2010-9645. Food Distribution Program on Indian Reservations: Amendments Related to the Food, Conservation, and Energy Act of 2008

AGENCY:

Food and Nutrition Service, USDA.

ACTION:

Proposed rule.

SUMMARY:

This rule proposes to amend Food Distribution Program on Indian Reservations (FDPIR) regulations to conform FDPIR policy to the requirements included in the Food, Conservation, and Energy Act of 2008 (the Farm Bill) for the Supplemental Nutrition Assistance Program (SNAP). The proposed rule is intended to improve program service to applicants and participants and ensure consistency between FDPIR and SNAP. When determining eligibility for FDPIR, the proposed rule would permanently exclude combat pay from being considered income and eliminate the maximum dollar limit of the dependent care deduction. The rule would also exclude from resource consideration household funds held in qualified education savings accounts identified in the Farm Bill and would exclude any other education savings accounts for which an exclusion is allowed under SNAP. The proposed rule would also clarify that the current resource exclusion for retirement accounts is restricted to the qualified retirement accounts identified in the Farm Bill, but that a resource exclusion would be allowed for any other retirement account for which an exclusion is allowed under SNAP. Additionally, the rule would clarify that the FDPIR regulations regarding income eligibility refer to the SNAP net monthly income standard, not the SNAP gross monthly income standard.

DATES:

To be assured of consideration, comments must be received on or before June 28, 2010.

ADDRESSES:

The Food and Nutrition Service invites interested persons to submit comments on this proposed rule. You may submit comments, identified by RIN number 0584-AD95, by any of the following methods:

• Federal eRulemaking Portal: Go to http://www.regulations.gov. Preferred method; follow the online instructions for submitting comments on docket FNS-2009-0017.
• Fax: Submit comments by facsimile transmission to [phone].
• Mail: Send comments to Laura Castro, Branch Chief, Policy Branch, Food Distribution Division, Food and Nutrition Service, U.S. Department of Agriculture, Room 500, 3101 Park Center Drive, Alexandria, Virginia 22302-1594.
• Hand Delivery or Courier: Deliver comments to the above address during regular business hours.

Comments submitted in response to this rule will be included in the record and will be made available to the public. Please be advised that the substance of the comments and the identity of the individuals or entities submitting the comments will be subject to public disclosure. The Department will make the comments publicly available on the Internet via http://www.regulations.gov.

All written submissions will be available for public inspection at the address above during regular business hours (8:30 a.m. to 5:30 p.m.), Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

Laura Castro at the above address or telephone [phone]. A regulatory impact analysis has been prepared for this rule. You may request a copy of the analysis by contacting us at the above address, or by e-mail to [e-mail].

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures

Your written comments on this proposed rule should be specific, confined to issues pertinent to the proposed rule, and should explain your reasons for any change recommended. Where possible, you should reference the specific section or paragraph of the proposal you are addressing. Comments received after the close of the comment period (see DATES) will not be considered or included in the Administrative Record for the final rule.

Executive Order 12866 requires each agency to write regulations that are simple and easy to understand. We invite your comments on how to make these regulations easier to understand, including answers to questions such as the following:

(1) Are the requirements in the rule clearly stated?

(2) Does the rule contain technical language or jargon that interferes with its clarity?

(3) Does the format of the rule (grouping and order of sections, use of headings, paragraphing, etc.) make it more or less clear?

(4) Would the rule be easier to understand if it were divided into more (but shorter) sections?

(5) Is the description of the rule in the preamble section entitled “Background and Discussion of the Proposed Rule” helpful in understanding the rule? How could this description be more helpful?

II. Procedural Matters

A. Executive Order 12866

This proposed rule has been determined to be significant and was reviewed by the Office of Management and Budget (OMB) under Executive Order 12866.

B. Regulatory Impact Analysis

Need for Action

This action is needed to ensure that regulations are consistent between FDPIR and SNAP. FDPIR was established by Congress in 1977 as an alternative to the Food Stamp Program for low-income households living on Indian reservations and households near reservations or in Oklahoma that contain at least one person who is a member of a Federally-recognized Tribe that does not have easy access to Food Stamp offices and authorized grocery stores. The name of the Food Stamp Program was changed to the Supplemental Nutrition Assistance Program pursuant to the Food, Conservation and Energy Act of 2008, Public Law 110-246 (Farm Bill). To avoid confusion, hereinafter, the terms Food Stamp Act and Food Stamp Program will not be used.

FDPIR has similar eligibility criteria to SNAP, although certain administrative requirements have been simplified and streamlined under FDPIR. The proposed rulemaking will update FDPIR regulations to be consistent with recent changes to SNAP in accordance with Sections 4101, 4103, and 4104 of the Farm Bill. Section 4101 permanently excludes combat pay (i.e., additional pay earned as a result of deployment to or service in a combat zone) as income for the purposes of determining SNAP eligibility. Section 4103 eliminates the maximum dollar limit to the dependent care deduction allowed under SNAP, and Section 4104 excludes from resources any household funds held in qualified retirement or education savings accounts when determining eligibility for SNAP. Section 4104 also excludes future qualified retirement accounts should they be created, and provides the Secretary with discretion to allow resource exclusions for other retirement plans and education savings accounts. This proposed rulemaking will also provide clarification that FDPIR regulations regarding income eligibility are referring to the SNAP net income guidelines, rather than the gross.

Benefits

This rule would amend FDPIR regulations by aligning provisions with recent changes to SNAP as a result of the Farm Bill. These regulatory changes are designed to help ensure that FDPIR benefits are provided to low-income households living on Indian reservations and households near reservations or in Oklahoma that contain at least one person who is a member of a Federally-recognized Tribe that are in need of nutrition assistance. Because FDPIR regulations regarding resource limits and income exclusions would be altered by this rule, participation could potentially increase, thus expanding access to the program and increasing benefits to the targeted population.

FNS has projected the impact of the proposed changes on FDPIR participation. The combined effect of the provisions in this proposed rule will potentially make a small number of households become newly eligible, primarily those households with sizeable dependent care expenses and/or funds in qualified education savings accounts. However, individual households might benefit from more than one provision and the effect of the overlap could not be determined. Therefore, we are unable to determine with any certainty the total number of individuals that might be added as a result of this rule.

Costs

This action is not expected to significantly increase costs of State and local agencies, or their commercial contractors. The combined impact of the proposed changes in this rulemaking is projected to increase Federal program costs by $1,000 in fiscal year (FY) 2010 and $7,000 over a five-year period (FY 2010 through FY 2014). These increased costs are attributable to potential increases in participation, primarily among those households that have funds in qualified education savings accounts.

C. Regulatory Flexibility Act

This proposed rule has been reviewed with regard to the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). It has been certified that this action will not have a significant impact on a substantial number of small entities. While Indian Tribal Organizations (ITOs) and State Agencies that administer FDPIR will be affected by this rulemaking, the economic effect will not be significant.

D. Public Law 104-4

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. Under Section 202 of the UMRA, FNS generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, or Tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. When such a statement is needed for a rule, section 205 of the UMRA generally requires FNS to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, more cost-effective or least burdensome alternative that achieves the objectives of the rule. This rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, and Tribal governments or the private sector of $100 million or more in any one year. This rule is, therefore, not subject to the requirements of sections 202 and 205 of the UMRA.

E. Executive Order 12372

The program addressed in this action is listed in the Catalog of Federal Domestic Assistance under 10.567. For the reasons set forth in the final rule in 7 CFR Part 3015, Subpart V and related Notice (48 FR 29115, June 24, 1983), the donation of foods in such programs is included in the scope of Executive Order 12372, which requires intergovernmental consultation with State and local officials.

F. Executive Order 13132

Executive Order 13132 requires Federal agencies to consider the impact of their regulatory actions on State and local governments. Where such actions have federalism implications, agencies are directed to provide a statement for inclusion in the preamble to the regulations describing the agency's considerations in terms of the three categories called for under section (6)(b)(2)(B) of Executive Order 13132.

The programs affected by the regulatory proposals in this rule are all Tribal or State-administered, Federally-funded programs. The FNS National Office and Regional Offices have formal and informal discussions with State officials on an ongoing basis regarding program issues relating to the distribution of donated foods. FNS meets annually with the National Association of Food Distribution Programs on Indian Reservations (NAFDPIR), a national group of Tribal and State agencies, to discuss issues relating to food distribution.

This rule is intended to provide consistency between FDPIR and SNAP. The rule was prompted by provisions contained in the Farm Bill, enacted on June 18, 2008. Section 4101 of the Farm Bill permanently excludes combat pay (i.e., additional pay earned as a result of deployment to or service in a combat zone) from income when determining eligibility for SNAP. Section 4103 removes the maximum limit on the dependent care deduction and Section 4104 excludes from resources any household funds held in qualified tuition program or retirement accounts when determining eligibility for SNAP.

FNS has considered the impact of the proposed rule on ITOs and State agencies. The overall effect is to ensure that nutrition assistance is provided to low-income households. During the prior consultation period in advance of this rulemaking, FNS was not made aware of any adverse concerns by ITOs or State Agencies.

G. Executive Order 12988

This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule, when finalized, 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 proposed rule would not have retroactive effect. Prior to any judicial challenge to the provisions of this rule or the application of its provisions, all applicable administrative procedures must be exhausted.

H. Civil Rights Impact Analysis

FNS has reviewed this rule in accordance with the Department Regulation 4300-4, “Civil Rights Impact Analysis,” to identify and address any major civil rights impacts the rule might have on minorities, women, and persons with disabilities. After a careful review of the rule's intent and provisions, FNS has determined that this rule will not in any way limit or reduce the ability of participants to receive the benefits of donated foods in food distribution programs on the basis of an individual's or group's race, color, national origin, sex, age, or disability. FNS found no factors that would negatively and disproportionately affect any group of individuals.

I. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR part 1320) requires that OMB approve all collections of information by a Federal agency from the public before they can be implemented. Respondents are not required to respond to any collection of information unless it displays a current valid OMB control number. This proposed rule does not contain any new information collection requirements that are subject to review and approval by OMB.

J. E-Government Act Compliance

FNS is committed to compliance with the E-Government Act of 2002 to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

III. Background and Discussion of the Proposed Rule

The proposed rule would amend the regulations for FDPIR at 7 CFR 253.6 to be consistent with SNAP relative to the requirements set forth in the Farm Bill. FDPIR was established by Congress in 1977 as an alternative to SNAP for low-income households living on Indian reservations and households near reservations or in Oklahoma that contain at least one person who is a member of a Federally-recognized Tribe that does not have easy access to SNAP offices and authorized grocery stores. Consequently, FDPIR has similar eligibility criteria to SNAP, although certain administrative requirements have been simplified and streamlined under FDPIR. The changes would improve program service by: (1) Excluding household funds held in education savings accounts specified in Section 4104 of the Farm Bill and any other education accounts for which a resource exclusion is provided under SNAP; (2) clarifying that the current FDPIR resource exclusion for retirement accounts is limited to qualified retirement accounts specified in Section 4104 of the Farm Bill and any other retirement accounts for which a resource exclusion is provided under SNAP; (3) clarifying that the FDPIR regulations regarding income eligibility are referring to the SNAP net monthly income standard, rather than the SNAP gross monthly income standard; (4) permanently excluding combat pay from income when determining eligibility for FDPIR; and (5) eliminating the maximum limit to the dependent care deduction.

The proposed amendments would also impact the operation of the Food Distribution Program for Indian Households in Oklahoma (FDPIHO), 7 CFR Part 254, under which the eligibility and certification provisions of 7 CFR Part 253 are adopted by reference at 7 CFR 254.5(a). The term “FDPIR,” as used in this proposed rule, refers collectively to FDPIR and FDPIHO. The proposed amendments are discussed in more detail below.

A. Excluding Household Funds Held in Education Savings Accounts From Consideration as a Resource

This proposed rule would amend FDPIR regulations at 7 CFR 253.6(d)(2) to ensure consistent treatment of certain resources in determining FDPIR and SNAP eligibility. In accordance with Section 4104 of the Farm Bill, which amended Section 5(g) of the Food and Nutrition Act 2008 (7 U.S.C. 2014(g)), funds that are held in qualified tuition program accounts described in section 529 of the Internal Revenue Code of 1986 or in a Coverdell education savings account under section 530 of that Code are excluded from the calculation of household resources when determining eligibility for SNAP. This rule proposes to amend 7 CFR 253.6(d)(2) to exclude any funds held in these accounts from being considered FDPIR resources.

Section 4104 of the Farm Bill also provides the Secretary with discretion to exclude in the calculation of resources under SNAP any other education programs, contracts or accounts as determined by the Secretary. This rule proposes to amend 7 CFR 253.6(d)(2) to allow a resource exclusion for any other education savings accounts for which a resource exclusion is allowed under SNAP. This would allow FNS to maintain consistent policy in the treatment of education savings accounts and promote consistency in policy between FDPIR and SNAP.

B. Clarification Regarding the Resource Exclusion for Qualified Retirement Accounts

This proposed rule would amend FDPIR regulations at 7 CFR 253.6(d)(2) to ensure consistent treatment of certain resources in determining FDPIR and SNAP eligibility. In accordance with Section 4104, funds that are held in qualified retirement accounts are excluded when determining eligibility for SNAP. Specifically, that section of the Farm Bill excludes the value of funds held in retirement accounts described in sections 401(a), 403(a), 403(b), 408, 408A, 457(b), and 501(c)(18) of the Internal Revenue Code of 1986 and the value of funds held in a Federal Thrift Savings Plan account as described in 5 U.S.C. 8439.

In accordance with FDPIR regulations and policy, retirement accounts and pension plans are excluded as long as the funds remain in the accounts. However, for clarification purposes and to ensure consistency between FDPIR and SNAP, this rule proposes to amend 7 CFR 253.6(d)(2) to exclude under FDPIR the comprehensive list of qualified retirement accounts specified in Section 4104 of the Farm Bill.

Section 4104 of the Farm Bill also provides for the exclusion of retirement accounts that may be enacted and determined to be exempt from tax under the Internal Revenue Code of 1986, and any other retirement plans, contracts, or accounts as determined by the Secretary. To allow FNS to maintain consistency with regard to its treatment of retirement accounts and promote consistency in policy between FDPIR and SNAP, this rule proposes to amend 7 CFR 253.6(d)(2) to allow a resource exclusion for any other retirement accounts for which a resource exclusion is allowed under SNAP.

C. Clarifying the Application of SNAP Net Income Standards to FDPIR

Current FDPIR regulations at 7 CFR 253.6(e)(1)(i) state that the FDPIR income eligibility standards shall be the “monthly income eligibility standards for the Food Stamp Program.” However, SNAP eligibility procedures employ two separate income standards—a gross monthly income standard and a net monthly income standard. It is FNS policy that the SNAP net monthly income standard is the applicable income standard for determining income eligibility for FDPIR. However, due to lack of clarity in the regulations, FNS has received requests for policy clarification regarding which SNAP income guideline is applicable under FDPIR. Therefore, FNS is proposing an amendment to the regulations at 7 CFR 253.6(e)(1)(i) to clarify that FDPIR applies the SNAP net income standard, not the gross income standard. This change would clarify the regulatory language at 7 CFR 253.6(e)(1)(i), but not change current FDPIR policy nor revise current FDPIR income guidelines or eligibility criteria.

D. Excluding Combat Pay From Income

Appropriation legislation in FY 2005 through FY 2008 excluded combat pay (i.e., additional pay earned as a result of deployment to or service in a combat zone) from income for the purposes of determining eligibility for SNAP. This policy was adopted for FDPIR and implemented by policy memorandum for those fiscal years. Section 4101 of the Farm Bill amended Section 5(d) of the Food and Nutrition Act of 2008 (7 U.S.C. 2014(d)) to permanently exclude combat pay from income for the purposes of determining SNAP eligibility. This change was implemented under FDPIR by policy memorandum on July 16, 2008. FNS is proposing a conforming amendment to FDPIR regulations at 7 CFR 253.6(e)(3)(xi) to permanently exclude combat pay from income when determining eligibility for FDPIR. The proposed change would align FDPIR regulations with current FDPIR and SNAP policy.

E. Amending the Dependent Care Deduction

Current FDPIR regulations at 7 CFR 253.6(f)(2) state that the dependent care deduction cannot exceed the maximum allowable under SNAP. Section 4103 of the Farm Bill amended Section 5(e)(3)(A) of the Food and Nutrition Act of 2008 (7 U.S.C. 2014(e)(3)(A)) and eliminated the maximum dollar limit to the SNAP dependent care deduction, allowing participants to claim the full cost of their dependent care expenses. FNS implemented this change under FDPIR by the same policy memorandum mentioned in the previous paragraph. This proposed revision would remove regulatory language at 7 CFR 253.6(f)(2) that imposes a maximum limit on dependent care deductions, thereby aligning the FDPIR regulations with current FDPIR and SNAP policy.

List of Subjects in 7 CFR Part 253

• Administrative practice and procedure
• Food assistance programs
• Grant programs
• Social programs
• Indians
• Reporting and recordkeeping requirements
• Surplus agricultural commodities

Accordingly, 7 CFR Part 253 is proposed to be amended as follows:

PART 253—ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR HOUSEHOLDS ON INDIAN RESERVATIONS

1. The authority citation for 7 CFR Part 253 continues to read as follows:

Authority: 91 Stat. 958 (7 U.S.C. 2011-2032).

2. In § 253.6:

a. Revise paragraph (d)(2)(i);

b. Redesignate paragraphs (d)(2)(ii) through (d)(2)(iv) as (d)(2)(iii) through (d)(2)(v), respectively;

c. Add new paragraph (d)(2)(ii);

d. Add new paragraph (d)(2)(vi);

e. Revise the second sentence of paragraph (e)(1)(i);

f. Add new paragraph (e)(3)(xi); and

g. Remove the second sentence of paragraph (f)(2).

The revisions and additions read as follows:

§ 253.6

Eligibility of households.

* * * * *

(d) * * *

(2) * * *

(i) The cash value of life insurance policies and the first $1,500 of the equity value of one bona fide pre-paid funeral agreement per household member. The equity value of a pre-paid funeral agreement is the value that can be legally converted to cash by the household member. For example, an individual has a $1,200 pre-paid funeral agreement with a funeral home. The conditions of the agreement allow the household to cancel the agreement and receive a refund of the $1,200 minus a service fee of $50. The equity value of the pre-paid funeral agreement is $1,150.

(ii) The value of funds held in retirement accounts described in sections 401(a), 403(a), 403(b), 408, 408A, 457(b), and 501(c)(18) of the Internal Revenue Code of 1986; the value of funds held in a Federal Thrift Savings Plan account as described in 5 U.S.C. 8439; and any other retirement program or account for which a resource exclusion is allowed under the Supplemental Nutrition Assistance Program (SNAP).

* * * * *

(vi) The value of funds held in a qualified education savings program described in section 529 of Internal Revenue Code of 1986 or in a Coverdell education savings account under section 530 of that Code, and any other education savings program or account for which a resource exclusion is allowed under SNAP.

* * * * *

(e) * * *

(1) * * *

(i) * * * The income eligibility standards shall be the applicable SNAP net monthly income eligibility standards for the appropriate area, increased by the amount of the applicable SNAP standard deduction for that area.

* * * * *

(3) * * *

(xi) Combat pay. Combat pay is defined as additional payment that is received by or from a member of the United States Armed Forces deployed to a combat zone, if the additional pay is the result of deployment to or service in a combat zone, and was not received immediately prior to serving in a combat zone.

* * * * *

Dated: April 20, 2010.

Kevin W. Concannon,

Under Secretary, Food, Nutrition, and Consumer Services.