[Federal Register Volume 64, Number 132 (Monday, July 12, 1999)]
[Proposed Rules]
[Pages 37454-37461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17445]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 64, No. 132 / Monday, July 12, 1999 / 
Proposed Rules  

[[Page 37454]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Chapter II, Subchapter C, and Parts 271, 273 and 276

RIN 0584-AC41


Food Stamp Program: Non-Discretionary Provisions of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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SUMMARY: On August 22, 1996, the President signed the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996. This 
rule proposes to amend the Food Stamp Program Regulations to implement 
the non-discretionary provisions of this law which affect the Food 
Stamp Program. These provisions concern changes in the minimum and 
maximum allotments, the standard and shelter deductions, household 
composition, the fair market value of vehicles, the definition of 
homeless, and expedited service. This rule also incorporates, where 
possible, the principles of the President's Regulatory Reform 
Initiative and removes overly prescriptive, outdated, and redundant 
provisions and increases State agency flexibility.

DATES: Comments on this proposed rulemaking must be received on or 
before September 10, 1999 to be assured of consideration.

ADDRESSES: Comments should be submitted to Margaret Werts Batko, 
Certification Policy Branch, Program Development Division, Food and 
Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia, 
22302. Comments may also be faxed to the attention of Ms. Batko at 
(703) 305-2486 or e-mailed to [email protected]. All written 
comments will be open for public inspection at the office of the Food 
and Nutrition Service during regular business hours (8:30 a.m. to 5 
p.m., Monday through Friday) at 3101 Park Center Drive, Alexandria, 
Virginia, Room 720.

FOR FURTHER INFORMATION CONTACT: Questions regarding this proposed 
rulemaking should be addressed to Ms. Batko at the above address or by 
telephone at (703) 305-2516.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be Economically Significant under 
E.O. 12866, and Major under P.L. 104-121, and has therefore 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 in 7 CFR Part 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.

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Shirley R. 
Watkins, Under Secretary for Food, Nutrition, and Nutrition Services, 
has certified that this rule will not have a significant economic 
impact on a substantial number of small entities. State and local 
welfare agencies will be the most affected to the extent that they 
administer the Program. Participants will be affected to the extent 
that their benefits will not increase at the rate they would have under 
the old law.

Paperwork Reduction Act

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

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is intended to have preemptive effect with 
respect to any State or local laws, regulations or policies that 
conflict with its provisions or that would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the ``Effective Date'' paragraph of the final 
rule. Prior to any judicial challenge to the provisions of this rule or 
the application of its provisions, all applicable administrative 
procedures must be exhausted. In the Food Stamp Program the 
administrative procedures are as follows: (1) For Program benefit 
recipients--State administrative procedures issued pursuant to 7 U.S.C. 
2020(e)(1) and 7 CFR 273.15; (2) for State agencies--administrative 
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for 
rules related to non-quality control (QC) liabilities) or Part 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 and Part 279.

Regulatory Impact Analysis

Need for Action

    This action is needed to implement 8 provisions of the Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. 
104-193. This rule proposes to remove the exception in current law that 
allows persons age 21 and under who are themselves parents or married, 
and who live with a parent, to participate in the Food Stamp Program as 
a separate household; change the way the maximum allotments are 
calculated by using 100% of the Thrifty Food Plan instead of 103%; 
alter the definition of homeless by setting a time limit (where there 
was none before) on people whose primary nighttime residence is a 
temporary accommodation in the home of another; freeze the standard 
deduction in food stamps for fiscal year 1997 and beyond at $134; 
retain a cap on the excess shelter expense deduction; freeze the fair 
market value of vehicle exemption at $4,650; freeze the minimum 
allotment at $10 a month; increase the number of days in which States 
have to provide expedited service from 5 to 7 calendar days; eliminate 
households consisting entirely of homeless people from those categories 
of households entitled to receive expedited service; and remove the 
State agency option to exclude from unearned income up to $50 monthly 
of title IV-D child support payments.

[[Page 37455]]

Effects on Administering Agencies

    State food stamp offices are affected to the extent that they must 
implement the provisions described in this action. However, State 
agencies are not expected to change their personnel due to these 
changes, so State agencies are expected to incur minimal costs.

Costs

    The changes in the food stamp requirements made by the provisions 
addressed in this rule would reduce Food Stamp Program costs for FY 
1998 by approximately $1,930 million.

Definitions--7 CFR 271.2

    Definition of Homeless: Current regulations at 7 CFR 271.2 define a 
homeless individual as an individual lacking a fixed or regular 
nighttime residence or whose primary nighttime residence is a shelter, 
a residence intended for those to be institutionalized, a temporary 
accommodation in the residence of another, or a public or private place 
not designed to be a regular sleeping accommodation for humans. The 
Food Stamp Act of 1977, as amended (7 U.S.C. 2011-2032) (the Act), did 
not place a time limit on what constitutes a temporary accommodation in 
the residence of another.
    Section 805 of the Personal Responsibility and Work Opportunity 
Reconciliation Act (PRWORA) of 1996 amends section 3(s)(2)(C) of the 
Act by setting a time limit for people whose primary nighttime 
residence is a temporary accommodation in the home of another. These 
people will only be considered homeless if the temporary accommodation 
is for not more than 90 days. This rule proposes to amend 7 CFR 271.2 
accordingly.
    Definition of Minimum Benefit: Prior to the PRWORA, section 8(a) of 
the Act provided that the minimum benefit for one- and two-person 
households shall be $10 per month, and shall be adjusted to the nearest 
$5 each October 1 based upon the percentage change in the Thrifty Food 
Plan for the twelve-month period ending the preceding June.
    The current regulations at 7 CFR 271.2 define minimum benefit as 
the minimum monthly amount of food stamps that one- and two-person 
households received. Section 271.2 also provides that the amount of the 
minimum benefit will be reviewed annually and adjusted to the nearest 
$5 each October 1 based on the percentage change in the Thrifty Food 
Plan for the twelve-month period ending the preceding June.
    Section 826 of the PRWORA amends section 8(a) of the Act by 
removing the annual adjustment provision, thus freezing the minimum 
benefit at $10. This rule proposes to amend 7 CFR 271.2 accordingly.

Household Concept--7 CFR 273.1

    7 CFR 273.1(a)(2)--Special Definition--Treatment of Children Living 
at Home: Section 3(i)(2) of the Act provides specific definitions for 
what constitutes a household when a child is living with his or her 
parents. The Mickey Leland Childhood Hunger Relief Act, Title XIII, 
Chapter 3 of the Omnibus Budget Reconciliation Act of 1993, Pub. L. 
103-66 (Leland Act), amended section 3(i) of the Act with the intention 
of simplifying the household definition provisions and supporting 
families that live together and share housing expenses but who do not 
necessarily purchase and prepare meals together. With certain 
enumerated exceptions, the simplified household definition allowed 
persons who live together and who purchase food and prepare meals 
separately to participate in the Program as separate food stamp 
households. Specifically, it provided that a child under 22 years of 
age who is living with his or her natural or adoptive parent or 
stepparent, is presumed to purchase and prepare meals together with the 
parent even if he does not, unless the child is also living with his or 
her own child(ren) or spouse. The ``Certification Provisions of the 
Mickey Leland Childhood Hunger Relief Act'' rule published October 17, 
1996 (61 FR 54279), amended 7 CFR 273.1 accordingly. Currently, 7 CFR 
273.1(a)(2)(B) provides that a child under 22 years of age who is 
living with his or her natural or adoptive parents or stepparents, is 
considered to be purchasing and preparing meals with his or her 
parents, unless the child is also living with his or her own child(ren) 
or spouse.
    Section 803 of the PRWORA amended section 3(i) of the Act by 
eliminating this exception to the household definition. This rule 
proposes to make a corresponding change to the regulations at 7 CFR 
273.1 to provide that a child under 22 years of age who is living with 
his or her natural or adoptive parents or stepparents is considered to 
be purchasing and preparing meals with his or her parents and, 
therefore, is part of the parents' household.
    Definition of Parental Control: To provide the same treatment for a 
child living with a non-parent adult that is provided for a child 
living with a natural or adoptive parent or stepparent, the Department 
is proposing to change the definition of parental control. This rule 
proposes to amend 7 CFR 273.1 by removing the exception that a child 
who is living with his or her own child(ren) or spouse is not 
considered to be under parental control.
    Reorganization of 7 CFR 273.1--Household Concept: In the spirit of 
the President's Regulatory Reform Initiative, we are proposing to 
reorganize section 273.1, with the exception of 7 CFR 273.1(d) and (f), 
which remain unchanged. We are not proposing significant changes to 
section 273.1 as nearly every provision is set forth in the Act and can 
be changed only through legislative action. However, we are condensing 
several sections into a single section; removing unnecessary verbiage 
and provisions covered elsewhere in the regulations; and providing 
State agency flexibility where possible. This proposed rule sets out 
the entire revised text for the convenience of the reader. The specific 
changes are detailed in the following paragraphs of this section of 
preamble.
    Eligibility for the Food Stamp Program is based on a ``household'' 
concept. Current regulations at 7 CFR 273.1(a)(1) define what 
constitutes a ``household'' for Food Stamp Program purposes. Generally, 
a household means an individual living alone or group of individuals 
living together and purchasing food and preparing meals in common. 
There are exceptions to this general household concept policy for 
certain types of living arrangements which are set forth in 7 CFR 
273.1(a)(2), (b), (c), and (e).
    This rule proposes to combine the current provisions at 7 CFR 
273.1(a)(2), (b), (c)(1), (c)(3), and (e) governing the inclusion or 
exclusion from a household of certain individuals living with others in 
a single section designated as paragraph (b). These individuals include 
spouses, children, elderly and disabled persons, roomers, live-in 
attendants, boarders, residents of institutions, and other individuals 
who share living quarters with the household but who do not customarily 
purchase food and prepare meals with the household. There has been 
confusion in the past as to when such individuals are included or 
excluded as household members. We believe including the provisions in 
separate paragraphs under a single regulatory section rather than 
addressing each inclusion/exclusion provision in a separate regulatory 
section will help to clarify the household concept.
    Furthermore, this rule would remove the definition of ``spouse'' at 
7 CFR 271.2. Most States have laws governing who is considered a 
spouse. Allowing State agencies to use a State definition of spouse 
provides flexibility while

[[Page 37456]]

ensuring a uniform policy throughout the State.
    To ensure uniformity among all States, we are proposing to retain 
in new paragraph (b)(3) the language currently appearing in 7 CFR 
273.1(c)(1) which defines a boarder. Boarders are individuals or groups 
of individuals residing with others and paying reasonable compensation 
to the others for meals or meals and lodging. Persons paying less than 
reasonable compensation for meals are not boarders and, thus, are 
required to be members of the household providing the services. We are 
also proposing to retain the language appearing in current rules at 7 
CFR 273.1(c)(3)(i) and (ii) that provides that an individual qualifies 
as a boarder paying reasonable compensation for board when the board 
payment is for more than two meals a day for which the individual pays 
an amount equal to or in excess of the maximum food stamp allotment for 
the appropriate size of the boarder household, or is for less than two 
meals a day and the individual pays an amount equal to or in excess of 
two-thirds of the maximum food stamp allotment for the appropriate size 
of the boarder household.
    We contemplated removing these computation provisions from the 
rules and allowing State agencies the flexibility to establish a means 
for computing reasonable compensation. This computation method has been 
in existence since 1982. Upon researching our files, we found no 
evidence that these provisions have been a problem for the State 
agencies or clients. This is not an area of the Program where State 
agencies have specifically asked for flexibility. We believe the 
provision as written is simple to administer, equitable to clients, and 
adaptable to each State's automated certification system. However, we 
specifically solicit comments from interested parties on this matter.
    With the proposed combining of 7 CFR 273.1(a)(2), (b), (c)(1), 
(c)(3), and (e) in new paragraph (b), 7 CFR 273.1(c) of current 
regulations would be eliminated. We are adding a new paragraph (c). 
There has been some confusion by State agencies as to when the policy 
on ``purchasing food and preparing meals'' overrides policy prohibiting 
the separation of spouses and children, or prohibiting the 
participation of boarders. In the new paragraph (c) we would 
specifically allow State agencies to apply discretion when the rule 
does not lend itself to a simple and direct answer to certain living 
situations. We cannot cover all living situations by regulation. We 
intend that State agencies use prudent judgment in determining when to 
allow individuals to be certified as separate households from others 
with whom they reside and to protect Program integrity by not allowing 
great numbers of households to fragment into smaller households. The 
language also clarifies that any State policy adopted under this 
provision must be applied consistently throughout the State.
    This rule proposes to remove the language currently appearing at 7 
CFR 273.1(c)(2) and (c)(4). The provision at 7 CFR 273.1(c)(2) reminds 
the State agency that the household with whom the boarder resides can 
participate in the Program if otherwise eligible. The provision at 7 
CFR 273.1(c)(4) reminds the State agency that an individual furnished 
both meals and lodging and paying less than reasonable compensation for 
these services is not a boarder, but is a member of the household 
providing the services pursuant to 7 CFR 273.1(a). We consider these 
two provisions to be redundant.
    We are not proposing any changes in 7 CFR 273.1(d) Head of 
Household, and (f) Authorized Representative because we believe the 
current regulations are appropriate. Requirements in current 
regulations at 7 CFR 273.1(g) for determining the eligibility and 
benefits of households containing members on strike are redesignated as 
paragraph (e), with minor editorial changes for clarity.

Application Processing--7 CFR 273.2

    Expedited Service: Current regulations at 7 CFR 273.2(i) provide 
for expedited service to migrant or seasonal farm workers who are 
destitute and households with less than $150 in combined monthly gross 
income. Both of these types of households must also have liquid 
resources of $100 or less to qualify for expedited service. Households 
in which all members are homeless individuals and eligible households 
whose combined monthly gross income and liquid resources are less than 
the household's monthly rent or mortgage and utilities are also 
eligible to receive expedited service. Prior to the PRWORA, section 
11(e)(9) of the Act required that benefits be provided not later than 
five calendar days following a household's date of application for all 
eligible households.
    Section 838 of the PRWORA amends section 11(e)(9) of the Act by 
increasing the amount of days in which States have to provide expedited 
service from five to seven calendar days, and eliminating households 
consisting entirely of homeless people from those categories of 
households entitled to receive expedited service.
    Accordingly, this rule proposes to amend 7 CFR 273.2(i)(3)(i) by 
striking ``fifth'' calendar day and inserting ``seventh''. This rule 
also would amend 7 CFR 273.2(i)(3)(ii) by striking ``5 calendar days'' 
and inserting ``7 calendar days.'' In addition, the rule would remove 7 
CFR 273.2(i)(1)(iii) which provides that households in which all 
members are homeless individuals are entitled to expedited service and 
redesignates 2(i)(1)(iv) as 2(i)(1)(iii). Homeless individuals may 
continue to qualify for expedited service under the financial criteria.

Resource Eligibility Standards--7 CFR 273.8

    Fair Market Value: The Leland Act amended section 5(g) of the Act 
to provide that on October 1, 1996, and each October 1 thereafter, the 
fair market value resource exclusion limit for licensed vehicles shall 
be adjusted, using a base of $5,000, to reflect changes in the new car 
component of the Consumer Price Index for All Urban Consumers (CPI-U) 
published by the Bureau of Labor Statistics for the 12-month period 
ending on June 30 preceding the date of such adjustment and rounded to 
the nearest $50. The ``Certification Provisions of the Mickey Leland 
Hunger Relief Act'' rule, published October 17, 1996 (61 FR 54279), 
amended 7 CFR 273.8(h)(3) accordingly.
    Section 810 of the PRWORA amended section 5(g) of the Act to 
provide that any licensed vehicle that is used for household 
transportation or to obtain or continue employment to the extent that 
the fair market value of the vehicle exceeds $4,600 through September 
30, 1996, and $4,650 beginning October 1, 1996 shall be included in 
financial resources. Section 810 also freezes the fair market value 
exclusion limit used in determining the countable value of the included 
vehicle at $4,650. Accordingly, this rule proposes to amend 7 CFR 273.8 
to include the new resource exclusion level which is effective October 
1, 1996.
    We are proposing to modify the definition in 7 CFR 273.8(c)(i)(C) 
of a vehicle that can be excluded from a household's assets because it 
is used for income-producing purposes to include vehicles needed for 
performing a job, although they may also be used for commuting and for 
normal household errands. Examples would be a car used for a job as a 
delivery person, a motor vehicle used by a courier, a car used by a 
household member to call on customers, even though the vehicle is not 
used for long-distance travel, or any vehicle used to perform a job 
that was advertised as requiring a personally-

[[Page 37457]]

owned motor vehicle. This will ensure that State agencies will not have 
to verify the relative amount of mileage traveled for income-producing 
purposes. Accordingly, this rule proposes to amend 7 CFR 273.8 to 
remove the requirement that a vehicle used for income-producing 
purposes be used primarily for those purposes in order to be excluded 
from a household's assets. FNS is seeking comments on the effect this 
proposal will have on State agencies and on food stamp applicants and 
recipients.
    Reorganization of 7 CFR 273.8: We are taking this opportunity to 
propose a reorganization of 7 CFR 273.8 and the removal of redundant or 
unnecessary verbiage.
    Section 5(g)(2) of the Act requires that the Secretary prescribe 
inclusions and exclusions from financial resources following the 
regulations in force as of June 1, 1982. The law provided an exception 
for the provisions governing vehicles and inaccessible resources. All 
other resource inclusion and exclusion provisions described in the 
regulations as of June 1, 1982 became law by reference and can only be 
changed through legislative action. Nonetheless, there are some 
provisions we are able to change and some areas where we can remove 
redundant or unnecessary verbiage. Those provisions relate to the fair 
market value test for vehicles, inaccessible resources, and the 
transfer of resources. This rule would revise 7 CFR 273.8(e), (g), (h), 
(i) and remove (j).
    Currently, paragraph (e)(3) provides that licensed vehicles shall 
be excluded from resources pursuant to the current provisions under 
paragraph (h). A list of vehicles excluded from resources without 
regard to the fair market value or equity value of the vehicle appears 
in paragraphs (h)(1) and (h)(2). Paragraphs (h)(3) through (h)(6) state 
that vehicles not excluded under paragraphs (h)(1) or (h)(2) must be 
evaluated for their fair market value and/or equity value to determine 
what portion of the value of the vehicle would be counted as a 
resource, unless the vehicle is exempt from such tests. Regulations 
governing the determination of the fair market value of a vehicle are 
set forth in paragraph (g). We believe that this organization is 
confusing and difficult to follow.
    This rule proposes to remove all the provisions from paragraph (h) 
and transfers them to either (e) or (g). The list of vehicles excluded 
from resource consideration currently contained in paragraphs 
(h)(1)(i)-(v) and (h)(2) are incorporated into 7 CFR 273.8(e)(3). The 
remaining provisions of paragraph 5(h)(3), (h)(4) and (h)(5) concerning 
the treatment of non-excluded vehicles are rewritten and combined with 
the provisions in paragraph (g) to improve readability. As a result of 
transferring the text of paragraph (h), that section would no longer 
exist and paragraph (i) would be re-designated as paragraph (h). A 
conforming amendment would also be made to paragraphs (e)(16) and 
(e)(18) to reference the relocation of the vehicle exclusion 
provisions. Furthermore, the current 7 CFR 273.8(j), which provides 
that the resources of certain non-household members shall be treated in 
accordance with 7 CFR 273.11, would be removed. We believe this 
reference is unnecessary.
    In keeping with the principles of the President's Regulatory Reform 
Initiative of increasing State flexibility, this interim rule removes 
the proscriptive regulations in paragraph (g) for determining the fair 
market value of a vehicle and allows State agencies to establish their 
own methodologies. However, to ensure client protection, we are 
proposing to retain the prohibition against increasing the basic value 
of a vehicle because of low mileage, optional equipment, or special 
apparatus for the handicapped as State variations may affect 
eligibility and costs.
    This proposed rule would also revise paragraph (e)(11) which 
excludes from countable resources any resource that is specifically 
excluded by any other Federal statute and lists such excluded 
resources. This rule proposes to remove the specific list of resources 
excluded by other Federal laws. We periodically provide State agencies 
with a list of such excluded resources through agency memoranda because 
the list changes frequently and quickly becomes outdated. Doing this by 
regulations results in incomplete regulations, thereby causing 
confusion. We believe it is sufficient to have the regulation simply 
provide an exclusion for any resource specifically excluded by another 
Federal statute and continue to notify State agencies through agency 
memoranda when such laws are enacted.

Income and Deductions--7 CFR 273.9

    Standard Deduction: Current regulations at 7 CFR 273.9(d)(7) 
provide that effective October 1, 1987, and each October 1 thereafter, 
the standard deduction shall be adjusted to reflect change in the CPI-U 
for items other than food for the twelve months ending the preceding 
June 30. Section 809 of the PRWORA amends section 5(e) of the Act to 
provide that the Secretary shall allow a standard deduction for each 
household in the 48 contiguous States and the District of Columbia, 
Alaska, Hawaii, Guam, and the Virgin Islands of the United States of 
$134, $229, $189, $269, and $118, respectively. The annual adjustment 
is eliminated. This rule would amend the regulations at 7 CFR 
273.9(d)(7) accordingly.
    Excess Shelter Expense Deduction: The current regulations at 7 CFR 
273.9(d)(5) provide that households are entitled to a deduction from 
income for excess shelter expenses that exceed 50 percent of the 
household's net income remaining after all other deductions. For 
households with an elderly or disabled member (as defined in 7 CFR 
271.2), the amount of the deduction is not limited. For other 
households, the deduction is limited. This limit, usually referred to 
as the ``shelter cap,'' has been changed several times due to 
legislation. The current regulations at 7 CFR 273.9(d)(8) were last 
updated in 1987 and provide that effective October 1, 1988, and each 
October 1 thereafter, the maximum limit for the excess shelter expense 
deduction shall be adjusted to reflect changes in the shelter, fuel, 
and utilities components of housing costs in the
CPI-U for the 12 months ending the preceding June 30.
    The Leland Act amended section 5(e) of the Act to gradually 
increase and then remove the limit on the amount of excess shelter 
expenses these households could deduct from their income to determine 
eligibility and benefits. The Leland Act provided that effective 
October 1, 1995 through December 31, 1996, the excess shelter expense 
deduction in the 48 contiguous States and the District of Columbia, 
Alaska, Hawaii, Guam and the Virgin Islands of the United States, shall 
not exceed $247, $429, $353, $300, and $182, respectively, and that the 
cap be removed January 1, 1997.
    The ``Excess Shelter Expense Limit and Standard Utility 
Allowances'' rule, published on November 22, 1994 (59 FR 60098), 
proposed to make the corresponding change in the regulations at 7 CFR 
273.9(d)(8). This rule has been overtaken by more recent statutory 
changes and will not be published in final form.
    Section 809 of the PRWORA once again amended section 5(e) of the 
Act in regard to the excess shelter limit. Section 809 provides that a 
household shall be entitled to an excess shelter expense deduction to 
the extent that the monthly amount expended by a household for shelter 
exceeds an amount equal to 50 percent of monthly household income after 
all other applicable deductions have been allowed. In the case of a 
household that does not contain an elderly or disabled individual, in 
the 48 contiguous States

[[Page 37458]]

and the District of Columbia, Alaska, Hawaii, Guam and the Virgin 
Islands of the United States, the excess shelter expense deduction 
shall not exceed:
    (i) for the period beginning on the date of enactment of the law 
and ending on December 31, 1996, $247, $429, $353, $300, and $182 per 
month, respectively;
    (ii) for the period beginning on January 1, 1997, and ending on 
September 30, 1998, $250, $434, $357, $304, and $184 per month, 
respectively;
    (iii) for fiscal years 1999 and 2000, $275, $478, $393, $334, and 
$203 per month, respectively; and
    (iv) for fiscal year 2001 and each subsequent fiscal year, $300, 
$521, $429, $364, and $221 per month, respectively.
    This proposed rule would make a corresponding change to the 
regulations at 7 CFR 273.9(d)(8).

Determining Household Eligibility and Benefit Levels--7 CFR 273.10

    Maximum Allotments: As required by section 3(o) of the Act prior to 
the PRWORA, the current regulations at 7 CFR 273.10(e)(4)(ii)(F) 
provide that effective October 1, 1990 and each October 1 thereafter, 
maximum food stamp allotments shall be based on 103 percent of the cost 
of the Thrifty Food Plan (TFP) for the four-person reference family for 
the preceding June, rounded to the nearest lower dollar increment.
    Section 804 of the PRWORA amends section 3(o) of the Act by 
providing that on October 1, 1996, and each October 1 thereafter, the 
Department shall adjust the cost of the maximum allotment to reflect 
the cost of the Thrifty Food Plan in the preceding June, and round the 
result to the nearest lower dollar increment for each household size, 
except that on October 1, 1996, the Sectretary may not reduce the cost 
of the maximum allotment in effect on September 30, 1996.
    Accordingly, this proposed rule would amend 7 CFR 273.10(e)(4)(ii) 
to provide that effective October 1, 1996, the maximum food stamp 
allotments shall be based on 100% of the cost of the TFP, as defined in 
section 271.2, for the preceding June, rounded to the nearest lower 
dollar increment, except that on October 1, 1996, the allotments may 
not fall below those in effect on September 30, 1996.
    In addition, the Department is proposing to remove 7 CFR 
273.10(e)(4)(ii)(A) through (F) as these paragraphs, which provide for 
the adjustment of the TFP for the years 1983 through 1995, are 
outdated.

Conforming Amendments

    Aid to Families with Dependent Children: The current food stamp 
regulations contain the terms, ``Aid to Families with Dependent 
Children,'' ``AFDC,'' and ``Aid to Families with Dependent Children 
(AFDC).'' The PRWORA block granted this program to the States and 
renamed it the Temporary Assistance for Needy Families (TANF) program. 
Therefore, these terms are obsolete. Section 109 of the PRWORA made 
conforming amendments to the Food Stamp Act by replacing those terms 
with a reference to assistance under a State program funded under part 
A of title IV of the Social Security Act.
    Accordingly, this rule proposes to amend Subchapter C by replacing 
the words ``Aid to Families with Dependent Children'' with ``Temporary 
Assistance for Needy Families'', by replacing ``AFDC'' with ``TANF'', 
and by replacing ``Aid to Families with Dependent Children (AFDC)'' 
with the phrase ``Temporary Assistance for Needy Families (TANF)''.
    Child support payments: As required by section 5 of the Act prior 
to the PRWORA, the current regulations at 7 CFR 273.9(c)(12) provide 
that the State agency has the option to exclude from unearned income, 
up to $50 monthly of title IV-D child support payments in cases where 
such payments are received by the households from the title IV-D 
support agency responsible for collecting such child support payments 
on behalf of AFDC recipients. The exclusion must be uniformly applied 
to all affected households. Section 109 of the PRWORA amends section 5 
of the Act by removing this exclusion. This rule proposes to remove 7 
CFR 273.9(c)(12) and renumber (c)(13) through (c)(17) accordingly.
    As required by section 5 of the Act prior to the PRWORA, current 
regulations at 7 CFR 276.2(e)(1) provide that the State agency shall be 
liable to FCS for the increased dollar value of coupon allotments 
resulting from providing households with an income exclusion for child 
support payments as described in section 273.9(c)(12). Section 109 of 
the PRWORA amends section 5 of the Act by removing the payback. 
Accordingly, this rule would remove 7 CFR 276.2(e) in its entirety.

Implementation

    State welfare agencies have been instructed through agency 
directive to implement the provisions of the PRWORA without waiting for 
formal regulations. Sections 803 (Treatment of Children Living at 
Home), 805 (Definition of Homeless), and 838 (Expedited Service) were 
required to be implemented as of August 22, 1996. Sections 804 
(Adjustment of the Thrifty Food Plan) and 810 (Vehicle Allowance) were 
required to be implemented as of October 1, 1996. Section 809 (Excess 
Shelter Cap) required no change until January 1, 1997. Sections 809 
(Standard Deduction), 826 (Minimum Allotment), and 109 (Conforming 
Amendments) required no immediate action by the State agencies. The 
Department is proposing that the changes in this rule be effective and 
must be implemented the first day of the month 60 days from date of 
publication of the final rule. State agencies shall implement the 
provisions no later than the required implementation date. State 
agencies would be required to adjust the cases of ongoing households at 
the next recertification, at household request, or when the case is 
next reviewed, whichever comes first. If implementation of the above 
Act or this rule is delayed, benefits shall be restored, as 
appropriate, in accordance with the Food Stamp Act. Any variances 
resulting from implementation of the provisions of the final rule would 
be excluded from error analysis for 120 days from the first day of the 
month 60 days from date of publication of the final rule.

List of Subjects

7 CFR Part 271

    Administrative practice and procedure, Food stamps, Grant 
programs--social programs.

7 CFR Part 273

    Administrative practice and procedures, Aliens, Claims, Food 
stamps, Fraud, Grant programs-social programs, Penalties, Reporting and 
recordkeeping requirements, Social Security, Students.

7 CFR Part 276

    Administrative practice and procedure, Food stamps, Reporting and 
recordkeeping requirements.

    Accordingly, 7 CFR chapter II, subchapter C, and parts 271, 273, 
276 are proposed to be amended as follows:

SUBCHAPTER C--FOOD STAMP AND FOOD DISTRIBUTION PROGRAM--[AMENDED]

    1. In Subchapter C:
    a. The words ``Aid to Families with Dependent Children'' are 
removed wherever they appear and the words ``Temporary Assistance for 
Needy Families'' are added in their place.

[[Page 37459]]

    b. The references to ``AFDC'' are removed wherever they appear and 
``TANF'' is added in their place.
    c. The references to ``Aid to Families with Dependent Children 
(AFDC)'' are removed wherever they appear, and the words ``Temporary 
Assistance for Needy Families (TANF)'' are added in their place.
    2. The authority citation for parts 271, 273, and 276 is revised to 
read as follows:

    Authority: 7 U.S.C. 2011-2036.

PART 271--GENERAL INFORMATION AND DEFINITIONS


Sec. 271.2  [Amended]

    3. In Sec. 271.2:
    a. Paragraph (3) of the definition of ``Homeless individual'' is 
amended by adding the words ``for not more than 90 days'' after the 
word ``accommodation''.
    b. The definition of ``Minimum benefit'' is amended by removing all 
text after the word ``benefit'' in the second sentence and adding in 
its place ``shall be $10.''
    c. The definition of ``Spouse'' is removed.

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

    4. In Sec. 273.1, paragraphs (a), (b), (c) and (e) are revised to 
read as follows:


Sec. 273.1  Household concept.

    (a) General household definition. A household is composed of one of 
the following individuals or groups of individuals, unless otherwise 
specified in paragraph (b) of this section:
    (1) An individual living alone;
    (2) An individual living with others, but customarily purchasing 
food and preparing meals for home consumption separate and apart from 
others; or
    (3) A group of individuals who live together and customarily 
purchase food and prepare meals together for home consumption.
    (b) Special household requirements. (1) Required household 
combinations. The following individuals who live with others shall be 
considered as customarily purchasing food and preparing meals with the 
others, even if they do not do so, and thus must be included in the 
same household, unless otherwise specified.
    (i) Spouses;
    (ii) A child under 22 years of age who is living with his or her 
natural or adoptive parent(s) or step-parent(s); and
    (iii) A child (other than a foster child) under 18 years of age who 
lives with and is under the parental control of a household member 
other than his or her parent. A child shall be considered to be under 
parental control for purposes of this provision if he or she is 
financially or otherwise dependent on a member of the household.
    (2) Elderly and disabled persons. Notwithstanding the provisions of 
paragraph (a) of this section, an otherwise eligible member of a 
household who is 60 years of age or older and is unable to purchase and 
prepare meals because he or she suffers from a disability considered 
permanent under the Social Security Act or a non disease-related, 
severe, permanent disability may be considered, together with his or 
her spouse (if living there), a separate household from the others with 
whom the individual lives. Separate household status under this 
provision shall not be granted when the income of the others with whom 
the elderly disabled individual resides (excluding the income of the 
elderly and disabled individual and his or her spouse) exceeds 165 
percent of the poverty line.
    (3) Boarders. (i) Residents of a commercial boarding house, 
regardless of the number of residents, are not eligible to participate 
in the Program. A commercial boarding house is an establishment 
licensed as an enterprise that offers meals and lodging for 
compensation. In project areas without licensing requirements, a 
commercial boarding house is a commercial establishment which offers 
meals and lodging for compensation with the intent of making a profit.
    (ii) All other individuals or groups of individuals paying a 
reasonable amount for meals or meals and lodging shall be considered 
boarders and are not eligible to participate in the Program 
independently of the household providing the board. Such individuals or 
groups of individuals may participate, along with a spouse or children 
living with them, as members of the household providing the boarder 
services, only at the request of the household providing the boarder 
service. An individual paying less than a reasonable amount for board 
shall not be considered a boarder but shall be considered, along with a 
spouse or children living with them, as a member of the household 
providing the board.
    (A) For individuals whose board arrangement is for more than two 
meals per day, ``reasonable compensation'' shall be an amount that 
equals or exceeds the maximum food stamp allotment for the appropriate 
size of the boarder household.
    (B) For individuals whose board arrangement is for two meals or 
less per day, ``reasonable compensation'' shall be an amount that 
equals or exceeds two-thirds of the maximum food stamp allotment for 
the appropriate size of the boarder household.
    (iii) Boarders shall not be considered to be residents of an 
institution for the purposes of paragraph (b)(7)(vii) of this section.
    (4) Foster care individuals. Individuals placed in the home of 
relatives or other individuals or families by a Federal, State, or 
local governmental foster care program shall be considered to be 
boarders and cannot participate in the Program independently of the 
household providing the foster care services. Such foster care 
individuals may participate, along with a spouse or children living 
with them, as members of the household providing the foster care 
services, only at the request of the household providing the foster 
care.
    (5) Roomers. Individuals to whom a household furnishes lodging for 
compensation, but not meals, may participate as separate households. 
Persons described in paragraph (b)(1) of this section shall not be 
considered roomers.
    (6) Live-in attendants. Live-in attendants may participate as a 
separate household. Persons described in paragraph (b)(1) of this 
section shall not be considered live-in attendants.
    (7) Ineligible household members. The following persons are not 
eligible to participate as separate households or as a member of any 
household:
    (i) Ineligible aliens and students as specified in Sec. 273.4 and 
Sec. 273.5, respectively;
    (ii) SSI recipients in ``cash-out'' States as specified in 
Sec. 273.20;
    (iii) Individuals disqualified for noncompliance with the work 
requirements of Sec. 273.7;
    (iv) Individuals against whom a sanction was imposed for failure to 
comply with a workfare requirement as specified in Sec. 273.22;
    (v) Individuals disqualified for failure to provide an SSN as 
specified in Sec. 273.6;
    (vi) Individuals disqualified for an intentional Program violation 
as specified in Sec. 273.16; and
    (vii) Residents of an institution, with some exceptions. 
Individuals shall be considered residents of an institution when the 
institution provides them with the majority of their meals (over 50 
percent of three meals daily) as part of the institution's normal 
services. Exceptions to this requirement include only the individuals 
listed in paragraphs (b)(7) (vii)(A) through (b)(7)(vii)(E) of this 
section. The individuals listed in paragraphs (b)(7)(vii)(A) through 
(b)(7)(vii)(E) can

[[Page 37460]]

participate in the Program and shall be treated as separate households 
from the others with whom they reside pursuant to the mandatory 
household combination requirements of paragraph (b)(1) of this section, 
unless otherwise stated:
    (A) Individuals who are residents of federally subsidized housing 
for the elderly;
    (B) Individuals who are narcotic addicts or alcoholics who reside 
at a facility or treatment center for the purpose of regular 
participation in a drug or alcohol treatment and rehabilitation 
program, and their children but not the spouse of such persons who live 
with them at the treatment center or facility;
    (C) Individuals who are disabled or blind who are residents of 
group living arrangements;
    (D) Individual women or women with their children who are 
temporarily residing in a shelter for battered women and children; and
    (E) Individuals who are residents of public or private nonprofit 
shelters for homeless persons.
    (c) Unregulated situations. For situations that are not clearly 
addressed by the provisions of paragraphs (a) and (b) of this section, 
the State agency may apply its own policy for determining when an 
individual is a separate household or a member of another household if 
the policy is applied consistently throughout the State.
* * * * *
    (e) Strikers. Households with a striking member are not eligible to 
participate in the Program, unless the household was eligible for 
benefits the day prior to the strike and is otherwise eligible at the 
time of application. A striker shall be anyone involved in a strike or 
concerted stoppage of work by employees (including a stoppage by reason 
of the expiration of a collective-bargaining agreement) and any 
concerted slowdown or other concerted interruption of operations by 
employees. Any employee affected by a lockout, however, shall not be 
deemed to be a striker. Further, an individual who goes on strike who 
is exempt from work registration, in accordance with Sec. 273.7(b), the 
day prior to the strike, other than those exempt solely on the grounds 
that they are employed, shall not be deemed to be a striker.
    (1) Pre-strike eligibility shall be determined by considering the 
day prior to the strike as the day of application and assuming the 
strike did not occur.
    (2) Eligibility at the time of application shall be determined by 
comparing the striking member's income before the strike to the 
striker's current income and adding the higher of the two to the 
current income of non-striking members during the month of application. 
If the household is eligible, the higher income figure shall also be 
used in determining the household's benefits.
* * * * *


Sec. 273.2  [Amended]

    5. In Sec. 273.2:
    a. Paragraph (i)(1)(iii) is removed.
    b. Paragraph (i)(1) (iv) is redesignated as paragraph (i)(1)(iii).
    c. Paragraph (i)(3)(i) is amended by removing the word ``fifth'' 
wherever it appears and adding the word ``seventh'' in its place.
    d. Paragraph (i)(3)(ii) is amended by removing the words ``5 
calendar days'' and adding the words ``7 calendar days'' in its place.
    6. In Sec. 273.8:
    a. Paragraph (c)(2) is amended by removing the regulatory reference 
to ``paragraph (h)'' and adding in its place a regulatory reference to 
``paragraph (g)''.
    b. Paragraph (e)(3) is revised.
    c. Paragraph (e)(11) is amended by removing the second sentence of 
the introductory text and by removing paragraphs (e)(11)(i) through 
(e)(11)(ix).
    d. Paragraph (e)(16) is amended by removing the regulatory 
reference to ``paragraphs (h)(1)(i), (h)(1)(ii) or (h)(1)(v)'' and 
adding in its place the regulatory reference to ``paragraphs 
(e)(3)(i)(A), (e)(3)(i)(B) or (e)(3)(i)(E)'', respectively.
    e. Paragraph (e)(18) is amended by removing the regulatory 
reference to ``paragraph (h)'' and adding in its place a regulatory 
reference to ``paragraph (g)''.
    f. Paragraph (g) is revised.
    g. Paragraphs (h) and (j) are removed and paragraph (i) is 
redesignated as paragraph (h).
    The revisions read as follows:


Sec. 273.8  Resource eligibility standards.

* * * * *
    (e) Exclusions from resources. * * *
    (3)(i) Licensed vehicles that meet the following conditions:
    (A) Used for income-producing purposes such as, but not limited to, 
a taxi, truck, or fishing boat, or a vehicle used for deliveries, to 
call on customers, or required by the terms of employment. Licensed 
vehicles that have previously been used by a self-employed household 
member engaged in farming but are no longer used over 50 percent of the 
time in farming because the household member has terminated his/her 
self-employment from farming shall continue to be excluded as a 
resource for one year from the date the household member terminated 
his/her self-employment farming;
    (B) Annually producing income consistent with its fair market 
value, even if used only on a seasonal basis;
    (C) Necessary for long-distance travel, other than daily commuting, 
that is essential to the employment of a household member (or 
ineligible alien or disqualified person whose resources are being 
considered available to the household), for example, the vehicle of a 
traveling sales person or a migrant farm worker following the work 
stream;
    (D) Used as the household's home and, therefore, excluded under 
paragraph (e)(1) of this section;
    (E) Necessary to transport a physically disabled household member 
(or ineligible alien or disqualified person whose resources are being 
considered available to the household) regardless of the purpose of 
such transportation (limited to one vehicle per physically disabled 
household member). A vehicle shall be considered necessary for the 
transportation of a physically disabled household member if the vehicle 
is specially equipped to meet the special needs of the disabled person 
or if the vehicle is a special type of vehicle that makes it possible 
to transport the disabled person. The vehicle need not have special 
equipment or be used primarily by or for the transportation of the 
physically disabled household member; or
    (F) Necessary to carry fuel for heating or water for home use when 
such transported fuel or water is anticipated to be the primary source 
of fuel or water for the household during the certification period. 
Households shall receive this resource exclusion without having to meet 
any additional tests concerning the nature, capabilities, or other uses 
of the vehicle. Households shall not be required to furnish 
documentation, as mandated by Sec. 273.2(f)(4), unless the exclusion of 
the vehicle is questionable. If the basis for exclusion of the vehicle 
is questionable, the State agency may require documentation from the 
household, in accordance with Sec. 273.2(f)(4).
    (ii) On those Indian reservations that do not require vehicles 
driven by tribal members to be licensed, such vehicles shall be treated 
as licensed vehicles for the purpose of this exclusion.
    (iii) The exclusion in paragraphs (e)(3)(i)(A) through (e)(3)(i)(F) 
of this section will apply when the vehicle is not in use because of 
temporary unemployment, such as when a taxi driver is ill and cannot 
work, or when

[[Page 37461]]

a fishing boat is frozen in and cannot be used.
* * * * *
    (g) Determining the value of non-excluded vehicles. (1) The State 
agency shall individually evaluate the fair market value of each 
licensed vehicle that is not excluded under paragraph (e)(3) of this 
section. That portion of the fair market value that exceeds $4,650 
beginning October 1, 1996, shall be counted in full toward the 
household's resource level, regardless of any encumbrances on the 
vehicle. Such licensed vehicles as well as all unlicensed vehicles 
shall also be evaluated for their equity value (fair market value less 
encumbrances), unless specifically exempt from the equity value test. 
If the vehicle has a countable fair market value of more than $4,650 
after October 1, 1996, and also has a countable equity value, only the 
greater of the two amounts shall be counted as a resource. Only the 
following vehicles are exempt from the equity value test:
    (i) Vehicles excluded under paragraph (e)(3)(i) of this section;
    (ii) One licensed vehicle per household; and
    (iii) Any other vehicle used to transport household members to and 
from employment (including times during temporary periods of 
unemployment), or to and from training or education that is preparatory 
to employment, or to seek employment in compliance with the employment 
and training criteria specified in Sec. 273.7.
    (2) State agencies shall be responsible for establishing 
methodologies for determining the fair market value of vehicles. In 
establishing such methodologies, the State agency shall not increase 
the basic value of a vehicle by adding the value of low mileage or 
other factors such as optional equipment or special apparatus for the 
handicapped. Households which claim that the State agency's 
determination of the value of its vehicle(s) does not apply shall be 
given the opportunity to acquire verification of the true value of the 
vehicle from a reliable source.
* * * * *
    7. In Sec. 273.9:
    a. Paragraph (c)(12) is removed and paragraphs (c)(13), (c)(14), 
(c)(15), (c)(16) and (c)(17) are redesignated as paragraphs (c)(12), 
(c)(13), (c)(14), (c)(15) and (c)(16) respectively.
    b. Paragraphs (d)(7) and (d)(8) are revised to read as follows:


Sec. 273.9  Income and deductions.

* * * * *
    (d) * * *
    (7) Adjustment of standard deduction. Effective October 1, 1996, 
for each household in the 48 contiguous States and the District of 
Columbia, Alaska, Hawaii, Guam and the Virgin Islands of the United 
States, the standard deduction shall be $134, $229, $189, $269, and 
$118, respectively.
    (8) Adjustment of shelter deduction. In the case of a household 
that does not contain an elderly or disabled individual, in the 48 
contiguous States and the District of Columbia, Alaska, Hawaii, Guam 
and the Virgin Islands of the United States, the excess shelter expense 
deduction shall not exceed
    (i) For the period beginning August 22, 1996, and ending on 
December 31, 1996, $247, $429, $353, $300, and $182 per month, 
respectively;
    (ii) For the period beginning on January 1, 1997, and ending on 
September 30, 1998, $250, $434, $357, $304, and $184 per month, 
respectively;
    (iii) For the period beginning on October 1, 1998 and ending on 
September 30, 2000, $275, $478, $393, $334, and $203 per month, 
respectively; and
    (iv) For the period beginning on October 1, 2000 and thereafter, 
$300, $521, $429, $364, and $221 per month, respectively.
* * * * *
    8. In Sec. 273.10 paragraph (e)(4)(ii) is revised to read as 
follows.


Sec. 273.10  Determining household eligibility and benefit levels.

* * * * *
    (e) Calculating net income and benefit levels. * * *
    (4) Thrifty Food Plan (TFP) and Maximum Food Stamp Allotments. * * 
*
    (ii) Adjustment. Effective October 1, 1996, the maximum food stamp 
allotments shall be based on 100% of the cost of the TFP as defined in 
section 271.2 for the preceding June, rounded to the nearest lower 
dollar increment, except that on October 1, 1996, the allotments may 
not fall below those in effect on September 30, 1996.
* * * * *


Sec. 276.2  [Amended]

    9. In Sec. 276.2, paragraph (e) is removed.

    Dated: June 29, 1999.
Shirley R. Watkins,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 99-17445 Filed 7-9-99; 8:45 am]
BILLING CODE 3410-30-U