[Federal Register Volume 64, Number 250 (Thursday, December 30, 1999)]
[Rules and Regulations]
[Pages 73381-73385]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33932]



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  Federal Register / Vol. 64, No. 250 / Thursday, December 30, 1999 / 
Rules and Regulations  

[[Page 73381]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 253 and 254

RIN 0584-AC65


Food Distribution Program on Indian Reservations: 
Disqualification Penalties for Intentional Program Violations

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: The Food and Nutrition Service is amending Food Distribution 
Program regulations in response to an audit recommendation by the 
Department of Agriculture's Office of Inspector General. The changes 
are intended to improve program integrity and promote consistency with 
the Food Stamp Program. This rule defines intentional program 
violations, establishes penalties for them, and requires Indian Tribal 
Organizations and State agencies that administer the Food Distribution 
Program to take appropriate action on suspected cases of intentional 
program violations. It also addresses the establishment and collection 
of claims against households for overissuances under the Food 
Distribution Program, and makes technical changes to correct erroneous 
regulatory references.

EFFECTIVE DATE: This rule is effective February 28, 2000.

FOR FURTHER INFORMATION CONTACT: Lillie F. Ragan, Assistant Branch 
Chief, Household Programs Branch, Food Distribution Division, Food and 
Nutrition Service, U.S. Department of Agriculture, Room 510, 3101 Park 
Center Drive, Alexandria, Virginia 22302-1594, or by telephone at (703) 
305-2662.

SUPPLEMENTARY INFORMATION:

I. Procedural Matters
II. Background and Discussion of Final Rule

I. Procedural Matters

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866. Therefore, it has not been reviewed by the 
Office of Management and Budget.

Public Law 104-4

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under Section 202 of the UMRA, the 
Food and Nutrition Service generally must prepare a written statement, 
including a cost-benefit analysis, for proposed and final rules with 
``Federal mandates'' that may result in expenditures by State, local, 
or tribal governments, in the aggregate, or by the private sector, of 
$100 million or more in any one year. When such a statement is needed 
for a rule, Section 205 of the UMRA generally requires the Food and 
Nutrition Service to identify and consider a reasonable number of 
regulatory alternatives and adopt the least costly, most cost-
effective, or least burdensome alternative that achieves the objectives 
of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) for State, local, and tribal 
governments or the private sector of $100 million or more in any one 
year. Therefore, this rule is not subject to the requirements of 
Sections 202 and 205 of the UMRA.

Executive Order 12372

    The programs addressed in this action are listed in the Catalog of 
Federal Domestic Assistance under Nos. 10.550 and 10.570, and for the 
reasons set forth in the final rule in 7 CFR 3015, Subpart V, and 
related Notice (48 FR 29115), are included in 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). The 
Administrator of the Food and Nutrition Service has certified that this 
action will not have a significant impact on a substantial number of 
small entities. Indian Tribal Organizations and State agencies that 
administer the Food Distribution Program, and program participants will 
be affected by this rulemaking, but the economic effect will not be 
significant.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. The 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. 
Prior to any judicial challenge to the provisions of this rule or the 
application of its provisions, all applicable administrative procedures 
must be exhausted.

Paperwork Reduction Act

    This rule does not contain information collection requirements 
subject to approval by the Office of Management and Budget under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3507).

II. Background and Discussion of the Final Rule

    On July 22, 1999, the Food and Nutrition Service (FNS) published a 
rule at 64 FR 39432 proposing amendments to the regulations for the 
Food Distribution Program at 7 CFR Parts 253 and 254. These proposed 
changes would have defined intentional program violations (IPV), 
established penalties for them, and required Indian Tribal 
Organizations (ITOs) and State agencies that administer the Food 
Distribution Program to take appropriate action on suspected cases of 
IPV. This proposed rule was prompted, in part, by an audit 
recommendation by the Department of Agriculture's Office of Inspector 
General. Please refer to the proposed rule for a discussion of the 
audit and its findings.
    Comments were solicited through September 20, 1999, on the 
provisions of the proposed rulemaking. FNS received two comment 
letters, which are discussed in detail below. For a full understanding 
of the provisions of this

[[Page 73382]]

final rule, the reader should refer to the preamble of the proposed 
rule.
    In preparing the final rule, we identified several areas discussed 
in the proposed rule that needed further explanation to ensure that the 
Department's position is clear. We wish to emphasize that these changes 
to the final rule are made for the purposes of clarification, and that 
the Department's position with regard to the necessity of the proposed 
changes has not altered.
    In the discussion and regulatory text below, we have used the term 
``State agency,'' as defined at 7 CFR 253.2 and 254.2, to include ITOs 
authorized to administer the Food Distribution Program.

1. Initiating Administrative Disqualification Procedures

    Section 253.8(a) of the proposed rule would define IPV, in part, as 
an act committed by an individual who willingly, knowingly and with 
deceitful intent misrepresents the household's circumstances or 
withholds facts in order to obtain benefits that the household is not 
entitled to receive. In preparing the final rule, we realized that 
there may be some confusion relating to the use of the term 
``individual'' in the proposed rule. By ``individual'' we meant the 
individual household member. We wanted to differentiate between the 
individual household member and the household as a whole. Since 
``household'' is a term defined in the Food Distribution Program 
regulations, we believe the use of the term ``household member,'' 
rather than the term ``individual,'' is preferable for the purposes of 
this rule. Therefore, we are revising the final rule to remove the term 
``individual'' and replace it with the term ``household member'' 
throughout the regulatory text pertaining to IPVs.

2. Referral to Authorities for Prosecution

    Section 253.8(e)(7) of the proposed rule would require State 
agencies to refer all substantiated cases of intentional program 
violations to Federal, State, or local authorities for prosecution 
under applicable statutes. It was our intent that the term ``local'' 
include Tribal authorities. However, in preparing the final rule we 
realized that ``local'' is commonly used to refer to County-level 
entities. Some readers may not associate ``Tribal authorities'' with 
the term ``local authorities.'' To avoid such confusion, we are 
revising the final rule to specifically include the term ``Tribal,'' as 
appropriate, throughout regulatory text.

3. Notification Requirements

    Section 253.8(e)(2) of the proposed rule would require State 
agencies to inform households in writing of the disqualification 
penalties for intentional program violation each time they apply for 
benefits (including recertifications). This notice is intended to 
advise the household of the consequences of committing an intentional 
program violation. One of those consequences may be prosecution by 
Tribal, Federal, State, or local authorities. In preparing the final 
rule we realized that the notification requirements did not clearly 
specify that households be informed of the possibility of prosecution. 
To ensure that households are properly informed of all the consequences 
of committing an intentional program violation, we are revising section 
253.8(e)(2) to require State agencies to include a statement in the 
notice informing households of the possibility of prosecution by 
authorities.

4. Application of the Disqualification Penalties

    We wish to clarify that the procedures proposed at section 253.8(h) 
would require imposition of the disqualification penalties without 
regard to the household member's current eligibility status. Because of 
an oversight, this policy was not stated correctly in one section of 
the preamble to the proposed rule that concerns fair hearing notices. 
However, it was stated correctly elsewhere in the preamble and the 
regulatory text. We apologize for any confusion caused by this 
oversight. Although there is no change to the final rule, we wish to 
confirm that the State agency must proceed with imposition of the 
disqualification penalty, even if the household member is not certified 
to participate in the Food Distribution Program at the time the 
disqualification is to begin.

5. Claims Against Households

    One commenter suggested that we allow households to repay an 
overissuance claim by voluntarily taking less commodities than they are 
entitled to receive. The value of the commodities not taken each month 
would be applied to the outstanding claim.
    Current policy on the collection of overissuance claims is 
addressed in FNS Handbook 501, Chapter V, Section 6, State Agency 
Claims Procedures Against Households. Subsection 5670 prohibits the 
recovery of benefits from households through a reduction in the amount 
of commodities the household would otherwise receive. We do not feel 
that this policy should be changed by this action. Such a change would 
place an undue burden on State agencies. They would be required to 
determine the value of each commodity not selected by the household 
each month. They would also be required to track the ``payments'' until 
the claim is paid in full. We are reluctant to impose a new burden on 
State agencies and make a change in policy without first providing an 
opportunity for public comment. Therefore, we are not incorporating the 
commenter's proposal in the final rule.
    Another commenter, who expressed strong support for administrative 
disqualification penalties for intentional program violations, 
recommended stronger penalties against households that fail to repay 
overissuance claims. The procedures for the collection of overissuance 
claims and actions to be taken against households that fail to repay 
claims are addressed in FNS Handbook 501, Chapter V, Section 6, State 
Agency Claims Procedures Against Households. We are reluctant to change 
these procedures by instituting a new penalty without first providing 
an opportunity for public comment. Therefore, we are not incorporating 
the commenter's recommendation in the final rule.

List of Subjects

7 CFR Part 253

    Administrative practice and procedure, Food assistance programs, 
Grant programs, Social programs, Indians, Reporting and recordkeeping 
requirements, Surplus agricultural commodities.

7 CFR Part 254

    Administrative practice and procedure, Food assistance programs, 
Grant programs, Social programs, Indians, Reporting and recordkeeping 
requirements, Surplus agricultural commodities.

    Accordingly, 7 CFR parts 253 and 254 are amended as follows:

PART 253--ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR 
HOUSEHOLDS ON INDIAN RESERVATIONS

    1. The authority citation for part 253 is revised to read as 
follows:

    Authority: 91 Stat. 958 (7 U.S.C. 2011-2036).

    2. In Sec. 253.2, redesignate paragraphs (f) through (i) as 
paragraphs (g) through (j), respectively, and add new paragraph (f) as 
follows:


Sec. 253.2  Definitions.

* * * * *
    (f) Overissuance means the dollar value of commodities issued to a

[[Page 73383]]

household that exceeds the dollar value of commodities it was eligible 
to receive.
* * * * *


Sec. 253.5  [Amended]

    3. In Sec. 253.5:
    a. Amend paragraph (a)(1) by removing the reference ``Sec. 253.9'' 
and adding, in its place, the reference ``part 250 of this chapter'';
    b. Amend paragraph (a)(2)(vii) by removing the reference ``part 283 
of this subchapter'' and adding, in its place, the words ``this part'';
    c. Amend paragraph (d)(1) by removing the references 
``Sec. 283.7(a)(2) and (b)(3)'' and adding, in its place, the 
references ``Sec. 253.7(a)(2) and (b)(3)'', and by removing the 
reference ``Sec. 283.7(c)'' and adding, in its place, the reference 
``Sec. 253.7(c)'';
    d. Amend paragraph (k)(1) by removing the reference ``Sec. 283.9(g) 
of this part'' and adding, in its place, the reference 
``Sec. 253.11(g)'';
    e. Amend paragraph (k)(2) by removing the reference ``Sec. 283.4'' 
and adding, in its place, the reference ``Sec. 253.4'';
    f. Amend paragraph (l)(1)(iii) by removing the reference 
``Sec. 283.5(k) or Sec. 283.9(g)'' and adding, in its place, the 
reference ``paragraph (k) of this section or Sec. 253.11(g)''; and
    g. Amend paragraph (l)(3)(i) by removing the reference 
``Sec. 283.4(d)(2)'' and adding, in its place, the reference 
``paragraph (m) of this section'', and removing the reference 
``Sec. 283.5'' and adding, in its place, the reference 
``Sec. 253.4(e)(2)''.


Sec. 253.6  [Amended]

    4. In Sec. 253.6:
    a. Amend paragraph (a)(3) by removing the reference 
``Sec. 283.7(a)(10)(i) and Sec. 283.7(a)(10)(ii)'' and adding, in its 
place, the reference ``Sec. 253.7(a)(10)(i) and 
Sec. 253.7(a)(10)(ii)'';
    b. Amend paragraph (b)(2) by removing the reference 
``Sec. 283.6(a)(3)(iv)'' and adding, in its place, the reference 
``paragraph (a)(2)(iv) of this section'';
    c. Amend paragraph (c)(1) by removing the reference 
``Sec. 283.6(a)(2)(ii)'' and adding, in its place, the reference 
``paragraph (a)(2)(ii) of this section'';
    d. Amend paragraph (d)(2)(iii) by removing the reference 
``Sec. 283.7(b)(1)(iii)'' and adding, in its place, the reference 
``Sec. 253.7(b)(1)(iii)'';
    e. Amend paragraph (e)(1)(i) by removing the reference 
``Sec. 283.6(a)(2)(ii)'' and adding, in its place, the reference 
``paragraph (a)(2)(ii) of this section'', and removing the reference 
``Sec. 283.6(c)'' and adding, in its place, the reference ``paragraph 
(c) of this section'';
    f. Amend paragraph (e)(2)(ii)(F) by removing the reference 
``Sec. 283.7'' and adding, in its place, the reference ``Sec. 253.7''; 
and
    g. Amend paragraph (e)(3)(ix) by removing the reference 
``Sec. 283.7(b)(1)(iii)'' and adding, in its place, the reference 
``Sec. 253.7(b)(1)(iii)''.
    5. In Sec. 253.7:
    a. Amend paragraph (a)(2) by removing the reference 
``Sec. 283.7(f)'' and adding, in its place, the words ``paragraph (g) 
of this section'';
    b. Amend paragraph (a)(5) by removing the reference 
``Sec. 283.7(a)(7) or Sec. 283.7(a)(9)'' and adding, in its place, the 
reference ``paragraphs (a)(7) and (a)(9) of this section'';
    c. Add two new sentences to the end of paragraph (b)(3)(iii)(A);
    d. Amend the second sentence of paragraph (b)(3)(iii)(B) by 
removing the words ``and no more than 20'', and by removing the word 
``mailed'' and adding, in its place, the word ``issued'';
    e. Revise paragraph (b)(3)(iii)(C);
    f. Add new paragraph (b)(3)(iii)(E);
    g. Amend paragraph (c)(1) by removing the reference 
``Sec. 283.6(e)(1)'' and adding, in its place, the reference 
``Sec. 253.6(e)(1)'';
    h. Remove paragraph (e)(3);
    i. Redesignate paragraphs (f) and (g) as paragraphs (g) and (h), 
respectively, and add a new paragraph (f);
    j. Amend newly redesignated paragraph (g)(1) by removing the 
reference ``Sec. 283.6(c)(2)'' and adding, in its place, the reference 
``Sec. 253.6(c)(2)'';
    k. Amend newly redesignated paragraph (g)(2) by removing the 
reference ``Sec. 283.7(a)(7) and Sec. 283.7(a)(9)'' and adding, in its 
place, the reference ``paragraphs (a)(7) and (a)(9) of this section'';
    l. Revise newly redesignated paragraph (h)(2)(i);
    m. Revise newly redesignated paragraph (h)(11)(iii); and
    n. Add new paragraph (h)(11)(iv).
    The revisions and additions read as follows:


Sec. 253.7  Certification of households.

* * * * *
    (b) Eligibility determinations. * * *
    (3) Certification notices. * * *
    (iii) Notice of adverse action.
    (A) * * * The notice must be issued within 10 days of determining 
that an adverse action is warranted. The adverse action must take 
effect with the next scheduled distribution of commodities that follows 
the expiration of the advance notice period, unless the household 
requests a fair hearing.
* * * * *
    (C) The notice of adverse action must include the following in 
easily understandable language:
    (1) The reason for the adverse action;
    (2) The date the adverse action will take effect;
    (3) The household's right to request a fair hearing and continue to 
receive benefits pending the outcome of the fair hearing;
    (4) The date by which the household must request the fair hearing;
    (5) The liability of the household for any overissuances received 
while awaiting the outcome of the fair hearing, if the fair hearing 
official's decision is adverse to the household;
    (6) The telephone number and address of someone to contact for 
additional information; and
    (7) The telephone number and address of an individual or 
organization that provides free legal representation, if available.
* * * * *
    (E) If the State agency determines that a household received more 
USDA commodities than it was entitled to receive, it must establish a 
claim against the household in accordance with Sec. 253.9. The initial 
demand letter for repayment must be provided to the household at the 
same time the notice of adverse action is issued. It may be combined 
with the notice of adverse action.
* * * * *
    (f) Treatment of disqualified household members. (1) The following 
are not eligible to participate in the Food Distribution Program:
    (i) Household members disqualified from the Food Distribution 
Program for an intentional program violation under Sec. 253.8. These 
household members may participate, if otherwise eligible, in the Food 
Distribution Program once the period of disqualification has ended.
    (ii) Household members disqualified from the Food Stamp Program for 
an intentional program violation under Sec. 273.16 of this chapter. 
These household members may participate, if otherwise eligible, in the 
Food Distribution Program once the period of disqualification under the 
Food Stamp Program has ended. The State agency must, in cooperation 
with the appropriate food stamp agency, develop a procedure that 
ensures that these household members are identified.
    (iii) Households disqualified from the Food Distribution Program 
for failure to pay an overissuance claim. The circumstances under which 
a disqualification is allowed for such failure are specified in FNS 
Handbook 501.

[[Page 73384]]

    (2) During the time a household member is disqualified, the 
eligibility and food distribution benefits of any remaining household 
members will be determined as follows:
    (i) Resources. The resources of the disqualified member will 
continue to count in their entirety to the remaining household members.
    (ii) Income. A pro rata share of the income of the disqualified 
member will be counted as income to the remaining members. This pro 
rata share is calculated by dividing the disqualified member's earned 
(less the 20 percent earned income deduction) and unearned income 
evenly among all household members, including the disqualified member. 
All but the disqualified member's share is counted as income to the 
remaining household members.
    (iii) Eligibility and benefits. The disqualified member will not be 
included when determining the household's size for purposes of 
assigning food distribution benefits to the household or for purposes 
of comparing the household's net monthly income with the income 
eligibility standards.
* * * * *
    (h) Fair hearing. * * 
    (2) Timely action on hearings--(i) Time frames for the State 
agency. The State agency must conduct the hearing, arrive at a 
decision, and notify the household of the decision within 60 days of 
receipt of a request for a fair hearing. The fair hearing decision may 
result in a change in the household's eligibility or the amount of 
commodities issued to the household based on household size. The State 
agency must implement these changes to be effective for the next 
scheduled distribution of commodities following the date of the fair 
hearing decision. If the commodities are normally made available to the 
household within a specific period of time (for example, from the first 
day of the month through the tenth day of the month), the effective 
date of the disqualification will be the first day of that period.
* * * * *
    (11) Hearing decisions. * * *
    (iii) Within 10 days of the date the fair hearing decision is 
issued, the State agency must issue a notice to the household advising 
it of the decision.
    (A) If the decision upheld the adverse action by the State agency, 
the notice must advise the household of the right to pursue judicial 
review.
    (B) If the decision upheld a disqualification, the notice must also 
include the reason for the decision, the date the disqualification will 
take effect, and the duration of the disqualification (that is, 12 
months; 24 months; or permanent). The State agency must also advise any 
remaining household members if the household's benefits will change, or 
if the household is no longer eligible as a result of the 
disqualification.
    (iv) The State agency must revise the demand letter for repayment 
issued previously to the household to include the value of all 
overissued commodities provided to the household during the appeal 
process, unless the fair hearing decision specifically requires the 
cancellation of the claim. The State agency must also advise the 
household that collection action on the claim will continue, in 
accordance with FNS Handbook 501, unless suspension is warranted.
* * * * *


Sec. 253.8  [Redesignated as Sec. 253.10 and Amended]

    6. Sec. 253.8 is redesignated as Sec. 253.10 and amended as 
follows:
    a. Amend paragraph (c)(12) by removing the reference 
``Sec. 283.7(b)(9)'' and adding, in its place, the reference 
``Sec. 253.7(a)(9)'';
    b. Amend paragraph (e) by removing the words ``the State agency's 
agreement with the Department under Sec. 250.6(b) of part 250 of this 
chapter and the requirements of Sec. 250.6(l) of this same chapter'' 
and adding, in its place, the reference ``Sec. 250.13 and Sec. 250.15 
of this chapter''; and
    c. Amend paragraph (f) by removing the reference ``Sec. 250.7 of 
part 250'' and adding, in its place, the reference ``Sec. 250.13(f)''.
    7. Add new Sec. 253.8 to read as follows:


Sec. 253.8  Administrative disqualification procedures for intentional 
program violation.

    (a) What is an intentional program violation? An intentional 
program violation is considered to have occurred when a household 
member knowingly, willingly, and with deceitful intent:
    (1) Makes a false or misleading statement, or misrepresents, 
conceals, or withholds facts in order to obtain Food Distribution 
Program benefits which the household is not entitled to receive; or
    (2) Commits any act that violates a Federal statute or regulation 
relating to the acquisition or use of Food Distribution Program 
commodities.
    (b) What are the disqualification penalties for an intentional 
program violation? Household members determined by the State agency to 
have committed an intentional program violation will be ineligible to 
participate in the program:
    (1) For a period of 12 months for the first violation;
    (2) For a period of 24 months for the second violation; and
    (3) Permanently for the third violation.
    (c) Who can be disqualified? Only the household member determined 
to have committed the intentional program violation can be 
disqualified. However, the disqualification may affect the eligibility 
of the household as a whole, as addressed under paragraphs (e)(5) and 
(h) of this section.
    (d) Can the disqualification be appealed? Household members 
determined by the State agency to have committed an intentional program 
violation may appeal the disqualification, as provided under 
Sec. 253.7(h)(1).
    (e) What are the State agency's responsibilities?
    (1) Each State agency must implement administrative 
disqualification procedures for intentional program violations that 
conform to this section.
    (2) The State agency must inform households in writing of the 
disqualification penalties for intentional program violations each time 
they apply for benefits, including recertifications. This notice must 
also advise households that an intentional program violation may be 
referred to authorities for prosecution.
    (3) The State agency must attempt to substantiate all suspected 
cases of intentional program violation. An intentional program 
violation is considered to be substantiated when the State agency has 
clear and convincing evidence demonstrating that a household member 
committed one or more acts of intentional program violation, as defined 
in paragraph (a) of this section.
    (4) Within 10 days of substantiating that a household member has 
committed an intentional program violation, the State agency must 
provide the household member with a notice of disqualification, as 
described in paragraph (f) of this section. A notice must still be 
issued in instances where the household member is not currently 
eligible or participating in the program.
    (5) The State agency must advise any remaining household members if 
the household's benefits will change or if the household will no longer 
be eligible as a result of the disqualification.
    (6) The State agency must provide the household member to be 
disqualified with an opportunity to appeal the disqualification through 
a fair hearing, as required by Sec. 253.7(h).
    (7) The State agency must refer all substantiated cases of 
intentional

[[Page 73385]]

program violations to Tribal, Federal, State, or local authorities for 
prosecution under applicable statutes. However, a State agency that has 
conferred with its legal counsel and prosecutors to determine the 
criteria for acceptance for possible prosecution is not required to 
refer cases that do not meet the prosecutors' criteria.
    (8) The State agency must establish claims, and pursue collection 
as appropriate, on all substantiated cases of intentional program 
violation in accordance with Sec. 253.9.
    (f) What are the requirements for the notice of disqualification?
    (1) Within 10 days of substantiating the intentional program 
violation, the State agency must issue to the household member a notice 
of disqualification. The notice must allow an advance notice period of 
at least 10 days. The disqualification must begin with the next 
scheduled distribution of commodities that follows the expiration of 
the advance notice period, unless the household member requests a fair 
hearing. A notice must still be issued in instances where the household 
member is not currently eligible or participating in the program.
    (2) The notice must conform to the requirements of 
Sec. 253.7(b)(3)(iii)(C) for notices of adverse action.
    (g) What are the appeal procedures for administrative 
disqualifications?
    (1) Appeal rights. The household member has the right to request a 
fair hearing to appeal the disqualification in accordance with the 
procedures at Sec. 253.7(h).
    (2) Notification of hearing. The State agency must provide the 
household member with a notification of the time and place of the fair 
hearing as described in Sec. 253.7(h)(7). The notice must also include:
    (i) A warning that if the household member fails to appear at the 
hearing, the hearing decision will be based solely on the information 
provided by the State agency; and
    (ii) A statement that the hearing does not prevent the Tribal, 
Federal, State, or local government from prosecuting the household 
member in a civil or criminal court action, or from collecting any 
overissuance(s).
    (h) What are the procedures for applying disqualification 
penalties?
    (1) If the household member did not request a fair hearing, the 
disqualification must begin with the next scheduled distribution of 
commodities that follows the expiration of the advance notice period of 
the notice of adverse action. If the commodities are normally made 
available to the household within a specific period of time (for 
example, from the first day of the month through the tenth day of the 
month), the effective date of the disqualification will be the first 
day of that period. The State agency must apply the disqualification 
period (that is, 12 months, 24 months, or permanent) specified in the 
notice of disqualification. The State agency must advise any remaining 
household members if the household's benefits will change or if the 
household is no longer eligible as a result of the disqualification.
    (2) If the household member requested a fair hearing and the 
disqualification was upheld by the fair hearing official, the 
disqualification must begin with the next scheduled distribution of 
commodities that follows the date the hearing decision is issued. If 
the commodities are normally made available to the household within a 
specific period of time (for example, from the first day of the month 
through the tenth day of the month), the effective date of the 
disqualification will be the first day of that period. The State agency 
must apply the disqualification period (that is, 12 months, 24 months, 
or permanent) specified in the notice of disqualification. No further 
administrative appeal procedure exists after an adverse fair hearing 
decision. The decision by a fair hearing official is binding on the 
State agency. The household member, however, may seek relief in a court 
having appropriate jurisdiction. As provided under 
Sec. 253.7(h)(11)(iii)(B), the State agency must advise any remaining 
household members if the household's benefits will change, or if the 
household is no longer eligible as a result of the disqualification.
    (3) Once a disqualification has begun, it must continue 
uninterrupted for the duration of the penalty period (that is, 12 
months; 24 months; or permanent). Changes in the eligibility of the 
disqualified household member's household will not interrupt or shorten 
the disqualification period.
    (4) The same act of intentional program violation continued over a 
period of time will not be separated so that more than one penalty can 
be imposed. For example, a household intentionally fails to report that 
a household member left the household, resulting in an overissuance of 
benefits for 5 months. Although the violation occurred over a period of 
5 months, only one penalty will apply to this single act of intentional 
program violation.
    (5) If the case was referred for Tribal, Federal, State, or local 
prosecution and the court of appropriate jurisdiction imposed a 
disqualification penalty, the State agency must follow the court order.


Sec. 253.9  [Redesignated as Sec. 253.11]

    8. Redesignate Sec. 253.9 as Sec. 253.11.
    9. Add new Sec. 253.9 to read as follows:


Sec. 253.9  Claims against households.

    (a) What are the procedures for establishing a claim against a 
household for an overissuance?
    (1) The State agency must establish a claim against any household 
that has received more Food Distribution Program commodities than it 
was entitled to receive.
    (2) The procedures for establishing and collecting claims against 
households are specified in FNS Handbook 501, The Food Distribution 
Program on Indian Reservations.
    (b) Who is responsible for repaying a household overissuance claim?
    (1) All adult household members are jointly and separately liable 
for the repayment of the value of any overissuance of Food Distribution 
Program benefits to the household.
    (2) Responsibility for repayment continues even in instances where 
the household becomes ineligible or is not participating in the 
program.

PART 254-ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR INDIAN 
HOUSEHOLDS IN OKLAHOMA

    1. The authority citation for part 254 continues to read as 
follows:

    Authority: Pub. L. 97-98, sec. 1338; Pub. L. 95-113.

    2. In Sec. 254.2, redesignate paragraphs (f) and (g) as paragraphs 
(g) and (h), respectively, and add new paragraph (f) to read as 
follows:


Sec. 254.2  Definitions.

* * * * *
    (f) Overissuance means the dollar value of commodities issued to a 
household that exceeds the dollar value of commodities it was eligible 
to receive.
* * * * *
    Dated: December 23, 1999.
Samuel Chambers, Jr.,
Administrator, Food and Nutrition Service.
[FR Doc. 99-33932 Filed 12-29-99; 8:45 am]
BILLING CODE 3410-30-P