[Federal Register Volume 60, Number 121 (Friday, June 23, 1995)]
[Proposed Rules]
[Pages 32615-32627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-15460]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 60, No. 121 / Friday, June 23, 1995 /
Proposed Rules
[[Page 32615]]
DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 273 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: Proposed rule.
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SUMMARY: This action proposes changes to Food Stamp Program regulations
based on section 13951 of the Mickey Leland Childhood Hunger Relief
Act. This action proposes to modify 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.
This action proposes to incorporate these legislative provisions into
the Food Stamp Program regulations.
DATES: Comments must be received by August 22, 1995 to be assured of
consideration.
ADDRESSES: Send comments to Quality Control Policy Section, Quality
Control Branch, Food Stamp Program, Food and Consumer Service, USDA,
3101 Park Center Drive, Room 904, Alexandria, Virginia 22302.
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:
Classification
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 12778
This action has been reviewed under Executive Order 12778, Civil
Justice Reform. This rule is intended to have preemptive effect with
respect to any state or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This 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 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 and 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. 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 proposed rule contains information collections which are
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1980 (44 U.S.C. 3507). The title,
description, and respondent description of the information collections
are shown below with an estimate of the annual reporting and
recordkeeping burdens. The estimate covers the time that a State agency
will need to complete and transmit a checklist with each request for
arbitration. As FCS will provide the content of the checklist to the
State agency it is believed that any time spent on the design of the
checklist will be minimal. The increase in burden hours reflects
current requirements for the arbitration process which were not
previously submitted for approval.
Title: Arbitration Checklist.
Description: Final regulations published January 21, 1988 (53 FR
1603) required State agencies to provide full documentation of the case
and the policy(s) in question when requesting arbitration. The burden
on the States for providing the documentation necessary for arbitration
under the requirements of that final rule were not submitted for
approval and inclusion under OMB No. 0584-0303 which covers existing
reporting and recordkeeping requirements of 7 CFR part 275. The
existing requirements in OMB No. 0584-0303 have been approved for use
through July 31, 1994. Thus, the following does not represent a change
in actual burden, but rather it reflects a redefinition of what is to
be included as burden under 7 CFR part 275.
Description of Respondents: State agencies.
Estimated Annual Reporting and Recordkeeping Burden:
[[Page 32616]]
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Average
Annual burden Annual
Section number of Annual per burden
respondents frequency response hours
hours
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7 CFR 275:
Existing............. 53 1 5.0236 266
Proposed............. 53 10 10.4 5512
Total Existing Burden
Hours: 266
Total Proposed Burden
Hours: 5512
Total Difference: 5246.
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Send comments regarding this burden estimate or any other aspect of
this collection of information, including suggestions for reducing this
burden to the Department of Agriculture, Clearance Officer, OIRM, Room
404-W, Washington, DC 20250; and to the Office of Management and
Budget, Paperwork Reduction Project (OMB # 0584-A679), Washington, DC
20503, ATTN: Wendy Taylor.
Background
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), revises sections 13(a)(1),
14(a), and 16(c) of the Food Stamp Act of 1977, as amended, (the
``Act'').
Section 13 of the Food Stamp Act is entitled ``Collection and
Disposition of Claims''. Subsection (a)(1) of this section concerns the
settlement and adjustment of claims, including the waiver, for good
cause, of all or a portion of a quality control (QC) liability claim
established against a State agency. This subsection also addresses the
collection of interest on such liability claims. The Leland Act has
amended the Food Stamp Act to remove the authority of the Secretary of
Agriculture's designee, the Food and Consumer Service (``FCS''), to
render good cause determinations. In addition, the timeframes for
charging interest on any unpaid portion of a liability claim has been
changed from two years to one year after the date that a bill for
collection of a liability claim has been received by a State agency.
Section 14 of the Act is entitled ``Administrative and Judicial
Review''. Subsection (a) of this section concerns the authority of
Department of Agriculture Administrative Law Judges (ALJs) to review
liability claims. The Leland Act has amended the Act to grant the ALJs
the authority to determine, upon the request of a State agency, whether
or not good cause exists to waive all or a portion of a liability
claim.
Section 16 of the Food Stamp Act is entitled ``Administrative Cost-
Sharing and Quality Control''. Subsection (c) of this section concerns
payment accuracy and provides for liabilities against State agencies
with payment error rates that exceed established tolerance levels, and
provides for enhanced funding for State agencies with the lowest error
rates. The Leland Act includes a number of provisions which replace key
features of the existing liability/incentive system. The Leland Act
establishes the national average error rate (also referred to as the
national performance measure) for a given fiscal year as the tolerance
level for individual State agency error rates for that year.
Previously, the tolerance level was equivalent to the lowest national
average error rate ever achieved, plus one percentage point. The Leland
Act also modifies the calculation of sanction amounts. Prior to the
Leland Act, a State agency with an individual error rate which exceeded
the tolerance level had a liability equivalent to the difference
between the State agency's error rate and the tolerance level, times
the total value of food stamp issuance by the State agency for that
fiscal year. The Leland Act modifies this calculation by the addition
of another factor, the percentage by which a State agency's error rate
exceeds the tolerance level or 1 (one), whichever is smaller. In
addition, the Leland Act has modified the variance exclusion period for
implementation of new regulations from 60/90 days to 120 days. The
Leland Act has also changed the timeframes for the determination of
final State agency error rates, the national average payment error
rate, and the amounts of liability claims against State agencies. The
Leland Act provides that these figures must be determined, and State
agencies notified, no later than 30 days after the completion of the
case review and arbitration process. The case review and arbitration
process itself will now be required to be completed no later than 180
days after the end of the fiscal year. Finally, the Leland Act adds
specific criteria into the language of section 16(c) of the Food Stamp
Act for what will be considered ``good cause'' for the waiver of
liability claims.
As part of the implementation of the new payment accuracy system,
this proposed rule addresses amendments made by section 13951 of the
Leland Act. Other provisions of section 13951 concerned with the
timeframes involved in the administrative law judge appeal process have
been published in a separate rulemaking.
Time Limits
Section 13951 of the Leland Act amends the Act by specifying 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''. This means that by March 29th (March 28th in leap years)
each year, all State agency QC reviews must be disposed of and
transmitted into the Integrated Quality Control System, all Federally
subsampled QC reviews must be selected and completed by FCS, and any
disparity between the State agency and Federal review findings must be
resolved. It should be recognized that these activities can, and do,
take place concurrently over the course of the annual review period,
but that they cannot be completed simultaneously. The final Federal
subsample cannot be selected until all State agency reviews have been
disposed of, and final arbitration requests and determinations cannot
be made until all Federal reviews have been completed, and the findings
transmitted to the State agencies. Current regulations at 7 CFR 275.21
provide State agencies with a deadline of January 5th to dispose of all
QC reviews, and regulations at 7 CFR 275.23(e)(8) specify that FCS must
determine final payment error rates, and notify State agencies of these
error rates by June 30th. Current regulations do not specify any
deadline for the completion of the arbitration process. The Department
has determined that the deadlines mandated by section 13951 of the
Leland Act cannot be met without changes in the timeframes for the
completion of QC reviews, and changes [[Page 32617]] in the arbitration
system. The specific Departmental proposals for meeting the deadlines
mandated by the Leland Act are contained in paragraphs entitled
Validation of State Agency Error Rates--Sec. 275.3(c), Arbitration--
Sec. 275.3(c)(4), and Quality control review reports--Sec. 275.21.
Validation of State Agency Error Rates--Sec. 275.3(c)
Current regulations at 7 CFR 275.3(c)(1)(iii), published February
17, 1984 (49 FR 6292), specify that FCS Regional Offices shall assist
State agencies in completing 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. It was determined that FCS
Regional Offices should assist State agencies in completing these
difficult cases because of the importance that accepted statistical
practices place on completion of the maximum possible percentage of
sampled cases. Regulations require a State agency to complete 100 per
cent of the cases sampled for QC review. Failure to complete 100 per
cent of the sampled cases results in FCS adjusting a State agency's
regressed error rate (see regulations at 7 CFR 275.23(e)(7)(iii)).
Actual experience since the implementation of these regulations has
shown that FCS Regional Offices are rarely able to gain the cooperation
of a household which has refused to cooperate with the State agency, so
that the results of this effort fail to justify the staff time and
resources dedicated to it. These efforts have also had a negative
impact on the efficiency of the State agency review process in some
instances. Occasionally a household will misinform the FCS Regional
Office that it is willing to cooperate with a State agency QC reviewer.
When the State agency reviewer attempts to contact the household and
complete the review the household again refuses to cooperate. The case
must remain incomplete, and additional State agency staff time and
resources have been expended in the process.
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, the case review and all arbitrations of State- Federal difference
cases shall be completed.'' The Department has concluded that this
mandated deadline cannot be achieved without maximizing the efficiency
of the QC process at both the State agency and Federal review levels.
Because efforts on the part of FCS Regional Offices to assist State
agencies in completing refusal-to-cooperate cases have proven to be
ineffective the Department is proposing to amend regulations so that an
FCS Regional Office will only assist a State agency in attempting to
complete refusal-to-cooperate cases at the specific request of the
State agency. This will allow the State agency, which is in the best
position to evaluate the probability of success, to determine whether
or not additional efforts should be made to complete reviews in which
the household has refused to cooperate.
Arbitration--Sec. 275.3(c)(4)
Current regulations at 7 CFR 275.3(c)(4), published January 21,
1988 (53 FR 1603), and June 5, 1989 (54 FR 23950) contain the QC
procedures for arbitrating differences in review findings between State
agencies and FCS. 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. As these timeframes
would indicate, arbitration is a process which can routinely take as
many as 86 days to reach the level of national arbitration. This
estimate does not include possible delays when a Regional arbitrator
requests additional information from a State agency. Nor does this
figure contain any time estimate for the completion of the National
arbitrator's evaluation, which can vary greatly depending on
priorities, the workload of the National arbitrator, and the complexity
of the case under review. 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.'' Granting that the current arbitration process
(not including the National arbitrator's evaluation) can routinely take
86 calendar days, it would be necessary for the arbitration process to
begin earlier than January 2nd following the end of the fiscal year in
order to insure meeting the March 29th deadline. Current regulations at
7 CFR 275.21(b)(2) provide State agencies with 95 days from the end of
a sample month to complete all case reviews. This means that for the
last sample month of the review period (September) the State agencies
final deadline for disposing of all cases for the fiscal year is
January 5th. The Department has concluded that the deadlines mandated
by the Leland Act for the completion of arbitration for a fiscal year
cannot be achieved without a restructuring of the current arbitration
system.
The Department proposes to replace the current two-tier arbitration
process with a one-tier arbitration system. State agencies would submit
requests for arbitration to their appropriate FCS Regional offices
within 10 days of receipt of the Federal QC findings for a case. The
Department considers 10 days to be sufficient for a State agency to
submit requests for arbitration because the State agency has already
completed its review of households' circumstances before the Federal
review was conducted. In preparing its cases for arbitration the State
agency is simply identifying the specific case issue(s) in dispute
between the State agency and FCS, and then ensuring that all
verification, documentation, or other material supporting its findings
are included in its submittal(s). The FCS Regional office QC staff may
also 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 is 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. Prudence dictates that with the
modification of the arbitration system to a single level of review, the
reviewing official should be allowed the longest possible timeframe to
render decisions.
The Department is proposing a number of other changes to the
arbitration process to maximize the efficiency and accuracy of the
system. The proposed regulations would limit requests for arbitration
to those cases where the State agency's findings or disposition, as
transmitted to the National Computer Center's (NCC) Integrated Quality
Control System (IQCS), differ from the Federal findings or disposition
transmitted to NCC. These cases are commonly referred to as ``disagree
cases''. Under the proposed system State agencies will not be permitted
to arbitrate cases where the [[Page 32618]] State agency's and Federal
findings or disposition are the same. The purpose of the arbitration
system is solely to resolve disagreements between the State agency's
and Federal findings or disposition. State agencies have sometimes used
the arbitration process as a way of registering disagreement with FCS
policy on an issue. In these cases, the State agency agrees that the
findings were correct, but it does not approve of the current Federal
policy. The Department maintains that it is important to dedicate the
limited resources and staff to those cases where there is a difference
between the State agency's and FCS regional office's findings or
disposition of an individual case, rather than those cases where all
parties agree.
As a further expedient to maximizing the efficiency of the
arbitration system, the Department is proposing that State agencies be
required to submit specific documents and to ensure that their
arbitration requests are complete, legible, and understandable. Over
the past several fiscal years, requests for arbitration have frequently
failed to provide arbitrators with the information needed to render
decisions efficiently and accurately without time consuming requests
for additional information or clarification. Common problems have
included: illegible documents, blank photocopied pages, income
calculations that cannot be duplicated, missing information regarding
waivers in effect at the time of the review, and lack of documentation
regarding the reporting and budgeting systems applicable to the case.
When arbitrators confront these problems, they often must recontact
State agencies and Regional offices for clarification. This process has
become both time-consuming and confusing. As a solution to this
problem, the Department proposes to require a standardized set of
documents to accompany each State agency request. The Department
proposes that the following items be required: (1) The request for
arbitration and basic case information, which would include State,
sample month and year, review number, review date, reporting and
budgeting procedure, food stamp procedures for budgeting grants from
the Aid to Families with Dependent Children Program, certification
period, and calendar or fiscal month system; (2) Information about the
certification action under dispute, which would include initial
certification or recertification, legible certification work papers,
legible State agency quality control work papers, and legible regional
office quality control work papers; and (3) Information about the State
agency's specific issues, which would include the element under
dispute, regulatory citations, handbook citations, policy memoranda,
legislative implementation dates, applicable waivers, and verification
of facts. Each arbitration request would also include a checklist
identifying the required items and indicating whether they were
included with the request. The Department is particularly interested in
soliciting comments about the need for such a checklist, the items that
should appear on the checklist, and any alternatives that might be
suggested to enhance the efficiency of arbitration.
If a State agency submitted an incomplete request for arbitration
the arbitrator would render a decision based strictly on the merits of
the available information. This does not mean that in instances where
the State agency submits an incomplete request, and the FCS Regional
office submits a response, the arbitrator(s) would automatically decide
in favor of the Federal position because of the incomplete State agency
request. Nor would this apply in the reverse situation. If a State
agency's request for arbitration is complete but the FCS Regional
office does not submit a response, the arbitrator(s) would not
automatically decide in favor of the State agency's position because
the Regional office had not submitted a response. The arbitrator(s)
would make an independent judgement of the request, based upon whatever
information the State agency and Regional office had provided. The
proposed procedure would not permit a State agency to submit a partial
request for arbitration and then supply supporting documentation over a
ten day period.
In order to ensure that the QC process meets the legislated
timeframes the Department is proposing that arbitration be limited to
those cases where the State agency's findings and disposition were
transmitted to the National Computer Center's (NCC) Integrated Quality
Control System (IQCS) in a timely manner. The timeframes for the
transmission of case findings to NCC is discussed in the paragraph
entitled ``Quality control review reports--Sec. 275.21''. The
Department maintains that State agency reviews which are not completed
and transmitted into the IQCS in a timely manner delay the selection
and completion of FCS's Federal QC subsample reviews, and jeopardize
the system's ability to meet the deadlines mandated by the Leland Act
for the completion of all case review and arbitration activity. The
Department proposes to restrict arbitration to those case reviews which
have met the timeframes for transmittal to NCC to ensure that the QC
process is completed in time to meet the mandated deadline of 180
calendar days after the end of the fiscal year. This restriction would
not apply to one exceptional class of case reviews transmitted into the
IQCS in an untimely manner. This class would be cases originally
disposed of (in a timely manner) as incomplete due to refusal to
cooperate on the part of the food stamp household. If the household
later agrees to cooperate with QC and the review is completed and
retransmitted to IQCS on a date after the original deadline for
completing the case, but prior to the final deadline for disposing of
all cases for the review period (December 29th under these proposed
rules) the State agency would retain the right to request arbitration
of the review findings of the completed case (assuming that the
completed case is selected for FCS review, and the Federal review
findings/disposition disagree with the State agency's findings/
disposition). The Department is soliciting comments on additional
categories of case reviews which should be excluded from the timeframe
restrictions for arbitration.
Quality Control Review Reports--Sec. 275.21
Current regulations at 7 CFR 275.21(b), published February 17, 1984
(49 FR 6292), specify 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. As discussed in the section dealing with
the arbitration process, this means that for the last sample month of
the review period (September) the State agencies final deadline for
disposing of all cases for the fiscal year is currently January 5th.
The Department is proposing an arbitration system which will provide
State agencies the opportunity to submit a request for arbitration of a
case, to be received by the appropriate FCS regional office within 10
days from the date of receipt of the Federal findings, and 35 days for
the arbitrator(s) to render a decision on a case. Thus, arbitration
will be a process which could routinely take up to 45 days to complete.
This is the minimum timeframe which the Department has deemed necessary
to ensure an arbitration process which will render accurate
determinations. Section 13951 of the Leland Act amends the Food
[[Page 32619]] Stamp Act of 1977 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.'' Since the Department has
concluded that the arbitration process requires a minimum of 45
calendar days to ensure accurate decisions being rendered, it would be
necessary for the arbitration process to begin no later than February
12th following the end of the fiscal year in order to insure meeting
the March 29th deadline. With the current State agency deadline for
final case disposition of January 5th, this would leave FCS a total of
38 days to select the final Federal subsample of cases (approximately
1,580 cases, based on one month, or one twelfth, of the Fiscal Year
1991 Federal sample size of 18,982), accumulate the State agency and
local office records necessary for the completion of the Federal
reviews, complete the Federal review, and transmit the Federal review
findings to the appropriate State agencies. The Department concludes
that the deadlines mandated by the Leland Act for case completion (both
State agency and Federal reviews) and arbitration cannot be achieved
without restructuring the current timeframes for case completion.
The Department proposes 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. State agencies would continue to be
required to dispose of 90 percent of selected cases within 75 calendar
days of the end of the sample month for which the cases were selected
for review, as provided for in current regulations at 7 CFR
275.21(b)(2). Such a timeframe will result in a final annual deadline
for the completion of State agency reviews of December 29th. This will
provide FCS with approximately 45 days to complete the Federal case
review process and transmit final Federal review findings to the State
agencies. While the Department recognizes that the proposed timeframes
for case completion may require dedication of additional resources by
both State agencies and FCS, only a modification of the case completion
timeframes and adherence to them, in conjunction with the redesign of
the arbitration process, will allow sufficient time to meet the
mandated deadlines contained in the Leland Act. Because of the
importance which accepted statistical practices places on the
completion of the maximum possible number of cases sampled for QC
review, the Department is proposing to restate, in this section of the
regulations, instructions currently contained in 7 CFR 275.12(g),
Disposition of Case Reviews
These instructions specify that without FCS approval a State agency
shall not dispose of a case as not completed based solely on the fact
that the State agency was unable to complete the case in time to meet
the timeframes for the disposal of case reviews.
The Department is also proposing a conforming change to regulations
at 7 CFR 273.2(d)(2), Cooperation with QC Reviewer. This section of the
regulations, published February 17, 1984 (49 FR 6292), currently
specifies 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). This 95 day timeframe was established to
correspond to the 95 day timeframe which the State agency has to
dispose of QC reviews. Just as QC has a final deadline for the disposal
of all reviews for an annual review period of 95 days after the end of
the review period, a household which refuses to cooperate with QC is
determined ineligible to participate in the Program until 95 days after
the end of the annual review period. The Department is proposing 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. The Department is proposing an additional conforming change
to regulations at 7 CFR 273.2(f)(1)(ix). This section of the
regulations, published February 4, 1987 (52 FR 3402), deals with the
requirement that State agencies verify all factors of eligibility for
households which have been terminated for refusal to cooperate with
quality control. A reference is made in this section to the period of
ineligibility lasting until the 95 day after the end of the annual
review period. The Department is proposing to change the reference 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.
Variances Excluded From Error Analysis--Sec. 275.12(d)(2)
Prior to the Leland Act, section 16(c)(3) of the Food Stamp Act
specified that any errors resulting from the application of new
regulations promulgated under the Act during the first 60 days (or 90
days at the discretion of the Secretary) from the required
implementation date of such regulations shall be excluded from the
payment error rate. Section 13951 of the Leland Act amends the Act by
changing the timeframe for excluding these errors from 60 (or 90) days,
to 120 days. In response to this change the Department is proposing a
regulatory change at 7 CFR 275.12(d)(2)(vii) to reflect the new
timeframe for excluding variances resulting from the promulgation of
new regulations.
State Agencies' Liabilities for Payment Error--Fiscal Year 1986 and
Beyond--Sec. 275.23(e)(4)
Current regulations at 7 CFR 275.23(e)(4), published November 27,
1991 (56 FR 60045), specify a payment error rate tolerance level for
any fiscal year to be one percentage point added to the lowest national
performance measure announced up to and including that fiscal year. A
State agency which exceeds this tolerance level is subject to a
liability claim equivalent to the difference between the State agency's
payment error rate and the tolerance level, multiplied by the total
value of the allotments issued in the fiscal year by the State agency.
Section 13951 of the Leland Act establishes a new system of payment
error rate goals and consequences. 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 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 claim 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,
[[Page 32620]] 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.
The Department is proposing changes to regulations at 7 CFR
275.23(e) to revise current subparagraph (4) to reflect the fact that
the sanction system mandated by the Hunger Prevention Act of 1988 (Pub.
L. 100-435, enacted September 19, 1988) (the ``Hunger Prevention Act'')
now applies only to Fiscal Years 1986 through 1991. A new paragraph
will be added to reflect the sanction system mandated by the Leland Act
for Fiscal Year 1992, and all subsequent fiscal years. In addition, the
Department proposes to continue the current policy under which, once
announced, the national performance measure for a fiscal year will not
be subject to change. The Leland Act mandates that within 30 days of
the completion of the case review and arbitration process for a fiscal
year (which itself must be completed within 180 days of the end of the
fiscal year) the Department shall determine final error rates, the
national performance measure, and the amounts of liability claims
against State agencies [emphasis added]. The Department concludes that
the intent of the Leland Act is that once individual State agency error
rates, and the national performance measure are announced, they are
final, and that adjustments to these figures cannot be considered.
Good Cause--Sec. 275.23(e)(6)
The Food Stamp Act of 1977, as amended by the Hunger Prevention
Act, allows 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. The legislative history for current regulations governing
good cause provides that ``The purpose of good cause under the new
system is to allow the Secretary the discretion to provide relief when
a State with otherwise effective administration has faced an unusual
event with a large uncontrollable impact on errors.'' (House Report
100-828, part 1, page 34).
Although the Leland Act transfers the authority to grant good cause
relief from the Secretary of Agriculture to the Department's
Administrative Law Judges (ALJs), the intent as to what constitutes
good cause has not changed. Congress' intent was made clear in the
legislative history accompanying the Leland Act which states, ``It is
the Committee's intent that the new national performance measure will
provide relief for those factors that are not unique to any one state
agency, such as the effects of recession or program changes. However,
the Committee recognizes that there will be unusual events with an
uncontrollable impact on errors which affect state agencies with
otherwise effective program administration (emphasis added). The
Committee expects that these individual state situations (emphasis
added) will be addressed through the good cause waiver procedures. The
Committee also expects that the Secretary's determination on states'
good cause waiver requests will be based on good cause criteria, and
not on such factors as budget considerations.'' (House Report 103-111,
pg.12). Other than the provision that the determination to waive all or
part of a Quality Control liability will be made by an ALJ, this intent
was adopted by the Conference Substitute. (Statement of Managers). The
language of these reports reaffirms Departmental policy as established
under the provisions of the Hunger Prevention Act.
The Department concludes, therefore, that good cause relief is
intended to ensure that a State agency which otherwise effectively
administers the Food Stamp Program is not held liable for that portion
of an excessive error rate caused by an unusual event which has an
uncontrollable impact on a State agency's payment error rate.
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.
This proposed rulemaking adopts the unusual events which qualify
for consideration under good cause relief. As noted above, the
legislative history makes clear that good cause relief based on the
impact of unusual events is limited to individual state situations, and
that allowances for those situations that are not unique to any one
state are made via the national performance measure.
The effects of recession and program changes are specifically
identified in the legislative history as factors that are not
considered unique to any one state. Program changes have therefore been
designated both as an unusual situation for which good cause relief
will be considered and as a condition that is not unique to one state.
From this report language, the Department concludes Congress' intent
was that the five situations are considered ``unusual events'',
appropriate for good cause relief, only if they exceed a national norm.
The preamble to current regulations published September 28, 1992,
(57 FR 44482) discusses further those situations that will not be
considered 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
the Secretary or the Secretary's designee will no longer be making the
final determination in good cause appeals, FCS retains the authority to
establish criteria under which good cause is evaluated. The Department
wishes to make it clear that current criteria and methodology, with
modifications, will serve as guidelines for both FCS and the ALJ to
assess, evaluate and respond to claims by the State agency for a good
cause waiver of liability in conjunction with the appeals process. As
under current regulations, an alternate methodology will continue to be
used for certain events when a State agency provides insufficient
information to demonstrate using factual analysis that the unusual
event had an uncontrollable impact on the error rate. However, the
Department is proposing modifications to these alternate methodologies.
While current procedures take into account the duration of an unusual
event, they do not measure the degree of impact that the unusual event
has on Program operations. As a result, a Federally-declared disaster,
for example, is treated the same regardless of size of the counties
affected or amount of issuances for those counties. The Department is
proposing an alternate methodology that will take into account both the
duration of the unusual event and the magnitude or intensity of the
unusual event. The alternate methodologies have also been modified to
include specific procedures for calculating waiver amounts to ensure
equity and consistency in these determinations. The following is a
summary of the modifications to the alternate methodologies:
[[Page 32621]]
Disasters/Civil Disorders and Strikes
Duration will be measured by the number of months the event had an
adverse impact on program operations. Intensity of these unusual events
will be a proportional measurement of the issuances for the counties
affected to the State's total issuance. 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 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.
For example, a tornado hits County A on 5/15, and the County is
declared a Federal disaster area. Program operations in this county
were adversely impacted for 3 months. In addition, a significant number
of program staff from County B were diverted for 1 month to handle the
crises in County A. Issuance figures for the month of April were:
2,000,000 (A); 1,900,000 (B); 38,500,000 (Statewide). The liability for
the fiscal yr. was $3,300,000. The above formula is applied as follows:
County A--[2,000,000/38,500,000] x 3/12 x 3,300,000 OR; .05195 x
.25 x 3,300,000 = $42,858 credit to the liability. County B--
[1,900,000/38,500,000] x 1/12 x 3,300,000 OR; .04935 x .08333 x
3,300,000 = $13,571 credit to the liability. Total credit to the
liability is $56,429 ($42,858 + $13,571). This results in a revised
liability for the State agency of $3,243,571 ($3,300,000--$56,429).
Significant Growth in Food Stamp Caseload
Duration and intensity will be measured by the degree to which
caseload growth, statewide, exceeds 15 percent during the 12 month
period from April of the prior fiscal year through March of the subject
fiscal year, and by the degree to which a State's error rate exceeds
the national performance measure. The amount of waiver of liability
will be determined using a ratio of the percentage of caseload increase
from a 12 month base period to the percentage the State's error rate
exceeds the national performance measure.
This proportional measurement is based on procedures similar to the
``sliding scale'' used for the determination of liability amounts, and
incorporates a floating national average which accounts for those
factors that are common to all States. Using the error rate in this
calculation allows greater consideration for a State agency that
effectively manages caseload growth. As a result, a State agency with
an error rate barely exceeding the national performance measure and an
18 percent increase in caseload growth will receive a proportionally
larger waiver amount than a State agency with the same percentage of
caseload growth but with an error rate greatly exceeding the national
performance measure.
Under this alternate methodology, requisite caseload growth will be
determined statewide rather than by individual counties. The Department
recognizes that an individual county, because of its size, may drive
the error rate for the State as a whole. The State agency may still use
the impact of caseload growth in individual counties on the State's
error rate to pursue good cause relief under the primary criterion.
With the improvements in automated systems for data analysis, State
agencies should have little difficulty in demonstrating the impact on
the error rate when the impact is significant. The Department has
designed the alternate methodology for use when the impact of an
unusual event on the error rate is more difficult to isolate and
distinguish.
Caseload growth occurring in the last half of the subject fiscal
year will not be considered under the alternate methodology. The
Department believes caseload growth occurring in the six month period
prior to the subject fiscal year and in the beginning of the subject
fiscal year will have a greater potential for disrupting Program
operations as more months will be affected than will caseload growth
occurring at the end of the fiscal year. For example, an increase in
caseload growth prior to the subject fiscal year will have an impact on
the error rate for the entire 12 months while caseload growth in the
last month of the fiscal year will have an impact for only 1 month. If
the State agency can demonstrate the effects of caseload growth in the
last half of the subject fiscal year, it may do so under primary
criterion.
The Department is proposing to modify the alternate methodology by
using an average of 12 months as the base period from which caseload
growth is measured rather than the 1 month base period that is
currently used. An average of 12 months takes into account normal
fluctuations in growth occurring over a period of time, and provides a
more accurate indication of actual growth than does 1 month.
These methodologies are described in full in the regulatory section
of this proposed rule.
In the application of the criteria and methodology, the mere
existence of an unusual event specified under good cause relief is not,
by itself, sufficient to establish a determination of good cause.
Congressional intent is explicit in stating that a determination of
good cause is contingent upon the following 3 conditions:
(1) An unusual event must occur. As previously stated, good cause
relief is only appropriate for events affecting individual State
agencies and exceeding a national norm. The national performance
measure which floats from year to year provides relief for those
factors that are common to all States. Certain events may be common to
all States but have a significantly different impact on State agencies
for a variety of reasons. For example, while all State agencies are
required to implement new regulations, an individual State agency may
be disproportionately affected by the program change due to the State's
caseload demographics. New regulations affecting Native American
households on reservations, for instance, would have an extensive
impact on State agencies with a large population of such food stamp
households. In these situations, the State agency needs to demonstrate
the disproportionate effect caused by the unusual event. Good cause
relief will be considered to the extent the unusual event has an
uncontrollable impact on a State's error rate beyond the relief that is
already provided through the national performance measure.
(2) The event must have an uncontrollable impact on errors. For
example, during the middle of a review period, several counties within
a state are declared Federal disaster areas due to massive flooding.
This disaster occurs shortly after the expiration of the variance
exclusion period for a new regulation which the State agency
implemented timely but incorrectly. Subsequent to the disaster, there
is a significant increase in the error rate. Data analysis show that
the increase in the error rate was attributable to the State's
incorrect implementation of the regulation. Even though there was a
Federally declared disaster, a good cause determination is not
appropriate, in this example, because the increase in the error rate
resulted from a factor that was not associated with the unusual event.
Good cause relief will be considered only for that portion of the
[[Page 32622]] error rate/liability attributal to the unusual event.
(3) The event must affect a State agency with otherwise effective
Program administration. Under current regulations, otherwise effective
administration is measured and evaluated by the State's error rate
together with any other available error rate data immediately before
and after the unusual event, and by determining the impact of the
unusual event on the error rate. With this proposed rulemaking, the
Department is modifying this measurement to take into consideration the
degree to which the error rate exceeds the national performance
measure.
FCS Timeframes--Sec. 275.23(e)(8)
Prior to the Leland Act, section 16(c)(5) of the Food Stamp Act
specified that the Secretary must make the determinations regarding any
possible incentive payments or claims, and notify the State agencies of
these determinations, within nine months following the end of each
fiscal year. Section 16(c)(6) specified that at the same time that the
State agencies are informed of their error rates and possible incentive
payments or claims, that the Secretary shall announce the national
performance measure (the sum of the products of each State agency's
error rate times that State agency's proportion of the total value of
national allotments issued for a fiscal year).
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, 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.'' In
response to this change the Department is proposing a regulatory change
at 7 CFR 275.23(e)(8) to reflect the new timeframes for the completion
of the QC review process for a fiscal year.
Interest Charges--Sec. 275.23(e)(9)
Prior to the Leland Act, section 13(a)(1) of the Food Stamp Act
specified that interest charges on any unpaid portion of a liability
claim would accrue from the date of the decision on an administrative
appeal of the claim, or from the day two years after the date the bill
for the claim was received by the State agency, whichever was earlier.
Section 13951 of the Leland Act amends the Food Stamp Act by changing
the timeframe for the accruing of interest charges from two years to
one year. The Food Stamp Act now specifies that interest on any unpaid
portion of the claim shall accrue from the date of the decision on the
administrative appeal, or from the day that is one year after the date
the bill is received, whichever is earlier, until the date the unpaid
portion of the payment is received. In response to this change the
Department is proposing a regulatory change at 7 CFR 275.23(e)(9) to
reflect the new timeframe of one year.
In addition, the Department is taking the opportunity to make a
technical correction to the language in this paragraph of the
regulations. The current regulations specify that interest will accrue
from the date that a State agency receives the bill for the liability
claim unless the State agency appeals the claim ``under Sec. 276.7 of
the regulations''. Since regulations at 7 CFR 275.23(e)(9) regarding
interest charges were published (November 27, 1991) (56 FR 60045) the
administrative appeals process for liability claims has been modified
to provide for appeal to a Departmental Administrative Law Judge. The
procedures for appeal of claims to a Departmental Administrative Law
Judge are contained in 7 CFR Part 283 of the regulations. The
Department proposes to change the reference to the appeal process
contained in 7 CFR 275.23(e)(9) from ``under Sec. 276.7 of the
regulations'' to ``under Part 283 of the regulations''.
Miscellaneous Technical Corrections
The Department is proposing to take advantage of the opportunity
presented with the publication of this rule to effect technical
corrections to 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 is taking this opportunity to correct references appearing
in the following paragraphs: 275.3(c), 275.11(g), 275.23(d)(1)(iii),
275.23(e)(1), 275.23(e)(7)(i)(D), 275.23(e)(7)(ii),
275.23(e)(7)(iii)(A), 275.23(e)(7)(iii)(B), and 275.23(e)(10)(iii).
Dates
Section 13971 of the Leland Act sets implementation dates for the
various provisions of the law addressed in this proposed rule. The
provisions of section 13951 that amended sections 13(a)(1), 14(a), and
16(c) of the Act are effective on October 1, 1991, with the exception
of the provision regarding exclusion of variances resulting from the
application of new regulations. The provision regarding the exclusion
of variances resulting from the application of new regulations is
effective on October 1, 1992.
List of Subjects
7 CFR Part 273
Administrative practice and procedure, Aliens, Claims, Food stamps,
Fraud, Grant programs--social programs, Penalties, Records, Reporting,
and recordkeeping requirements, Social Security, Students.
7 CFR Part 275
Administrative practice and procedure, Food stamps, Reporting, and
recordkeeping requirements.
For the reasons set out in the preamble, Parts 273 and 275 of
Chapter II of Title 7 Code of Federal Regulations are proposed to be
amended as follows:
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
1. The authority citation for Part 273 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
Sec. 273.2 [Amended]
2. In Sec. 273.2:
a. the third sentence of paragraph (d)(2) is amended by removing
the words ``after 95 days'' and adding the words ``after 90 days'' in
their place;
b. the first sentence of paragraph (f)(1)(ix) is amended by
removing the words ``after 95 days'' and adding the words ``after 90
days'' in their place.
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
[[Page 32623]] 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.
(C) The State agency shall only be eligible to request arbitration
of the Federal findings or disposition of an individual case if that
case was disposed of and the findings reported in accordance with the
timeframes specified in Sec. 275.21(b)(2). An exception shall be made
for cases which fail to meet the timeframes specified in
Sec. 275.21(b)(2) if the cases were originally disposed of by the State
agency, in a timely manner, as incomplete due to refusal-to-cooperate
on the part of the household. If the household later agrees to
cooperate with the Quality Control reviewer, and the case is
retransmitted into IQCS as completed, then the secondary disposition/
findings shall not be subject to the timeliness of disposition
restriction.
(ii) The FCS Arbitrator(s) shall be an individual or individuals
who are not directly involved in the validation effort.
(iii) The State agency shall submit a request for arbitration, to
be received by the appropriate FCS regional office within 10 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.
(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 a response to the State agency's request to
the FCS Arbitrator.
(A) A complete request is one that contains all of the information
that FCS requires. The following items shall be required:
(1) The request for arbitration and basic case information, which
would include State, sample month and year, review number, review date,
reporting and budgeting procedure, food stamp procedures for budgeting
grants from the Aid to Families with Dependent Children Program,
certification period, and calendar or fiscal month system.
(2) Information about the certification action under dispute, which
would include initial certification or recertification, legible
certification work papers, legible State agency quality control work
papers, and legible regional office quality control work papers.
(3) Information about the State agency's specific issues, which
would include the element under dispute, regulatory citations, handbook
citations, policy memoranda, legislative implementation dates,
applicable waivers, and verification of facts.
(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 35 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;
c. paragraph (d)(2)(vii)(D) is revised.
The revisions read as follows:
Sec. 275.12 Review of active cases.
* * * * *
(d) Variance identification. * * *
(2) Variances 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. 275.21:
a. paragraph (b)(2) is revised;
b. the first sentence of paragraph (b)(4) is amended by removing
the words ``pending 95 days'' and adding the words ``pending 90 days''
in their place.
The revision reads as follows:
Sec. 275.21 Quality control review reports.
* * * * *
(b) Individual cases. * * *
(2) The State agency shall dispose of and report the findings of 90
percent of all cases selected in a given sample month so that they are
received by FCS within 75 days of the end of the sample month. All
cases selected in a sample month shall be disposed of and the findings
reported so that they are received by FCS within 90 days of the end of
the sample month. Without FCS approval, no active case shall be
reported as not completed solely because the State agency was unable to
process the case review in time for it to be reported in accordance
with these timeframes.
* * * * *
8. 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 [[Page 32624]] (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. the 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 ``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 5 unusual events described below are considered to have a
potential for disrupting 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 rate/liability attributal
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,
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 a disaster or [[Page 32625]] 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. 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 for a
natural disaster 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 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 based
upon the degree to which the error rate exceeded the national
performance measure. If a State agency has provided insufficient
information to determine a 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,
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 unusual caseload growth: Geographical impact
of the caseload growth; State efforts to control impact on program
operations; the proportion of food stamp caseload
[[Page 32626]] 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. 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: first, 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; second,
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 the twelve month
period beginning with April of the prior fiscal year and ending with
March of the current fiscal year; third, 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;
fourth, 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
finally, 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. Under this methodology, caseload growth of less than 15%
and/or occurring in the last half 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, 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 unusual changes in the Food Stamp Program or
other Federal and State programs: Geographical impact of the 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 administration 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 this paragraph 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 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, 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 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 [[Page 32627]] 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)
uncontrollably 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 Sec. 283.20 of this chapter.
* * * * *
(9) FCS Timeframes. FCS shall determine, and announce the national
average payment error rate for a fiscal year within 30 days following
the completion of the case review process and all arbitrations of State
agency-FCS 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: June 16, 1995.
Ellen Haas,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 95-15460 Filed 6-22-95; 8:45 am]
BILLING CODE 3410-30-U
