[Federal Register Volume 67, Number 231 (Monday, December 2, 2002)]
[Proposed Rules]
[Pages 71774-71791]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-30223]



[[Page 71773]]

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Part V





Department of Agriculture





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Food and Nutrition Service



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7 CFR Part 246



Special Supplemental Nutrition Program for Women, Infants, and Children 
(WIC): Miscellaneous Provisions; Proposed Rule

  Federal Register / Vol. 67, No. 231 / Monday, December 2, 2002 / 
Proposed Rules  

[[Page 71774]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 246

RIN 0584-AB10


Special Supplemental Nutrition Program for Women, Infants, and 
Children (WIC): Miscellaneous Provisions

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule amends a number of existing provisions in 
the WIC Program regulations. In response to issues raised by WIC State 
agencies and other members of the WIC community, the United States 
Department of Agriculture (the Department) proposes two principal 
changes. First, this rulemaking would streamline the Federal 
requirements for financial and participation reporting by State 
agencies. Second, it would clarify the rules on confidentiality of WIC 
information in order to strengthen coordination with organizations and 
private physicians, and to provide guidance to State agencies on 
responding to subpoenas and other court-ordered requests for 
confidential information.
    These two provisions are intended to strengthen services to WIC 
participants, improve Program administration, and increase State agency 
flexibility in managing the Program. The other provisions in this rule 
have been designed to improve program administration or to incorporate 
program policies that have been in effect for some time into 
regulations.

DATES: To be assured of consideration, comments must be postmarked on 
or before April 1, 2003.

ADDRESSES: Comments should be sent to Patricia N. Daniels, Director, 
Supplemental Food Programs Division, Food and Nutrition Service, USDA, 
3101 Park Center Drive, Room 520, Alexandria, VA 22302. All written 
comments will be available for public inspection during regular 
business hours (8:30 a.m. to 5 p.m., Monday through Friday), at the 
above address.

FOR FURTHER INFORMATION CONTACT: Debra R. Whitford, Chief of the Policy 
and Program Development Branch, Supplemental Food Programs Division, at 
the address indicated in the ADDRESSES section or at (703) 305-2730, 
during regular business hours (8:30 a.m. to 5 p.m.) Monday through 
Friday.

SUPPLEMENTARY INFORMATION:

Background

1. Definitions of ``Sign or Signature'' and ``Electronic Signature'' 
(Sec.  246.2)

    This rule proposes to amend Sec.  246.2 to add new definitions of 
``sign or signature'' and ``electronic signature.'' These definitions 
would give State agencies the option to use electronic signatures in 
their administration of the WIC Program. WIC regulations require 
signatures in various contexts. For example, Sec.  246.7(i)(9) requires 
the ``signature'' of the competent professional authority (CPA) who 
determined that the applicant is at nutritional risk and the 
``signature'' of the administrative person who determined that the 
applicant meets WIC income eligibility requirements. In addition, Sec.  
246.7(i)(10) requires the ``signature'' of the applicant, parent, or 
caretaker as part of the WIC application/certification process, and 
Sec.  246.12(r)(2) requires participants and their representatives to 
``sign'' when they receive WIC supplemental foods or food instruments. 
Currently, the terms ``sign'' or ``signature'' throughout part 246 
could be interpreted to exclude the use of electronic signatures. With 
advancements in technology, we do not want to limit State agencies' 
authority to use such tools. Many State agencies are using or 
implementing automated management information systems whereby all 
information collected from applicants is typed into an electronic 
record/data system at the time of application. As part of the move to 
automated records and paperless systems, some State agencies are 
interested in using electronic signatures.
    While new technologies continue to emerge, currently, electronic 
signatures include a broad range of signature types. For example, an 
applicant could sign his/her name on a device similar to a note pad, 
called a digital pen and pad. The signature becomes digitized and is 
stored in the data system as an exact replica of the applicant's 
signature. Other types of electronic signature devices allow for the 
collection of an applicant's signature with the digital pen and pad and 
the signature is subsequently converted and stored as a unique series 
of digits or numbers. For administrative purposes, an electronic 
signature could be a unique key and/or personal identification number 
assigned by staff that is authorized to determine a WIC applicant's 
nutrition risk or income eligibility. Depending on its application, a 
combination of electronic signature tools may be necessary to address 
appropriately the reliability and integrity of the technology and/or 
security of the State agency's system.
    This rule would define ``electronic signature'' in the same way as 
it is defined in the Electronic Signatures in Global and National 
Commerce Act (Pub. L. 106-229, signed June 30, 2000), also known as 
ESIGN. ESIGN covers the use of electronic signatures in most business, 
consumer, and commercial transactions, but does not generally cover 
``governmental'' transactions. However, we believe the broad 
application of ESIGN will make the definition of ``electronic 
signature'' the standard. Therefore, we propose to adopt the ESIGN 
definition of ``electronic signature'' for WIC purposes.
    This rule would make clear that electronic signatures may be used 
only if the State agency ensures the reliability and integrity of the 
technology used and the security and confidentiality of electronic 
signatures collected in accordance with sound management practices and 
WIC Program regulations concerning confidentiality. State agencies 
interested in using electronic signatures will need to assess the 
suitability of electronic signatures for various applications, security 
issues, and cost implications. Interested State agencies should explore 
available technology, including off-the-shelf software that may meet 
WIC's needs at a reasonable price. This rule would not require the use 
of electronic signatures.

2. Selection of Local Agencies (Sec.  246.5)

    The Department proposes to remove the requirement in Sec. Sec.  
246.5(c)(1) and (d)(2) of the regulations for WIC State agencies to 
fund new local agencies in areas based on the sequential order of 
neediest areas listed in the Affirmative Action Plans that are part of 
each State agency's Plan of Operation. This change is intended to give 
State agencies more flexibility in using their WIC Program grants as 
efficiently and practically as possible to best meet the needs of 
program participation. In order to do this, it may not always be 
practical to adhere strictly to the sequential order of neediest areas 
when funding local WIC agencies for expansion.
    At Sec. Sec.  246.5(c)(1) and (d)(2), emphasis is placed on 
expanding the Program through the selection of local agencies that are 
next in line on the basis of need as established by the State agency's 
Affirmative Action Plan. Although State agencies should continue to 
consider the relative need of certain areas for program expansion as 
identified in the Affirmative Action Plan when selecting new local 
agencies, we are aware that there are certain practical considerations 
in expanding program operations that may override the choice

[[Page 71775]]

of a local agency in an area that is next in line according to the 
Plan. For example, while it remains important to expand operations in 
the ``neediest one-third of all areas unserved or partially served'', 
as required in Sec.  246.4(a)(5)(i), it may be impossible to do so at a 
particular point in time because of lack of funding. An inadequate 
health care system infrastructure (public or private) to provide 
health-related services to support the opening of a local agency is a 
common situation that State agencies often face in attempting to expand 
in remote areas. The cost of opening new WIC clinics in such areas, 
even if those areas happen to be ``next in line'' for expanded services 
may exceed the funds that the State agency has available for caseload 
growth. By comparison, it may be more cost-effective and expeditious to 
expand caseload in other areas that are also underserved, but possess 
the health care infrastructure to support additional WIC services.

3. Mid-Certification Actions (Sec.  246.7(h))

    The Department proposes several revisions to this section. The most 
significant proposed change would require local agencies to reassess a 
participant's income eligibility (including household composition) 
during the certification period if information is received about a 
change in circumstances, indicating possible ineligibility. Although 
many State agencies require reassessment of income eligibility based on 
receipt of information indicating a change, current regulations do not 
mandate such reassessments. This proposal would strengthen Federal 
requirements for local agencies to act on information about changes in 
household circumstances that affect only the income eligibility of 
participants, not the nutrition risk eligibility.
Income Eligibility Reassessments
    Currently, WIC program regulations (Sec.  246.7(h)(1)) require 
local agencies to disqualify an individual in the middle of a 
certification period if, on the basis of a reassessment of Program 
eligibility status, the individual is found to be ineligible. Because 
of the ambiguity in the reference to reassessment of ``Program 
eligibility'' during certification periods, the Department wishes to 
exercise its interpretive discretion to specify that mid-certification 
reassessments pertain to income eligibility, not to the participant's 
nutrition risk status.
    This proposed interpretation is consistent with the Department's 
policy about mid-certification reassessments. Many State agencies 
already specify in their formal policies that disqualifications due to 
reassessments are appropriate only in response to information that 
establishes ineligibility based on income. It has not been the 
Department's position that local agencies should reassess nutrition 
risk status during the certification period or disqualify a participant 
based on a learned improvement in nutrition risk status. Provided that 
the individual remains income-eligible for WIC benefits, the Department 
believes that enrollment in the Program generally entails a commitment 
to the participant for a full certification period. This policy 
regarding nutrition risk status recognizes the preventive nature of the 
WIC Program.
    However, the Department also believes that local agencies should 
follow up on information that a change in income or household size may 
make a participant ineligible to continue to receive WIC benefits. 
Current regulations only require State agencies to ensure that local 
agencies disqualify participants who are found to be ineligible only if 
a reassessment of program eligibility is conducted. The regulations do 
not currently mandate that any reassessment be performed. This proposed 
change would require that local agencies reassess income eligibility 
when information is received indicating that a change in income 
eligibility has occurred. Local agencies would not be required to seek 
out information. However, if information comes to their attention, 
either from the participant or from other sources, which suggests 
ineligibility, this would trigger the regulatory requirement to 
reassess WIC income eligibility.
    For an adjunctively income-eligible participant, the trigger action 
for income reassessment within a certification period would be 
confirmation that the individual or other eligible family member is no 
longer participating in any of the programs forming the basis for 
adjunctive income eligibility. This proposed provision would require 
local agencies to ask the adjunctively income-eligible participant for 
proof of current eligibility to participate in another qualifying 
program only when that local agency has reason to believe that the 
original program participation has ended. If, on the basis of the 
reassessment, the participant is no longer eligible to receive WIC 
benefits because of income, then disqualification proceedings would be 
initiated.
    Disqualification based on a reassessment of income ineligibility 
also applies to other household members currently receiving WIC 
benefits. When one household member is reassessed for income 
eligibility and determined ineligible based on household size and 
income, in effect all participating members of that household have been 
reassessed and are equally ineligible. Therefore, the regulations have 
been revised to require that if one member of a household is reassessed 
for income eligibility and determined ineligible, all other 
participating household members in the economic unit must be 
disqualified. This provision applies to normal income screenings as 
well as to proof that a participant is no longer receiving benefits 
under another program that confers adjunctive income eligibility.
    The Department is not interested in limiting State agency 
flexibility in this area, but is establishing clear Federal 
requirements that are both reasonable and responsible. The Department 
understands that many State agencies already have similar or even more 
stringent policies in place regarding reassessing income eligibility 
during the certification period. State agency policy need not be 
changed as long as State requirements meet the minimum Federal 
requirements.
    The Department is aware that some State agencies oppose both 
reassessment of income eligibility and program disqualification based 
on such reassessment during a certification period. Some of the 
arguments offered to FNS include the disparity of treatment among 
participants according to their willingness to report income changes, 
and the consideration that financial situations of many participants 
are tenuous and subject to fluctuations. Another concern is the fact 
that other family members who are also WIC participants will be 
disqualified if a reassessment reveals the family to be over the income 
standard.
    The philosophical issue underlying the arguments for or against 
mid-certification reassessments and disqualifications for income 
ineligibility is whether WIC's commitment to improving an individual's 
nutritional status during a period of time (e.g., during a 6-month 
certification period) is more or less important than ensuring the 
integrity of income eligibility standards. The Department can find no 
statutory justification for allowing known income ineligible persons to 
continue to receive WIC benefits. The Department agrees with the 
rationale that because nutritional status may take at least a full 
certification period to improve, a commitment to the participant is 
implied. However, that commitment may not be extended to persons who no 
longer meet the basic income eligibility requirements set forth

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in the Child Nutrition Act. A participant whose household income 
clearly exceeds the income standards used by the State agency is no 
longer eligible for WIC benefits. Federal policy should be unequivocal 
regarding the ineligibility of known over-income participants.
    Again, the Department is not requiring local agencies to seek out 
information about the income status of participants during the 
certification period. Rather, if information regarding a change in 
income and/or family size is brought to the attention of the local 
agency, action must be taken to reassess the participant's income 
eligibility for program benefits. The proposed language represents a 
reasonable approach that balances responsible action against 
unnecessary paperwork burden.
    The Department also proposes to indicate clearly the mandatory or 
optional nature of other mid-certification actions addressed in this 
section. As proposed, mandatory mid-certification actions would include 
reassessment of income eligibility based on information received and 
disqualification of participants, including family members, if found to 
be over-income. Optional mid-certification disqualification actions 
would include those necessitated by funding shortages or the failure to 
pick up food instruments or supplemental foods for a number of 
consecutive months as established by the State.

4. Requesting Pregnancy Tests, Checking Identification and Other Basic 
Certification Procedures (Sec.  246.7(c))

    We propose to expand Sec.  246.7(c) to address several basic 
certification procedures, along with the delineation of eligibility 
criteria, in an effort to highlight the importance of certain 
procedures, such as providing proof of residency and proof of identity, 
and ensuring that applicants are not charged for certification. To 
accomplish this, the following changes are being made:
    (a) The provisions currently found at Sec. Sec.  246.7 (l)(2) and 
(m), addressing proof of residency/proof of identity, and program 
certification without charge to the applicant, respectively, are being 
moved to more prominent positions in the regulations;
    (b) A new provision concerning pregnancy tests is proposed; and
    (c) A reference is made to the application processing standards 
contained in paragraph (f) of this section.
Pregnancy Tests
    In response to questions that have arisen in recent years, we are 
proposing basic guidelines that State and local agencies must observe 
if documentation of pregnancy is part of the certification process. 
Some State and local agencies have expressed an interest in requiring 
proof of pregnancy to stem possible abuse from ineligible applicants 
claiming categorical eligibility as pregnant women. We realize that 
pregnancy in its very early stages may not be immediately apparent. We 
also understand why a local agency may wish to obtain confirmation of 
the pregnancy before it issues WIC benefits, especially if incidents of 
possible fraud have been reported. For these reasons, we are proposing 
in a new paragraph (c)(2)(ii) that State agencies may issue benefits to 
applicants who claim to be pregnant (assuming that all other 
eligibility criteria are met) but who do not have documented proof of 
pregnancy at the time of the certification interview and determination. 
The State agency should then allow a reasonable period of time, not to 
exceed 60 days, for the applicant to provide the requested 
documentation. If such documentation is not provided as requested, the 
local agency would then be justified in terminating the woman's WIC 
participation in the middle of a certification period.

5. Determining Income Eligibility (Sec.  246.7(d))

    The Department proposes several changes to this section of the 
regulations.
A. Use of State or Local Income Health Care Guidelines to Determine 
Income Eligibility for WIC
    The first proposed revision, at paragraph (d)(2)(iii) would require 
State agencies using State or local income guidelines for free or 
reduced-price health care to base the income eligibility determinations 
of WIC applicants on the income and family definition and exclusions 
outlined in paragraphs (d)(2)(iii) and (d)(2)(iv), respectively. This 
change would continue to allow variation among the State agencies only 
with regard to the actual income guidelines used (i.e., the percent of 
gross income above the Federal poverty income guidelines, up to a 
maximum of 185 percent), but not with the definition of income, family, 
or exclusions from income. This proposed revision would continue the 
WIC Program's current policy of excluding from these requirements 
persons who are determined adjunctively or automatically income 
eligible.
    We are proposing this change for two reasons:
    1. The number of WIC State agencies that use State or local free or 
reduced-price income guidelines has declined over the years. At this 
time, all 88 WIC State agencies use income guidelines which are set at 
185 percent of the Federal poverty income guidelines, established and 
updated annually by the Department of Health and Human Services.
    2. Current WIC Program regulations at Sec.  246.7(d)(2)(iii) allow 
State agencies using State or local free or reduced-price health care 
income guidelines to use the State or local definition of income, 
provided that the values of in-kind housing or other in-kind benefits 
are not counted toward an applicant's income determination and that no 
one with gross income over 185 percent of the Federal poverty income 
guidelines is determined eligible for WIC. Because the local agency 
must ensure that the applicant's income is within the Federal 
guidelines after applying the State or local income definition, 
procedurally it would be simpler for local agencies to apply the WIC 
income definition and exclusions outlined in the regulations to all 
applicants rather than apply two sets of income guidelines and family 
definitions and exclusions.
B. Consideration of Loans as Income
    Finally, this proposal would specify that funds from loans are 
excluded from consideration as income when determining an applicant's 
income eligibility. Program regulations have not specifically addressed 
this issue; however, FNS Instruction 803-3, Rev. 1, clarifies that 
funds from loans are not to be counted as income because they are only 
temporarily available and must be repaid.

6. Limitation on the Use of Possibility of Regression as a Nutrition 
Risk Criterion (Sec.  246.7(e)(1)(vi)

    Historically, program regulations have permitted WIC participants 
to remain on the program due to the possibility of regression, i.e., 
previously certified participants who might regress in nutritional 
status if they are not allowed to continue to receive WIC benefits. The 
possibility of regression has been allowed as a nutrition risk 
criterion in order to prevent the ``revolving door'' situation in which 
individuals improve their nutritional status as the result of 
participation in the WIC Program and are therefore removed, only to 
deteriorate in nutritional status at a later date and have to re-enter 
the program.
    It has always been the Department's position, however, that the 
possibility of regression should not be used excessively as a nutrition 
risk criterion,

[[Page 71777]]

because this practice may result in participants with no current 
nutrition risk condition continuing to be served while other eligible 
applicants who do have current nutritionally-related medical conditions 
or deficient diets go unserved. To encourage the limited use of 
regression, the Department confirmed the State agency's authority to 
limit the number of times and circumstances under which a participant 
may be certified for possible regression in a final rule published on 
February 13, 1985 (50 FR 6108).
    The use of regression as a basis for certification has continued to 
cause concern, particularly as the Department has intensified its 
efforts to encourage State agencies to target benefits to those persons 
at greatest nutritional risk. Therefore, the Department issued further 
guidance on the use of regression in FNS Instruction 803-2, Rev. 1, 
which recommends that possibility of regression be employed as a reason 
for certification one time at most. The Instruction also clarifies that 
certification based on possible regression for Priority II infants is 
generally inappropriate, because the infant's certification is based 
upon the mother's nutrition risk condition, and there is no prior 
condition on which to base the infant's supposed regression.
    While the possibility of regression can be a legitimate basis for 
certification, a regulatory limit on its use would ensure that 
possibility of regression is not employed repeatedly as a basis of 
continued program participation by persons who are not currently at 
nutritional risk. Such a limit is consistent with the Department's 
efforts to target benefits to those persons in greatest need and at 
greatest nutritional risk. Further, a limit on the use of possibility 
of regression as a basis for certification is logical because the term 
itself implies that there must be a prior nutrition risk condition on 
which the regression would be based. Therefore, it follows that once a 
participant has been certified one time for possible regression to a 
prior condition, there is no longer a prior nutrition risk condition to 
justify an additional certification on this basis.
    In view of these concerns, we propose to prohibit the use of 
possibility of regression as the basis of nutrition risk eligibility 
for consecutive certifications.

    Example: A child might be initially certified for WIC based on 
iron-deficiency anemia; at the end of that 6-month certification 
period, s/he might have improved just enough to be barely outside 
the definition of anemia established by the Centers for Disease 
Control and Prevention (CDC), and could legitimately be certified 
for another 6 months based on the possibility of regression to his/
her earlier anemic condition. At the end of this second 
certification period, if this child does not exhibit some other 
condition that is an allowed nutrition risk, s/he would no longer be 
eligible to receive WIC benefits.

    State agencies who elect to use the possibility of regression as a 
basis for WIC certification would be expected to certify the WIC 
participant either at the same priority level for which s/he was 
initially certified (based on a specific medical, anthropometric, or 
dietary condition) or at the Priority VII level (if the State agency is 
using Priority VII). State agencies should also keep in mind that in 
those situations where a waiting list must be used because funding 
levels are limited, the certification of an applicant based on the 
possibility of regression to a prior condition can exclude the 
certification of another applicant who may be at greater nutritional 
risk, and should make their decisions about the use of regression (as 
well as the priority levels to which it applies) very carefully.
    Commenters should note that this proposal would not place an 
absolute limit on the number of times that regression can be used as 
the nonconsecutive basis for certification. This provision would not 
restrict, for example, the certification of a child on the basis of 
possibility of regression several times during the years that s/he is 
categorically eligible. The Department believes that this provision 
places a reasonable limit on the use of possibility of regression but, 
at the same time, recognizes instances in which a subsequently 
developed nutrition risk condition may warrant an additional 
certification period based on the real possibility of regression to 
that condition. Finally, the provision in no way infringes upon the 
State agency's authority to limit the circumstances under which a 
participant may be certified for possible regression, as long as the 
condition in question is one to which an individual can actually 
regress. Because it is not possible for a woman who has been receiving 
WIC benefits as a pregnant woman to regress to that pregnancy once it 
has ended, it would not be appropriate to certify her as a postpartum 
woman based on a condition that was caused by or unique to her 
pregnancy, such as hyperemesis gravidum (morning sickness) or 
pregnancy-induced hypertension.

7. Certification Periods (Sec.  246.7(g)(1))

    In response to concerns cited by Congress, State agencies, and the 
National WIC Association (NWA) (formerly known as the National 
Association of WIC Directors (NAWD)), the Department proposes to modify 
the timeframes for certification periods in order to make them more 
consistent across participant categories. Current regulations establish 
the following timeframes for certification:

------------------------------------------------------------------------
            A/an:                       Is currently certified:
------------------------------------------------------------------------
Pregnant woman...............  For the duration of her pregnancy, and up
                                to 6 weeks after the infant is born or
                                the pregnancy is ended.
Postpartum woman.............  Up to 6 months after the baby is born or
                                the pregnancy is ended (postpartum).
Breastfeeding woman..........  Every 6 months ending with the infant's
                                first birthday.
Infant.......................  Approximately every 6 months. The State
                                agency may permit its local agencies to
                                certify infants under 6 months of age up
                                to the last day of the month in which
                                the infant turns 1 year old, provided
                                the quality and accessibility of health
                                care services are not diminished.
Child........................  Approximately every sixth month ending
                                with the last day of the month in which
                                a child reaches his/her fifth birthday.
------------------------------------------------------------------------

    Some State agencies have expressed concern that the timeframes for 
establishing certification periods are complicated and administratively 
burdensome. These State agencies contend that current regulations 
require the frequent proration of monthly food benefits and special 
data processing capabilities to accommodate specific cut-off dates. 
NWA/NAWD has also expressed concern about the lack of consistency in 
certification period timeframes.
    The Department fully supports greater simplicity and consistency in 
this area. Therefore, the Department proposes to adopt the 
recommendation made by NWA/NAWD to allow certification periods for all 
participant categories to be extended to the end of the month.

[[Page 71778]]

Specifically, the following maximum certification periods are proposed 
in Sec.  246.7(g)(1):

------------------------------------------------------------------------
            A/an:                          Will be certified:
------------------------------------------------------------------------
Pregnant woman...............  For the duration of her pregnancy, and up
                                to the last day of the month in which
                                the infant becomes 6 weeks old. (For
                                example, if the infant is born June 4, 6
                                weeks after birth would be July 16, and
                                certification would end July 31.)
Postpartum woman.............  Up to the last day of the sixth month
                                after the baby is born (postpartum).
Breastfeeding woman..........  Approximately every 6 months ending with
                                the last day of the month in which the
                                infant turns 1 year old.
Infant.......................  Approximately every 6 months. The State
                                agency may permit its local agencies to
                                certify infants under 6 months of age up
                                to the last day of the month in which
                                the infant turns 1 year old, provided
                                the quality and accessibility of health
                                care services are not diminished.
Child........................  Approximately every sixth month ending
                                with the last day of the month in which
                                a child reaches his/her fifth birthday.
                                (No change from current regulations)
------------------------------------------------------------------------

    The Department believes that these proposed timeframes will 
alleviate concerns voiced by State agencies. However, we want to 
emphasize that State and local agencies should continue to exercise 
good judgment in assigning certification periods, particularly in the 
case of pregnant participants. The current regulatory provision, which 
limits the certification period for pregnant women to up to 6 weeks 
postpartum, was designed to facilitate the scheduling of the mother's 
and infant's visit to the clinic soon after delivery and to encourage 
the prompt reassessment of continued program eligibility. Scheduling 
the postpartum clinic visit within this timeframe best serves the 
health care needs of the mother and the infant, and strengthens the 
program's tie to health services. Commenters should note that this 
proposed change would have the effect of extending a woman's 
certification under the pregnant woman category to up to 9 weeks 
postpartum. Some State and local agencies may not want to extend the 
certification periods for these women, preferring instead to 
concentrate their resources on women who are in the early months of 
pregnancy.
    Finally, the proration of program benefits for all participant 
categories continues to be an effective means of targeting benefits and 
managing program costs. State agencies should also be aware that these 
proposed regulations would not remove their authority to maintain 
current certification period lengths or to permit local agencies to 
shorten certification periods on a case-by-case basis. The Department 
encourages State agencies to exercise this authority as appropriate.

8. Certification Forms (Sec.  246.7(i))

    The Department proposes to allow State agencies the option of 
substituting simpler language in order to make the ``rights and 
obligations'' statement contained in Sec.  246.7(i)(10) clearer to 
applicants. State agencies would also have the option of modifying the 
language at Sec.  246.7(j)(2)(i)-(iii), which must be read to or by the 
participant (or parent/caregiver of a participating infant or child) at 
the time of certification along with the statement of ``rights and 
obligations'' contained in paragraph (i)(10). Modification of the 
``rights and obligations'' statements would be subject to FNS approval 
during the State Plan approval process. Approval of alternate language 
would be contingent upon whether the language substitutions convey the 
same meaning and intent as the existing regulatory text.
    In addition, in Sec.  246.7(i)(11), the required content of the 
certification form statement which acknowledges the potential 
disclosure of applicant and participant information would be revised to 
incorporate the changes proposed in Sec.  246.26(d) pertaining to 
confidentiality and data sharing. These changes primarily pertain to 
expansion of the types of programs with which information can be 
shared. The proposed changes are discussed later in this preamble as 
part of a larger discussion about confidentiality.

9. Continuation of Benefits During Fair Hearings (Sec.  246.9(g))

    It has come to the Department's attention that current provisions 
at Sec.  246.9(g) allow for the continuation of benefits for a 
categorically ineligible participant who has appealed an adverse action 
to terminate benefits and is waiting for a fair hearing decision. The 
situation involves breastfeeding participants who continued to receive 
WIC benefits although they had discontinued breastfeeding and were more 
than 6 months postpartum. These participants, as postpartum non-
breastfeeding women, are no longer categorically eligible for program 
benefits and should be terminated from the WIC Program. Under these 
circumstances, when a change in the participant's breastfeeding status 
becomes known to the WIC local agency and the participant is not 
eligible to continue receiving benefits as a postpartum participant, 
the agency would issue a notice of adverse action to terminate 
benefits. Such written notice must be issued not less than 15 days 
before the benefits are actually terminated. However, the language at 
paragraph (g) of this section technically allows the categorically 
ineligible individual to continue to receive WIC benefits during the 
appeal process. To correct this minor inconsistency, the Department 
proposes to revise paragraph (g) to prohibit any participants who have 
become categorically ineligible from continuing to receive benefits 
while a fair hearing decision is pending.

10. Prohibition Against the Use of Program Funds To Provide Retroactive 
Benefits (Sec.  246.14(a))

    This proposed rule would specify that WIC Program funds may not be 
used to provide retroactive benefits to participants. Regulations have 
not previously addressed the issue of retroactive benefits, although it 
has been a long-standing policy in the WIC Program (based on 
fundamental principles of appropriation law) that such benefits are 
inappropriate. The WIC food package is designed to be consumed during 
specified periods when participants are undergoing critical growth and 
development. Providing WIC foods to persons after they have passed 
through such periods is not consistent with the nutritional goals of 
the WIC Program, nor is it appropriate to give participants more food 
than they can reasonably consume within a given period of time. In 
either case, it is not an effective use of program benefits. A 
regulatory prohibition against the use of program funds to provide 
retroactive benefits would clearly and formally establish the

[[Page 71779]]

inappropriateness of such benefits in WIC.

11. Transportation as Allowable Costs (Sec.  246.14(c)(7))

    The Department has learned that a number of urban and suburban 
localities experience difficulties in serving needy program eligibles 
due to inadequate access to transportation by existing or potential WIC 
participants. Limited, expensive, or nonexistent transportation has 
been identified as a primary barrier that prevents or discourages 
potentially eligible persons and participants from getting to WIC 
clinics. To address this problem, several State agencies have purchased 
mobile vans to deliver WIC services to participants in ``non-rural'' 
areas. State agencies have also requested approval to purchase vans to 
transport participants to and from inner city and suburban clinics. 
Currently, however, the allowability of such transportation costs is 
limited to assisting rural participants. Because State agencies may 
purchase vans to bring WIC services to participants, it seems only 
reasonable to allow the transportation of WIC participants to WIC 
clinic sites in any situation, rural or non-rural, where access is a 
barrier. The Department wants to remove unnecessary barriers that 
prevent State and local agencies from reaching potentially eligible 
persons. Therefore, the Department proposes to revise Sec.  
246.14(c)(7) by removing the limiting word ``rural'' from the 
allowability of costs in transporting applicants and participants to 
clinics.
    In developing policies to allow reimbursement to local agencies for 
transportation costs, State agencies should consider other competing 
demands for nutrition services and administration (NSA) funds. State 
and local agencies should note that alternatives to providing 
transportation to participants exist, such as establishing fixed-
location satellite clinics in strategic locations with sufficient 
access to public transportation. State agencies may want to limit 
approvals to those areas where transportation is urgently needed to 
ensure access and where they stand to get the biggest return in terms 
of increased participation. Finally, State agencies should be aware 
that approving local use of NSA funds for transportation of some 
participants may raise issues of fairness and civil rights concerns; 
participants residing in areas where transportation to and from the WIC 
clinic is not provided may argue that they too qualify or deserve such 
a service given their circumstances. This underscores the need for 
State agencies to develop a carefully-structured rationale for allowing 
the provision of transportation assistance to certain participants that 
cannot be perceived as a discriminatory policy.
    Local agencies seeking to provide transportation must obtain prior 
approval from the State agency, and must document that the 
transportation service is essential to assure program access. A fee may 
be charged for providing transportation services. The State agency must 
advise participants that the provision of transportation is offered as 
a convenience to the participant, and is not a condition of eligibility 
or a standard program benefit. Finally, the Department proposes to 
require that a State agency which elects to allow the provision of 
transportation to participants must include its policy for approving 
such costs in the portion of the State Plan that describes the State 
agency's plans to provide program benefits to eligible persons most in 
need of such benefits. Section 246.4(a)(21) would be revised 
accordingly to reflect this requirement.

12. Capital Expenditures Which Require Agency Approval (Sec.  
246.14(d))

    The Department proposes three revisions to this section: A. 
Paragraph (d)(1) would be deleted because the purchase of automated 
information systems constitutes a capital expenditure and therefore is 
subject to the requirements for prior approval from FNS. This 
modification simplifies prior approval requirements.
    B. Paragraph (d)(3) would also be deleted. Current WIC regulations 
at Sec.  246.14(d)(3) require prior FNS approval for management studies 
performed by agencies or departments other than the State or local 
agency or those performed by outside consultants under contract with 
the State or local agency. However, on May 17, 1995, the Office of 
Management and Budget (OMB) published a revision to its Circular A-87, 
Cost Principles for State, Local and Indian Tribal Governments. The 
revision no longer requires prior approval of the cost of management 
studies. To be consistent with revised OMB Circular A-87, prior 
approval of the cost of management studies is no longer required for 
WIC State agencies. State agencies were advised of this change through 
WIC Policy Memorandum 98-8, issued by FNS on September 30, 1998.
    C. The third revision to this section redesignates paragraph (d)(2) 
as paragraph (d). The newly designated paragraph (d) would then be 
revised to eliminate the specific dollar threshold for capital 
expenditures above which State agencies must obtain the prior approval 
of FNS. The dollar threshold is being eliminated in recognition of a 
change in OMB Circular A-87 that allows Federal awarding agencies to 
waive prior approval requirements in regard to capital expenditures for 
equipment. Therefore, rather than specify a dollar threshold, newly 
designated paragraph (d) will be revised to say that State agencies 
must obtain prior approval for capital expenditures in accordance with 
FNS policy and guidance. Please note, however, that FNS waiver 
authority is applicable only to the requirement for prior approval. 
Equipment costs that do not meet requirements or tests for allowability 
(as determined by audits or other means) may still be disallowed.
    The Department believes that these provisions are reasonable and 
will not compromise accountability.

13. Other Program Income (Sec.  246.15(b))

    The Department proposes to revise paragraph (b) of this section to 
authorize the use of the addition method of applying program income. As 
required at 7 CFR 3016.25(g)(1) and (2), the deduction method of 
applying program income must be used unless the addition method is 
authorized through program regulations. If the addition method is 
authorized, program income may be added to the funds committed to the 
grant agreement by the Federal agency and the grantee. The following 
example describes the difference between the deduction and the addition 
methods of applying program income:

    If a State agency receives a WIC grant of $1 million and it 
generates program income of $5,000, the deduction method would allow 
the State to spend $1 million: $995,000 to be funded by the Federal 
grant, and $5,000 to be funded by the program income. The remaining 
$5,000 in Federal grant funds is returned to FNS for reallocation. 
Using the same amounts, under the addition method the State agency 
could spend a total of $1,005,000--its $1 million grant plus its 
program income of $5,000.

    The Department believes that State agencies should be authorized to 
use the addition method of applying program income because the addition 
method encourages State agencies and clinics to make the best use of 
Program funds, including generating new revenues that are used for 
Program purposes.

14. Closeout Procedures (Sec.  246.17(b)(2), Sec.  246.12(f)(2)(iv), 
and Sec.  246.12(q))

    To help ensure timely allocation of funds and closeout of WIC 
expenditures for the previous fiscal year, the Department proposes that 
the current 150-day reporting cycle, as described in

[[Page 71780]]

Sec.  246.17(b)(2), be reduced to 120 days. Under the current 150-day 
reporting cycle, the participant has 30 days to redeem the food 
instrument from the date it first becomes valid (as described in Sec.  
246.12(q)), and the vendor has a maximum of 90 days from the first 
valid date of the food instrument to submit it for payment (Sec.  
246.12(f)(2)(iv)). Thus, in the first 90 days of the reporting cycle, 
if the participant uses his/her full 30 days to redeem the food 
instrument at an authorized vendor's place of business, that vendor 
still has 60 days to submit the food instrument to the State agency for 
payment. The State agency then has the remaining 60 days left in the 
150-day cycle in which to review the food instrument for accuracy, 
approve payment to the vendor, bill appropriate companies, and receive 
payment of any negotiated rebates.
    The Department notes that most State agencies are already reporting 
99 percent of food outlays within 120 days or less. Conference Report 
language from the Agriculture Appropriations Act for Fiscal Year 1998 
(House Report 105-825) specifically directs the Department to reduce to 
120 days the time period in which States are required to report on 
monthly obligation of funds. To reduce the expenditure reporting cycle 
from 150 days to 120 days, the Department proposes to revise Sec.  
246.12(f)(2)(iv) to reduce the amount of time currently allowed for 
redemption of the food instrument by authorized vendors from 90 days to 
60 days. This reduction would still allow the vendor a minimum of 30 
days to submit a food instrument for payment, even if a participant 
took the entire allowable 30 days to redeem the food instrument. As it 
is in the vendor's interest to receive payment for the food instruments 
as soon as possible, the Department does not believe that this change 
would impose a burden on vendors. Comments are welcomed on the impact 
of the provision, and any specific problems that State agencies foresee 
in meeting a shorter reporting cycle.

15. State Audit Responsibilities (Sec. Sec.  246.20(b)(1) and (2))

    Proposed language at Sec.  246.20(b)(1) would direct State agencies 
to the requirements of 7 CFR part 3052 for obtaining audits. State 
agencies would be required to instruct local agencies, including 
private nonprofit local agencies, that they must obtain audits in 
accordance with 7 CFR part 3052. Further, State agencies would inform 
local agencies that they may choose to obtain either an organization-
wide audit or a WIC Program-specific audit if allowed to do so under 
the provisions of 7 CFR part 3052.
    This proposed language is needed for two primary purposes:
    First, it references Departmental audit requirements at 7 CFR part 
3052. Second, the revised language establishes State agency 
responsibility for ensuring that local agencies are appropriately 
audited.
    Consistent with the proposed revisions to paragraph (b)(1) of this 
section as described above, the Department further proposes to delete 
paragraph (b)(2). The references in paragraph (b)(1) to 7 CFR part 3052 
which contain the requirements for organization-wide audits make the 
specific listing of those requirements in paragraph (b)(2) redundant.

16. State Agency Reporting Requirements (Sec. Sec.  246.25(b) and (c))

    The Department proposes a number of revisions to the State agency 
reporting requirements at Sec. Sec.  246.25(b) and (c). A reporting 
system should yield useful management tools for both Federal and State 
program managers, and should be responsive to requests for program 
information from Congress and the general public. The objectives of the 
proposed revisions to Sec.  246.25 in this rulemaking are to encourage 
faster reporting, better quality data, more efficient data collection, 
and a reduction in the current paperwork burden on State agencies.
Participation Reporting
    Under the regulatory requirements as detailed in Sec.  246.25, 
State agencies should report actual and projected participation and 
expenditure information on a monthly basis. In order to bring the 
regulatory language up to date with current reporting practices, the 
Department proposes several revisions to these monthly reporting 
requirements, listed in paragraph (b)(1).
    A. The stated purpose for reporting monthly financial and program 
performance data is to support program management and funding 
decisions.
    B. Most of the items specified in paragraph (b)(1) as currently 
requiring monthly reporting would be retained, except that the 
requirement to report itemized NSA expenditures would be dropped; 
instead, only the monthly totals of NSA expenditures would be reported.
    C. Itemized NSA expenditures would be reported annually, as an 
addendum to the fiscal year closeout report.
    D. State agencies would also report actual and projected food funds 
expenditures and available food and NSA funds, which would be listed by 
the funding source year. This information is necessary in order to 
improve monitoring of program expenditures as well as to keep FNS fully 
informed about State agency plans to use available funds. It is, in 
fact, the reporting of this data that alerts FNS to impending caseload 
management problems. Early warning and prudent action based on this 
information should avert the need for severe caseload fluctuations.
    Section 17(i)(2) of the Child Nutrition Act of 1966 (CNA) as 
amended, requires the Secretary to reallocate funds periodically, if a 
State agency is unable to spend its full allocation. To fulfill this 
obligation, FNS must make funding determinations that involve 
continuous forecasting and reevaluation of State agencies' funding 
needs through the analysis of reported data. The Department would 
retain regulatory language at paragraphs (b)(1)(i) and (ii) of Sec.  
246.25, which specifies additional information that State agencies may 
be required to include in their monthly financial and participation 
reports. This information pertains to the amount of excess cash 
allowances held by local agencies and the actions taken by the State 
agency to reduce such excess balance.
    The Department proposes to revise paragraph (b)(2) of this section 
to delete the quarterly report of participants by category (i.e., 
pregnant women, breastfeeding women, postpartum women, infants, and 
children) and by priority level. This revision corresponds to reporting 
changes made in Fiscal Year 2001 to reduce paperwork. Additionally, the 
number of migrant participants, as well as itemized NSA funds 
expenditures, which current regulations require to be reported monthly, 
would be reduced to an annual reporting requirement.
    Reporting quarterly on participation by priority and category 
became a requirement with the May 3, 1988, publication of revised 
program regulations. The Department's purpose in requiring State 
agencies to report this information four times a year was two-fold. 
First, it enabled FNS to determine how well State agencies were 
targeting limited program benefits to persons eligible within the 
highest priority groups. Second, the data were used in the formula for 
allocation of food funds. In Fiscal Year 1993, State agencies began 
reporting these data annually instead of quarterly. WIC funding 
formulas no longer utilize priority data and priority participation is 
relatively stable. Thus in Fiscal Year 2000, State agencies began 
reporting these data every other year instead of annually.

[[Page 71781]]

The regulatory language would be revised to reflect the current 
practice in which State agencies report participation by priority every 
other year. While State agencies continue to track participation by 
priority on a monthly basis for program management purposes, they only 
have to report the data to FNS once every other year.
    As previously mentioned, the regulatory language would be revised 
to require that the itemized NSA expenditures are reported through an 
addendum to the annual closeout report. The itemized NSA expenditures 
are used to determine a State agency's compliance with the statutory 
requirements (section 17(h)(3)(A)(i)(I) and (II) of the CNA) to spend 
at least one-sixth of its NSA expenditures on nutrition education and 
its proportionate share of the national minimum breastfeeding promotion 
expenditures.
    Section 17(g)(4) of the CNA requires that not less than nine-tenths 
of one percent of the annual WIC Program appropriation shall be 
available first for services to eligible members of migrant 
populations. In order to determine the migrant expenditure target 
amount each year, FNS needs documentation of each State agency's annual 
average migrant participation. To calculate each State's share of the 
migrant expenditure target, FNS uses a 12-month average of State 
migrant participation. Because a 12-month average is used for 
establishing the annual migrant expenditure target, yearly submission 
of the average of 12 months of data is sufficient.
Racial/Ethnic Group Reporting
    The Department also proposes revisions to Sec. Sec.  246.25(b)(3) 
and (c) to reflect current reporting practices that have reduced 
reporting of participant category by priority level and racial and 
ethnic participation data to a biennial basis. Prior to Fiscal Year 
1993, racial and ethnic participation information had been collected 
and reported annually by all local agencies, through the State 
agencies, on the form FNS-191 (Racial/Ethnic Group Participation 
Report). Not only did the FNS-191 constitute a significant reporting 
burden, but it was also duplicative. Racial and ethnic data are 
captured by the Participant Characteristics (PC) Minimum Data Set 
(MDS), a comprehensive reporting format designed by FNS to provide 
information for the biennial report provided to the Secretary of 
Agriculture and to Congress on income and nutritional risk 
characteristics, migrant farmworker status, and other matters 
determined by the Secretary. Beginning with the 1992 PC report, WIC 
State agencies have provided an MDS using a census or a State-
representative sample of WIC participants, making use of ongoing data 
collection routinely conducted as a component of WIC certification. The 
racial/ethnic group data collected on the MDS is identical to the data 
collected on the FNS-191. Therefore, the Department proposes the 
following revisions to the biennial reports at Sec.  246.25(b)(3) that 
reflect the current reporting practices:
    A. Add a new paragraph (b)(3)(i) that names and describes the 
participant characteristics reporting requirements;
    B. Redesignate paragraph (c) of this section as paragraph 
(b)(3)(ii); and
    C. Specify that racial and ethnic participation data submitted for 
the Report on Participant Characteristics will also be used to fulfill 
civil rights reporting requirements.
    Finally, the Department proposes to add a new paragraph (c) to this 
section to collect data that were previously only reported on the FNS-
191. In addition to racial/ethnic data provided by the FNS-191, the 
name, address, telephone number, and number of clinics of all WIC local 
agencies were reported. FNS has compiled this information into an 
annual directory of local agencies, and it has become an indispensable 
resource for program communications. The local agency directory has 
been used to provide referrals to participants inquiring about the 
availability of WIC Program services, to maintain continuity of program 
services for migrants and other transient participants, and to provide 
a cross-reference for the PC MDS data to ensure complete coverage of 
all local agencies. To prevent the loss of this valuable local agency 
information, the Department proposes to revise the regulatory language 
to require State agencies to submit additions and deletions of local 
agencies administering the WIC Program, as well as local agency address 
changes, when such changes occur.

17. Confidentiality of Participant Information (Sec. Sec.  246.26(d) 
through (i)

    The Department proposes several revisions to the participant 
confidentiality provisions in Sec.  246.26(d) of the current 
regulations. This rule would completely revise paragraphs (d) and (g) 
and add new paragraphs (h) and (i) to address the use and disclosure of 
confidential information. The Department proposes these changes in 
order to remove barriers to coordination among programs caused by 
restrictions on sharing participant information, and to provide 
regulatory clarification and guidance on legal issues pertaining to the 
release of confidential applicant and participant information in 
connection with court proceedings, criminal investigations, or 
instances of known or suspected child abuse or neglect.
    State agencies are reminded that under both the current and 
proposed confidentiality provisions, confidential applicant and 
participant information may be used or disclosed only to the extent 
permitted by those provisions. Any other use or disclosure is not 
permitted. Additionally, State agencies should be aware that 
information obtained from WIC applicants or participants is protected 
by these provisions regardless of the manner in which the information 
is recorded or stored. For example, confidential information that is 
written in a participant case file, confidential information that is 
stored on a magnetic medium, such as computer tape or disk, or as part 
of a general office record such as a sign-in sheet, are equally 
protected. State agencies must ensure that confidential information 
stored on computer disks or tapes will not be available to persons or 
programs that are not authorized to receive such data.
    The additional flexibility afforded by this proposed rule would not 
disturb the balance between sharing information in the interest of 
enhanced services and safeguarding information so that barriers to 
Program participation are not created. We are fully committed to the 
principle that the integration of health care and social service 
programs must proceed with careful regard for an individual's right to 
privacy.
A. Definition of Confidential Applicant and Participant Information
    Current Program regulations, at Sec.  246.26(d), limit the use and 
disclosure of information obtained from applicants and participants. 
The current confidentiality provisions do not differentiate between the 
treatment of information about applicants and participants obtained 
from other sources or generated as a result of WIC application, 
certification, or participation. This rule would make clear in proposed 
Sec.  246.26(d)(1) that confidential applicant and participant 
information is any information about an applicant or participant 
(whether it is obtained from the applicant or participant, another 
source, or generated as a result of WIC application, certification, or 
participation) that individually identifies those individuals and/or a 
family member(s).

[[Page 71782]]

B. Use in the Administration and Enforcement of the WIC Program
    Presently, applicant/participant information may be used and 
disclosed to only the following:
    1. Persons directly connected with the administration or 
enforcement of the WIC Program;
    2. Representatives of public organizations designated by the chief 
State health officer (or the governing authority in the case of Indian 
State agencies) which administer health or welfare programs that serve 
persons categorically eligible for the WIC Program; and
    3. The Comptroller General of the United States, for audit and 
examination.
    In addition, current Sec.  246.25(a)(4) requires State agencies to 
provide the Department and the Comptroller General of the United States 
access to all Program records, except medical care records of 
individual participants unless they are the only source of 
certification data.
    This rule would clarify the scope of the first category by 
emphasizing that even when confidential applicant/participant 
information is used for the administration or enforcement of the WIC 
Program, it may only be used by persons who have a need to know the 
information. Confidential applicant/participant information may include 
sensitive financial and medical information and not all State agency or 
local agency personnel need access to this information. Also, the 
proposed rule makes clear that this information may be used for the 
administration and enforcement of any WIC Program, not just by the 
State agency or local agency where the applicant or participant is 
certified. This clarification is necessary to facilitate the transfer 
of participants from one State agency or local agency to another and 
for Program oversight.
C. Use and Disclosure for non-WIC purposes
    Currently, State agencies choosing to disclose applicant/
participant information to public organizations designated by the chief 
State health officer pursuant to the second category discussed above 
must execute a written agreement with each agency. The agreement must 
limit the use of the information by the receiving agency to 
establishing eligibility for their own programs and conducting outreach 
for such programs. The organizations must assure that WIC applicant/
participant information will not be disclosed to a third party. Also, 
Sec.  246.7(i)(9) in current regulations requires State agencies to 
inform WIC applicants on the WIC certification form that information 
they provide may be disclosed to public organizations that administer 
other health or welfare programs for purposes of determining 
eligibility and conducting outreach.
    Although section 17 of the CNA does not address the confidentiality 
of WIC information, the current regulations at Sec.  246.26(d) and the 
guidance provided in FNS Instruction 800-1 reflect the Department's 
commitment to maintaining the confidentiality of the financial and 
health information of WIC applicants and participants. The current 
narrow avenues of disclosure of confidential applicant/participant 
information reflect the Department's position that an individual's 
right to privacy interests should not be surrendered as a condition of 
Program participation. Even more fundamentally, the Department 
understands that individuals may refuse to apply or participate in the 
WIC Program if they fear that their privacy will not be safeguarded.
    At the same time, the Department recognizes that there are 
legitimate reasons for disclosing confidential information, many of 
which directly benefit the applicant or participant. One important 
reason is to facilitate the delivery of health services and other 
benefits for which WIC applicants or participants are eligible. 
Coordination among programs and ``one-stop shopping'' represent a 
dynamic area of growth and development in public service delivery. 
Requests for access to WIC applicant and participant information as a 
practical means of facilitating services have increased as States and 
local agencies strengthen coordination efforts with other agencies or 
persons delivering benefits or services to WIC applicants/participants. 
Members of Congress have also encouraged greater coordination among 
health, education, and social service programs as an effective means of 
maximizing funds and reaching individuals who are eligible for several 
programs. Finally, there are indications that the ``users'' of public 
health, education, and social service programs desire a more 
convenient, coordinated, integrated system of service delivery.
    The Department's goal is to facilitate these coordination efforts 
without sacrificing the privacy interests of applicants and 
participants. We are committed to maintaining the confidentiality of 
applicant/participant information as programs coordinate services and 
share information, although the task becomes more challenging. One way 
to control the access of confidential information while promoting 
coordination is through the use of a written agreement between 
programs, specifying how and with whom data may be disclosed, and the 
proposed use of such information.
    For these reasons, the Department proposes to allow State agencies 
greater flexibility in determining organizations to which they may 
disclose confidential applicant/participant information pursuant to 
written agreements as well as the permissible uses of such information. 
Specifically, in proposed Sec.  246.26(d)(2) the reference to ``health 
or welfare'' programs would be removed. This would provide State 
agencies greater latitude in choosing appropriate programs with which 
to coordinate and share information. Additionally, proposed Sec.  
246.26(h)(3)(i) would expand the permitted uses of confidential 
applicant/participant information to add three new categories. As noted 
above, currently applicant/participation information may be used by 
another public organization only for the purpose of establishing 
eligibility and conducting outreach for the programs administered by 
that organization. The three new categories of permissible use proposed 
by this rule are:
    [sbull] Enhancing the health, education, or well-being of WIC 
applicants or participants;
    [sbull] Streamlining administrative procedures in order to minimize 
burdens on staff and applicants or participants; and
    [sbull] Assessing and evaluating a State's health system in terms 
of responsiveness to participants' health care needs and health care 
outcomes.
    However, as a balance to this proposed expansion, the Department 
proposes a new Sec.  246.4(a)(24) that would require State agencies to 
include in their State Plan a list of the programs with which the State 
agency or its local agency has or intends to execute written agreements 
for the disclosure and use of confidential applicant/participant 
information and planned use of the information, consistent with the 
uses authorized in proposed Sec.  246.26(d). This rule includes a 
cross-reference to the State plan requirement in proposed Sec.  
246.26(h)(3). This list is to be included in the State Plan for 
informational purposes only; FNS does not need to approve State 
agencies' decisions in this matter as long as the reasons for sharing 
information are consistent with the authorized uses in the proposed 
rule.
    This broader language would address some situations that State 
agencies have cited as examples of administrative inefficiency or as 
barriers to the health

[[Page 71783]]

and well-being of WIC applicants and participants resulting from the 
current confidentiality provisions. For example, these proposed changes 
would:
    [sbull] Permit streamlining of duplicative administrative and 
health procedures among programs;
    [sbull] Make it easier to coordinate with public educational 
programs, such as the Expanded Food and Nutrition Education Program 
(EFNEP), or with educational organizations that provide health services 
to WIC applicants or participants;
    [sbull] Encourage sharing information with other programs in which 
WIC participants are currently enrolled, such as Head Start; and
    [sbull] Permit sharing with child protective service programs 
certain information that is deemed to be critical to the health and 
well-being of WIC participants.
    This proposed rule also would make clear in proposed Sec. Sec.  
246.26(d)(2) and (h)(3) that the conditions for disclosing confidential 
applicant/participant information extend to non-WIC use of the 
information by the State agency and its local agencies. In these cases, 
the written agreement would be between the WIC State agency or local 
agency and the unit of the WIC State agency or local agency that will 
be using the information for non-WIC purposes. The rule proposes to 
require a written agreement in these instances because the State or 
local agency personnel who will be using the information for non-WIC 
purposes may be unfamiliar with the limits on the use of the 
information. Requiring a written agreement in these cases provides an 
additional safeguard for this sensitive information.
    Some State agencies have objected to the requirement of written 
agreements prior to disclosing applicant/participant information 
because of the amount of paperwork that can be involved, especially 
when programs are not administered at the State level. The Department 
agrees that written agreements may not always be practical for sharing 
information, and later in this preamble we discuss the situations in 
which release forms may be used. However, there are ways to limit the 
amount of paperwork involved in written agreements in some situations. 
For example, FNS Instruction 800-1 states that separate agreements do 
not have to be executed for each program. Instead, the chief State 
health officer (or his equivalent) may list in one agreement all of the 
programs with which information is to be disclosed. Responsible 
officials for each of the programs listed would then sign the written 
agreement. This rule would retain the requirement for written 
agreements between WIC and other program providers because such 
agreements establish accountability. They also provide a protocol for 
sharing data, thus protecting confidential information.
    State agencies that choose to share information as authorized by 
Program regulations are not required to obtain a separate release form 
signed by the applicant or participant. However, this rule would 
require State and local agencies that choose not to use release forms 
to notify applicants and participants at the time of application or 
through a subsequent notice that information about their participation 
in the WIC Program may be used by State and local WIC agencies and 
public organizations in the administration of their programs that serve 
persons eligible for the WIC Program. This requirement is contained in 
proposed Sec. Sec.  246.7(i)(11) and 246.26(h)(2) of this proposed 
rule.
D. Child Abuse and Neglect Reporting
    In the past, questions have arisen about the disclosure of 
applicant/participant information to child protective services or other 
State or local officials in cases of known or suspected child abuse or 
neglect. The Department's current policy, as detailed in FNS 
Instruction 800-1, is determined by Federal and State law. The 
Department's policy stems from a requirement in Section 106 of the 
Child Abuse Prevention and Treatment Act (42 U.S.C. 5106a). This Act 
authorizes the Secretary of Health and Human Services to make grants to 
States to assist them in developing and implementing child abuse and 
neglect prevention and treatment programs. A State's statute must 
require that known or suspected child abuse or neglect be reported to 
specified persons in order for that State to receive such grants. 
Generally, the Department's regulations take precedence over State laws 
or regulations. However, in this case State laws requiring the 
reporting of suspected child abuse reflect federal statutory intent 
designed to safeguard the health and well-being of the nation's 
children.
    If a State statute requires known or suspected child abuse or 
neglect to be reported, then WIC staff must report or release 
applicant/participant information to State or local officials who have 
requested such information. If State law does not require that known or 
suspected child abuse be reported by public programs, such as WIC, the 
guidance in FNS Instruction 800-1 encourages WIC State agencies to 
consult with State legal counsel to determine the appropriateness of 
reporting such information. The Department's position remains the same 
as that stated in guidance. However, we propose to codify the current 
policy as stated in FNS Instruction 800-1 in proposed Sec.  
246.26(d)(3).
    In the absence of State reporting laws, the proposed language at 
Sec.  246.26(h)(3)(i)(C) would allow State agencies the option to 
disclose such information if a written agreement has been executed 
between the WIC State or local agency and the appropriate child 
protective service organization. The written agreement could also be 
used to strengthen ties between WIC and agencies that provide child 
abuse counseling.
E. Release Forms
    State agencies have requested latitude to allow medical information 
to be disclosed to private parties such as physicians treating WIC 
applicants or participants. After examining the issue, we concluded 
that permitting a general or blanket release form under which an 
applicant or participant would permit a local or State agency to 
release confidential information to unidentified parties would be 
inappropriately broad. At the same time, the Department recognizes that 
some increased flexibility in disclosing medical information can be 
beneficial to the applicant or participant, as well as the respective 
party.
    As a result, this rule proposes in Sec.  246.26(d)(4) to allow 
disclosure of confidential applicant/participant information when an 
applicant or participant signs a form authorizing disclosure and 
specifying the parties to which the information may be disclosed. In 
addition, the applicant or participant must be given the right to 
refuse to sign the release form and notified that consent is not a 
condition of WIC Program participation and that refusal to sign the 
release form will not affect the application or participation in the 
WIC Program. To underscore the voluntary nature of the release form, 
the proposed rule would permit only release forms authorizing 
disclosure to the applicant or participant's physicians or other health 
care providers at the time of application or certification for the WIC 
Program. All other requests for signature of release forms would be 
required to take place after the application and certification process 
is completed. In addition, to the extent that an applicant or 
participant voluntarily signs a release form, agreeing that 
confidential information may be disclosed, the restrictions in

[[Page 71784]]

proposed Sec. Sec.  246.26(d) and (h) would not apply.
F. Access by Applicants and Participants
    This rule would codify in proposed Sec.  246.26(d)(5) the current 
policy of requiring State and local agencies to provide applicants and 
participants access to the information they provide. In the case of an 
applicant or participant who is an infant or child, the State or local 
agency would be required to provide access to the parent or guardian of 
the infant or child, assuming that any issues regarding custody of 
guardianship are resolved. This rule would not require State and local 
agencies to provide access to any other information concerning an 
applicant or participant, such as documentation of income provided by 
third parties and staff assessments of the participant's condition or 
behavior, unless required by Federal, State, or local law or policy or 
unless the information supports a State or local agency decision that 
is being appealed by the applicant or participant pursuant to Sec.  
246.9.
G. Access by the USDA and the Comptroller General of the United States
    This rule would also revise paragraph (g) in Sec.  246.26 to 
clarify that access to Program records by the Department and 
Comptroller General of the United States includes confidential 
applicant and participant information. This rule also proposes to amend 
Sec.  246.25(a)(4) to require State and local agencies to make 
available to the Department and the Comptroller General all Program 
records, including confidential applicant and participant information. 
However, the proposed rule would prohibit any reports or other 
documents resulting from the examination of such records that are 
publicly released from including confidential applicant or participant 
information. We also want to point out that the provisions providing 
access to the Department and the Comptroller General extend to 
contractors and other agents of the Department or the Comptroller 
General who may be performing research or other activities on behalf of 
the Department, so long as those activities relate to the 
administration or enforcement of the WIC Program.
H. Subpoenas and Search Warrants
    The Department additionally proposes to add a new paragraph (i) to 
Sec.  246.26 that would specify the procedures State and local agencies 
must follow in responding to requests from courts for confidential 
information pertaining to WIC applicants, participants, and vendors. 
The Department proposes to add these procedures to the WIC regulations 
in response to an increase in instances in which State and local 
agencies are presented with subpoenas or search warrants for 
confidential applicant and participant information. This rule proposes 
step-by-step procedures that State and local agencies, in consultation 
with legal counsel, would be required to follow in handling these 
requests. The proposed procedures are intended to create a basic, 
standard approach that emphasizes the importance of preserving 
confidentiality within the scope of the Federal regulations governing 
the WIC Program. At the same time, these procedures would protect WIC 
staff from adverse legal action for refusals to release confidential 
information.
    In proposed Sec.  246.6(i), the Department proposes to identify the 
situations in which State or local agencies must release information: 
when served with a search warrant or when served with a subpoena which 
the court has already denied the State or local agency's attempt to 
quash or which the local agency and legal counsel have reviewed and 
determined not to attempt to quash. If the State or local agency fails 
to comply in these situations, WIC staff may face adverse legal action, 
including imprisonment.
    This rule proposes different procedures for responding to subpoenas 
as opposed to search warrants in recognition of the differences between 
these legal documents. A subpoena is a written directive for 
information to be provided by an individual or entity. Generally, a 
subpoena directs an individual or entity to appear at a stated time and 
place and give information on a topic about which the individual or 
entity is knowledgeable. One type of subpoena is a ``subpoena duces 
tecum.'' A subpoena duces tecum is a written directive that orders the 
production and delivery of documents. Documents may be requested by 
type, e.g., all records for participants of a certain age and gender, 
or by topic, e.g., all documents which deal with immunization. The 
deadline for delivery, as well as the site for delivery, is generally 
specified. Search warrants are issued by the courts and are used by law 
enforcement officers to obtain information, and sometimes objects, from 
specific premises. Compliance with a search warrant is required at the 
time the search warrant is served.
    Compared to a search warrant, with which State or local agency 
compliance must be immediate, a response to a subpoena may involve a 
process of several steps. This process, as outlined at proposed 
paragraph (i)(2), would allow State and local agencies, in consultation 
with legal counsel, to determine how to respond to a subpoena when it 
is initially received. However, if efforts to quash the subpoena (i.e., 
receive court approval not to comply with the directive) have been 
denied by the court, then the State or local agency must comply.
    Subpoenas duces tecum for information about Program participants 
have been the most common type of court-ordered directive. Subpoenas, 
whether directed to an individual or an entity, generally do not 
initially represent a court's ruling that a WIC State or local agency 
must release the requested information. However, subpoenas cannot be 
ignored. The Department proposes that the primary consideration in 
deciding how to respond to subpoenas follows the provisions of proposed 
Sec.  246.26(i). Under the proposed procedures, State and local 
agencies, acting on the advice of legal counsel, would first determine 
whether the requested information is in fact confidential applicant or 
participant information prohibited from release under the federal 
regulations. If not, the state or local agency would provide the 
information requested. If so, however, we propose that the State or 
local agency, or legal counsel acting on its behalf, must proceed to 
attempt to quash the subpoena. In doing so, the State/local agency or 
legal counsel may be required to appear before the court to argue 
against the release of information. The Department further proposes 
that at a minimum in attempting to quash a subpoena, the State/local 
agency or legal counsel acting on its behalf must inform the court of 
the federal regulatory prohibitions against providing the requested 
information. If the court denies the motion to quash the subpoena and 
rules that the information must be released, then, as proposed in this 
rule, the State/local agency or legal counsel would attempt to limit 
the extent of the disclosure of confidential WIC Program information 
by:
    [sbull] Ensuring that the information released is only what is 
essential to respond to the subpoena; and
    [sbull] Limiting to the greatest extent possible the public access 
to the confidential WIC information disclosed.
    Occasionally, State and local agencies have confronted serious 
dilemmas when requested confidential applicant or participant 
information was key to the solution of criminal investigations of 
felonies. Program regulations prohibited disclosure of the information, 
even

[[Page 71785]]

though Program interests would have been well served in furthering the 
investigations. The Department therefore proposes to recognize, in new 
Sec.  246.26(i)(2)(iii), that in rare instances a State or local agency 
in consultation with legal counsel could decide that disclosing 
confidential applicant or participant information would be in the best 
interest of the Program. Because requests arising from investigations 
of this caliber and seriousness are rare, we expect State and local 
agencies to conclude only infrequently that such disclosure is 
necessary.
    In Sec.  246.26(i)(3), the Department proposes to set forth 
procedures for State and local agencies to follow when they are served 
with search warrants. As proposed, the State and local agency are 
required to:
    [sbull] If a local agency, immediately notify the State agency;
    [sbull] Immediately notify legal counsel;
    [sbull] Comply with the search warrant;
    [sbull] Inform the individual(s) producing the search warrant of 
the confidential nature of WIC information; and
    [sbull] Review the search warrant and provide only the specific 
information requested in the warrant and no other information.
    Search warrants differ from subpoenas in that generally, they are 
issued or approved by a court in criminal matters only when law 
enforcement officials have made an adequate showing of the need for the 
search. Failure to comply with a search warrant at the time it is 
served could result in the immediate imprisonment of WIC State or local 
agency staff. As stated above, State or local legal counsel should be 
alerted to the request for the provision of the information required in 
the search warrant immediately upon service of the warrant. WIC clinic 
staff should retain a copy of the search warrant for their files as 
evidence of the cause of the specific information's being released.
    The proposed process for responding to court-ordered requests for 
confidential WIC Program information will assist State and local 
agencies in handling future requests. These proposed procedures are 
intended to achieve two objectives. First, the Department intends to 
clarify through regulations the primacy of Federal authority to limit 
disclosure of information in the interest of preserving the 
confidentiality of WIC applicant/participant information. The 
Department further intends to communicate a national, uniform approach 
to disclosure of WIC records that will assist the courts in handling 
matters related to the confidentiality of Program information. Because 
of variation in State law, however, the Department encourages legal 
counsel for State and local agencies to consider these proposed 
revisions carefully, and to provide comments that will assist the 
Department in issuing final regulations that are sufficiently flexible 
to accommodate State laws in this area.

18. Conflict of Interest

    One of the recommendations included in an August 1999 Report by the 
General Accounting Office (GAO) addressing fraud and abuse in the WIC 
Program (``FOOD ASSISTANCE: Efforts to Control Fraud and Abuse in the 
WIC Program Can Be Strengthened'') stated that WIC State agencies 
should be required to have policies and procedures for addressing 
employee conflicts of interest at the local agency level. Conflicts of 
interest may arise when local agency employees who participate in the 
WIC Program are in a position to certify their own eligibility and 
issue their own benefits. They may also arise when there is no 
separation of duties within the local agency staff so that an employee 
can certify and issue benefits to the same individual. The GAO report 
indicated that 45 percent of the local WIC agencies do not have 
conflict-of-interest policies in place for employees who also receive 
WIC benefits. Furthermore, an estimated 30 percent of the local 
agencies do not separate duties within the certification process. In 
this latter case, employees could certify and issue WIC benefits to 
relatives and friends.
    The Department realizes that in many local agencies, the WIC 
clinics do not have enough employees on site to separate these 
essential duties. However, GAO reminds the Department that even in such 
understaffed situations, prudent precautions can and should be taken. 
For example, one agency uses a separate agency number for issuing WIC 
benefits to employee participants. Another agency requires a 
supervisor's sign-off whenever an employee is going to both certify and 
issue benefits to the same individual because staffing levels are low.
    Consistent with GAO's recommendation, a new paragraph (a)(25) would 
be added to Sec.  246.4 to require that State agencies develop and 
implement reasonable policies and procedures to prevent conflicts of 
interest within the local agency staffs.

19. Participant and Employee Fraud and Abuse (Sec.  246.4(a))

    The GAO study on fraud and abuse in the WIC Program also noted that 
consistent and reliable information regarding participant fraud and 
abuse--who is committing the fraud and how often, what types of fraud 
are being committed, and how much program funding is lost--is important 
in evaluating the effectiveness of both Federal and State agency 
efforts aimed at preventing and detecting these problems. Currently, 
State agencies do not collect information on the number and 
characteristics of participants who engage in participant fraud and 
abuse. In fact, nearly half of the states that were included in the GAO 
study reported that they do not maintain such data. Without this 
information, FNS is not able to assess the extent of participant fraud 
and abuse, evaluate State and local agencies' efforts to control it, or 
identify the changes needed to improve program integrity.
    GAO suggests that not collecting such information may send an 
unintentional message to agency officials and other stakeholders that 
preventing and detecting participant/employee fraud and abuse is a low 
priority, thus damaging the public's trust in the WIC Program. 
Therefore, this rule proposes that State agencies include as part of 
the annual State Plan of Operation a description of the system(s) that 
are in place at the local agency level for collecting and maintaining 
information on cases of fraud and abuse by participants as well as by 
employees (including any violations caused by employee conflicts of 
interest described above). The information should include the nature of 
the fraud detected and the associated dollar losses that are the actual 
or estimated result of such fraud and abuse. This requirement would be 
added to Sec.  246.4 of the regulations as a new paragraph (a)(26).

20. State Plan Requirements (Sec.  246.4(a))

    The proposed revisions described above will also require several 
changes to the State Plan. Therefore, Sec.  246.4(a)(11)(i) would be 
revised to incorporate the following provisions:
    (1) State agencies which allow local agencies the option of 
requesting documentation of pregnancy from applicants would specify in 
their State Plans the type of documentation that is requested, and 
would also provide assurance that the request for documentation will 
not constitute a barrier to participants.
    (2) States would specify any alternate language, developed at their 
option, that will be used to inform WIC applicants of their rights and 
responsibilities, as provided in Sec.  246.7(i)(10) of this proposed 
rule. The alternate language must be approved by FNS before it can be 
used by WIC local agencies.

[[Page 71786]]

    (3) State agencies must describe their policies concerning the 
approval of local agency costs for transporting participants to and 
from WIC clinics, as provided in Sec.  246.4(a)(18).
    (4) A new paragraph (a)(24) would be added to this section to 
require that State agencies list all programs with which written 
agreements for sharing participant information have been or will be 
executed. State agencies would also be required to specify the 
reason(s), as specified by Sec.  246.26(d)(2)(i), for sharing 
information with each program.

Procedural Matters

Executive Order 12866

    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, 
Roberto Salazar, Administrator of the Food and Nutrition Service (FNS), 
has certified that this rule will not have a significant effect on a 
substantial number of small entities. State and local WIC agencies 
would be most affected because there are several additional program 
administration requirements. However, this rule also reduces 
considerably more program administration requirements. The net effect 
on State and local agencies is expected to result in reduced and 
streamlined administrative procedures. Participants and applicants 
would also be affected by changes in application processing, 
certification, and the disclosure of information.

Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995, the Food 
and Nutrition Service (FNS) is submitting for public comment the change 
in the information collection burden that would result from the 
adoption of the proposals in this rule, as indicated below.

                                        Estimated Annual Reporting Burden
----------------------------------------------------------------------------------------------------------------
                                                   Annual number
             Section of regulations                     of            Annual      Average burden   Annual burden
                                                    respondents      frequency     per  response       hours
----------------------------------------------------------------------------------------------------------------
Reporting:
    246.4(a)(11)(i).............................              88               1            1.00           88.00
    246.4(a)(11)(ii)............................              88               1             .50           44.00
    246.4(a)(18)................................              88               1            1.00           88.00
    246.4(a)(24)................................              88               1            1.00           88.00
                                                 -----------------
        Total Reporting Burden..................              88  ..............            3.50          308.00
----------------------------------------------------------------------------------------------------------------

    Comments are invited on:
    [sbull] Whether the proposed collection of information is necessary 
for the proper performance of the Agency's functions, including whether 
the information will have practical utility;
    [sbull] The accuracy of the Agency's estimate of the proposed 
information collection burden, including the validity of the 
methodology and the information to be collected; and
    [sbull] Ways to minimize the burden of information collection on 
those who are required to respond, including through the use of 
appropriate automated, electronic, mechanical, or other technological 
collection techniques or other forms of information technology.
    In addition to the proposed reporting requirements noted above, 
this rulemaking would also update regulatory language at section 246.25 
regarding the State agency reporting requirements to reflect the 
current reporting requirements that began in Fiscal Year 1993. 
Revisions to the information collection burden associated with these 
reporting changes have been previously approved by OMB as follows:
    [sbull] FNS-798 and -798A, WIC Financial Management and 
Participation Report with Addendum (OMB 0584-0045);
    [sbull] FNS-648, WIC Local Agency Directory Report (OMB 
0584-0431).
    Comments may be sent to Laura Wittenberg, Desk Officer for 
Agriculture, Office of Information and Regulatory Affairs, Office of 
Management and Budget (OMB), Washington, DC 20503. (A copy may also be 
sent to Debra Whitford at the address below.) For further information, 
or for copies of the information collection, please contact Debra R. 
Whitford, Chief, Policy and Program Development Branch, Supplemental 
Food Programs Division, Food and Nutrition Service, U.S. Department of 
Agriculture, 3101 Park Center Drive, Room 540, Alexandria, VA 22302, or 
telephone (703) 305-2730.
    Comments and recommendations on the proposed information collection 
must be received by January 31, 2003. A comment to OMB is best assured 
of having its full effect if OMB receives it within 30 days of 
publication.

Executive Order 12372

    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

    This proposed rule has been reviewed under Executive Order 12988, 
Civil 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 the preamble to 
the final rule. 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

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 10404, 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

[[Page 71787]]

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.

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 
proposed to be 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.  246.2, add new definitions of ``Electronic signature'' 
and ``Sign or signature'' in alphabetical order to read as follows:


Sec.  246.2  Definitions.

* * * * *
    Electronic signature means an electronic sound, symbol, or process, 
attached to or associated with an application or other record and 
executed and or adopted by a person with the intent to sign the record.
* * * * *
    Sign or signature means a handwritten signature on paper or an 
electronic signature. If the State agency chooses to use electronic 
signatures, the State agency must ensure the reliability and integrity 
of the technology used and the security and confidentiality of 
electronic signatures collected in accordance with sound management 
practices and the confidentiality requirements in Sec.  246.26.
* * * * *
    3. In Sec.  246.4:
    a. Revise paragraphs (a)(11)(i) and (a)(11)(ii);
    b. Add a sentence to the end of paragraph (a)(21); and
    c. Add new paragraphs (a)(24), (a)(25), and (a)(26).
    The revision and additions read as follows:


Sec.  246.4  State plan.

    (a) * * *
    (11) * * *
    (i) Certification procedures, including:
    (A) a list of the specific nutritional risk criteria by priority 
level which explains how a person's nutritional risk is determined;
    (B) hematological data requirements including timeframes for the 
collection of such data;
    (C) the State agency's income guidelines for Program eligibility;
    (D) adjustments to the participant priority system (see Sec.  
246.7(e)(4)) to accommodate high-risk postpartum women or the addition 
of Priority VII; and
    (E) alternate language for the statement of rights and 
responsibilities which is provided to applicants, parents, or 
caretakers when applying for benefits as outlined in Sec.  246.7(i)(10) 
and (j)(2)(i) through (j)(2)(iii). This alternate language must be 
approved by FNS before it can be used in the required statement.
    (ii) Methods for providing nutrition education to participants, and 
criteria for deciding who will be offered individual care plans. 
Nutrition education will include drug abuse information. Participants 
will include homeless individuals.
* * * * *
    (21) * * * The State agency will also describe its policy for 
approving transportation of participants to and from WIC clinics.
* * * * *
    (24) A list of all organizations with which the State agency or its 
local agencies has executed or intends to execute a written agreement 
pursuant to Sec.  246.26(h) authorizing the use and disclosure of 
confidential applicant and participant information for non-WIC 
purposes.
    (25) The State agency's plan to prevent conflicts of interest at 
the local agency or clinic level. At a minimum, this plan must address 
situations in which local agency or clinic staff:
    (i) are also WIC participants;
    (ii) certify relatives or close friends; or
    (iii) perform both certification and food instrument issuance 
functions.
    (26) The State agency's plan for collecting and maintaining 
information on cases of participant and employee fraud and abuse. Such 
information should include the nature of the fraud detected and the 
associated dollar losses.
* * * * *
    4. In Sec.  246.5:
    a. Revise the first sentence of paragraph (c)(1) and remove the 
last sentence; and
    b. Revise paragraph (d)(2).
    The revisions read as follows:


Sec.  246.5  Selection of local agencies.

* * * * *
    (c) * * *
    (1) The State agency will consider the Affirmative Action Plan (see 
Sec.  246.4(a)(5)) when funding local agencies and expanding existing 
operations, and may consider how much of the current need is being met 
at each priority level. * * *
* * * * *
    (d) * * *
    (2) The State agency will, when seeking new local agencies, publish 
a notice in the local media (unless it has received an application from 
a local public or nonprofit private health agency which can provide 
adequate services). The notice will include a brief explanation of the 
Program, a description of the local agency priority system (outlined in 
this paragraph (d)), and a request that potential local agencies notify 
the State agency of their interest. In addition, the State agency will 
contact all potential local agencies to make sure they are aware of the 
opportunity to apply. If no agency submits an application in 30 days, 
the State agency may then select a local agency in another area. If 
sufficient funds are available, a State agency will give notice and 
consider applications outside the local area at the same time.
* * * * *
    5. In Sec.  246.7:
    a. Revise the heading of paragraph (c) and revise paragraph (c)(1);
    b. Redesignate paragraph (c)(2) as paragraph (c)(3) and add new 
paragraphs (c)(2) and (c)(4);
    c. Revise paragraph (d)(2)(iii);
    d. Redesignate paragraph (d)(2)(iv)(C) as paragraph (d)(2)(iv)(D) 
and add a new paragraph (d)(2)(iv)(C);
    e. Revise paragraph (e)(1)(vi);
    f. Revise paragraph (g)(1);
    g. Revise paragraph (h);
    h. Revise paragraph (i)(10) introductory text;
    i. Revise paragraph (i)(11);
    j. Revise paragraph (j)(2) introductory text;
    k. Redesignate paragraph (l)(1) as paragraph (l) introductory text, 
and remove paragraph (l)(2);
    l. Redesignate paragraphs (l)(1)(i) through (l)(1)(iv) as (l)(1) 
through (l)(4), respectively; and
    m. Remove paragraph (m), and redesignate paragraphs (n), (o), (p), 
and

[[Page 71788]]

(q) as paragraphs (m), (n), (o), and (p), respectively.
    The revisions and additions read as follows:


Sec.  246.7  Certification of participants.

* * * * *
    (c) Eligibility criteria and basic certification procedures. (1) To 
qualify for the Program, infants, children, and pregnant, postpartum, 
and breastfeeding women must:
    (i) Reside within the jurisdiction of the State (except for Indian 
State agencies). Indian State agencies may establish a similar 
requirement. All State agencies may determine a service area for any 
local agency, and may require that an applicant reside within the 
service area. However, the State agency may not use length of residency 
as an eligibility requirement.
    (ii) Meet the income criteria specified in paragraph (d) of this 
section.
    (iii) Meet the nutritional risk criteria specified in paragraph (e) 
of this section.
    (2)(i) At certification, the State or local agency must require 
each applicant to present proof of residency (i.e., location or address 
where the applicant routinely lives or spends the night) and proof of 
identity. The State or local agency must also check the identity of 
participants, or in the case of infants or children, the identity of 
the parent or guardian, or proxies when issuing food or food 
instruments. The State agency may authorize the certification of 
applicants when no proof of residency or identity exists (such as when 
an applicant or an applicant's parent is a victim of theft, loss, or 
disaster; a homeless individual; or a migrant farmworker). In these 
cases, the State or local agency must require the applicant to confirm 
in writing his/her residency or identity. Further, an individual 
residing in a remote Indian or Native village or an individual served 
by an Indian tribal organization and residing on a reservation or 
pueblo may establish proof of residency by providing the State agency 
their mailing address and the name of the remote Indian or Native 
village.
    (ii) The State agency may issue benefits to applicants who claim to 
be pregnant (assuming that all other eligibility criteria are met) but 
who do not have documented proof of pregnancy at the time of the 
certification interview and determination. The State agency should then 
allow a reasonable period of time, not to exceed 60 days, for the 
applicant to provide the requested documentation. If such documentation 
is not provided as requested, the woman can no longer be considered 
categorically eligible, and the local agency would then be justified in 
terminating the woman's WIC participation in the middle of a 
certification period.
* * * * *
    (4) The certification procedure shall be performed at no cost to 
the applicant.
    (d) * * *
    (2) * * *
    (iii) Use of a State or local health care definition of ``Income''. 
If the State agency uses State or local free or reduced-price health 
care income guidelines, it will ensure that the definitions of income 
(see paragraph (d)(2)(ii) of this section), family (see Sec.  246.2) 
and allowable exclusions from income (see paragraph (d)(2)(iv) of this 
section) are used uniformly to determine an applicant's income 
eligibility. This ensures that households with a gross income in excess 
of 185 percent of the Federal income guidelines (see paragraph (d)(1) 
of this section) are not eligible for Program benefits. The exception 
to this requirement is persons who are also income eligible under other 
programs (see paragraph (d)(2)(vi) of this section).
    (iv) * * *
    (C) Short term, unsecured loans that are expected to be repaid in a 
reasonably short period of time, and to which the applicant does not 
have constant or unlimited access.
* * * * *
    (e) * * *
    (1) * * *
    (vi) Regression. A WIC participant who is reapplying for WIC 
benefits may be considered to be at nutritional risk in the next 
certification period if the competent professional authority determines 
that his/her nutritional status will worsen (regress) without 
supplemental foods. However, such participants may not be considered at 
nutritional risk for this reason (regression) for more than one 
certification period immediately following the initial certification. 
Individuals who are certified based on the possibility of regression 
should be placed either in the same priority for which they were 
initially certified, or in Priority VII, if the State agency is using 
that priority level.
* * * * *
    (g) * * *
    (1) Program benefits will be based upon certifications established 
in accordance with the following timeframes:

------------------------------------------------------------------------
            A/an:                          Will be certified:
------------------------------------------------------------------------
(i) Pregnant woman...........  For the duration of her pregnancy, and up
                                to the last day of the month in which
                                the infant becomes six weeks old or the
                                pregnancy ends (for example, if the
                                infant is born June 4, six weeks after
                                birth would be July 16, and
                                certification would end July 31).
(ii) Postpartum woman........  Up to the last day of the sixth month
                                after the baby is born or the pregnancy
                                ends (postpartum).
(iii) Breastfeeding woman....  Approximately every six months ending
                                with the last day of the month in which
                                the infant turns 1 year old.
(iv) Infant..................  Approximately every six months. The State
                                agency may permit its local agencies to
                                certify infants under six months of age
                                up to the last day of the month in which
                                the infant turns 1 year old, provided
                                the quality and accessibility of health
                                care services are not diminished.
(v) Child....................  Approximately every sixth months ending
                                with the last day of the month in which
                                a child reaches his/her fifth birthday.
------------------------------------------------------------------------

* * * * *
    (h) Mid-certification period disqualifications. Participants may be 
disqualified from the Program during a certification period for:
    (1) Income ineligibility. If the local agency finds out that an 
individual's household income level has changed, the local agency will 
reassess the individual's income eligibility during the current 
certification period. The local agency will disqualify an individual 
and any other household members currently receiving WIC benefits 
determined ineligible based on the new information. However, 
adjunctively-eligible WIC participants (as defined in paragraphs 
(d)(2)(vi)(A) or (d)(2)(vi)(B) of this section) may not be disqualified 
from the WIC Program solely because they, or certain family members, no 
longer participate in one of

[[Page 71789]]

the other specified programs. The State agency will ensure that such 
persons, and other household members currently receiving WIC benefits, 
are disqualified during a certification period only after their income 
eligibility has been reassessed based on the income screening 
procedures used for applicants who are not adjunctively eligible.
    (2) Other (optional) reasons. Local agencies may disqualify an 
individual during a certification period for the following reasons:
    (i) Failure to obtain food instruments or supplemental foods for 
several consecutive months. Proof of such failure includes failure to 
pick up supplemental foods or food instruments, nonreceipt of food 
instruments (when mailed instruments are returned), or failure to have 
an electronic benefit transfer card revalidated for purchase of 
supplemental foods; or
    (ii) If a State agency experiences funding shortages, it may be 
necessary to discontinue Program benefits to some certified 
participants. The State agency must explore alternatives (such as 
elimination of new certifications) before taking such action. Reduction 
of food benefit quantities for cost reasons is not an acceptable 
alternative action. In discontinuing benefits, the State agency will 
affect the least possible number of participants and those whose 
nutritional and health status would be least impaired by the action. 
When a State agency elects to discontinue benefits due to insufficient 
funds, it will not enroll new participants during that period. The 
State may discontinue benefits by:
    (A) Disqualifying a group of participants; and/or
    (B) Withholding benefits of a group with the expectation of 
providing benefits again when funds are available.
    (i) * * *
    (10) A statement of the rights and obligations under the Program. 
The statement must contain a signature space, and must be read by or to 
the applicant, parent, or caretaker. It must contain the following 
language or alternate language as approved by FNS (see Sec.  
246.4(a)(11)(i)), and be signed by the applicant, parent, or caretaker 
after the statement is read:
* * * * *
    (11) If the State agency exercises the authority to use and 
disclose confidential applicant and participant information for non-WIC 
purposes pursuant to Sec.  246.26(d)(2), a statement that:
    (i) Notifies applicants that the chief State health officer (or the 
governing authority, in the case of an Indian State agency) may 
authorize the use and disclosure of information about their 
participation in the WIC Program for non-WIC purposes;
    (ii) Must indicate that such information will be used by State and 
local WIC agencies and public organizations only in the administration 
of their programs that serve persons eligible for the WIC Program; and
    (iii) Will be added to the statement required under paragraph 
(i)(10) of this section. This statement must also indicate that such 
information can be used by the recipient organizations only for the 
following:
    (A) To determine the eligibility of WIC applicants and participants 
for programs administered by such organizations;
    (B) To conduct outreach for such programs;
    (C) To enhance the health, education, or well-being of WIC 
applicants and participants currently enrolled in those programs;
    (D) To streamline administrative procedures in order to minimize 
burdens on participants and staff; and
    (E) To assess and evaluate a State's health system in terms of 
responsiveness to participants' health care needs and health care 
outcomes.
    (j) * * *
    (2) At the time of certification, each Program participant, parent 
or caretaker must read, or have read to him or her, the statement 
provided in paragraph (i)(10) of this section (or an alternate 
statement as approved by FNS). In addition, the following sentences (or 
alternate sentences as approved by FNS) must be read:
* * * * *
    6. In Sec.  246.9, revise paragraph (g) to read as follows:


Sec.  246.9  Fair hearing procedures for participants.

* * * * *
    (g) Continuation of benefits. Participants who appeal the 
termination of benefits within the period of time provided under 
paragraph (e) of this section must continue to receive Program benefits 
until the hearing official reaches a decision or the certification 
period expires, whichever occurs first. This does not apply to 
applicants denied benefits at initial certification, participants whose 
certification period has expired or participants who become 
categorically ineligible for benefits. Applicants who are denied 
benefits at initial certification, or participants who become 
categorically ineligible during a certification (or whose certification 
period expires), may appeal the denial or termination, but must not 
receive benefits while awaiting the hearing.
* * * * *


Sec.  246.12  [Amended]

    7. In Sec.  246.12:
    a. Amend paragraph (f)(2)(iv) by removing the words ``90 days'' 
wherever they appear and by adding in their place the words ``60 
days''; and
    b. Amend paragraph (q) by removing the words ``150 days'' and by 
adding in their place the words ``120 days''.
    8. In Sec.  246.14:
    a. Add a new sentence at the beginning of paragraph (a)(2);
    b. Amend the first sentence of paragraph (c)(7) by removing the 
word ``rural''; and
    c. Revise paragraph (d).
    The addition and revision read as follows:


Sec.  246.14  Program costs.

    (a) * * *
    (2) Program funds may not be used to pay for retroactive benefits. 
* * *
* * * * *
    (d) Costs allowable with approval. The costs of capital 
expenditures exceeding the dollar threshold established in Agency 
policy and guidance are allowable only with the approval of FNS prior 
to the capital investment. These expenditures include the costs of 
facilities, equipment (including medical equipment), automated data 
processing (ADP) projects, other capital assets, and any repairs that 
materially increase the value or useful life of such assets.
* * * * *
    9. In Sec.  246.15, revise the first sentence of paragraph (b) to 
read as follows:


Sec.  246.15  Program income other than grants.

* * * * *
    (b) Other Program income. The State agency may use current program 
income (applied in accordance with the addition method described in 
Sec.  3016.25(g)(2) of this title) for costs incurred in the current 
fiscal year and, with the approval of FNS, for costs incurred in 
previous years or subsequent fiscal years. * * *


Sec.  246.17  [Amended]

    10. In Sec.  246.17, remove the words ``150 days'' in paragraph 
(b)(2), and add in their place the words ``120 days''.
    11. In Sec.  246.20:
    a. Revise paragraph (b)(1); and
    b. Remove paragraph (b)(2), and redesignate paragraph (b)(3) as 
paragraph (b)(2).
    The revision reads as follows:

[[Page 71790]]

Sec.  246.20  Audits.

* * * * *
    (b) * * * (1) State agencies must obtain annual audits in 
accordance with part 3052 of this title. In addition, States must 
require local agencies under their jurisdiction to obtain audits in 
accordance with part 3052 of this title.
* * * * *
    12. In Sec.  246.25, revise paragraphs (a)(4), (b) and (c) to read 
as follows:


Sec.  246.25  Records and reports.

    (a) * * *
    (4) All records shall be available during normal business hours for 
representatives of the Department and the Comptroller General of the 
United States to inspect, audit, and copy. Any reports or other 
documents resulting from the examination of such records that are 
publicly released may not include confidential applicant or participant 
information.
    (b) Financial and participation reports.
    (1) Monthly reports. (i) State agencies must submit financial and 
program performance data on a monthly basis, as specified by FNS, to 
support program management and funding decisions. Such information must 
include, but may not be limited to:
    (A) Actual and projected participation;
    (B) Actual and projected food funds expenditures;
    (C) A listing by source year of food and NSA funds available for 
expenditure; and
    (D) NSA expenditures.
    (ii) State agencies must require local agencies to report such 
financial and participation information as is necessary for the 
efficient management of food and NSA funds expenditures. When 
considered necessary and feasible by FNS, State agencies may be 
required to:
    (A) Show in the ``Remarks'' section of the WIC Financial Management 
and Participation Report the amount of cash allowances exceeding three 
days' need being held by their local agencies or contractors; and
    (B) Provide short narrative explanations of actions taken by the 
State agency to reduce such excess balances.
    (2) Annual reports. (i) Every year, State agencies must report to 
FNS the average number of migrant farmworker household members 
participating in the Program during a 12-month period of time specified 
by FNS.
    (ii) State agencies must submit itemized NSA expenditure reports 
annually as an addendum to their WIC Program closeout reports, as 
required by Sec.  246.17(b)(2).
    (3) Biennial reports. (i) Participant characteristics report. State 
and local agencies must provide such information as may be required by 
FNS to provide a biennial participant characteristics report to 
Congress. This includes, at a minimum, information on income and 
nutritional risk characteristics of participants, information on 
breastfeeding incidence and duration, and participation in the Program 
by category (i.e., pregnant, breastfeeding and postpartum women, 
infants and children) within each priority level (as established in 
Sec.  246.7(e)(4)) and by migrant farmworker households.
    (ii) Civil rights report. Racial and ethnic participation data 
contained in the participant characteristics report that is submitted 
biennially to Congress will also be used to fulfill civil rights 
reporting requirements.
    (c) Other reports. State agencies must submit reports to reflect 
additions and deletions of local agencies administering the WIC Program 
and local agency address changes as these events occur.
* * * * *
    13. In Sec.  246.26, revise paragraphs (d) and (g) and add new 
paragraphs (h) and (i) to read as follows:


Sec.  246.26  Other provisions.

* * * * *
    (d) Confidentiality of applicant and participant information.
    (1) WIC purposes. Confidential applicant and participant 
information is any information about an applicant or participant 
(whether it is obtained from the applicant or participant, another 
source, or generated as a result of WIC application, certification, or 
participation) that individually identifies those individuals and/or a 
family member(s). Except as otherwise permitted by this section, the 
State agency must restrict the use and disclosure of confidential 
applicant and participant information to persons directly connected 
with the administration or enforcement of the WIC Program whom the 
State agency determines have a need to know the information for WIC 
Program purposes. These persons may include personnel from its local 
agencies and other WIC State and local agencies, persons under contract 
with the State agency to perform research regarding the WIC Program, 
and persons investigating or prosecuting WIC Program violations under 
Federal, State or local law.
    (2) Non-WIC purposes. (i) Use by WIC State and local agencies. Any 
WIC State or local agency may use confidential applicant and 
participant information in the administration of its other programs 
that serve persons eligible for the WIC Program in accordance with 
paragraph (h) of this section.
    (ii) Disclosure to public organizations. The State agency and its 
local agencies may disclose confidential applicant and participant 
information to public organizations for use in the administration of 
their programs that serve persons eligible for the WIC Program in 
accordance with paragraph (h) of this section.
    (3) Child abuse and neglect reporting. Staff of the State agency 
and its local agencies who are required by State law to report known or 
suspected child abuse or neglect may disclose confidential applicant 
and participant information to the extent necessary to comply with such 
law.
    (4) Release forms. Except in the case of subpoenas or search 
warrants (see paragraph (i) of this section), the State agency and its 
local agencies may disclose confidential applicant and participant 
information to individuals or entities not listed in this section only 
if the affected applicant or participant signs a release form 
authorizing the disclosure and specifying the parties to which the 
information may be disclosed. The State or local agency must permit 
applicants and participants to refuse to sign the release form and must 
notify the applicants and participants that signing the form is not a 
condition of eligibility and refusing to sign the form will not affect 
the applicant's or participant's application or participation in the 
WIC Program. Release forms authorizing disclosure to private physicians 
or other health care providers may be included as part of the WIC 
application or certification process. All other requests for applicants 
or participants to sign voluntary release forms must occur after the 
application and certification process is completed.
    (5) Access to information by applicants and participants. The State 
or local agency must provide applicants and participants access to all 
information they have provided to the WIC Program. In the case of an 
applicant or participant who is an infant or child, the access may be 
provided to the parent or guardian of the infant or child, assuming 
that any issues regarding custody or guardianship have been settled. 
However, the State or local agency need not provide the applicant or 
participant (or the parent or guardian of an infant or child) access to 
any other information in the file or record such as documentation of 
income provided by third parties and staff assessments of the 
participant's condition or behavior, unless required by Federal, State, 
or local law or policy or unless the

[[Page 71791]]

information supports a State or local agency decision being appealed 
pursuant to Sec.  246.9.
* * * * *
    (g) USDA and the Comptroller General. The State agency must provide 
the Department and the Comptroller General of the United States access 
to all WIC Program records, including confidential vendor, applicant 
and participant information, pursuant to Sec.  246.25(a)(4).
    (h) Requirements for use and disclosure of confidential applicant 
and participant information for non-WIC purposes. The State or local 
agency must take the following steps before using or disclosing 
confidential applicant or participant information for non-WIC purposes 
pursuant to paragraph (d)(2) of this section.
    (1) Designation by chief State health officer. The chief State 
health officer (or, in the case of an Indian State agency, the 
governing authority) must designate in writing the permitted non-WIC 
uses of the information and the names of the organizations to which 
such information may be disclosed.
    (2) Notice to applicants and participants. The applicant or 
participant must be notified either at the time of application (in 
accordance with Sec.  246.7(i)(11)) or through a subsequent notice that 
the chief State health officer (or, in the case of an Indian State 
agency, the governing authority) may authorize the use and disclosure 
of information about their participation in the WIC Program for non-WIC 
purposes. This statement must also indicate that such information will 
be used by State and local WIC agencies and public organizations only 
in the administration of their programs that serve persons eligible for 
the WIC Program.
    (3) Written agreement and State plan. The State or local agency 
disclosing the information must enter into a written agreement with the 
other public organization or, in the case of a non-WIC use by a State 
or local WIC agency, the unit of the State or local agency that will be 
using the information. The State agency must also include in its State 
plan, as specified in Sec.  246.4(a)(24), a list of all organizations 
(including units of the State agency or local agencies) with which the 
State agency or its local agencies has executed or intends to execute a 
written agreement. The written agreement must:
    (i) Specify that the receiving organization may use the 
confidential applicant and participant information only for:
    (A) Establishing the eligibility of WIC applicants or participants 
for the programs that the organization administers;
    (B) Conducting outreach to WIC applicants and participants for such 
programs;
    (C) Enhancing the health, education, or well-being of WIC 
applicants or participants who are currently enrolled in such programs, 
including the reporting of known or suspected child abuse or neglect 
that is not otherwise required by State law;
    (D) Streamlining administrative procedures in order to minimize 
burdens on staff, applicants, or participants in either the receiving 
program or the WIC Program; and/or
    (E) Assessing and evaluating the responsiveness of a State's health 
system to participants' health care needs and health care outcomes; and
    (ii) Contain the receiving organization's assurance that it will 
not use the information for any other purpose or disclose the 
information to a third party.
    (i) Subpoenas and search warrants. (1) General. The State agency 
may disclose confidential applicant, participant, or vendor information 
pursuant to a valid subpoena or search warrant only if it has been 
reviewed in accordance with this paragraph (i).
    (2) Subpoena procedures. In determining how to respond to a 
subpoena duces tecum (i.e., a subpoena for documents) or other subpoena 
for confidential information, the State or local agency must use the 
following procedures:
    (i) Upon receiving the subpoena, immediately notify its State 
agency;
    (ii) Consult with legal counsel for the State or local agency and 
determine whether the information requested is in fact confidential and 
prohibited by this section from being used or disclosed as stated in 
the subpoena;
    (iii) If the State or local agency determines that the information 
is confidential and prohibited from being used or disclosed as stated 
in the subpoena, attempt to quash the subpoena unless the State or 
local agency determines that disclosing the confidential information is 
in the best interest of the Program. The determination to disclose 
confidential information without attempting to quash the subpoena 
should be made only infrequently; and
    (iv) If the State or local agency seeks to quash the subpoena or 
decides that disclosing the confidential information is in the best 
interest of the Program, inform the court or the receiving party that 
this information is confidential and seek to limit the disclosure by:
    (A) Providing only the specific information requested in the 
subpoena and no other information; and
    (B) Limiting to the greatest extent possible the public access to 
the confidential information disclosed.
    (3) Search warrant procedures. In responding to a search warrant 
for confidential information, the State or local agency must use the 
following procedures:
    (i) Upon receiving the search warrant, immediately notify its State 
agency;
    (ii) Immediately notify legal counsel for the State or local 
agency;
    (iii) Comply with the search warrant; and
    (iv) Inform the individual(s) serving the search warrant that the 
information being sought is confidential and seek to limit the 
disclosure by:
    (A) Providing only the specific information requested in the search 
warrant and no other information; and
    (B) Limiting to the greatest extent possible the public access to 
the confidential information disclosed.
    14. In Sec.  246.27, paragraph (c) is revised to read as follows:


Sec.  246.27  Program information.

* * * * *
    (c) Alabama, Florida, Georgia, Kentucky, Mississippi, North 
Carolina, South Carolina, Tennessee: U.S. Department of Agriculture, 
FNS, Southeast Region, 61 Forsyth Street, SW., Room 8T36, Atlanta, 
Georgia 30303.
* * * * *

    Dated: November 22, 2002.
Roberto Salazar,
Administrator, Food and Nutrition Service.
[FR Doc. 02-30223 Filed 11-29-02; 8:45 am]
BILLING CODE 3410-30-P