formula or evaluation criteria to provide good cause relief if a State
agency can demonstrate excessive caseload growth at a lower (project
area) geographic level. The Department has considered these comments,
but decided not to adopt them. The Department must again emphasize that
the formula is only an alternative methodology for demonstrating the
extent to which excessive error rates can be attributed to caseload
growth. If a State agency demonstrates (as determined by the ALJ),
through other means or data, the impact that caseload growth has had on
their payment error rate, then the formula evaluating only statewide
growth need not be applied. It was the Department's expectation, as
expressed in the preamble of the proposed rule, that with modern
automated systems for data analysis, State agencies would have little
difficulty in demonstrating the impact on the payment error rate from
geographic subdivisions within the state, when that impact is
significant.
FCS Timeframes--Sec. 275.23(e)(8)
Four organizations provided comments on the proposed regulatory
change to Sec. 275.23(e)(8) regarding the provision of Section 13951 of
the Leland Act that specifies that: ``Not later than 180 days after the
end of the fiscal year, the case review and all arbitrations of State-
Federal difference cases shall be completed. Not later than 30 days
thereafter, the Secretary shall determine final error rates, the
national average payment error rate, and the amounts of payment claimed
against State agencies; and notify State agencies of the payment
claims.'' All four of the commenters were opposed to the proposed time
frames. It was the opinion of the commenters that the time frames
specified in the Leland Act were a mistake, and they urged the
Department to work with Congress towards passing new legislation which
would return the deadline for the announcement of error rates to June
30th in the year following the end of the quality control review
period. One commenter has recommended that the Department delay
implementation of these changes until legislation can be adopted to
repeal the Leland Act provision that requires this regulatory change.
The Department understands the commenters concerns, but until the
provisions are amended the provision must be adopted as proposed. This
change was mandated by Section 13951 of the Leland Act, and the
Department cannot delay implementing the provisions of the law.
Interest Charges--Sec. 275.23(e)(9)
Five organizations provided comments on the proposed regulatory
change to Sec. 275.23(e)(9) regarding the interest charges on any
unpaid portion of a liability claim. Section 13951 of the Leland Act
amends the Food Stamp Act by providing that interest will accrue from
the date of the decision on an administrative appeal of the claim, or
from the day one year after the date the bill for the claim was
received by the State agency, whichever is earlier. Four of the
commenters disapproved of the proposed change. One commenter offered
remarks that were neither in favor of nor opposed to the proposed
provision. The Department has considered the comments and determined
that the provision must be adopted as proposed. This change was
mandated by Section 13951 of the Leland Act.
Miscellaneous Technical Corrections
No comments were received regarding the Department's proposal to
effect technical corrections to various regulatory references appearing
in part 275 of the regulations. In a number of paragraphs in part 275
other paragraphs or sections of the regulations are cited as a
reference for the reader. Over the years many of these references have
become inaccurate due to revisions and renumbering of various sections
of the regulations. The Department has decided to adopt all of the
technical reference changes as proposed.
Implementation
Effective Dates: Section 13971 of the Mickey Leland Childhood
Hunger Relief Act sets effective dates for the various provisions of
the Leland Act addressed in this rule. The amendment to 7 CFR
275.12(d)(2)(vii) was effective October 1, 1992. The amendments to 7
CFR 275.23(e)(4), and newly designated (e)(5), (e)(7), (e)(9), and
(e)(10)(i) were effective October 1, 1991. The amendments to 7 CFR
272.1(g), 275.3(c) (Introductory text), 275.3(c)(1)(iii), 275.11(g),
275.23(d)(1)(iii), 275.23(e)(1), and newly designated
275.23(e)(8)(i)(D), 275.23(e)(8)(ii), 275.23(e)(8)(iii)(A),
[[Page 29658]]
275.23(e)(8)(iii)(B), and 275.23(e)(11)(iii) are effective July 2,
1997. The provisions of 275.3(c)(4) will become effective after
approval by OMB.
Implementation Dates: With the exception of the provisions
contained in 7 CFR 275.3(c)(4) [Arbitration], 275.23(e)(5) [State
agencies' liabilities for payment error-Fiscal Year 1992 and beyond],
and newly designated 275.23(e)(7) [Good Cause], and 275.23(e)(9)
[Timeframes], all provisions of this rule shall be implemented July 2,
1997. The provisions contained in 275.3(c)(4), 275.23(e)(5), and newly
designated 275.23(e)(7), and 275.23(e)(9) shall be implemented after
approval of the provisions of 275.3(c)(4) and newly designated
275.23(e)(7) by OMB under the Paperwork Reduction Act of 1995.
OMB Submissions: The provisions contained in 7 CFR 275.3(c)(4), and
newly designated 275.23(e)(7) shall be submitted to the Office of
Management and Budget for approval under the Paperwork Reduction Act of
1995. FCS will publish a notice in the Federal Register announcing the
effective and implementation dates, which will be dates occurring after
the publication date of that notice. FCS can not issue billing letters
for the review periods of Fiscal Years 1992 and beyond until such time
as these provisions have been implemented by the publication of the
notice.
List of Subjects
7 CFR Part 272
Alaska, Civil rights, Food stamps, Grant programs-social programs,
Reporting and recordkeeping requirements.
7 CFR Part 275
Administrative practice and procedure, Food stamps, Reporting, and
recordkeeping requirements.
For the reasons set out in the preamble, parts 272 and 275 of
chapter II of title 7 Code of Federal Regulation are amended as
follows:
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
1. The authority citation for part 272 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
2. In Sec. 272.1, a new paragraph (g)(153) is added in numerical
order to read as follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(153) Amendment No. 366. (i) With the exception of the changes to
Sec. 275.3(c)(4) [Arbitration], Sec. 275.23(e)(5) [State agencies'
liabilities for payment error-Fiscal Year 1992 and beyond],
Sec. 275.23(e)(7)[Good Cause], and Sec. 275.23(e)(9) [timeframes], all
quality control changes that are made by Amendment No. 366 shall be
implemented July 2, 1997.
(ii) The quality control changes to Sec. 275.3(c)(4) [Arbitration],
Sec. 275.23(e)(5) [State agencies' liabilities for payment error-Fiscal
Year 1992 and beyond], Sec. 275.23(e)(7) [Good Cause], and
Sec. 275.23(e)(9) [Timeframes], shall be implemented after approval of
the provisions at Sec. 275.3(c)(4) [Arbitration], and Sec. 275.23(e)(7)
[Good Cause] by the Office of Management and Budget under the Paperwork
Reduction Act of 1995. FCS will publish a notice in the Federal
Register announcing the implementation date. It shall be a date
occurring after the publication date of the notice.
PART 275--PERFORMANCE REPORTING SYSTEM
3. The authority citation for part 275 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
4. In Sec. 275.3:
a. the last sentence of the introductory text of paragraph (c) is
amended by removing the reference to ``275.23(e)(6)'' and adding in its
place a reference to ``275.23(e)(8)'';
b. paragraph (c)(1)(iii) is revised;
c. paragraph (c)(4) is revised.
The revisions read as follows:
Sec. 275.3 Federal monitoring.
* * * * *
(c) Validation of State Agency Error Rates. * * *
(1) Payment error rate. * * *
(iii) Upon the request of a State agency, the appropriate FCS
Regional Office will assist the State agency in completing active cases
reported as not completed due to household refusal to cooperate.
* * * * *
(4) Arbitration. (i) Whenever the State agency disagrees with the
FCS regional office concerning individual QC case findings and the
appropriateness of actions taken to dispose of an individual case, the
State agency may request that the dispute be arbitrated on a case-by-
case basis by an FCS Arbitrator, subject to the following limitations.
(A) The State agency may only request arbitration when the State
agency's and FCS regional office's findings or disposition of an
individual QC case disagree.
(B) The arbitration review shall be limited to the point(s) within
the Federal findings or disposition that the State agency disputes.
However, if the arbitrator in the course of the review discovers a
mathematical error in the computational sheet, the arbitration shall
correct the error while calculating the allotment.
(ii) The FCS Arbitrator(s) shall be an individual or individuals
who are not directly involved in the validation effort.
(iii) With the exception of the restrictions contained in paragraph
(c)(4)(iii), for an arbitration request to be considered, it must be
received by the appropriate FCS regional office within 20 calendar days
of the date of receipt by the State agency of the regional office case
findings. In the event the last day of this time period falls on a
Saturday, Sunday, or Federal or State holiday, the period shall run to
the end of the next work day. The State agency shall be restricted in
its eligibility to request arbitration of an individual case if that
case was not disposed of and the findings reported in accordance with
the timeframes specified in Sec. 275.21(b)(2). For each day late that a
case was disposed of and the findings reported, the State agency shall
have one less day to request arbitration of the case.
(iv) When the State agency requests arbitration, it shall submit
all required documentation to the appropriate FCS regional office
addressed to the attention of the FCS Arbitrator. The FCS regional
office QC staff may submit an explanation of the Federal position
regarding a case to the FCS Arbitrator.
(A) A complete request is one that contains all information
necessary for the arbitrator to render an accurate, timely decision.
(B) If the State agency's request is not complete the arbitrator
shall make a decision based solely on the available documents.
(v) The FCS Arbitrator shall have 20 calendar days from the date of
receipt of a State agency's request for arbitration to review the case
and make a decision.
* * * * *
Sec. 275.11 [Amended]
5. In Sec. 275.11:
a. the third sentence of paragraph (g) is amended by removing the
reference to ``275.25(e)(6)'' and adding in its place a reference to
``275.23(e)(8)'';
b. the fourth sentence of paragraph (g) is amended by removing the
reference to ``275.25(c)'' and adding in its place a reference to
``275.23(c)''.
6. In Sec. 275.12:
a. the introductory text of paragraph (d)(2)(vii) is revised;
b. paragraph (d)(2)(vii)(A) is revised;
[[Page 29659]]
c. paragraph (d)(2)(vii)(D) is revised.
The revisions read as follows:
Sec. 275.12 Review of active cases.
* * * * *
(d) Variance identification. * * *
(2) Variance excluded from error analysis. * * *
(vii) Subject to the limitations provided in paragraphs
(d)(2)(vii)(A) through (d)(2)(vii)(F) of this section any variance
resulting from application of a new Program regulation or implementing
memorandum (if one is sent to advise State agencies of a change in
Federal law, in lieu of regulations during the first 120 days from the
required implementation date.
(A) When a regulation allows a State agency an option to implement
prior to the required implementation date, the date on which the State
agency chooses to implement may, at the option of the State, be
considered to be the required implementation date for purposes of this
provision. The exclusion period would be adjusted to begin with this
date and end on the 120th day that follows. States choosing to
implement prior to the required implementation date must notify the
appropriate FCS Regional Office, in writing, prior to implementation
that they wish the 120 day variance exclusion to commence with actual
implementation. Absent such notification, the exclusionary period will
commence with the required implementation date.
* * * * *
(D) Regardless of when the State agency actually implemented the
regulation, the variance exclusion period shall end on the 120th day
following the required implementation date, including the required
implementation date defined in paragraph (d)(2)(vii)(A) of this
section.
* * * * *
7. In Sec. 275.23:
a. the last sentence of paragraph (d)(1)(iii) is amended by
removing the reference to ``(e)(6)(iii)'' and adding in its place a
reference to ``(e)(8)(iii)'';
b. paragraph (e)(1) is amended by removing the reference to
``paragraph (e)(6)'' and adding in its place a reference to ``paragraph
(e)(8)'';
c. the heading of paragraph (e)(4) is amended by removing the words
``Fiscal Year 1986 and Beyond'' and adding the words ``Fiscal Years
1986 through Fiscal Year 1991'' in their place;
d. the first sentence of paragraph (e)(4)(i) is amended by removing
the words ``For Fiscal Year 1986 and subsequent years'' and adding the
words ``For Fiscal Year 1986 through Fiscal year 1991'' in their place;
e. paragraphs (e)(5), (e)(6), (e)(7), (e)(8), (e)(9), and (e)(10)
are redesignated as paragraphs (e)(6), (e)(7), (e)(8), (e)(9), (e)(10),
and (e)(11), respectively and a new paragraph (e)(5) is added;
f. newly redesignated paragraph (e)(7) is revised;
g. the first sentence of newly redesignated paragraph (e)(8)(i)(D)
is amended by removing the reference to ``paragraph (e)(7)(iii)'' and
adding in its place a reference to ``paragraph (e)(8)(iii)'';
h. the last sentence of newly redesignated paragraph (e)(8)(ii) is
amended by removing the words ``procedure of Sec. 276.7'' and adding
the words ``procedures of Part 283'' in their place;
i. the first sentence of newly redesignated paragraph
(e)(8)(iii)(A) is amended by removing the reference to ``paragraph
(e)(7)(i)(C)'' and adding in its place a reference to ``paragraph
(e)(8)(i)(C)'';
j. the first sentence of newly redesignated paragraph
(e)(8)(iii)(B) is amended by removing the reference to ``paragraph
(e)(7)(i)(C)'' and adding in its place a reference to ``paragraph
(e)(8)(i)(C)'';
k. the first three sentences in newly redesignated paragraph (e)(9)
are revised;
l. in newly redesignated paragraph (e)(10)(i) the first sentence is
amended by removing the reference to ``275.23(e)(4)'' and adding in its
place a reference to ``275.23(e)(5)''. The second sentence is amended
by removing the reference to ``Sec. 276.7'' and adding in its place a
reference to ``part 283''. The fourth sentence is amended by removing
the words ``2 years'' and adding the words ``one year'' in their place.
m. the last sentence of newly redesignated paragraph (e)(11)(iii)
is amended by removing the reference to ``(e)(10)(vi)'' and adding in
its place a reference to ``(e)(11)(vi)''.
The revisions and additions read as follows:
Sec. 275.23 Determination of State agency program performance.
* * * * *
(e) State agencies' liabilities for payment error rates. * * *
(5) State agencies' liabilities for payment error-Fiscal Year 1992
and beyond. Each State agency that fails to achieve its payment error
rate goal during a fiscal year shall be liable as specified in the
following paragraphs.
(i) For Fiscal Year 1992 and subsequent years, FCS shall announce a
national performance measure within 30 days following the completion of
the case review and the arbitration processes for the fiscal year. The
national performance measure is the sum of the products of each State
agency's payment error rates times that State agency's proportion of
the total value of national allotments issued for the fiscal year using
the most recent issuance data available at the time the State agency is
notified of its payment error rate. Once announced, the national
performance measure for a given fiscal year will not be subject to
change.
(ii) For any fiscal year in which a State agency's payment error
rate exceeds the national performance measure for the fiscal year, the
State agency shall pay or have its share of administrative funding
reduced by an amount equal to the product of:
(A) The value of all allotments issued by the State agency in the
fiscal year; multiplied by
(B) The lesser of--
(1) The ratio of the amount by which the payment error rate of the
State agency for the fiscal year exceeds the national performance
measure for the fiscal year, to the national performance measure for
the fiscal year, or
(2) One; multiplied by
(C) The amount by which the payment error rate of the State agency
for the fiscal year exceeds the national performance measure for the
fiscal year.
* * * * *
(7) Good cause--(i) Events. When a State agency with otherwise
effective administration exceeds the tolerance level for payment errors
as described in this section, the State agency may seek relief from
liability claims that would otherwise be levied under this section on
the basis that the State agency had good cause for not achieving the
payment error rate tolerance. State agencies desiring such relief must
file an appeal with the Department's Administrative Law Judge (ALJ) in
accordance with the procedures established under part 283 of this
chapter. The five unusual events described below are considered to have
a potential for disputing program operations and increasing error rates
to an extent that relief from a resulting liability or increased
liability is appropriate. The occurrence of an event(s) does not
automatically result in a determination of good cause for an error rate
in excess of the national performance measure. The State agency must
demonstrate that the event had an adverse and uncontrollable impact on
program operations during the relevant period, and the event caused an
uncontrollable increase in the error rate. Good cause relief will only
be considered for that portion of the error
[[Page 29660]]
rate/liability attributable to the unusual event. The following are
unusual events which State agencies may use as a basis for requesting
good cause relief and specific information that must be submitted to
justify such requests for relief:
(A) Natural disasters such as those under the authority of the
Stafford Act of 1988 (Pub. L. 100-707), which amended the Disaster
Relief Act of 1974 (Pub. L. 93-288) or civil disorders that adversely
affect program operations.
(1) When submitting a request for good cause relief based on this
example, the State agency shall provide the following information:
(i) The nature of the disaster(s) (e.g. a tornado, hurricane,
earthquake, flood, etc.) or civil disorder(s)) and evidence that the
President has declared a disaster;
(ii) The date(s) of the occurrence;
(iii) The date(s) after the occurrence when program operations were
affected;
(iv) The geographic extent of the occurrence (i.e. the county or
counties where the disaster occurred);
(v) The proportion of the food stamp caseload whose management was
affected;
(vi) The reason(s) why the State agency was unable to control the
effects of the disaster on program administration and errors;
(vii) The identification and explanation of the uncontrollable
nature of errors caused by the event (types of errors, geographic
location of the errors, time period during which the errors occurred,
etc.).
(viii) The percentage of the payment error rate that resulted from
the occurrence and how this figure was derived; and
(ix) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria and methodology will be used to assess
and evaluate good cause in conjunction with the appeals process, and to
determine that portion of the error rate/liability attributable to the
uncontrollable effects of a disaster or civil disorder: Geographical
impact of the disaster; State efforts to control impact on program
operations; the proportion of food stamp caseload affected; and/or the
duration of the disaster and its impact on program operations.
Adjustments for these factors may result in a waiver of all, part, or
none of the error rate liabilities for the applicable period. As
appropriate, the waiver amount will be adjusted to reflect States'
otherwise effective administration of the program based upon the degree
to which the error rate exceeds the national performance measure. For
example, a reduction in the amount may be made when a State agency's
recent error rate history indicates that even absent the events
described, the State agency would have exceeded the national
performance measure in the review period.
(3) If a State agency has provided insufficient information to
determine a waiver amount for the uncontrollable effects of a natural
disaster or civil disorder using factual analysis, the waiver amount
shall be evaluated using the following formula and methodology which
measures both the duration and intensity of the event: Duration will be
measured by the number of months the event had an adverse impact on
program operations. Intensity will be a proportional measurement of the
issuances for the counties affected to the State's total issuance. This
ratio will be determined using issuance figures for the first full
month immediately preceding the disaster. This figure will not include
issuances made to households participating under disaster certification
authorized by FCS and already excluded from the error rate calculations
under Sec. 275.12(g)(2)(vi). ``Counties affected'' will include
counties where the disaster/civil disorder occurred, and any other
county that the State agency can demonstrate had program operations
adversely impacted due to the event (such as a county that diverted
significant numbers of food stamp certification or administrative
staff). The amount of the waiver of liability will be determined using
the following linear equation: Ia/Ib x [M/12 or Mp/18] x L, where
Ia is the issuance for the first full month immediately preceding the
unusual event for the county affected; Ib is the State's total issuance
for the first full month immediately preceding the unusual event; M/12
is the number of months in the subject fiscal year that the unusual
event had an adverse impact on program operations; Mp/18 is the number
of months in the last half (April through September) of the prior
fiscal year that the unusual event had an adverse impact on program
operations; L is the total amount of the liability for the fiscal year.
Mathematically this formula could result in a waiver of more than 100%
of the liability, however, no more than 100% of a State's liability
will be waived for any one fiscal year. Under this approach, unless the
State agency can demonstrate a direct uncontrollable impact on the
error rate, the effects of disasters or civil disorders that ended
prior to the second half of the prior fiscal year will not be
considered.
(B) Strikes by State agency staff necessary to determine Food Stamp
Program eligibility and process case changes.
(1) When submitting a request for good cause relief based on this
example, the State agency shall provide the following information:
(i) Which workers (i.e. eligibility workers, clerks, data input
staff, etc.) and how many (number and percentage of total staff) were
on strike or refused to cross picket lines;
(ii) The date(s) and nature of the strike (i.e., the issues
surrounding the strike);
(iii) The date(s) after the occurrence when program operations were
affected;
(iv) The geographic extent of the strike (i.e. the county or
counties where the strike occurred);
(v) The proportion of the food stamp caseload whose management was
affected;
(vi) The reason(s) why the State agency was unable to control the
effects of the strike on program administration and errors;
(vii) Identification and explanation of the uncontrollable nature
of errors caused by the event (types of errors, geographic location of
the errors, time period during which the errors occurred, etc.);
(viii) The percentage of the payment error rate that resulted from
the strike and how this figure was derived; and
(ix) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria shall be used to assess, evaluate and
respond to claims by the State agency for a good cause waiver of
liability in conjunction with the appeals process, and to determine
that portion of the error rate/liability attributable to the
uncontrollable effects of the strike: Geographical impact of the
strike; State efforts to control impact on program operations; the
proportion of food stamp caseload affected; and/or the duration of the
strike and its impact on program operations. Adjustments for these
factors may result in a waiver of all, part, or none of the error rate
liabilities for the applicable period. For example, the amount of the
waiver might be reduced for a strike that was limited to a small area
of the State. As appropriate, the waiver amount will be adjusted to
reflect States' otherwise effective administration of the program upon
the degree to which the error rate exceeded the national performance
measure.
(3) If a State agency has provided insufficient information to
determine a
[[Page 29661]]
waiver amount for the uncontrollable effects of a strike using factual
analysis, a waiver amount shall be evaluated by using the formula
described in paragraph (e)(7)(i)(A) of this section. Under this
approach, unless the State agency can demonstrate a direct
uncontrollable impact on the error rate, the effects of strikes that
ended prior to the second half of the prior fiscal year will not be
considered.
(C) A significant growth in food stamp caseload in a State prior to
or during a fiscal year, such as a 15 percent growth in caseload.
Caseload growth which historically increases during certain periods of
the year will not be considered unusual or beyond the State agency's
control.
(1) When submitting a request for good cause relief based on this
example, the State agency shall provide the following information:
(i) The amount of growth (both actual and percentage);
(ii) The time the growth occurred (what month(s)/year);
(iii) The date(s) after the occurrence when program operations were
affected;
(iv) The geographic extent of the caseload growth (i.e. Statewide
or in which particular counties);
(v) The impact of caseload growth;
(vi) The reason(s) why the State agency was unable to control the
effects of caseload growth on program administration and errors;
(vii) The percentage of the payment error rate that resulted from
the caseload growth and how this figure was derived; and
(viii) The degree to which the error rate exceeded the national
performance measure in the subject fiscal year.
(2) The following criteria and methodology shall be used to assess
and evaluate good cause in conjunction with the appeals process, and to
determine that portion of the error rate/liability attributable to the
uncontrollable effects of unusual caseload growth: Geographical impact
of the caseload growth; State efforts to control impact on program
operations; the proportion of food stamp caseload affected; and/or the
duration of the caseload growth and its impact on program operations.
Adjustments for these factors may result in a waiver of all, part, or
none of the error rate liabilities for the applicable period. As
appropriate, the waiver amount will be adjusted to reflect States'
otherwise effective administration of the program based upon the degree
to which the error rate exceeded the national performance measure. For
example, a reduction in the amount may be made when a State agency's
recent error rate history indicates that even absent the events
described, the State agency would have exceeded the national
performance measure in the review period. Under this approach, unless
the State agency can demonstrate a direct uncontrollable impact on the
error rate, the effects of caseload growth that ended prior to the
second half of the prior fiscal year will not be considered.
(3) If the State agency has provided insufficient information to
determine a waiver amount for the uncontrollable effects of caseload
growth using factual analysis, the waiver amount shall be evaluated
using the following five-step calculation:
(i) Step 1, determine the average number of households certified to
participate statewide in the Food Stamp Program for the base period
consisting of the twelve consecutive months ending with March of the
prior fiscal year;
(ii) Step 2, determine the percentage of increase in caseload
growth from the base period (Step 1) using the average number of
households certified to participate statewide in the Food Stamp Program
for any twelve consecutive months in the period beginning with April of
the prior fiscal year and ending with June of the current fiscal year;
(iii) Step 3, determine the percentage the error rate for the
subject fiscal year, as calculated under paragraph (e)(5)(i) of this
section, exceeds the national performance measure determined in
accordance with paragraph (e)(5)(i) of this section;
(iv) Step 4, divide the percentage of caseload growth increase
arrived at in step 2 by the percentage the error rate for the subject
fiscal year exceeds the national performance measure as determined in
step 3; and
(v) Step 5, multiply the quotient arrived at in step 4 by the
liability amount for the current fiscal year to determine the amount of
waiver of liability.
(4) Under this methodology, caseload growth of less than 15% and/or
occurring in the last three months of the subject fiscal year will not
be considered. Mathematically this formula could result in a waiver of
more than 100% of the liability however, no more than 100% of a State's
liability will be waived for any one fiscal year.
(D) A change in the Food Stamp Program or other Federal or State
program that has a substantial adverse impact on the management of the
Food Stamp Program of a State. Requests for relief from errors caused
by the uncontrollable effects of unusual program changes other than
those variances already excluded by Sec. 275.12(d)(2)(vii) will be
considered to the extent the program change is not common to all
States.
(1) When submitting a request for good cause relief based on
unusual changes in the Food Stamp or other Federal or State programs,
the State agency shall provide the following information:
(i) The type of change(s) that occurred;
(ii) When the change(s) occurred;
(iii) The nature of the adverse effect of the changes on program
operations and the State agency's efforts to mitigate these effects;
(iv) Reason(s) the State agency was unable to adequately handle the
change(s);
(v) Identification and explanation of the uncontrollable errors
caused by the changes (types of errors, geographic location of the
errors, time period during which the errors occurred, etc.);
(vi) The percentage of the payment error rate that resulted from
the adverse impact of the change(s) and how this figure was derived;
and
(vii) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria will be used to assess and evaluate good
cause in conjunction with the appeals process, and to determine that
portion of the error rate/liability attributable to the uncontrollable
effects of unusual changes in the Food Stamp Program or other Federal
and State programs; State efforts to control impact on program
operations; the proportion of food stamp caseload affected; and/or the
duration of the unusual changes in the Food Stamp Program or other
Federal and State programs and the impact on program operations.
Adjustments for these factors may result in a waiver of all, part, or
none of the error rate liabilities for the applicable period. As
appropriate, the waiver amount will be adjusted to reflect States'
otherwise effective administrative of the program based upon the degree
to which the error rate exceeded the national performance measure.
(E) A significant circumstance beyond the control of the State
agency. Requests for relief from errors caused by the uncontrollable
effect of the significant circumstance other than those specifically
set forth in paragraphs (e)(7)(i)(A) through (e)(7)(i)(D) of this
section will be considered to the extent that the circumstance is not
common to all States, such as a fire in a certification office.
(1) When submitting a request for good cause relief based on
significant
[[Page 29662]]
circumstances, the State agency shall provide the following
information:
(i) The significant circumstances that the State agency believes
uncontrollably and adversely affected the payment error rate for the
fiscal year in question;
(ii) Why the State agency had no control over the significant
circumstances;
(iii) How the significant circumstances had an uncontrollable and
adverse impact on the State agency's error rate;
(iv) Where the significant circumstances existed (i.e. Statewide or
in particular counties);
(v) When the significant circumstances existed (provide specific
dates whenever possible);
(vi) The proportion of the food stamp caseload whose management was
affected;
(vii) Identification and explanation of the uncontrollable errors
caused by the event (types of errors, geographic location of the
errors, time period during which the errors occurred, etc.);
(viii) The percentage of the payment error rate that was caused by
the significant circumstances and how this figure was derived; and
(ix) The degree to which the payment error rate exceeded the
national performance measure in the subject fiscal year.
(2) The following criteria shall be used to assess and evaluate
good cause in conjunction with the appeals process, and to determine
that portion of the error rate/liability attributable to the
uncontrollable effects of a significant circumstance beyond the control
of the State agency, other than those set forth in paragraph
(e)(7)(i)(E) of this section: Geographical impact of the significant
circumstances; State efforts to control impact on program operations;
the proportion of food stamp caseload affected; and/or the duration of
the significant circumstances and the impact on program operations.
Adjustments for these factors may result in a waiver of all, part, or
none of the error rate liabilities for the applicable period. As
appropriate, the waiver amount will be adjusted to reflect States'
otherwise effective administration of the program based upon the degree
to which the error rate exceeded the national performance measure.
(ii) Adjustments. When good cause is found under the criteria in
paragraphs (e)(7)(i)(A) through (e)(7)(i)(E) of this section, the
waiver amount may be adjusted to reflect States' otherwise effective
administration of the program based upon the degree to which the error
rate exceeds the national performance measure.
(iii) Evidence. When submitting a request to the ALJ for good cause
relief, the State agency shall include such data and documentation as
is necessary to support and verify the information submitted in
accordance with the requirements of paragraph (e)(7) of this section so
as to fully explain how a particular significant circumstance(s)
uncontrollable affected its payment error rate.
(iv) Finality. The initial decision of the ALJ concerning good
cause shall constitute the final determination for purposes of judicial
review without further proceedings as established under the provisions
of Sec. 283.17 and $283.20 of this chapter.
* * * * *
(9) FCS Timeframes. FCS shall determine, and announce the national
average payment error rate for fiscal year within 30 days following the
completion of the case review process and all arbitrations of State
agency-Federal difference cases for that fiscal year, and at the same
time FCS shall notify all State agencies of their individual payment
error rates and payment error rate liabilities, if any. The case review
process and the arbitration of all difference cases shall be completed
not later than 180 days after the end of fiscal year. FCS shall
initiate collection action on each claim for such liabilities before
the end of the fiscal year following the end of the fiscal year
reporting period in which the claim arose unless an administrative
appeal relating to the claim is pending.
* * * * *
Dated: May 20, 1997.
Mary Ann Keeffe,
Acting Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 97-13946 Filed 5-30-97; 8:45 am]
BILLING CODE 3410-30-M
