[Federal Register Volume 59, Number 166 (Monday, August 29, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-21188] Federal Register / Vol. 59, No. 166 / Monday, August 29, 1994 / [[Page Unknown]] [Federal Register: August 29, 1994] VOL. 59, NO. 166 Monday, August 29, 1994 DEPARTMENT OF AGRICULTURE Food and Nutrition Service 7 CFR Parts 272 and 273 [Amendment No. 350] RIN 0584-AB39 Food Stamp Program: Miscellaneous Provisions of the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 and Earned Income Tax Credit Amendment AGENCY: Food and Nutrition Service, USDA. ACTION: Final rule. ----------------------------------------------------------------------- SUMMARY: This rule implements several legislative provisions from the Food, Agriculture, Conservation, and Trade Act Amendments of 1991, the Mickey Leland Childhood Hunger Relief Act of 1993, and the Food Stamp Program Improvements Act of 1994. It finalizes provisions in a proposed rule published in the Federal Register on November 1, 1993. The provisions affect categorical eligibility of households receiving general assistance, monthly reporting and retrospective budgeting, and earned income tax credit resource exclusions. This rule also makes technical corrections to the Food Stamp Program regulations concerning waivers of retrospective budgeting requirements, self-employment income, verification, State agency action on reports and changes in reporting and budgeting status. DATES: Effective Dates: This rule is effective October 28, 1994, except that 7 CFR 273.8(e)(12)(i) is effective January 1, 1991; 7 CFR 273.8(e)(12)(ii) is effective September 1, 1994; 7 CFR 273.21(b) is effective March 25, 1994; and the amendments to 7 CFR 273.2(j) are effective February 1, 1992. Implementation Dates: The amendments made by this rule must be implemented October 28, 1994, except that 7 CFR 273.8(e)(12)(i) must be implemented January 1, 1991; 7 CFR 273.8(e)(12)(ii) must be implemented September 1, 1994; 7 CFR 273.21(b) must be implemented March 25, 1994; and the amendments to 7 CFR 273.2(j) must be implemented February 1, 1992. FOR FURTHER INFORMATION CONTACT: Judith M. Seymour, Supervisor, Eligibility and Certification Regulations Section, Certification Policy Branch, Program Development Division, Food Stamp Program, Food and Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia 22302 or by telephone at (703) 305-2496. SUPPLEMENTARY INFORMATION: Executive Order 12866 This final rule has been determined to be not significant for purposes of Executive Order 12866 and therefore has not been reviewed by the Office of Management and Budget. Executive Order 12778 This final 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. s2020(e)(10) and 7 CFR 273.15; (2) for State agencies--administrative procedures issued pursuant to 7 U.S.C. s2023 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 retailers and wholesalers--administrative procedures issued pursuant to 7 U.S.C. s2023 set out at 7 CFR 278.8. Executive Order 12372 The Food Stamp Program is listed in the Catalog of Federal Domestic Assistance under No. 10.551. For the reasons set forth in the final rule and related Notice(s) to 7 CFR part 3105, subpart V (48 FR 29115; June 24, 1983; or 48 FR 54317, December 1, 1983, as appropriate), this Program is excluded from the scope of Executive Order 12372 which requires intergovernmental consultation with State and local officials. Regulatory Flexibility Act This final rule has also been reviewed with regard to the requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354, 94 Stat. 1164, September 19, 1980). Ellen Haas, Assistant Secretary for Food and Consumer Services, has certified that this rule would not have a significant economic impact on a substantial number of small entities. The changes would affect food stamp applicants and recipients and State and local agencies which administer the Food Stamp Program. Paperwork Reduction Act In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C. 3507), the reporting and recordkeeping requirements associated with monthly reporting and retrospective budgeting (MRRB) have been approved by the Office of Management and Budget (OMB) under OMB No. 0584-0064. The provisions in this final rule are related to certification and MRRB, but they do not impose additional reporting or recordkeeping requirements. Public Comment The amendment to 7 CFR 273.21(b) discussed in this rule is being adopted as a final rule without prior notice and comment. This provision of the Food Stamp Program regulations responds to the direction of Congress in Section 101(a) of the Food Stamp Program Improvements Act of 1994 (Pub. L. 103-225), 7 U.S.C. 2015(c)(1), prohibiting State agencies from requiring monthly reporting for households residing on Indian reservations unless such a requirement was in existence on March 25, 1994, the date Pub. L. 103-225 was enacted. Because of the nondiscretionary nature of Section 101(a) of Pub. L. 103-225, Ellen Haas, Assistant Secretary for Food and Consumer Services, has determined, pursuant to 5 U.S.C. 553, that public comment on this provision prior to implementation is unnecessary as it would serve no practical purpose. Background On December 4, 1991, the Department published final rulemakings entitled ``Categorical Eligibility and Application Provisions of the Mickey Leland Memorial Domestic Hunger Relief Act'' (56 FR 63605) and ``Monthly Reporting and Retrospective Budgeting Amendments and Mass Changes'' (56 FR 63597). These rulemakings made changes to Food Stamp Program requirements concerning categorical eligibility and monthly reporting and retrospective budgeting (MRRB). On December 13, 1991, the Food, Agriculture, Conservation, and Trade Act Amendments of 1991 (Pub. L. 102-237 (105 Stat. 1818)) (FACT amendments) were enacted. That legislation required modification of provisions implemented in the December 4, 1991, rulemakings. In addition, various provisions of the Omnibus Budget Reconciliation Act of 1990 (Pub. L. 101-508) and Section 13913 of the Mickey Leland Childhood Hunger Relief Act, Chapter 3, Title XIII of the Omnibus Budget Reconciliation Act of 1993, Pub. L. 103-66 (1993 Leland Act), modified existing Food Stamp Program requirements concerning the treatment of Earned Income Tax Credits (EITC). Proposed rules to implement these legislative changes were published at 58 FR 58458 on November 1, 1993 and provided the public with 90 days to comment on the proposed provisions. In addition, on January 20, 1994, the Department held a public hearing at the FNS Headquarters office in Alexandria, Virginia. The purpose of the hearing was to provide for a public dialogue among the State agencies, advocacy groups, and other interested parties concerning the provisions of the 1993 Leland Act. The Department received eight written comments on the proposed provisions, seven from State agencies and one from a local agency. Two comments were received on the EITC provision (Section 13913 of the 1993 Leland Act) at the public hearing. The concerns raised by the commenters are discussed below. For additional information on the provisions discussed in this rule, the reader should refer to the preamble of the proposed rule, 58 FR 58458-61. Categorical Eligibility for Recipients of General Assistance (GA) Section 5(a) of the Food Stamp Act of 1977, as amended (the Act), 7 U.S.C. 2014(a), provides that the recipients of certain types of GA payments are categorically eligible for Food Stamp Program benefits. That is, receipt of a payment from a qualifying program entitles the recipient to food stamp eligibility regardless of other income or resources. Under current regulations at 7 CFR 273.2(j)(4)(i), a GA program is considered appropriate for categorical eligibility if it: 1. Has income and resource eligibility standards either separate from or included in the payment standard which do not exceed those of the food stamp, Aid to Families with Dependent Children (AFDC) or SSI programs; 2. Provides GA benefits as defined in 7 CFR 271.2; and 3. Provides assistance that is not limited to emergency assistance. Section 902 of the FACT amendments amended Section 5(a) of the Act to change the criteria for GA programs that confer categorical eligibility. Section 5(a) now specifies that, with certain exceptions, households shall be eligible for food stamps if each member receives benefits under a State or local GA program that complies with the standards established by the Secretary for ensuring that the program is based on income criteria comparable to or more restrictive than those under subsection 5(c)(2) of the Food Stamp Act and ``not limited to one-time emergency payments that cannot be provided for more than one month.'' Section 5(c)(2) contains the gross income limit of 130 percent of the poverty line, as defined in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). Congress did not establish any resource standard for GA programs suitable for conferring categorical eligibility. The November 1, 1993, rulemaking proposed to amend 7 CFR 273.2(j)(4)(i) to provide that a GA program must have the following characteristics in order for recipients of the GA program's benefits to be considered categorically eligible for food stamp benefits: 1) the program must have income eligibility standards at least as restrictive as the food stamp gross income limit specified in 7 CFR 273.9(a)(1); 2) the program must provide GA benefits as they are defined in the regulations at 7 CFR 271.2; and 3) the program must also provide benefits that are not limited to one-time emergency payments. The Department received three comments on this proposal, two supporting it and one requesting a clarification about the implementation date for local GA programs. The regulatory provisions concerning GA categorical eligibility were effective for State GA programs on February 1, 1992, and for local GA programs on August 1, 1992. Subsequently, Section 902 of the FACT amendments concerning GA programs was made effective for both State and local GA programs on February 1, 1992 by Section 1101(d)(1) of the FACT amendments. Accordingly, the Department is adopting as proposed the modifications to provisions at 7 CFR 273.2(j)(4)(i). Monthly Reporting and Retrospective Budgeting--Households Residing on Indian Reservations Section 1723 of the 1993 Leland Act amended Section 6(c)(1)(A)(i) of the Act, 7 U.S.C. 2015(c)(1)(A)(i), to exempt households residing on Indian reservations from MRRB effective February 1, 1992. The Department implemented Section 1723 in a final rule amending 7 CFR 273.21(b)(4) on December 4, 1991, 56 FR 63605. Since that time, several pieces of legislation have been enacted that affect this provision. Implementation of this provision was initially postponed by Section 908 of the FACT amendments until April 1, 1993, and then by Public Law 103-11 (107 Stat 41) until February 1, 1994. In the November 1, 1993, rulemaking, the Department proposed at 58 FR 58459 to revise 7 CFR 272.1(g)(121)(ii) to delete the requirement to implement 7 CFR 273.21(b)(4) by February 1, 1992. Thus, proposed 7 CFR 272.1(g)(121)(ii) addressed only the implementation of provisions concerning the design of the monthly report form. A new implementation date of February 1, 1994, was proposed for the mandatory exclusion of households residing on Indian reservations. Following publication of the proposed rule, Section 1 of Public Law 103-205 was enacted on December 17, 1993, again postponing implementation of the prohibition concerning MRRB on Indian reservations until March 15, 1994. State agencies were notified of this delay through an implementing memorandum dated January 6, 1994. On March 25, 1994, the Food Stamp Program Improvements Act of 1994 (Pub. L. 103-225 (108 Stat. 106)) was enacted. Section 101(a) of that law modified the prohibition against monthly reporting for households residing on Indian reservations that had been added to section 6(c)(1)(A) of the Act (7 U.S.C. 2015(c)(1)), by Section 1723 of the Leland Act. Section 6(c)(1)(C)(iii) now directs that State agencies which were not requiring households residing on Indian reservations to submit monthly reports on March 25, 1994, are prohibited from establishing monthly reporting requirements for these households. These households may be retrospectively budgeted. State agencies that were using monthly reporting on March 25, 1994, for households residing on Indian reservations may continue to do so if certain enumerated conditions are met. In this final rule, the Department is addressing the prohibition against establishing new monthly reporting for households residing on Indian reservations if no monthly reporting system was in place on March 25, 1994. The Department is including the prohibition in this rulemaking as a final rule without prior notice and comment because it is nondiscretionary and, therefore, consistent with 5 U.S.C. 553, prior notice and comment would serve no practical purpose. The provisions in Section 101(a) of Pub. L. 103-225 dealing with the one-month grace period afforded reservation households for submitting required reports, 7 U.S.C. 2015(c)(1)(C) (i) and (ii), will be addressed in a future proposed rulemaking. The Department received one comment in response to the November 1, 1993, proposed rule on this subject that is relevant despite the change in law brought about by Section 101(a) of Pub. L. 102-225. The commenter requested clarification of what is meant by ``residing on an Indian reservation.'' This provision applies to any household residing within the boundaries of an Indian reservation. As defined in Section 3(j) of the Act (7 U.S.C. 2012(j)), ``reservation'' means the geographically determined area or areas over which a tribal organization (as the term is defined in subsection (p)) exercises governmental jurisdiction. Section 3(p) of the Act defines a tribal organization as ``the recognized governing body of an Indian tribe (including the tribally recognized intertribal organization of such tribes), as the term ``Indian tribe'' is defined in the Indian Self- Determination Act (25 U.S.C. 450b(b)), as well as any Indian tribe, band, or community holding a treaty with a State government.'' In this final rule, the Department is adopting as proposed on November 1, 1993, the revision to 7 CFR 272.1(g)(121)(ii) to delete the requirement to implement 7 CFR 273.21(b)(4) by February 1, 1992. The Department is not adopting the parenthetical phrase ``(beginning February 1, 1994)'' as proposed in 7 CFR 273.21(b). In order to implement the prohibition barring a State agency from establishing monthly reporting on Indian reservations if it was not doing so on March 25, 1994, the Department is revising 7 CFR 273.21(b) to prohibit establishing after March 25, 1994 any monthly reporting system for households residing on Indian reservations. Monthly Reporting and Retrospective Budgeting--Prorating Supplements for New Household Members The final rulemaking, ``Monthly Reporting and Retrospective Budgeting Amendments and Mass Changes'' (56 FR 63597, December 4, 1991), at 7 CFR 273.21(f)(1)(iii)(D), authorized a State agency, at its option, to provide a prorated supplement for a new household member in the month for which the change is reported for retrospectively budgeted households, if the State agency provided a prorated supplement for AFDC. The provision was effective January 3, 1992, and was to be implemented by July 1, 1992. This provision was a technical amendment that allowed State agencies to treat new household members consistent with its treatment of new household members for AFDC. Section 910(1) of the FACT amendments amended Section 9(c)(1) of the Act, 7 U.S.C. 2017(c)(1), to prohibit proration of benefits during the certification period except for the initial month. In a manner that would not conflict with Section 910(1), the Department wanted to allow State agencies the option to provide a supplement for a new household member in the month the change is reported. Therefore, the Department proposed on November 1, 1993, to revise 7 CFR 273.21(f)(1)(iii)(D) to allow State agencies the option to provide a supplement for the entire month for a new household member for the month in which the change was reported The Department received four comments on the proposal, two supporting it and two requesting clarification. The Department has revised the language of the proposed revision of 7 CFR 273.21(f)(1)(iii)(D) to make it clear that State agencies are being given an option to add a new household member in the month the change is reported in a two-month system (the processing month) or the first day of the issuance month following the month the report is received. If the State agency opts to add a new household member in the processing month, a full supplement for that member shall be provided, rather than the prorated supplement specified in the December 4, 1991, rulemaking concerning MRRB. Accordingly, with the one change noted above, the proposed revision of 7 CFR 273.21(f)(1)(iii)(D) is adopted as final. Earned Income Tax Credits Section 11111(b) of the Omnibus Budget Reconciliation Act of 1990 (OBRA 1990) (Pub. L. 101-508) excluded an Earned Income Tax Credit (EITC) received as a lump sum or in payments under section 3507 of the Internal Revenue Code from income and resource consideration for the individual and his/her spouse for the month of its receipt and the following month for food stamp and certain housing programs purposes. Section 402 of the Hunger Prevention Act of 1988 (Pub. L. 100-435) amended Section 5(d)(14) of the Act, 7 U.S.C. 2014(d)(14), to exclude EITC payments from income. OBRA 1990 mandated that the exclusion of EITC payments from resources be implemented January 1, 1991. The Department proposed in the November 1, 1993, rulemaking to add a paragraph (xii) to 7 CFR 273.8(e)(11) to exclude any Federal EITC received as a lump sum or as payments under section 3507 of the Internal Revenue Code from resource consideration for the month of its receipt and the following month beginning January 1, 1991. The Department did not receive any comments on this proposal. Therefore, the Department is adopting as final the proposal to exclude from resources any Federal EITC for the month of its receipt and the following month. However, as discussed below, the exclusion will replace the provision that is currently located at 7 CFR 273.8(e)(12). Section 13913 of the 1993 Leland Act amended Section 5(g)(3) of the Food Stamp Act, 7 U.S.C. 2014(g)(3), to extend the exclusion of any household member's EITC as a resource for 12 months, if the household was participating at the time of the receipt of the EITC and provided the household remains on the program continuously during that time. In accordance with Section 13193 of the 1993 Leland Act, the Department proposed on November 1, 1993, to modify 7 CFR 273.8(e)(11)(xii) to exclude the EITC payment received by a participating household consistent with the conditions of exclusion specified in Section 13913 of the 1993 Leland Act, beginning September 1, 1994. The Department also proposed that continuous participation include breaks in participation of one month or less due to administrative reasons, such as delayed recertifications or missing or late monthly reports, as recommended in the legislative history at 139 Cong. Rec. H6032, August 4, 1993. The Department received five comments on this provision. One commenter requested the Department to clarify whether the exclusion applied to State and local EITC payments as well as the Federal EITC. Unlike the two-month exclusion of the EITC for applicants and participants enacted by Section 11111(b) of OBRA 1990, the 12-month exclusion for participants provided for in Section 13913 of the 1993 Leland Act is not restricted to the Federal EITC. The proposed regulatory language has been revised to reflect that the 12-month exclusion applies to any EITC while the two-month exclusion applies only to the Federal EITC. Two commenters requested that the exclusion be a total exclusion, not limited to 12 months. As the law specifically establishes a 12-month exclusion, the Department is unable to make the exclusion permanent. One commenter requested that the continuous participation provision be eliminated. That commenter also requested two clarifications, (1) whether the month of receipt was the first month of the exclusion and (2) whether breaks resulting from one month suspensions for ineligibility were included in the administrative reasons. The final commenter requested that ``continuous participation'' be modified to allow for breaks in participation of longer than one month. For purposes of this exclusion, the month of receipt would be the first month of the exclusion. As ``continuous participation'' is required by section 13913 of the Leland Act, that requirement cannot be eliminated. House Report No. 103-111 (May 23, 1993), p. 29, states that ``[i]t is not intended that households that reapply within one month of their termination from the program be denied this exclusion.'' Further, it is evident that Congress intended that the only time a break in participation would not result in the loss of the exclusion is when the break is for administrative reasons and provided the household continues to meet the income and resource eligibility criteria (Congressional Record, H6032, August 4, 1993). The Department believes the intent of Congress was to continue to allow the exclusion for administrative reasons only and for one month only. Consequently, the Department is adopting as proposed the requirement that the household participate continuously except for breaks of one month or less resulting from administrative reasons. The Department proposed that the 12-month EITC exclusion be located in the Program regulations together with the two-month EITC exclusion at 7 CFR 273.8(e)(11)(xii). In the final rule we are placing both EITC exclusions in 7 CFR 273.8(e)(12). The two-month exclusion is designated 7 CFR 273.8(e)(12)(i), and the 12-month exclusion is at 7 CFR 273.8(e)(12)(ii). It is necessary to designate the exclusions separately because the two-month exclusion is in the Internal Revenue Code while the 12-month exclusion is in the Food Stamp Act, the two exclusions have different implementing dates, and the two exclusions affect different categories of recipients. Therefore, in this final rule, the Department is removing an obsolete exclusion and adding new 7 CFR 273.8(e)(12) (i) and (ii). Miscellaneous Technical Changes Budgeting Waivers--7 CFR 273.21(a)(4) Section 273.21(a)(4) of the regulations allows FNS to approve waivers of the Food Stamp Program budgeting requirements to conform food stamp budgeting procedures to AFDC's budgeting procedures. However, this section has not been updated to incorporate the additional households excluded from retrospective budgeting that are listed in 7 CFR 273.21(b). In order to conform 7 CFR 273.21(a)(4) to 7 CFR 273.21(b), the Department proposed to revise the language in 7 CFR 273.21(a)(4) to prohibit waivers under 7 CFR 273.21(a)(4) for all households in 7 CFR 273.21(b). One comment was received supporting the proposal. We are adopting the provision at 7 CFR 273.21(a)(4) as proposed. Self-Employment Income--7 CFR 273.21(f)(2)(i) The Department proposed to revise 7 CFR 273.21(f)(2)(i) to require that self-employment income be budgeted such that the income would not affect more benefit months than the number of months over which it was prorated. This proposal would have corrected an omission in the Monthly Reporting and Retrospective Budgeting Amendments and Mass Changes final rulemaking (56 FR 63597) published December 4, 1991. Under the proposal, prorated self-employment income would be treated in the same fashion that prorated contract and prorated nonexcluded educational income is treated. One comment opposing the provision was received. Despite the opposing comment, the Department is adopting the provision because it makes the treatment of prorated self-employment income similar to other prorated income and more equitably treats households with such income. Prorated contract and nonexcluded educational income are required to be budgeted retrospectively. In response to a request from a State agency, we proposed at 7 CFR 273.21(f)(2) (i), (ii), and (iii) to require that prorated self-employment, contract, and nonexcluded educational income be prospectively budgeted, provided that the income not affect more benefit months than the number of months in the period over which it is prorated. We indicated in the November 1, 1993, proposed rule that we were interested in hearing from States that are using retrospective budgeting as to whether they prefer to retrospectively or prospectively budget these types of income. The Department received eight comments on this proposal. Six commenters preferred that we continue to require these types of income to be retrospectively budgeted because continuous regulatory changes are greater problems than individual case problems presented by retrospective budgeting. One State agency requested that we switch to prospective budgeting and described one particular problem that retrospective budgeting created. One commenter recommended that we give State agencies the option to prospectively or retrospectively budget these types of income. One commenter who preferred to have the income continue to be retrospectively budgeted requested that State agencies be given the option to prospectively or retrospectively budget such income, rather than adopt the proposal to require prospective budgeting. The Department has considered the comments and has decided to revise the proposed provision to permit State agencies to opt to either prospectively or retrospectively budget such income. Such option must be made on a State-wide, not a case-by-case, basis. The Department has revised 7 CFR 273.21(f)(2) (i), (ii), and (iii) accordingly to allow State agencies to prorate self-employment, contract, and nonexcluded educational income either prospectively or retrospectively. For consistency with the prorated income proposal, the Department proposed at 7 CFR 273.21(f)(2)(iv) that prorated deductible expenses be budgeted prospectively. Again for consistency, the Department has changed the provision at 7 CFR 273.21(f)(2)(iv) to allow State agencies the option to either prospectively or retrospectively budget prorated deductible expenses. State agencies may choose a different budgeting procedure for deductions than income. However, such option must be made on a State-wide, not a case-by-case, basis. Verification--7 CFR 273.21(i) The Department proposed in 7 CFR 273.21(i) to allow State agencies to request verification for any item on the monthly report that has changed or appears questionable. The Department also sought comments on an alternate proposal in the November 1, 1993 proposed rule. That proposal would allow State agencies to request that verification be submitted with the monthly report form for any item that has changed or can be expected to change on a frequent basis. The Department received five comments, two supporting the option in the rule and two supporting the alternate proposal in the preamble. One commenter supported both provisions under the aegis of increased State agency latitude. As there was no consensus of option among the commenters, the Department has adopted the provision as proposed in 7 CFR 273.21(i) to allow State agencies to request verification for any item on the monthly report that has changed or appears questionable. State Agency Action on Reports--7 CFR 273.21(j)(3) The Department proposed to revise the first sentence in 7 CFR 273.21(j)(3)(iii) to clarify that when an item is required to be verified by the State agency and the household fails to provide that verification, the actions in (A) through (E) will be taken as appropriate. One comment was received supporting the proposal. Accordingly, the provision at 7 CFR 273.21(j)(3)(iii) is being adopted as proposed. Changes in Reporting/Budgeting Status--7 CFR 273.21(r) The current regulatory language at 7 CFR 273.21(r)(2)(i) states that the first month of prospective budgeting would be the first month that the household was no longer required to file a monthly report. The Department proposed to revise 7 CFR 273.21(r)(2)(i) to state that the household's benefits shall be prospectively budgeted no later than the first issuance month for which no monthly report was submitted. Three commenters supported the proposal. The provision at 7 CFR 273.21(r)(2)(i) is being adopted as proposed. Additional Changes For clarification, the Department proposed to delete the provision on verification from 7 CFR 273.9(d)(5)(i), adding a reference to 7 CFR 273.2(f)(1), and adding the verification provisions for homeless households to 7 CFR 273.2(f)(1). Two commenters supported the proposal. The provisions at 7 CFR 273.9(d)(5)(i) and 7 CFR 273.2(f)(1) are being adopted as proposed. The Department proposed technical corrections and revisions to 7 CFR 272.1(g)(121)(iii), 7 CFR 273.2(j) and (j)(4)(iv)(A), 7 CFR 273.9(d)(5)(i) and (ii), 7 CFR 273.9(d)(6)(i)(A) and (ii)(C), 7 CFR 273.21(r)(1)(i) and (2)(ii), and 7 CFR 273.21(s). The Department received one comment supporting these technical corrections and revisions. The corrections to 7 CFR 273.21(r) have already been made by the Federal Register. We are adopting the other provisions as proposed. Implementation The Department did not receive any comments on the implementation schedule as proposed. The major provisions have implementation dates required by law. The remaining changes are mostly technical in nature. The Department proposed that those provisions without legislatively- mandated effective dates would effective and must be implemented on the effective date of the final rule. Accordingly, this action amends 7 CFR 272.2(g) to add a new paragraph to address implementation requirements for this final action. The two-month EITC provision at 7 CFR 273.8(e)(12)(i) was effective and must be implemented according to statute retroactive to January 1, 1991. The 12-month EITC provision at 7 CFR 273.8(e)(12)(ii) will be effective and must be implemented on September 1, 1994. The prohibition at 7 CFR 273.21(b) against establishing new monthly reporting requirements for households residing on Indian reservations if no monthly reporting system was in place on March 25, 1994, was effective and should have been implemented on that date. The provision in 7 CFR 273.2(j) concerning categorical eligibility for GA recipients was effective and must be implemented retroactive to February 1, 1992. The remaining provisions are effective and must be implemented October 28, 1994. State agencies were required to implement certain provisions of this final rule by FNS implementing memoranda as follows: 1. The two-month EITC provision at 7 CFR 273.8(e)(12)(i) adopts the corresponding provisions of the FNS implementing memorandum dated February 22, 1991. For the period of January 1, 1991, through March 31, 1991, quality control reviewers did not code errors if the eligibility worker had failed to implement the EITC resource exclusion for the sample month. Quality control variances for this provision were excluded for 60 days from April 1, 1991 in accordance with 7 CFR 275.12(d)(12). 2. The provision at 7 CFR 273.2(j) concerning categorical eligibility for GA recipients adopts the corresponding provisions of the FNS implementing memorandum dated December 27, 1991. Quality control variances for this provision were excluded for 60 days from the required implementation date of February 1, 1992, in accordance with 7 CFR 273.12(d)(12). 3. The provision at 7 CFR 273.21(b) against establishing new monthly reporting requirements for households residing on Indian reservations adopts the corresponding provisions of the FNS implementing memorandum dated March 31, 1994. Quality control variances for this provision are excluded for 120 days from the required implementation date, in accordance with 7 CFR 275.12(d)(12), as modified by 7 U.S.C. 2025(c)(3)(A). No other variance exclusions are applicable for these provisions. Quality control variances resulting from implementation of the remaining provisions of this final rule will be excluded for 120 days from the required implementation date, in accordance with 7 CFR 275.12(d)(12), as modified by 7 U.S.C. 2025(c)(3)(A). List of Subjects 7 CFR Part 272 Alaska, Civil rights, Food stamps, Grant programs-social programs, Reporting and recordkeeping requirements. 7 CFR Part 273 Administrative practice and procedures, Aliens, Claims, Food stamps, Grant programs-social programs, Penalties, Reporting and recordkeeping requirements, Social security, Students. Accordingly, 7 CFR Parts 272 and 273 are amended as follows: 1. The authority citation of 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. Paragraph (g)(121)(ii) is revised. b. Paragraph (g)(121)(iii) is amended by adding the word ``by'' after the word ``implemented''. c. A new paragraph (g)(137) is added. The revision and addition read as follows: Sec. 272.1 General terms and conditions * * * * * (g) Implementation. * * * (121) Amendment No. 336. * * * (ii) The delegation of the responsibility for design of the monthly report from (Sec. 273.21(h)(3) and Sec. 273.21(j)(1)(ii) of this chapter) must be implemented by February 1, 1992. * * * * * (137) Amendment No. 350. The provisions of Amendment No. 350 are effective and must be implemented as follows: (i) The provision at Sec. 273.8(e)(12)(i) of this chapter is effective and must be implemented according to statute retroactive to January 1, 1991. (ii) The provision at Sec. 273.8(e)(12)(ii) of this chapter will be effective and must be implemented on September 1, 1994. (iii) The provision at Sec. 273.21(b) of this chapter against establishing new monthly reporting requirements for households residing on Indian reservations if no monthly reporting system was in place on March 25, 1994 is effective and must be implemented according to statute retroactive to March 25, 1994. (iv) The provision in Sec. 273.2(j) of this chapter concerning categorical eligibility for GA recipients is effective and must be implemented according to statute retroactive to February 1, 1992. (v) The remaining provisions are effective and must be implemented October 28, 1994. PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS 3. In Sec. 273.2: a. A new paragraph (f)(1(xi) is added. b. The title of paragraph (j)(2) is revised. c. Paragraph (j)(4)(i) is revised; and d. Paragraph (j)(4)(iv)(A) is amended by removing the word ``eligible'' and adding the word ``ineligible'' in its place. The addition and revisions read as follows: Sec. 273.2 Application processing. * * * * * (f) Verification. * * * (1) Mandatory Verification. * * * (xi) Shelter costs for homeless households. Homeless households claiming shelter expenses greater than the standard estimate of shelter expenses (as defined in Sec. 273.9(d)(5)(i)) must provide verification of these shelter expenses. If a homeless household has difficulty in obtaining traditional types of verification of shelter costs, the caseworker shall use prudent judgment in determining if the verification obtained is adequate. For example, if a homeless individual claims to have incurred shelter costs for several nights and the costs are comparable to costs typically incurred by homeless people for shelter, the caseworker may decide to accept this information as adequate information and not require further verification. * * * * * (j) * * * (2) Categorically eligible PA and SSI households. * * * * * * * * (4) * * * (i) Certification of qualifying programs. Recipients of benefits from programs that meet the criteria in paragraphs (j)(4)(i)(A) through (j)(4(i)(C) of this section shall be considered categorically eligible to receive benefits from the Food Stamp Program. If a program does not meet all of these criteria, the State agency may submit a program description to the appropriate FNS regional office for a determination. The description should contain, at a minimum, the type of assistance provided, the income eligibility standard, and the period for which the assistance is provided. (A) The program must have income standards which do not exceed the gross income eligibility standard in Sec. 273.9(a)(1). The rules of the GA program apply in determining countable income. (B) The program must provide GA benefits as defined in Sec. 271.2 of this part. (C) The program must provide benefits which are not limited to one- time emergency assistance. * * * * * 4. In Sec. 273.8, paragraph (e)(12) is revised to read as follows: Sec. 273.8 Resource eligibility standards. * * * * * (e) Exclusions from resources. * * * (12) Earned income tax credits shall be excluded as follows: (i) A Federal earned income tax credit received either as a lump sum or as payments under section 3507 of the Internal Revenue Code for the month of receipt and the following month for the individual and that individual's spouse. (ii) Any Federal, State or local earned income tax credit received by any household member shall be excluded for 12 months, provided the household was participating in the Food Stamp Program at the time of receipt of the earned income tax credit and provided the household participates continuously during that 12-month period. Breaks in participation of one month or less due to administrative reasons, such as delayed recertification or missing or late monthly reports, shall not be considered as nonparticipation in determining the 12-month exclusion. * * * * * Sec. 273.9 [Amended] 5. In Sec. 273.9: a. Paragraph (d)(5)(i) is amended by removing the word ``calendar'' in the first sentence, and adding the words ``in accordance with Sec. 273.2(f)(1)(xi) of this chapter'' after the word ``verified'' in the eighth sentence, and by removing the ninth and tenth sentences. b. The title of paragraph (d)(5)(ii) is revised to read ``Household shelter deduction''. c. Paragraph (d)(6)(i)(A) is amended by removing the reference to ``(d)(5)(iii)'' and adding in its place a reference to ``(d)(5)(ii)(C)''. d. The fourth sentence of the undesignated paragraph following paragraph (d)(6)(ii)(C) is amended by removing the reference to ``(d)(5)(iii)'' and adding in its place a reference to ``(d)(5)(ii)(C)''. 6. In Sec. 273.21: a. Paragraph (a)(4) is revised. b. Paragraph (b) is revised. c. Paragraph (f)(1)(iii)(D) is revised, a new sentence is added following the first sentence in paragraph (f)(2)(i), and in paragraphs (f)(2)(ii), (f)(2)(iii), and (f)(2)(iv) the words ``either prospectively or'' are added before the word ``retrospectively''. d. The second sentence in paragraph (i) is revised. e. The introductory text of paragraph (j)(3)(iii) is revised. f. The last sentence of paragraph (r)(2)(i) is revised. g. In paragraph (s), the word ``of'' after the word ``same'' is removed. The revisions and additions read as follows: Sec. 273.21 Monthly Reporting and Retrospective Budgeting (MRRB). (a) System design. * * * (4) Budgeting waivers. FNS may approve waivers of the budgeting requirements of this section to conform to budgeting procedures in the AFDC program, except for households excluded from retrospective budgeting under paragraph (b) of this section. (b) Included and excluded households. The establishment of either a monthly reporting or retrospective budgeting system is a State agency option. Certain households are specifically excluded from both monthly reporting and retrospective budgeting. A household that is included in a monthly reporting system must be retrospectively budgeted. Households not required to submit monthly reports may have their benefits determined on either a prospective or retrospective basis at the State agency's option, unless specifically excluded from retrospective budgeting. (1) The following households are excluded from both monthly reporting and retrospective budgeting: (i) Migrant or seasonal farmworker households. (ii) Households in which all members are homeless individuals. (iii) Households with no earned income in which all adult members are elderly or disabled. (2) Households residing on an Indian reservation where there was no monthly reporting system in operation on March 25, 1994 are excluded from monthly reporting. * * * * * (f) Calculating allotments for households following the beginning months--(1) Household composition. * * * (iii) * * * (D) The State agency may add new members to the household effective either the month the household reports the gain of a new household member or the first day of the issuance month following the month the household reports the gain of a new member. The benefits shall not be prorated. * * * * * (2) Income and deductions. * * * (i) * * * Such income shall be budgeted either prospectively or retrospectively and shall not affect more benefit months than the number of months in the period over which it is annualized or prorated. * * * * * * * * (i) Verification. * * * The State agency may designate that verification be submitted for any item that has changed or appears questionable. (j) State agency action on reports. * * * (3) Incomplete filing. * * * (iii) When a State agency requires verification for the item listed and the household does not provide the verification, the State agency shall take the following actions: * * * * * (r) Procedures for households that change their reporting and budgeting status. * * * (2) Households which are no longer subject to MRRB. * * * (i) Procedures for households exempt from MRRB. * * * The State agency shall begin determining the household's benefits prospectively no later than the first issuance month for which a household has not submitted a monthly report for the budget month. * * * * * Dated: August 2, 1994. Ellen Haas, Assistant Secretary for Food and Consumer Services. [FR Doc. 94-21188 Filed 8-26-94; 8:45 am] BILLING CODE 3410-30-M