[Federal Register Volume 65, Number 240 (Wednesday, December 13, 2000)]
[Rules and Regulations]
[Pages 77769-77771]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31731]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 246

RIN 0584-AC93


Special Supplemental Nutrition Program for Women, Infants, and 
Children (WIC): Final Rule--WIC Nondiscretionary Funding Modifications 
of P.L. 106-224

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule amends the WIC Program regulations to 
incorporate two nondiscretionary funding provisions mandated by the 
Agricultural Risk Protection Act of 2000. The first change modifies the 
methodology used to calculate the national administrative grant per 
person, which is used to determine the amount of WIC funds to be used 
for food benefits and nutrition services and administration (NSA). The 
second change provides greater flexibility for State agencies in 
noncontiguous States containing a significant number of remote Indian 
or Native villages by permitting them to convert food funds to cover 
allowable NSA costs incurred in providing services and breastfeeding 
support to those areas.

EFFECTIVE DATE: This rule is effective October 1, 2000.

FOR FURTHER INFORMATION CONTACT: Patricia Daniels, (703) 305-2746.

SUPPLEMENTARY INFORMATION:

Background

Why Is This Rule Being Promulgated?

    The Agriculture Risk Protection Act of 2000 (Pub. L. 106-224), was 
enacted on June 20, 2000, and, among other things, mandates two 
modifications to WIC funding procedures. The first change modifies the 
methodology used to calculate the national administrative grant per 
participant, which is used to determine the amount of WIC funds to be 
used for food benefits and NSA. This change calls for a revision of the 
inflation rate calculation methodology. The second change provides 
greater flexibility for State agencies in noncontiguous States 
containing a significant number of remote Indian or Native villages by 
permitting them to convert food funds to cover allowable NSA costs 
incurred in providing services and breastfeeding support to those 
areas. This provision recognizes the higher costs associated with 
service delivery to these remote sites.

Why Are no Comments Being Taken on This Rule and Why Is It Effective 
October 1, 2000?

    The changes to the WIC regulations made by this rule are mandated 
by Congress and require no Agency discretion. Further, section 263 of 
Pub. L. 106-224 requires that FNS promulgate regulations to implement 
these provisions as soon as practicable after the date of enactment 
without regard to the Administrative Procedure Act's notice and comment 
provisions at 5 U.S.C. 553; the Statement of Policy of the Secretary of 
Agriculture effective July 24, 1971 (36 FR 13804, July 24, 1971), 
relating to notices of proposed rulemaking and public participation in 
rulemaking; and the Paperwork Reduction Act at 44 U.S.C. chapter 35. In 
addition, section 172 of Pub. L. 106-224 requires us to promulgate 
rules to carry out the Act and its amendments not later than 120 days 
after the date of enactment. For these reasons, we are not taking 
public comment prior to promulgating this rule. Finally, section 
244(f)(2) of Pub. L. 106-224 provides that the WIC funding changes take 
effect on October 1, 2000. Accordingly, this rule is effective October 
1, 2000.

Why Is This Rule and Preamble in Question and Answer Format?

    We have used this opportunity to rewrite the affected provisions in 
a question and answer format to improve readability. This approach also 
complies with the President's Executive Memorandum requiring all 
Federal regulations published after January 1, 1999 to be in Plain 
Language, as recommended by the National Partnership for Reinventing 
Government.

What Is the Change to the Calculation of the National Administrative 
Grant Per Participant?

    The national administrative grant per person (AGP) is used in the 
WIC funding formula to determine the amount of funds allocated for: (1) 
Food benefits; and (2) NSA costs. The Child Nutrition and WIC 
Reauthorization Act of 1989 (Pub.L. 101-147), amended section 17(h)(1) 
of the Child Nutrition Act of 1966 (CNA) to require a specific 
methodology be used to calculate the AGP. (Section 17 of the CNA is 
codified at 42 U.S.C. 1786.) This legislation required the AGP for any 
fiscal year to be calculated by adjusting the actual national average 
per participant grant for fiscal year 1987 to reflect the percentage 
change between: (1) the value of the index for State and local 
government purchases (S&LP), using the

[[Page 77770]]

implicit price deflator, for the 12-month period ending June 30, 1986; 
and (2) the estimate of the value of the index for the 12-month period 
ending June 30 of the previous fiscal year. This index is published by 
the Department of Commerce, Bureau of Economic Analysis (BEA) in the 
National Income and Product Accounts as a component of the Gross 
Domestic Product (GDP).
    A potential concern is that the implicit price deflator, although 
appropriate at the time, is no longer the best index to calculate the 
AGP for the WIC Program. The BEA recommends the use of the chain-type 
price index rather than the implicit price deflator for measuring 
inflation. The Office of Management and Budget (OMB) also requires the 
use of the State and Local chain-type price index rather than the 
implicit price deflator in projection of State and local costs in 
budget estimates. The continued use of the implicit price deflator in 
the WIC AGP calculations, rather than conversion to the now standard 
chain-type price index, is undesirable.
    In addition, the primary problem of using current rules is that 
they require the AGP to be based upon the 1987 S&LP data, including 
annual and benchmark revisions. Occasionally, as in 1992, 1995 and 
1999, the National Income and Product Accounts undergo benchmark or 
comprehensive revisions. These revisions typically involve revision of 
the entire S&LP series. The revisions over the last few years have led 
to a downward shift in the AGP from the level it would have been if the 
index had not been revised. Index revisions cause instability in the 
AGP because, although the S&LP continues to rise from year to year, the 
AGP has the potential to go down or up disproportionately when the 
historical series is adjusted. In turn, WIC NSA grants to State 
agencies are unstable.
    In recognition of these concerns, section 244(d) of Pub. L. 106-224 
amended section 17(h)(1)(B)(ii)(I) of the CNA by removing the 
requirement to use the implicit price deflator. In addition, section 
244(d) amended section 17(h)(1)(B)(ii) to remove the reference to 
fiscal year 1987 as the base year and requires instead that the 
adjustment be made to the AGP for the ``preceding fiscal year'' with 
conforming changes to the adjustment methodology. This rule amends 
Sec. 246.16(c)(2) of the WIC regulations to reflect these changes.

What Is the Additional Flexibility for State Agencies in Noncontiguous 
States Containing a Significant Number of Indian or Native Villages?

    In recognition of higher costs associated with delivery of WIC 
services to remote Indian and Native villages, section 244(e) of Pub. 
L. 106-224 added a new section 17(h)(5)(D) to the CNA to allow for 
State agencies to convert food funds to NSA funds to cover allowable 
NSA expenditures necessary to provide WIC services and breastfeeding 
support in those areas. This new conversion authority is limited to 
State agencies in noncontiguous States containing a significant number 
of Indian or Native villages.
    Current conversion authority, described in section 17(h)(5)(A) of 
the CNA and Sec. 246.16(f) in Program regulations, allows for the 
conversion of food funds to NSA funds under two conditions: (1) An 
approved plan outlining food cost reduction strategies and increases in 
participation levels above the FNS-projected participation levels; and 
(2) actual participation increases achieved in excess of participation 
projected by FNS. Conversion of food funds to NSA funds are allowed to 
the extent that the funds are used to cover current year allowable NSA 
expenditures and the current fiscal year's per participant NSA grant 
for each State agency is maintained.
    Under this new authority, food funds may be converted to NSA funds 
to the extent the conversion is necessary to cover expenditures 
incurred in providing services (including the full cost of air 
transportation and other transportation) to remote Indian or Native 
villages and to provide breastfeeding support in those areas. This rule 
amends Sec. 246.16(g) of the WIC regulations to add this new conversion 
authority. New paragraph (g)(2) makes clear that funds may only be 
converted as necessary to cover costs in providing service and 
breastfeeding support in remote Indian or Native villages to the extent 
that they exceed the State agency's NSA funds, including any spent 
forward funds, for the fiscal year. This rule also revises 
Sec. 246.16(i) to clarify how the converted funds will be treated in 
calculating a State agency's prior year food grant and base NSA grant. 
Finally, this rule also makes a conforming change to 
Sec. 246.16(f)(2)(i) to incorporate the limitation in current 
Sec. 246.16(g).
    Section 244 (a) of Pub. L. 106-224 amended section 17(b) of the CNA 
to add a new definition of ``remote Indian or Native village.'' This 
definition is used both in connection with the new conversion authority 
and with a new provision concerning proof of residency by residents of 
remote Indian or Native villages. The new proof of residency provision 
and the definition of ``remote Indian or Native village'' were added to 
the WIC regulations by the WIC Certification Integrity final rule 
(published on December 11, 2000).

Procedural Matters

Executive Order 12866--Regulatory Planning and Review

    This rule has been determined to be ``not significant'' for 
purposes of Executive Order 12866, and therefore has not been reviewed 
by the Office of Management and Budget (OMB).

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act (5 U.S.C. 601-612). Pursuant to that review, 
Samuel Chambers, Jr., Administrator of the Food and Nutrition Service 
(FNS), has certified that this rule will not have a significant 
economic impact on a substantial number of small entities. This rule 
will only affect State and local WIC agencies. Although some of these 
agencies may fall within the definition of ``small entities,'' the 
number of affected entities will not be substantial. Further, the 
impact of the changes on small entities is not significant. Finally, 
because this rule contains only nondiscretionary provisions required by 
statute, we could not consider any alternatives.

Paperwork Reduction Act

    This final rule does not contain reporting or record keeping 
requirements subject to approval by the Office of Management and Budget 
under section 3507 of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501-20).

Executive Order 12372--Intergovernmental Review of Federal Programs

    The Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC) is listed in the Catalog of Federal Domestic Assistance 
Programs under No. 10.557, and is subject to Executive Order 12372, 
which requires intergovernmental consultation with State and local 
officials (7 CFR part 3015, Subpart V, and final rule-related Notice 
published June 24, 1983 (48 FR 29114)).

Executive Order 12988--Civil Justice Reform

    This final rule has been reviewed under Executive Order 12988, 
Civil

[[Page 77771]]

Justice Reform. It 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 application of the provisions of this 
rule, all applicable administrative procedures must be exhausted.

Public Law 104-4--Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 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 to State, local, 
or tribal governments, in the aggregate, or to 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, more cost-
effective, or least burdensome alternative that achieves the objectives 
of that 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. Thus today's rule is not subject to the requirements of sections 
202 and 205 of the UMRA.

Executive Order 13132--Federalism

    Executive Order 13132 does not require consultation with State and 
local officials and a federalism impact statement for rules that are 
required by statute. This rule is required by Pub. L. 106-244. 
Therefore, we determined that this rule does not meet the threshold 
criteria for further review under Executive Order 13132.

List of Subjects in 7 CFR Part 246

    Food assistance programs, Food donations, Grant programs--social 
programs, Indians, Infants and children, Maternal and child health, 
Nutrition, Nutrition education, Public assistance programs, WIC, Women.


    For the reasons set forth in the preamble, 7 CFR Part 246 is 
amended as follows:

PART 246--SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS 
AND CHILDREN

    1. The authority citation for Part 246 continues to read as 
follows:

    Authority:  42 U.S.C. 1786.

    2. In Sec. 246.16:
    a. Revise paragraph (c)(2) introductory text;
    b. Revise the heading of paragraph (f);
    c. Revise the introductory text of paragraph (f)(1);
    d. Revise paragraph (f)(2)(i);
    e. Revise paragraph (g);
    f. Amend paragraph (h) by revising the paragraph heading, removing 
the reference to ``paragraph (f)'', and adding in its place a reference 
to ``paragraphs (f) and (g)''; and
    g. Revise paragraph (i).
    The revisions read as follows:


Sec. 246.16  Distribution of funds.

* * * * *
    (c) * * *
    (2) How is the amount of NSA funds determined? The funds available 
for allocation to State agencies for NSA for each fiscal year must be 
sufficient to guarantee a national average per participant NSA grant, 
adjusted for inflation. The amount of the national average per 
participant grant for NSA for any fiscal year will be an amount equal 
to the national average per participant grant for NSA issued for the 
preceding fiscal year, adjusted for inflation. The inflation adjustment 
will be equal to the percentage change between two values. The first is 
the value of the index for State and local government purchases, as 
published by the Bureau of Economic Analysis of the Department of 
Commerce, for the 12-month period ending June 30 of the second 
preceding fiscal year. The second is the best estimate that is 
available at the start of the fiscal year of the value of such index 
for the 12-month period ending June 30 of the previous fiscal year. 
Funds for NSA costs will be allocated according to the following 
procedure:
* * * * *
    (f) How do I qualify to convert food funds to NSA funds based on 
increased participation? (1) Requirements. The State agency qualifies 
to convert food funds to NSA funds based on increased participation in 
any fiscal year in two ways:
* * * * *
    (2) * * *
    (i) To cover NSA expenditures in the current fiscal year that 
exceed the State agency's NSA grant for the current fiscal year and any 
NSA funds which the State agency has spent forward into the current 
fiscal year; and
* * * * *
    (g) How do I qualify to convert food funds to NSA funds for service 
to remote Indian or Native villages? (1) Eligible State agencies. Only 
State agencies located in noncontiguous States containing a significant 
number of remote Indian or Native villages qualify to convert food 
funds to NSA funds under this paragraph (g) in any fiscal year.
    (2) Limitation. In the current fiscal year, food funds may be 
converted only to the extent necessary to cover expenditures incurred:
    (i) In providing services (including the full cost of air 
transportation and other transportation) to remote Indian or Native 
villages; and
    (ii) To provide breastfeeding support in those areas that exceed 
the State agency's NSA grant for the current fiscal year and any NSA 
funds which the State agency has spent forward into the current fiscal 
year.
    (h) What happens at the end of the fiscal year in which food funds 
are converted? * * *
    (i) How do converted funds affect the calculation of my prior year 
food grant and base NSA grant? For purposes of establishing a State 
agency's prior year food grant and base NSA grant under paragraphs 
(c)(2)(i) and (c)(3)(i) of this section, respectively, amounts 
converted from food funds to NSA funds under paragraphs (f) and (g) of 
this section and Sec. 246.14(e) during the preceding fiscal year will 
be treated as though no conversion had taken place.

    Dated: December 7, 2000.
George A. Braley,
Acting Administrator, Food and Nutrition Service.
[FR Doc. 00-31731 Filed 12-12-00; 8:45 am]
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