[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: 94-21245]
[[Page Unknown]]
[Federal Register: August 29, 1994]
VOL. 59, NO. 166
Monday, August 29, 1994
DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Part 273
[Amdt. No. 357]
RIN 0584-AB77
Food Stamp Program: Disqualification Penalties for Intentional
Program Violations
AGENCY: Food and Nutrition Service (FNS), USDA.
ACTION: Proposed rule.
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SUMMARY: FNS is proposing to amend Food Stamp Program regulations by
increasing the disqualification penalties for individuals who are found
guilty in a Federal, State or local court of trading or receiving food
stamp coupons (coupons) for firearms, ammunition, explosives or
controlled substances. This proposal is aimed at deterring recipient
abuse in the Food Stamp Program. This rule also proposes changes to the
procedures for establishing intentional Program violations. These
changes are based on recommendations from State agencies and the
Department's Office of the General Counsel (OGC).
DATES: Comments on this proposed rulemaking must be received by October
28, 1994 to be assured of consideration. Only written comments will be
accepted.
ADDRESSES: Comments should be submitted to James I. Porter, Supervisor,
Issuance and Accountability Section, State Administration Branch,
Program Accountability Division, Food Stamp Program, Food and Nutrition
Service, USDA, 3101 Park Center Drive, Alexandria, Virginia 22302. All
written comments will be open for public inspection during regular
business hours (8:30 am to 5:00 pm, Monday through Friday) at 3101 Park
Center Drive, Alexandria, Virginia, Room 905.
FOR FURTHER INFORMATION CONTACT: Questions regarding this proposed
rulemaking should be directed to Mr. Porter at the above address or by
telephone at (703)305-2385.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This proposed 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 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 proposed 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 ``Implementation'' section of this preamble.
Prior to any judicial challenge to the provisions of this proposed 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 7 CFR 275.23 (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 proposed rule has been reviewed with regard to the
requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354,
94 Stat. 1164, September 19, 1980). William E. Ludwig, Administrator of
the Food and Nutrition 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 by simplifying the requirements for
giving advance notice of hearing to food stamp recipients. It will also
modify the penalties applicable to individuals who engage in Program
misconduct.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1980 (44 U.S.C.
3507), the reporting and recordkeeping burden associated with this
proposed rule has been approved by the Office of Management and Budget
(OMB) under OMB number 0584-0064. The provisions of this rule do not
contain any additional reporting and/or recordkeeping requirements
subject to OMB approval.
Background
The Mickey Leland Childhood Hunger Relief Act (Pub. L. 103-66)
(Leland Act) amended the Food Stamp Act of 1977 (7 U.S.C. 2011-2021)
(the Act) in a number of ways. This rule proposes to implement the
nondiscretionary provisions of the Leland Act relating to
disqualification penalties for intentional Program violations. Other
provisions of the Leland Act are being addressed in separate rules.
This rule proposes to implement the disqualification penalties for
individuals who are found guilty in a Federal, State or local court of
trading or receiving coupons for firearms, ammunition, explosives or
controlled substances. This rule also proposes regulatory changes with
regard to the delivery of administrative disqualification hearing
notices and the initiation of disqualification periods for intentional
Program violations. In addition, this rule proposes to eliminate two
model forms referred to under 7 CFR 273.16 of the current regulations.
I. Disqualification Penalties for Intentional Program Violations
An intentional Program violation is defined in 7 CFR 273.16(c) as,
``having intentionally (1) Made a false or misleading statement or
misrepresented, concealed or withheld facts or, (2) committed any act
that constitutes a violation of the Food Stamp Act, the Food Stamp
Program Regulations, or any State statute relating to the use,
presentation, transfer, acquisition, receipt, or possession of food
stamp coupons or ATP's [Authorization to Participate cards].'' As
reflected by current regulations at 7 CFR 273.16(b), Section 6(b)(1) of
the Act (7 U.S.C. Sec. 2015 (b)(1)) establishes a graduated system of
intentional Program violation disqualification penalties. Under this
system, individuals receive a mandatory disqualification of 6 months
for the first offense or 12 months for the second offense, and a
permanent disqualification for the third offense. Under the current
regulations, there is no distinction in penalties for different types
of conduct which result in an intentional Program violation finding.
The Leland Act changes this. It amends Section 6(b)(1) of the Act
to increase the penalties for intentional Program violations which
involve certain egregious conduct. Specifically, the Leland Act
requires that an individual be disqualified for 12 months for a first
finding by a court, and permanently for a second finding by a court
that the person has either traded or received controlled substances
using coupons. The Leland Act also requires that an individual be
permanently disqualified for the first finding by a court that the
individual has either traded or received firearms, ammunition, or
explosives using coupons. Accordingly, the Department proposes to amend
7 CFR 273.16 by revising paragraph (b) to include the new penalties.
The Department is also proposing to make conforming amendments to 7 CFR
273.16(e)(3)(i)(F) and 7 CFR 273.16(h)(1)(ii)(c). The applicability of
the new penalties to the Disqualified Recipient Subsystem under 7 CFR
273.16(i) will be addressed in a different rulemaking.
The language being proposed in Sec. 273.16(b) states that the new
penalties will apply to applicable violations involving the use of
``coupons.'' In addition to violations involving traditional paper
coupons, the Department believes that the increased penalties also
apply to violations involving trafficking in alternative benefit
issuance systems such as electronic benefit transfer (EBT). Current
regulations at 7 CFR 271.2 define a ``coupon'' as ``any coupon, stamp,
access device or type of certification provided * * * for the purchase
of eligible food.'' Since alternative forms of benefit issuance
systems, such as EBT, are included in this definition, providing
additional language in Sec. 273.16(b) of the proposed rule regarding
this issue and the extent of applicability is unnecessary.
Current regulations at 7 CFR 273.2(b)(ii) and 7 CFR 273.16(d)
require that the disqualification penalties be included on the Food
Stamp Program application form. In order to satisfy this requirement,
the Department issued an implementation memorandum on March 16, 1994,
requiring that State agencies are to modify the application to reflect
the new penalties by the September 1, 1994 implementation date.
In preparing this proposed rule, the Department considered whether
the increased penalties apply to violations settled by deferred
adjudications. A deferred adjudication, as specified in 7 CFR 273.16(h)
of the current regulations, is when a determination of guilt by a court
is deferred subject to the accused individual meeting the terms of an
agreement with a prosecutor or of a court order. The statutory language
provides for the increased penalties to take effect where there is an
actual court finding that the intentional Program violation involved
trading firearms, ammunition, explosives or controlled substances for
coupons. Accordingly, the increased penalties will be applied under
this rule in cases of deferred adjudication where the court makes such
a finding. We note that the statute does not speak of a ``conviction''
but rather of a ``finding by a Federal, State or local court.'' Since
court rules generally require a finding of culpability in jurisdictions
where deferred adjudication procedures are used, the Department
believes the increased penalties would apply if such a finding has been
made, even though the final adjudication is deferred. If, for any
reason, final adjudication is deferred and no finding of culpability is
made by the court, the increased administrative penalties would not
apply until such a finding is made or final adjudication is reached.
It is the Department's intent in this proposed rule to allow the
inclusion of the increased penalties in signed deferred adjudication
agreements in exactly the same manner that the existing penalties are
currently included in such agreements. Accordingly, the Department
proposes to amend 7 CFR 273.16 by revising paragraph (b) to specify
that the increased penalties shall also apply to signed deferred
adjudication agreements. We encourage comments on this proposed
amendment. The Department is also proposing to make a conforming
amendment to 7 CFR 273.16(h)(1)(ii)(C).
As opposed to deferred adjudication, since there is no formal
involvement or inclusion of a Federal, state or local court process in
the administrative disqualification hearing system, the Department is
proposing that the increased penalties not apply to intentional Program
violations determined as a result of an administrative disqualification
hearing or a signed waiver of the right to an administrative
disqualification hearing.
The second sentence in paragraph (b) of 7 CFR 273.16 in the current
regulations concerns the treatment of disqualifications which occurred
prior to the implementation of the current disqualification penalties.
The Department is proposing to amend paragraph (b) by breaking this
sentence out into its own paragraph, paragraph (6) in Sec. 273.16(b) of
the proposed rule, and specifying which penalties apply to this policy.
The Department is also proposing to make a conforming amendment to 7
CFR 273.16(i)(5). There is no intent on the part of the Department to
change the effect of this provision as it applies to the existing
penalties. This specific revision is being proposed solely to provide
clarification.
Regarding the application of the new penalties for trading or
receiving coupons for firearms, ammunition, explosives or controlled
substances, the increased penalties apply to court findings which occur
subsequent to the effective date of Section 13942 of the Leland Act--
September 1, 1994--as reflected in a new paragraph Sec. 273.16(b)(7) in
the proposed rule.
The third sentence in 7 CFR 273.16(b) in the current regulations
discusses the disqualification procedure if a disqualification period
is not imposed by the court. The current procedure requires the State
agency to impose the appropriate penalty unless it is contrary to the
court order. The Department is proposing to retain this policy and to
apply it to the proposed increased penalties. Accordingly, the
Department is proposing to amend the existing provision to include the
increased penalties. In keeping with the proposed reorganization of 7
CFR 273.16(b), the provision is also being separated into its own
paragraph, Sec. 273.16(b)(5).
In addition, the Department is proposing to retain its current
policy in 7 CFR 273.16(b) regarding the disqualification of the
individual as opposed to the entire household. The Department is also
proposing to retain its current policy in 7 CFR 273.16(b) that the
household, and not just the individual, is responsible for repayment of
the debt. However, the Department is proposing to break these policies
out into their own respective paragraphs, Sec. 273.16(b)(8) and (9) of
the proposed rule.
The current regulations at 7 CFR 273.16(b) include some of the
claim establishment and collection procedures for intentional Program
violations. As this subject is covered in greater detail in 7 CFR
273.18 of the current regulations, the Department is proposing to
eliminate repetition by amending 7 CFR 273.16(b) to remove the specific
procedures and replace it with Sec. 273.16(b)(9) which states that all
claims should be established and collected in accordance with the
procedures set forth in 7 CFR 273.18 in the current regulations. The
procedures for establishing and collecting intentional Program
violations found in 7 CFR 273.18 of the current regulations are not
affected by this proposed rule.
II. Advance Notice of Administrative Disqualification Hearings
Under the current regulations at 7 CFR 273.16(e)(3), ``proof of
receipt'' of a written advance notice must be obtained prior to
conducting a scheduled administrative disqualification hearing. State
agencies have found this requirement to be burdensome, costly and
inconsistent with other Federal programs they administer. Regular mail
service is an inexpensive and efficient mechanism to provide notice
that an individual's rights are being affected. In addition, the Texas
Department of Human Services is currently operating under a
Departmental waiver which allows the State agency to conduct
disqualification hearings without obtaining proof of receipt of the
advance notice. Data collected from the State agency revealed that only
four recipients, out of a total of 3,931 administrative
disqualification hearing notices mailed from November 1992 to September
1993, subsequently claimed that their respective notices were never
received. Therefore, in an effort to increase Program efficiency while
lowering administrative costs, the Department is proposing to amend 7
CFR 273.16(e)(3) to allow State agencies the option of delivering these
advance notices via first class mail. In addition, the Department is
proposing to eliminate the proof of receipt requirement where the State
agency elects an alternative method of delivery.
In order to safeguard the rights of recipients who may be affected
by this proposed rule, the Department is proposing to make a claim of
non-receipt of an advance notice, unless proof of receipt was obtained
by the State agency, a good cause criterion under 7 CFR 273.16(e)(4).
If the household member shows non-receipt of the notice in a timely
fashion, any previous decision determined in absentia would no longer
remain valid and the State agency would conduct a new hearing. We are
especially interested in receiving comments on this proposal.
III. Imposition of Disqualification Penalties
Section 6(b)(1) of the Act (7 U.S.C. 2015(b)(1)) states that an
individual who has been found to have committed an intentional Program
violation shall ``immediately'' become ineligible for further
participation in the Food Stamp Program for the length of the
disqualification period. However, the language currently used in
paragraphs (a), (e), (f), (g) and (h) of 7 CFR 273.16 specifies that,
if the individual is not participating in the Program at the time the
disqualification is to begin, the disqualification period is to be
``postponed'' until the individual applies for and is determined
eligible to receive Program benefits. The Department found that the use
of the word ``postponed'' in the current regulations, when compared to
``immediately'' in the Act, may be the cause of confusion which has
recently led to some court suits. There is concern because an exacting
interpretation of ``immediately'' would result in the disqualification
period beginning at once for the specified length of time regardless of
whether the individual is eligible to participate in the Program. Under
this interpretation, the worst offenders, those who concealed steady
employment and large amounts of income in order to obtain food stamps,
are unlikely to be penalized at all since their level of income and/or
resources, once discovered, would prevent them from participating in
the Program during the period of time covered by the disqualification
penalty. Since the legislative intent (Senate Report No. 128, 97th
Congress, 1st Session, pages 54 and 55) is to strengthen the laws
applying to Program violators, the Department strongly believes that
allowing individuals to escape without penalty is contrary to this
intent. In addition, the Department feels that the concept expressed in
the Act of becoming ineligible for further participation, to which an
immediate disqualification period applies, implies that an individual
is either participating or has been determined eligible to participate.
It simply defies common sense to have periods of disqualification run
concurrently with periods of ineligibility.
Therefore, the Department is proposing to clarify existing
regulations at 7 CFR 273.16(a), (e), (f), (g) and (h) by stating that
an individual disqualified while not currently participating in the
Program would have his/her disqualification period begin immediately
after applying for and becoming eligible to receive benefits.
The Department is also proposing to make an additional revision to
paragraphs (a), (e), (f), (g) and (h) in 7 CFR 273.16 by replacing
``participating'' with ``certified to participate'' where reference is
made to the imposition of the disqualification period. This is being
proposed to clarify the Department's position regarding the timing of
the imposition of disqualification penalties in instances such as when
an individual is found eligible for the Program but technically does
not ``participate'' by failing to redeem an intermediary document such
as an authorization to participate card (ATP). The proposed rule makes
clear the Department's position that the State agency should begin the
disqualification period against an individual provided that
individual's household is certified to participate in the Program
regardless of whether an ATP or similar document has been redeemed.
IV. Model Forms
The current regulations at 7 CFR 273.16(e) make two references to
FNS providing model forms for adaptation by State agencies. The first
model form, referred to in 7 CFR 273.16(e)(3)(iii), is for providing
advance notice of an administrative disqualification hearing. The
second form, referred to in 7 CFR 273.16(e)(9)(iii), provides a model
for notifying individuals of administrative action taken in their
administrative disqualification hearing. The primary purpose for
furnishing these forms was to assist State agencies with the initial
implementation of the current regulations when they were originally
published in 1983. Since that time, most State agencies have designed
their own State-specific forms based on regulatory requirements, thus
reducing the effectiveness of and need for these models. As part of an
ongoing effort to do away with unnecessary Federal forms while
affording State agencies maximum flexibility, the Department is
proposing to eliminate these model forms by deleting the sentences in 7
CFR 273.16(e)(3)(iii) and 7 CFR 273.16(e)(9)(iii) which make reference
to the forms. However, FNS will continue to provide State agencies with
guidance and assistance for form development or changes to forms
necessitated by revisions to the regulations.
Implementation
Section 13971 of the Leland Act sets effective dates for the
various provisions of the law. Section 13971(6)(4) provides that the
provision in Section 13942, which amends Section 6(b) of the Act (7
U.S.C. 2015(b)(1)) to enhance certain intentional Program violation
disqualification penalties, is effective and shall be implemented on
September 1, 1994. Current regulations at 7 CFR 273.2(b)(ii) and 7 CFR
273.16(d) require that the notice of disqualification penalties be
included on the Food Stamp application form. Therefore, the Department,
on March 16, 1994, issued an implementation memorandum stating that
notice of the enhanced intentional Program violation disqualification
penalties is to be included on the Food Stamp application form by
September 1, 1994.
List of Subjects in 7 CFR Part 273
Administrative practice and procedure, Aliens, Claims, Food Stamps,
Fraud, Grant programs--social programs, Penalties, Reporting and
recordkeeping requirements, Social security, Students.
For the reasons set out in the preamble, 7 CFR Part 273 is proposed
to be amended as follows:
1. The authority citation for Part 273 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
2. In Sec. 273.16:
a. The last sentence of paragraph (a)(1) is revised;
b. Paragraph (b) is revised;
c. The second sentence of the introductory text of paragraph
(e)(3)(i) is removed, and four new sentences are added in its place;
d. Paragraph (e)(3)(i)(F) is revised;
e. The last sentence of paragraph (e)(3)(iii) is removed;
f. Paragraph (e)(8)(iii) is revised;
g. The last sentence of paragraph (e)(9)(iii) is removed;
h. Paragraph (f)(2)(iii) is revised;
i. Paragraph (g)(2)(ii) is revised;
j. Paragraph (h)(1)(ii)(C) is revised;
k. Paragraph (h)(2)(ii) is revised; and
l. The second sentence of paragraph (i)(5) is revised.
The revisions and additions read as follows:
Sec. 273.16 Disqualification for intentional Program violation.
(a) Administrative responsibility. (1) * * * The disqualification
period for nonparticipants at the time of the administrative
disqualification or court decision shall take effect immediately after
the individual applies for and is determined eligible for Program
benefits.
* * * * *
(b) Disqualification penalties. (1) Individuals found to have
committed an intentional Program violation either through an
administrative disqualification hearing or by a Federal, State or local
court, or who have signed either a waiver of right to an administrative
disqualification hearing or a disqualification consent agreement in
cases referred for prosecution, shall be ineligible to participate in
the Program:
(i) For a period of six months for the first intentional Program
violation, except as provided under paragraphs (b)(2) and (b)(3) of
this section;
(ii) For a period of twelve months upon the second occasion of any
intentional Program violation, except as provided in paragraphs (b)(2)
and (b)(3) of this section; and
(iii) Permanently for the third occasion of any intentional Program
violation.
(2) Individuals found by a Federal, State or local court to have
used or received coupons in a transaction involving the sale of a
controlled substance (as defined in section 102 of the Controlled
Substances Act (21 U.S.C. 802)) shall be ineligible to participate in
the Program:
(i) For a period of twelve months upon the first occasion of such
violation; and
(ii) Permanently upon the second occasion of such violation.
(3) Individuals found by a Federal, State or local court to have
used or received coupons in a transaction involving the sale of
firearms, ammunition or explosives shall be permanently ineligible to
participate in the Program upon the first occasion of such violation.
(4) The penalties in paragraphs (b)(2) and (b)(3) of this section
shall also apply in cases of deferred adjudication as described in
paragraph (h) of this section where the court makes a finding that the
individual engaged in the conduct described in paragraph (b)(2) or
(b)(3) of this section.
(5) If a court fails to impose a disqualification period for any
intentional Program violation, the State agency shall impose the
appropriate disqualification penalty specified in paragraph (b)(1),
(b)(2) or (b)(3) of this section unless it is contrary to the court
order.
(6) One or more intentional Program violations which occurred prior
to the State agency's implementation of the disqualification periods
specified in paragraphs (b)(1)(i), (b)(1)(ii) or (b)(1)(iii) of this
section shall be considered as only one previous disqualification when
determining the appropriate penalty to impose in a case under
consideration.
(7) Regardless of when an action taken by an individual which
caused an intentional Program violation occurred, the disqualification
periods specified in paragraphs (b)(2) and (b)(3) of this section shall
apply to any case in which the court makes the requisite finding on or
after September 1, 1994.
(8) State agencies shall disqualify only the individual found to
have committed the intentional Program violation, or who signed the
waiver of the right to an administrative disqualification hearing or
disqualification consent agreement in cases referred for prosecution,
and not the entire household.
(9) Even though only the individual is disqualified, the household,
as defined in Sec. 273.1, is responsible for making restitution for the
amount of any overpayment. All intentional Program violation claims
shall be established and collected in accordance with the procedures
set forth in Sec. 273.18.
* * * * *
(e) Disqualification hearings. * * *
(3) Advance notice of hearing. (i) * * * If mailed, the notice
shall be sent either first class mail or certified mail- return receipt
requested. The notice may also be provided by any other reliable
method. If no proof of receipt is obtained, a showing of non-receipt by
the household member shall be considered good cause for not appearing
at the hearing. The notice shall contain at a minimum:
* * * * *
(F) A warning that a determination of intentional Program violation
will result in disqualification periods as determined by paragraph (b)
of this section, and a statement of which penalty the State agency
believes is applicable to the case scheduled for a hearing;
* * * * *
(8) Imposition of disqualification penalties. * * *
(iii) If the individual is not certified to participate in the
Program at the time the disqualification period is to begin, the period
shall take effect immediately after the individual applies for and is
determined eligible for benefits.
* * * * *
(f) Waived hearings. * * *
(2) Imposition of disqualification penalties. * * *
(iii) If the individual is not certified to participate in the
Program at the time the disqualification period is to begin, the period
shall take effect immediately after the individual applies for and is
determined eligible for benefits.
* * * * *
(g) Court Referrals. * * *
(2) Imposition of disqualification penalties. * * *
(ii) If the individual is not certified to participate in the
Program at the time the disqualification period is to begin, the period
shall take effect immediately after the individual applies for and is
determined eligible for benefits.
* * * * *
(h) Deferred adjudication. * * *
(1) Advance notification. * * *
(ii) * * *
(C) A warning that the disqualification periods for intentional
Program violations under the Food Stamp Program are as specified in
paragraph (b) of this section, and a statement of which penalty will be
imposed as a result of the accused individual having consented to
disqualification.
* * * * *
(2) Imposition of disqualification penalties. * * *
(ii) If the individual is not certified to participate in the
Program at the time the disqualification period is to begin, the period
shall take effect immediately after the individual applies for and is
determined eligible for benefits.
* * * * *
(i) Reporting requirements. * * *
(5) * * * However, one or more intentional Program violations which
occurred prior to the State agency's implementation of the
disqualification periods specified in paragraph (b)(1) of this section
shall be considered as only one previous disqualification when
determining the appropriate penalty to impose in a case under
consideration, regardless of where the disqualification(s) took place.
* * *
* * * * *
Dated: August 24, 1994.
William E. Ludwig,
Administrator, Food and Nutrition Service.
[FR Doc. 94-21245 Filed 8-26-94; 8:45 am]
BILLING CODE 3410-30-U