[Federal Register Volume 59, Number 115 (Thursday, June 16, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14713]
[[Page Unknown]]
[Federal Register: June 16, 1994]
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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Parts 272 and 273
[Amendment No. 355]
RIN 0584-AB79
Food Stamp Program: Utility Reimbursement Exclusion
AGENCY: Food and Nutrition Service, USDA.
ACTION: Interim Rule and request for comments.
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SUMMARY: This action excludes certain utility reimbursements made by
the Department of Housing and Urban Development (HUD) and Farmers Home
Administration (FmHA) from income consideration in determining Food
Stamp Program eligibility and benefits. This action will result in
increased benefits to households that receive the reimbursements, a
consistent nationwide policy, greater consistency in the treatment of
housing and energy assistance payments, and more consistency with the
Aid to Families with Dependent Children (AFDC) Program.
DATES: This rule is effective and must be implemented no later than
August 1, 1994. Comments must be received on or before August 15, 1994
to be assured of consideration.
ADDRESSES: Comments should be submitted to Judith M. Seymour,
Eligibility and Certification Regulation Section, Certification Policy
Branch, Program Development Division, Food and Nutrition Service, USDA,
3101 Park Center Drive, Alexandria, Virginia, 22302. Comments may also
be datafaxed to the attention of Ms. Seymour at (703) 305-2454. All
written comments will be open for public inspection at the office of
the Food and Nutrition Service during regular business hours (8:30 a.m.
to 5 p.m., Monday through Friday) at 3101 Park Center Drive,
Alexandria, Virginia, Room 720.
FOR FURTHER INFORMATION CONTACT: Questions regarding the proposed
rulemaking should be addressed to Ms. Seymour at the above address or
by telephone at (703) 305-2496.
SUPPLEMENTARY INFORMATION:
Classification
Executive Order 12866
The Food and Nutrition Service is issuing this interim rule in
conformance with Executive Order 12866 and it has been designated
``economically significant.''
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 in 7 CFR part 3015, Subpart V and related Notice (48 FR 29115),
this Program is excluded from the scope of Executive Order 12372 which
requires intergovernmental consultation with State and local officials.
Regulatory Flexibility Act
This rule has been reviewed with regard to the requirements of the
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Ellen Haas, the
Assistant Secretary for Food and Consumer Services, has certified that
this rule does not have a significant economic impact on a substantial
number of small entities. State and local welfare agencies will be the
most affected to the extent that they administer the Program.
Paperwork Reduction Act
This rule does not contain reporting or recordkeeping requirements
subject to approval by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
Regulatory Impact Analysis
Need for Action
This rule is required to eliminate inconsistent policies resulting
from litigation, promote equity in the treatment of housing and energy
assistance, and increase consistency with the Aid to Families with
Dependent Children program.
Benefits
This action increases benefits to low-income households responsible
for paying utility expenses separately from their rent who receive
utility reimbursements from HUD and FmHA.
Costs
It is estimated that this action will increase the cost of the Food
Stamp Program by approximately $13 million for each month of its
implementation in FY 1994 and $160 million in FY 1995.
Executive Order 12778
This rule has been reviewed under Executive Order 12778, Civil
Justice Reform. This rule is intended to have preemptive effect with
respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Effective Date'' paragraph of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions, all applicable
administrative procedures must be exhausted. In the Food Stamp Program
the administrative procedures are as follows: (1) For Program benefit
recipients--State administrative procedures issued pursuant to 7 U.S.C.
2020(e)(1) and 7 CFR 273.15; (2) for State agencies--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for
rules related to non-quality control (QC) liabilities) or Part 284 (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.
Public Participation and Effective Date
The provisions of this rulemaking are required to be effective and
implemented no later than August 1, 1994. Because of the need to
establish a consistent nationwide policy with respect to the treatment
of the specified utility reimbursements, Ellen Haas, Assistant
Secretary for Food and Consumer Services, has determined, pursuant to 5
U.S.C. 553, that public comment on this rulemaking prior to
implementation is impracticable. However, because we believe that the
administration of the rule may be improved by public comment, comments
are solicited on this rule for 60 days. All comments will be analyzed,
and any appropriate changes to the rule will be incorporated in the
subsequent publication of a final rule.
Background
The HUD utility reimbursements excluded from Food Stamp Program
(Program) income consideration by this rule are provided pursuant to
the United States Housing Act of 1937 (the Housing Act), 42 U.S.C.
1437, to comply with a provision of the Housing Act (42 U.S.C.
1437a(a)(1)) that requires HUD to limit the shelter costs of tenants in
Federally assisted housing to 30 percent of their income. In
calculating a tenant's rent payment, HUD has interpreted the term
``rent'' to include the cost of utilities and other services, including
electricity, gas, heating fuel, water and sewerage, and trash and
garbage collection (24 CFR 813.102, 965.472, 965.476). In some housing,
utilities are included in the tenant's rent. In units in which the
utilities are paid directly by the tenant, HUD permits a deduction to
be made from the rent paid to the owner on account of the separate
payment being made to the utility supplier. This deduction, provided
for in 24 CFR 813.102 and 913.102, for the estimated value of utilities
and charges for other housing services payable directly by the family
is called a ``utility allowance.'' The amount of the utility allowance
is based, not on an individual family's expenses, but on a community-
wide standard. Therefore, the tenant's actual utility costs may be more
or less than the allowance.
For most tenants, the amount of the utility allowance is less than
the amount they are required to pay toward their rent including
utilities. In most cases, the utility allowance involves no direct
payment to the household, but is merely a credit reducing the
household's contribution to the landlord. If the utility allowance
exceeds the rent that can be charged for a dwelling, the excess is paid
in the form of a ``utility reimbursement'' or rebate to the household.
Similar reimbursements are made to some rural low-income households
by the Farmers Home Administration (FmHA) of the Department of
Agriculture as part of its Rental Assistance Program which provides,
pursuant to 7 CFR pt. 1930, subpt. C; pt. 1944, subpt. E, loans for
housing in rural areas. Under the FmHA Program, the borrower (the owner
of the property) may apply for Rental Assistance for each tenant in the
project who meets the eligibility criteria. The Rental Assistance
payment equals the difference between 30 percent of the household's
income and the sum of the rent plus the utility allowance for the
project. If the tenant pays the utilities, the total Rental Assistance
payment from FmHA is made to the owner, who is obligated to pass on to
the tenant the portion allocated to utilities. When FmHA's utility
allowance is more than 30 percent of the household's adjusted income,
the landlord is obligated to forward the difference to the tenant as a
utility reimbursement.
Under section 5(d) of the Food Stamp Act of 1977 (7 U.S.C.
2014(d)), any income received by the household directly or indirectly
must be counted in determining the household's eligibility and
benefits, except for the exclusions listed in the Act. Neither the Food
Stamp Act nor current regulations specifically address the treatment of
HUD and FmHA utility reimbursements. It is clear that Federal energy
assistance payments are excluded by section 5(d)(11) of the Food Stamp
Act. However, the HUD and FmHA reimbursements are not provided
specifically for energy assistance alone. Current policy requires
counting these HUD utility reimbursements as income. This policy is
applicable nationwide except in jurisdictions in which the
reimbursements are excluded by judicial decision.
In the past, it was our policy that utility reimbursements did not
qualify as energy assistance. In response to questions concerning the
payments, we issued Policy Memo 90-6 addressing HUD payments and Policy
Memo 3-91-04 regarding FmHA payments. Policy Memo 90-6 provides that
any amount paid by HUD directly to the household as a utility
reimbursement or indirectly to the utility provider must be counted as
income to the household. Under Policy Memo 3-91-04, the utility
reimbursement paid by the landlord to the tenant is counted as income
to the household.
This policy has been maintained over several years and has been
successfully defended in court on a number of occasions. While we
believe the current policy is a permissible interpretation of the
statute, we believe it is not in the best interest of the Program to
continue to litigate this issue. In reexamining the policy, we have
determined that there are several compelling reasons to change the
policy so as to exclude the utility reimbursements in the future.
First, although the HUD and FmHA utility reimbursements are not
provided specifically for energy assistance, a substantial portion of a
household's utility expense is for heating and cooling. A change in
policy to exclude the utility reimbursements is not inconsistent with
the specific exclusion in section 5(d)(11) of the Food Stamp Act and 7
CFR 273.9(c)(11) for Federal energy assistance. Excluding the utility
reimbursements under the existing regulatory provision would achieve
consistency in the treatment of Federal energy assistance.
Second, the current policy is inconsistent with the policy of the
Aid to Families with Dependent Children (AFDC) Program in most States.
Increasing consistency between the Food Stamp and AFDC Programs is a
Department priority because it makes the Programs simpler to administer
and more understandable to households.
Maintaining the current policy also causes inconsistent treatment
of households in subsidized housing between those in traditional
housing whose utilities are included in their rent and households who
are responsible for paying their own utility expenses. Excluding the
utility reimbursements would provide greater consistency in treatment
of various forms of housing assistance.
Finally, a change in policy eliminates the need to maintain at
least two distinct and conflicting policies for the foreseeable future
because courts in some jurisdictions have affirmed the current policy
and others have found it insupportable.
Therefore, this rule amends 7 CFR 273.9(c)(11) to provide that
payments or allowances made for the purpose of providing energy
assistance under any Federal law, including HUD and FmHA
reimbursements, are excluded from income. We are making a conforming
amendment to 7 CFR 273.10(d)(1)(i) to provide that a utility expense
which is reimbursed or paid by an excluded payment, including HUD or
FmHA utility payments, shall not be deductible. In accordance with
Section 5(e) of the Act, 7 U.S.C. 2014(e), households that receive
these payments will be entitled to use a standard utility allowance
that includes a heating or cooling component only if they incur heating
or cooling costs that exceed the amount of the excluded payment.
Implementation
This rule is effective and must be implemented no later than August
1, 1994. For quality control purposes, any variances resulting from the
implementation of the rule shall be excluded from error analysis for
120 days from the required implementation date, in accordance with 7
CFR 275.12(d)(2)(vii), as modified by section 13951(c)(2) of Pub. L.
103-66. Section 13951(c)(2) extended the variance exclusion period of
Section 16(c)(3)(A) of the Act, 7 U.S.C. 2025 (c)(3)(A), from a maximum
of 90 days to 120 days. The provisions must be implemented for all
households that newly apply for Program benefits on or after the
required implementation date. The current caseload shall be converted
to these provisions at household request, at the time of
recertification, or when the case is next reviewed, whichever occurs
first, and the State agency must provide restored benefits back to the
required implementation date. If for any reason a State agency fails to
implement on the required implementation date, restored benefits shall
be provided, if appropriate, back to the required implementation date
or the date of application, whichever is later.
List of Subjects
7 CFR Part 272
Alaska, Civil rights, Food stamps, Grant programs--social programs,
Reporting and recordkeeping requirements.
7 CFR Part 273
Administrative practice and procedure, Aliens, Claims, Food stamps,
Fraud, Grant programs--social programs, Penalties, Records, Reporting
and recordkeeping requirements, Social Security, Students.
Accordingly, 7 CFR parts 272 and 273 are amended as follows:
1. The authority citation for Parts 272 and 273 continues to read
as follows:
Authority: 7 U.S.C. 2011-2032.
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
2. In Sec. 272.1, a new paragraph (g)(134) is added to read as
follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(134) Amendment No. 355. The provisions of Amendment No. 355 are
effective and must be implemented on August 1, 1994. Any variance
resulting from implementation of the provisions of this amendment shall
be excluded from error analysis for 120 days from this required
implementation date in accordance with 7 CFR 275.12(d)(2)(vii) as
modified by section 13951(c)(2) of Pub. L. 103-66. The provisions must
be implemented for all households that newly apply for Program benefits
on or after the required implementation date. The current caseload
shall be converted to these provisions at household request, at the
time of recertification, or when the case is next reviewed, whichever
occurs first, and the State agency must provide restored benefits back
to the required implementation date. If for any reason a State agency
fails to implement on the required implementation date, restored
benefits shall be provided, if appropriate, back to the required
implementation date or the date of application, whichever is later.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
Sec. 273.9 [Amended]
3. In 273.9, the first sentence of paragraph (c)(11) introductory
text is amended by adding the words ``, including utility
reimbursements made by the Department of Housing and Urban Development
and the Farmers Home Administration'' before the period.
4. In 273.10, paragraph (d)(1)(i) is amended by adding a sentence
at the end of the paragraph to read as follows:
Sec. 273.10 Determining household eligibility and benefit levels.
* * * * *
(d) Determining deductions.
* * *
(1) Disallowed expenses.
(i) * * * A utility expense which is reimbursed or paid by an
excluded payment, including HUD or FmHA utility reimbursements, shall
not be deductible.
* * * * *
Dated: June 13, 1994.
Ellen Haas,
Assistant Secretary for Food and Consumer Services.
[FR Doc. 94-14713 Filed 6-15-94; 8:45 am]
BILLING CODE 3410-30-U