[Federal Register Volume 60, Number 161 (Monday, August 21, 1995)]
[Rules and Regulations]
[Pages 43347-43350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20591]



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 Rules and Regulations
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  Federal Register / Vol. 60, No. 161 / Monday, August 21, 1995 / Rules 
and Regulations  


[[Page 43347]]


DEPARTMENT OF AGRICULTURE

Food and Consumer Service

7 CFR Parts 272 and 273

[Amdt. No. 360]

RIN 0584-AB40


Food Stamp Program: Resource Provision From the Mickey Leland 
Memorial Domestic Hunger Relief Act of 1990

AGENCY: Food and Consumer Service, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule amends Food Stamp Program regulations to implement 
provisions contained in the Mickey Leland Memorial Domestic Hunger 
Relief Act of 1990 (the Leland Act) and the Food, Agriculture, 
Conservation, and Trade Act Amendments of 1991 that expand the criteria 
by which a resource can be considered inaccessible. It finalizes 
provisions in a proposed rule published in the Federal Register on 
October 20, 1994.

DATES: This rule is effective September 20, 1995, and must be 
implemented no later than the first day of the first month beginning 
after December 19, 1995.

FOR FURTHER INFORMATION CONTACT: Supervisor, Eligibility and 
Certification Regulations Section, Certification Policy Branch, Program 
Development Division, Food Stamp Program, Food and Consumer 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 significant and was 
reviewed by the Office of Management and Budget in conformance with 
Executive Order 12866.

Executive Order 12372

    The Food Stamp Program (``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.

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. 
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-quality control (QC) liabilities) or Part 283 (for 
rules related to QC liabilities); 3) for retailers and wholesalers--
administrative procedures issued pursuant to 7 U.S.C. 2023 set out at 7 
CFR 278.8.

Regulatory Flexibility Act

    This final rule has also been reviewed with respect to the 
requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354, 
94 Stat. 1164, September 19, 1980). The Administrator of the Food and 
Consumer Service (FCS) has certified that this proposal would not have 
a significant economic impact on a substantial number of small 
entities. State and local agencies that administer the Program will be 
the most affected. Food stamp applicants and recipients will be 
affected due to changes in excludable resources for purposes of the 
Food Stamp Program.

Paperwork Reduction Act

    This action does not contain reporting or record keeping 
requirements subject to approval by the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
Background

    The Mickey Leland Memorial Domestic Hunger Relief Act (Food, 
Agriculture, Conservation, and Trade Act of 1990, Title XVII, Pub. L. 
101-624, 104 Stat. 3783); (hereinafter referred to as the Leland Act) 
made several changes to the Food Stamp Act of 1977, as amended (7 
U.S.C. 2011, et seq.) (the Act). This rulemaking pertains to section 
1719 of the Leland Act which amended section 5(g) of the Act, 7 U.S.C. 
2014(g)(5), to expand the criteria by which property can be considered 
inaccessible to households in the calculation of their resources for 
purposes of food stamp eligibility. The Department originally published 
a proposed rule on August 13, 1991 at 56 FR 40164 regarding, in part, 
this Leland Act provision. The Department received twenty comments on 
the proposal to amend 7 CFR 273.8(e) to incorporate this provision. On 
December 13, 1991, section 904 of the Food, Agriculture, Conservation, 
and Trade Act Amendments of 1991 (Pub. L. 102-237, 105 Stat. 1818) 
(hereinafter referred to as the 1991 Technical Amendments) further 
amended section 5(g)(5) of the Act. The Department re-proposed the rule 
on the inaccessible resources provision on October 20, 1994 at 59 FR 
52928 and provided the public with 90 days to comment on the proposed 
provision. For additional information on the provisions of this rule, 
the reader should refer to the preamble of the proposed rule, 59 FR 
52928-31.
    The Department received 12 comments on this proposed rule, 7 from 
State agencies and 5 from public interest groups. Three commenters 
supported the proposed rule as written. One commenter opposed the rule 
as written. The other commenters opposed or suggested modifications to 
one or more provisions of the proposed rule. These comments are 
discussed below.
    Currently, regulations at 7 CFR 273.8(c) describe both liquid and 
non-liquid resources that are counted when determining a household's 
eligibility for food stamps. Non-liquid resources such 

[[Page 43348]]
as land, buildings, and licensed and unlicensed vehicles, with some 
exceptions, are included as resources because they can be converted to 
cash. However, not all property can be easily sold, and this has posed 
significant problems for both State agencies administering the Food 
Stamp Program and households applying for benefits. Except for the 
provisions regarding vehicles, current regulations focus on the 
accessibility/inaccessibility of resources. In establishing 
inaccessibility, State agencies are compelled to require a household to 
verify that the property it owns, which is not otherwise an exempt 
resource, has little or no fair market value; cannot be sold because it 
is jointly owned with non-household members who are unwilling to sell; 
or is otherwise inaccessible. In many instances, households have found 
it difficult to provide this verification. Further, in establishing 
accessibility/inaccessibility, State agencies may be faced with 
questions of state property law and probate law. The situation was 
particularly difficult with heir property, i.e., an undivided 
fractional interest in a decedent's property. It is apparent that the 
treatment of heir property was the primary problem Congress was 
addressing when it passed section 1719 of the Leland Act, as the 
legislative history contained in House Report No. 101-569, 101st 
Congress, 2nd Session, Part 1, at 429-30, specifically refers to the 
problems of heir property encountered by food stamp applicants and 
State agencies.
    Section 1719 of the Leland Act required the Department to 
promulgate regulations requiring State agencies to develop standards 
for identifying kinds of resources that, as a practical matter, a 
household is unlikely to be able to sell for any significant return 
because the household's interest is relatively slight or because the 
cost of selling the household's interest would be relatively great. 
Resources so identified were to be excluded as inaccessible resources 
for food stamp purposes.
    In December 1991, section 904 of the 1991 Technical Amendments 
amended section 5(g)(5) of the Food Stamp Act by adding to the end of 
this paragraph the following new sentences: ``A resource shall be so 
identified (as inaccessible) if its sale or other disposition is 
unlikely to produce any significant amount of funds for the support of 
the household. The Secretary shall not require the State agency to 
require verification of the value of a resource to be excluded under 
this paragraph unless the State agency determines that the information 
provided by the household is questionable.''
    The regulations at 7 CFR 273.8(d) already exclude jointly-owned 
resources that can be shown to be inaccessible. An example is a bank 
account that is jointly-owned by food stamp applicant household and 
non-household members which, by State law, is determined to be 
inaccessible wholly or in part to the food stamp household. Also, 
certain types of property are excluded from consideration as a resource 
including property that the household is making a good faith effort to 
sell (7 CFR 273.8(e)(8)). The Department believes that the amendments 
to section 5(g)(5) of the Act were not intended to supplant the 
existing regulations on inaccessible resources. Rather, these 
amendments were intended to provide an additional exclusion for 
resources such as heir property or other property which is unlikely to 
produce a significant return or significant funds for the support of 
the household.
    One commenter, a State agency, opposed the rule as written, citing 
administrative complexity, inconsistency with AFDC, and inequities 
among food stamp recipients. The Department understands the State 
agency's concerns; however, it disagrees with the commenter about the 
rule. Given the legislative parameters, the Department believes it has 
crafted a regulation that gives States maximum flexibility to establish 
standards identifying a resource, not readily determined inaccessible 
under existing regulations, as inaccessible with a minimum amount of 
verification, without endangering program integrity.
Definition of ``Significant Return'' and ``Any Significant Amount 
of Funds''

    The Department proposed to define ``any significant return'' and 
``any significant amount of funds'' as being one half the resource 
limit for the household. The Department received 5 comments addressing 
these definitions. Three commenters supported the definitions. Two 
commenters suggested that the definitions be modified to define ``any 
significant return'' and ``any significant amount of funds'' as being 
the appropriate resource limit for the household.
    The Department has decided to keep the definitions as proposed. For 
food stamp purposes, households are permitted to have up to $2,000 in 
resources ($3,000 for households if at least one member is aged 60 or 
older). (For categorically-resource-eligible households, the issue of 
accessibility is irrelevant.) As was pointed out in the proposed rule, 
current data show that the average value of countable resources for all 
food stamp households is less than $100. Ninety-five percent of all 
food stamp households have $1,000 or less in countable resources. As 
very few households participating in the food stamp program have 
resources exceeding $1,000, the Department continues to believe that a 
resource that would yield a return of $1,000 (or $1,500, as 
appropriate) would be a significant return or a significant amount of 
funds for a household that is otherwise eligible for food stamps. 
Accordingly, the Department is adopting as proposed the definition of 
``any significant return'' and ``any significant amount of funds'' at 7 
CFR 273.8(e)(18) (i) and (ii).

Aggregation of Assets

    Two commenters, both State agencies, recommended that all assets 
being considered for a determination as inaccessible be added together 
prior to the determination of inaccessibility and that the sum of those 
assets be used in the determination. The Department is not adopting 
this suggestion because the legislation is concerned with determining 
the inaccessibility of a specific resource, not the aggregate resources 
of a household. The Department understands the State agencies' 
concerns, specifically those concerns dealing with attempts by 
applicants to have resources declared inaccessible by sub-dividing one 
resource into multiple units, each of which has a net value of less 
than $1,000. In developing their standards, State agencies should make 
it clear that a single resource cannot be sub-divided solely to apply 
to obtain an exclusion as inaccessible. Also, the Department would like 
to emphasize that this standard does not invalidate any other provision 
regarding jointly-owned resources and inaccessible resources, as 
described in 7 CFR 273.8(d). The Department expects that State agencies 
will continue to apply all the provisions in 7 CFR 273.8 concerning 
jointly-owned and inaccessible resources. The provisions of this rule 
are intended to apply only to those resources that do not readily meet 
the requirements in the other paragraphs of 7 CFR 273.8 for exclusion, 
but would not provide a significant return to the household if sold.

Negotiable Financial Instruments

    The Department proposed in 7 CFR 273.8(e) to prohibit applying this 
provision to negotiable financial instruments. In the preamble, the 
Department indicated that financial instruments such as stocks and 
bonds 

[[Page 43349]]
were to be considered for this purpose as negotiable financial 
instruments. One comment was received on this provision. That commenter 
pointed out that in that State, a ``negotiable financial instrument'' 
has a specific legal meaning and does not include financial resources 
such as stocks. The Department has revised the language of the 
provision to provide that financial resources such as stocks, bonds, 
and negotiable financial instruments are excluded from being considered 
an inaccessible resource under this provision. Thus, in the State in 
question, as in all other States, stocks and bonds are ineligible for 
designation as inaccessible resources.
Application of this Rule to Vehicles

    Three commenters on the August 13, 1991 proposed rulemaking 
discussed whether or not vehicles could be identified as inaccessible 
resources under this provision. As discussed in the October 20, 1994 
proposed rule, the Department believes that it is very clear from the 
statutory language and the legislative history of the inaccessible 
resource provision that it was not the intent of Congress to include 
vehicles. Five commenters, all public interest groups, disagreed with 
the Department's position. The Department continues to believe, for the 
reasons cited at length in the October 20, 1994 proposed rule, that its 
interpretation that this legislative provision does not apply to 
vehicles is the correct interpretation. Accordingly, the Department is 
adopting as final the prohibition against applying the provision to 
vehicles.

Quality Control

    One commenter noted that the proposed rule did not address how 
quality control review would affect a situation in which a State agency 
had excluded a resource as unlikely for the household to sell for any 
significant return, and the eligibility worker had not required the 
household to provide any verification. The commenter has recommended 
that the resource should be excluded from the error determination if 
the resource is an appropriately excludable resource and the State 
agency did not deem the significant return questionable. The Department 
has considered this comment and agrees, in part. The Department agrees 
that any resource which meets the standards developed by the State 
agency to be considered unlikely to generate a significant return for 
the household must be excluded from the error determination process. 
However, the Department does not agree that the status of the resource, 
as either included or excluded by quality control, should be based 
strictly on the information provided by the household, and on the 
eligibility worker's determination that this information is not 
questionable. One of the key aspects of the quality control review 
process is to determine a household's actual living circumstances for 
the period of time under review, regardless of the information reported 
by the household, or any determinations made by the eligibility worker. 
The Department has determined that any resources discovered in the 
course of the quality control review process which may be excluded 
because their sale would not generate a significant return to the 
household must be treated in the same manner as any other resource 
discovered by quality control. The resource must be examined by the 
quality control reviewer to determine whether or not the resource meets 
the standards developed by the State agency to be considered unlikely 
to generate a significant return for the household. Specific quality 
control guidance regarding the review of these resources shall be 
developed upon publication of this rule.

Implementation

    The Department proposed that this rule be effective upon 
implementation by State agencies but in no event later than the first 
day of the first month beginning 120 days after publication of the 
final rule. The Department did not receive any comments on the 
implementation schedule as proposed. Accordingly, this action amends 7 
CFR 272.1(g) to add a new paragraph to address implementation 
requirements for this final action.
    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 new paragraph (g)(141) is added to read as 
follows:


Sec. 272.1  General terms and conditions.

* * * * *
    (g) Implementation. * * *
    (141) Amendment No. 360. This provision is effective September 20, 
1995, and must be implemented no later than the first day of the first 
month beginning December 19, 1995.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

    3. In Sec. 273.8, a new paragraph (e)(18) is added to read as 
follows:


Sec. 273.8  Resource eligibility standards.

* * * * *
    (e) Exclusions from resources. * * *
    (18) State agencies shall develop clear and uniform standards for 
identifying kinds of resources that, as a practical matter, the 
household is unable to sell for any significant return because the 
household's interest is relatively slight or because the costs of 
selling the household's interest would be relatively great. A resource 
shall be so identified if its sale or other disposition is unlikely to 
produce any significant amount of funds for the support of the 
household. This provision does not apply to financial instruments such 
as stocks, bonds, and negotiable financial instruments, or to vehicles. 
The determination of whether any part of the value of a vehicle is 
included as a resource shall be handled using the provisions of 
paragraph (h) of this section. The State agency may require 
verification of the value of a resource to be excluded if the 
information provided by the household is questionable. The following 
definitions shall be used in developing these standards:
    (i) ``Significant return'' shall be any return, after estimated 
costs of sale or disposition, and taking into account the ownership 
interest of the household, that is estimated to be one half or more of 
the applicable resource limit for the household; and
    (ii) ``Any significant amount of funds'' shall be funds amounting 
to one half or more of the applicable resource limit for the household.
* * * * * 

[[Page 43350]]

    Dated: August 10, 1995.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 95-20591 Filed 8-18-95; 8:45 am]
BILLING CODE 3410-30-U