[Federal Register Volume 68, Number 168 (Friday, August 29, 2003)]
[Proposed Rules]
[Pages 51932-51938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22144]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 68, No. 168 / Friday, August 29, 2003 / 
Proposed Rules  

[[Page 51932]]



DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 273

RIN 0584-AD13


Food Stamp Program: Vehicle and Maximum Excess Shelter Expense 
Deduction Provisions of Public Law 106-387

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Department proposes to amend its regulations to implement 
Sections 846 and 847 of the Agriculture, Rural Development, Food and 
Drug Administration, and Related Agencies--Appropriations Act 2001 
(Agriculture Appropriations Act of 2001). This rule would increase the 
maximum amount of the food stamp excess shelter expense deduction and 
index it to the Consumer Price Index, and allow State agencies the 
option to use their Temporary Assistance for Needy Families (TANF) 
Program vehicle allowance rules rather than the vehicle rules used in 
the Food Stamp Program (FSP) where doing so will result in a lower 
attribution of resources to food stamp households. The proposed rule 
would increase benefits for some participants, make additional 
households eligible for food stamps, and provide greater flexibility 
for States in determining the value of vehicles.

DATES: Send your comments to reach us by October 28, 2003.

ADDRESSES: You may mail comments to Food Stamp Program, Food and 
Nutrition Service, USDA, 3101 Park Center Drive, Alexandria, Virginia, 
22302, attention Program Design Branch. You may fax comments to us at 
(703) 305-2486, attention Program Design Branch. You may also hand-
deliver comments to us on the 8th floor at the above address. For 
information about filing electronically, see the SUPPLEMENTARY 
INFORMATION section under Electronic Access and Filing Address.

FOR FURTHER INFORMATION CONTACT: John Knaus, Chief, Program Design 
Branch, Program Development Division, Food Stamp Program, FNS, at (703) 
305-2098. Individuals who use a telecommunications device for the deaf 
(TDD) may call the Federal Information Relay Service at 800-877-8339 
between 8 a.m. and 4 p.m. Eastern time, Monday through Friday, 
excluding Federal holidays.

SUPPLEMENTARY INFORMATION:

Public Comment Procedures

Electronic Access and Filing Address

    You may view and download an electronic version of this proposed 
rule at http://www.fns.usda.gov/fsp/rules/Regulations/default.htm. You 
may also send comments to PRGDEV.WEB at the same Internet address after 
clicking ``Email Us'' in the yellow bar near the top of the screen. 
Please include ``Attention RIN 0584-AD13'' and your name and return 
address in your e-mail message. If you do not receive a confirmation 
from the system that we have received your message, please contact us 
directly at (703) 305-2098.

Written Comments

    Please make your written comments on the proposed rule specific, 
confine them to issues pertinent to the proposed rule, and explain the 
reason for any change you recommend. Where possible, you should cite 
the specific section or paragraph of the proposed rule you are 
addressing. We may not consider or include in the Administrative Record 
for the final rule comments that we receive after the close of the 
comment period or comments delivered to an address other than those 
listed above. We will make all comments, including names, street 
addresses, and other contact information of respondents, available for 
public inspection on the 8th floor, 3101 Park Center Drive, Alexandria, 
Virginia 22302 between 8:30 a.m. and 5 p.m. Eastern time, Monday 
through Friday, excluding Federal holidays. Individual respondents may 
request confidentiality. If you wish to request that we consider 
withholding your name, street address, or other contact information 
from public review or from disclosure under the Freedom of Information 
Act, you must state this prominently at the beginning of your comment. 
We will honor requests for confidentiality on a case-by-case basis to 
the extent allowed by law. We will make available for inspection in 
their entirety all submissions from organizations or businesses, and 
from individuals identifying themselves as representatives or officials 
of organizations or businesses.

Background

    Section 846: Recognizing that many low-income households have 
extremely high shelter expenses, Section 5(e)(7) of the Food Stamp Act 
of 1977 (FSA), 7 U.S.C. 2014(e)(7), provides a deduction from income 
for households whose shelter expenses exceed 50 percent of their 
income, after other applicable deductions are made. Because families 
with comparable amounts of income may have substantially different 
shelter expenses, affecting their ability to purchase food, the 
deduction is a means of targeting benefits to those in need. Households 
without elderly or disabled members are subject to a limit on the 
amount of shelter expenses that can be deducted. The Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA) 
set limits that reached a maximum of $300 in fiscal year (FY) 2001. 
Those limits are set forth in Section 5(e)(7)(B) of the FSA. In FY 
2000, the year prior to implementation of this provision, about three 
in five households participating in the Food Stamp Program received an 
excess shelter expense deduction. In FY 2000, 5.3 percent of all 
households (about 384,000 households) were at the shelter limit and 
could have received larger benefits if the limit were increased. Almost 
all of these households contained children. The excess shelter 
deduction limits in effect at the start of FY 2001 were: $300, $521, 
$429, $364, and $221 respectively, for the 48 contiguous States and the 
District of Columbia, Alaska, Hawaii, Guam, and the United States 
Virgin Islands. Households with elderly or disabled members are not 
subject to the limits.
    Section 847: Since 1964, food stamp legislation has limited the 
value of resources households may own while remaining eligible for food 
stamps. The FSA specifically addresses the valuation of vehicles as 
resources that count toward the resource limit of $2,000 per

[[Page 51933]]

household, or $3,000 for households with one or more members who are 
disabled, or aged 60 years or over. In 1977, the FSA designated the 
fair market value (FMV) of vehicles in excess of $4,500 as a countable 
resource. Subsequent laws and regulations have raised the FMV exclusion 
to $4,650, excluded the value of vehicles used for various purposes 
from household resources, and designated vehicles whose sale would net 
no more than $1,500, after payment of liens, as inaccessible resources.

Discussion of the Proposed Rule

    Section 846: Section 846 of the Agriculture Appropriations Act of 
2001 amends Sec.  5(e)(7)(B) of the FSA to set new limits on the excess 
shelter expense deduction and to provide for annual fiscal year 
adjustments based on the Consumer Price Index. The Act set the fiscal 
year 2001 maximum excess shelter expense deductions at the levels 
specified in Sec.  846: $340, $543, $458, $399, and $268 per month for, 
respectively, the contiguous 48 States and the District of Columbia, 
Alaska, Hawaii, Guam, and the Virgin Islands effective March, 2001. 
Section 846 also amends Sec.  5(e)(7)(B) of the FSA to set the maximum 
excess shelter expense deductions for fiscal year 2002 and beyond. For 
this reason, the Department proposes to amend 7 CFR 273.9(d)(6)(ii) to 
state its obligation to compute and announce maximum excess shelter 
expense deductions for FY 2002 and other future years by adjusting the 
previous year's maximums to changes in the Consumer Price Index for All 
Urban Consumers for each 12-month period ending the preceding November 
30. The Department proposes to use the Shelter and the Fuels and 
Utilities Components of the Consumer Price Index rather than the 
Consumer Price Index for All Items because doing so provides a more 
accurate measure of changes in shelter and utility expenses.
    The Department posts the updated maximum excess shelter expense 
deductions annually at http://www.fns.usda.gov/fsp/government/FY03_Allot_Deduct.htm.
    Section 847: 7 CFR 273.8 excludes from household resources the 
value of vehicles that produce income, are used as a home, transport a 
physically disabled household member, are used for long distance travel 
other than daily commuting, carry most of a household's heating fuel or 
drinking water, or are considered inaccessible resources because their 
sale would net $1,500 or less after any loans are repaid. The FMV (in 
excess of $4,650) of one licensed vehicle per adult household member is 
counted as a household resource, as is the FMV (in excess of $4,650) of 
any other licensed vehicles that teenagers in the household drive to 
work, job training, or job hunting. The value of any remaining licensed 
vehicles is included as a household resource, using the greater of the 
vehicle's FMV (in excess of $4,650) or its equity value. Unlicensed 
vehicles are counted at their equity value.
    Section 847 of the Agriculture Appropriations Act of 2001 amends 
Sec.  5(g)(2)(B)(iv) of the FSA to allow States to substitute their 
TANF vehicle rules for the food stamp vehicle rules when doing so would 
result in a lower attribution of resources to households. 
Implementation of Sec.  847 will streamline the process of determining 
eligibility, make more households eligible for food stamps, reduce 
errors, and facilitate conformance of TANF and food stamp vehicle 
policies. This proposed rule would amend 7 CFR 273.8(f)(4) to implement 
the vehicle provisions set forth in Sec.  847. Below, we answer 
questions we believe are likely to arise in connection with the 
proposed rule.

Which TANF Programs Qualify as Sources of Substitute Vehicle Rules?

    In lieu of the food stamp vehicle rules at 7 CFR 273.8(f), the 
Department proposes that a State may substitute the vehicle rules from 
a program in that State that uses TANF funds, or State or local funds 
to meet TANF maintenance-of-effort (MOE) requirements, and meets the 
definition of ``assistance'' according to TANF regulations at 45 CFR 
260.31.
    This definition includes cash payments, vouchers, and other forms 
of benefits designed to meet a household's ongoing basic needs, 
including benefits provided in the form of payments by a TANF agency, 
or other agency on its behalf, to individual recipients and conditioned 
on participation in work experience, community service, or any other 
work activity under TANF regulations. It also includes supportive 
services such as transportation and child-care provided to families 
without employment.

How May State Agencies Apply Sec.  847?

    The Department proposes that State agencies electing to use Sec.  
847 must apply either the TANF or food stamp rules, whichever produces 
the lower attribution of resources to the household, on a vehicle-by-
vehicle basis, using any exclusions allowed by either set of rules. The 
statute does not permit a blanket substitution of TANF rules for food 
stamp rules unless, of course, a State's TANF rules invariably result 
in a lower attribution of resources, as in States whose TANF policies 
exclude all vehicles from household assets. Although Sec.  847 mentions 
only the food stamp FMV test, the rule proposes to apply it equally to 
the food stamp equity test because the intent of the law is to permit 
TANF policy to substitute for food stamp policy. Under the proposed 
rule, State agencies electing to apply Sec.  847 must, therefore, apply 
their TANF rules to any vehicles that would previously have been 
subject to the food stamp equity test, where doing so would result in a 
lower attribution of resources. States whose TANF rules exclude one 
vehicle must apply the exclusion to the vehicle with the highest value 
unless prohibited by their rules. States whose TANF vehicle rules 
exclude all vehicles completely, or contain no resource provisions at 
all, would exclude any vehicle owned by any household in the State from 
resources when determining eligibility for food stamps. For example, 
suppose a State agency is evaluating a vehicle with a FMV of $5,000 and 
an unpaid loan balance of $2,400. The State's TANF vehicle rules 
exclude equity under $3,000, while food stamp rules exclude FMV under 
$4,650. In this case, the TANF rules result in the lower attribution of 
resources because they exclude the vehicle's entire equity value of 
$2,600, while the food stamp rules would count $350 excess FMV ($5,000-
$4,650) toward household resources. Consequently, the State agency 
would use the TANF rules.

What Happens When a Household Owns Multiple Vehicles?

    Where a household has more than one vehicle, the rule proposes that 
a State must exclude any vehicles it can under either TANF or food 
stamp rules, and evaluate each remaining vehicle separately under 
whichever rules will result in the lower attribution of resources to 
the household. For example, a State could exclude a vehicle used to 
transport a disabled household member (under food stamp rules), exclude 
one vehicle per licensed driver (under its TANF rules) and value a 
remaining vehicle at the greater of its equity value or its FMV in 
excess of $4,650 (under food stamp rules, assuming its TANF rules 
offered no option more favorable to the household).

Can a State Agency Mix Provisions of the TANF Vehicle Rules With 
Provisions of the Food Stamp Vehicle Rules When Evaluating the Same 
Vehicle?

    No. The rule proposes that a State has the option to apply its TANF 
vehicle rules in lieu of food stamp vehicle rules,

[[Page 51934]]

not to combine them or parts of them to evaluate any given vehicle or 
category of vehicles. To illustrate how the TANF and FSP rules might 
interact, suppose that a State's TANF vehicle rules exclude equity 
under $3,000, while food stamp vehicle rules exclude FMV under $4,650. 
This State would improperly mix TANF and food stamp vehicle rules if it 
excludes equity under $4,650, thus combining the type of exclusion 
(equity) from its TANF rules and the exclusion limit ($4,650) from food 
stamp rules.

IV. Procedural Matters

Executive Order 12866

    This proposed rule has been determined to be economically 
significant and was reviewed by the Office of Management and Budget in 
conformance with Executive Order 12866.

Executive Order 12372

    The Food Stamp Program (Program) is listed in the Catalog of 
Federal Domestic Assistance under No. 10.551. For the reasons set forth 
in the final rule in 7 CFR 3015, Subpart V and related Notice (48 FR 
29115), this Program is excluded from the scope of Executive Order 
12372 which requires intergovernmental consultation with State and 
local officials.

Executive Order 12778

    This rule has been reviewed under Executive Order 12778, Civil 
Justice Reform. This rule is not 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 final 
rule preamble. Prior to any judicial challenge to the provisions of 
this rule or the application of its provisions, all applicable 
administrative procedures must be exhausted.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implication, agencies are directed 
to provide a statement for inclusion in the preamble to the regulation 
describing the agency's considerations in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13132.

Prior Consultation With State Officials

    Prior to drafting this proposed rule, we consulted with State and 
local agencies at various times. Because the Food Stamp Program (FSP) 
is a State administered, Federally funded program, our regional offices 
have formal and informal discussions with State and local officials on 
an ongoing basis regarding program implementation and policy issues.
    This arrangement allows State and local agencies to provide 
comments that form the basis for many discretionary decisions in this 
and other FSP rules. We have also had numerous written requests for 
policy guidance on the implications of Public Law 106-387 from the 
State agencies that deliver food stamp services. These questions have 
helped us make the rule responsive to concerns presented by State 
agencies.

Nature of Concerns and the Need To Issue This Rule

    State agencies generally want greater flexibility in their 
implementation of FSP asset policy, especially with regard to vehicle 
ownership. The proposed rule provides much greater flexibility in this 
area and also addresses another major State concern, the need to 
conform FSP rules to the rules of other means-tested Federal programs. 
Specific policy questions submitted by State agencies after enactment 
of Public Law 106-387, but prior to the promulgation of regulations, 
helped us identify issues that needed to be clarified in the proposed 
rule.

Extent To Which We Meet Those Concerns

    The Department has considered the impact of the proposed rule on 
State and local agencies. This rule makes changes required by law, and 
made effective in 2001. The effects on State agencies are minimal. 
While the vehicle provision of the rule will require eligibility 
workers to make additional computations in some cases, the ability to 
substitute TANF vehicle rules for FSP vehicle rules, when doing so 
results in a lower attribution of resources, allows a growing number of 
States to exclude some or all vehicles from household assets. The 
maximum excess shelter expense deduction provision simply increases the 
amount of the deduction and indexes it to the Consumer Price Index, 
resulting in no additional requirements for State agencies. In the 
proposed rule, we have addressed every question submitted by State 
agencies regarding both of these provisions. The Department is not 
aware of any case where the discretionary provisions of the rule would 
preempt State law. In addition, the Department is willing to approve a 
waiver of any discretionary provision in this rule where (1) a State 
agency can demonstrate that its own procedures would be more effective 
and efficient; (2) such a waiver would not result in a material 
impairment of any statutory or regulatory rights of participants or 
potential participants; and (3) such a waiver would otherwise be 
consistent with the waiver authority set out at 7 CFR 272.39(c).

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612). Eric M. Bost, 
Under Secretary for Food, Nutrition, and Consumer Services, has 
certified that this rule will not have a significant economic impact on 
a substantial number of small entities. This rule does not regulate the 
activities of small businesses or other small entities; instead it 
regulates the administration of the Food Stamp Program, which is 
administered only by State or county social service agencies.

Paperwork Reduction Act

    Burden associated with the food stamp certification process is 
approved under OMB control number 0584-0064. Burden estimates in that 
submission are based on the only recent data available, data from the 
actual operation of the Food Stamp Program in Mississippi. The data 
provided by Mississippi indicate that the burden associated with 
completing a new food stamp application or a re-certification 
application is 19 minutes for each applicant and 36 minutes per 
applicant for each State agency. These burden estimates are based on 
total time required for certification (or re-certification) processing 
and are not broken down into sub-categories for gathering data on such 
variables as household income, resources, or deductions.
    The maximum excess shelter expense deduction provisions of this 
proposed rule would result in no change in the burden for either 
applicants or State agencies. For applicants and State agencies, the 
effect of this provision is simply to substitute new maximum deductions 
for the previous ones.
    The vehicle provisions of this rule do not change the burden on 
applicants. Applicants will need to supply the same information as 
under current regulations, except in States that elect to use TANF 
vehicle rules that exclude the value of all vehicles from household 
resources. The vehicle provisions are exercised at State option and may 
be selected by many States or by few States. States that elect to 
substitute their TANF vehicle rules for their food

[[Page 51935]]

stamp vehicle rules will experience minor increases or decreases in 
burden associated with the complexity or simplicity of each case. 
States that elect to retain the food stamp vehicle rules will 
experience no change in burden. The Department has concluded that 
burden will vary from case to case and State to State but not enough to 
affect the average total processing time data upon which all burden 
estimates for food stamp certification (and re-certification) are 
based.

Unfunded Mandate Reform Act of 1995 (UMRA)

    Title II of UMRA establishes requirements for Federal agencies to 
assess the effects of their regulatory actions on State, local, and 
tribal governments and the private sector. Under Sec.  202 of the UMRA, 
the Department generally must prepare a written statement, including a 
cost-benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures to State, local, or tribal 
governments in the aggregate, or to the private sector, of $100 million 
or more in any one year. When such a statement is needed for a rule, 
Sec.  205 of the UMRA generally requires the Department 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 the rule. This notice 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. This rule is, therefore, not subject 
to the requirements of Sec.  202 and Sec.  205 of the UMRA.

Civil Rights Impact Analysis

    The Department has reviewed this proposed rule in accordance with 
the Department Regulation 4300-4, ``Civil Rights Impact Analysis'' to 
identify and address any major civil rights impacts the proposed rule 
might have on minorities, women, and persons with disabilities. After a 
careful review of the rule's intent and provisions, and the 
characteristics of food stamp households and individuals participants, 
the Department has determined that there is no adverse effect on any of 
the protected classes. The Department has minimal discretion in 
implementing many of these changes. The changes required by law have 
been implemented. All data available to the Department indicate that 
protected individuals have the same opportunity to participate in the 
Food Stamp Program as non-protected individuals. The Department 
specifically prohibits the State and local government agencies that 
administer the program from engaging in actions that discriminate based 
on race, color, national origin, gender, age, disability, marital or 
family status. Regulations at 7 CFR 272.6 specifically state that 
``State agencies shall not discriminate against any applicant or 
participant in any aspect of program administration, including, but not 
limited to, the certification of households, the issuance of coupons, 
the conduct of fair hearings, or the conduct of any other program 
service for reasons of age, race, color, sex, handicap, religious 
creed, national origin, or political beliefs. Discrimination in any 
aspect of program administration is prohibited by these regulations, 
the FSA, the Age Discrimination Act of 1975 (Pub. L. 94-135), the 
Rehabilitation Act of 1973 (Pub. L. 93-112, Sec.  504), and title VI of 
the Civil Rights Act of 1964 (42 U.S.C. 2000d). Enforcement action may 
be brought under any applicable Federal law. Title VI complaints shall 
be processed in accord with 7 CFR part 15.'' Where State agencies have 
options, and they choose to implement a certain provision, they must 
implement it in such a way that it complies with the regulations at 7 
CFR 272.6.

Regulatory Impact Analysis

Need for Action

    This action is needed to implement Sec.  846 and Sec.  847 of the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act 2001, Public Law 106-387. The 
proposed rule would increase the amounts of the maximum excess shelter 
expense deductions, and for future years, index them to the Consumer 
Price Index. It would also allow States the option of substituting 
their TANF vehicle rules for their food stamp vehicle rules when doing 
so would result in a lower attribution of resources to a household.

Benefits

    Section 846, maximum excess shelter expense deduction provision: 
the proposed rule would allow a larger income deduction for shelter 
expenses to low-income families whose shelter expenses exceed 50 
percent of their monthly income, after all other applicable deductions 
have been made. The Department does not expect raising the excess 
shelter deduction limit to significantly increase food stamp 
participation. Instead, we estimate that the change will raise benefits 
for 7.6 percent of current participants. Applying this percentage to 
the participation projections for the President's FY 2004 budget 
baseline, we estimate that 1.65 million persons will each receive an 
average of $6.02 more per month in food stamp benefits in FY 2004. 
These impacts are already incorporated into the President's FY 2004 
budget baseline.
    Section 847, vehicle provision: the proposed rule will allow food 
stamp applicants to benefit when State agencies elect to use more 
expansive vehicle policy rules that will allow them to own a reliable 
vehicle and still be eligible for food stamps. The Department estimates 
that this provision will increase average participation in the FSP by 
243,000 persons in FY 2004 and that their average monthly food stamp 
benefit will be $74.11. These impacts are already incorporated into the 
President's FY 2004 budget baseline. State agencies will benefit from 
the increased flexibility in program administration afforded by the 
proposed rule and from an anticipated decrease in payment errors.

Costs

    Section 846: the Department estimates that the cost of implementing 
Sec.  846 will be $119 million in FY 2004 and $705 million over the 
five years, FY 2004 through FY 2008. These impacts are already 
incorporated into the President's FY 2004 budget baseline.
    Section 847: the Department estimates that the cost of implementing 
Sec.  847 will be $216 million in FY 2004 and $1.115 billion over the 
five years, FY 2004 through FY 2008. These impacts are already 
incorporated into the President's FY 2004 budget baseline.

List of Subjects in 7 CFR Part 273

    Administrative practice and procedure, Food stamps, Fraud, Grant 
programs, Social programs, Resources, Vehicles.

    Accordingly, the Department proposes to amend 7 CFR part 273 as 
follows:

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

    1. The authority citation for part 273 continues to read as 
follows:

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

    2. In Sec.  273.8, add new paragraph (f)(4) to read as follows:


Sec.  273.8  Resource eligibility standards.

* * * * *
    (f) * * *
    (4) A State agency may substitute for the vehicle evaluation 
provisions in

[[Page 51936]]

paragraphs (f)(1) through (f)(3) of this section the vehicle evaluation 
provisions of a program in that State that uses TANF or State or local 
funds to meet TANF maintenance of effort requirements and provides 
benefits that meet the definition of ``assistance'' according to TANF 
regulations at 45 CFR 260.31, where doing so results in a lower 
attribution of resources to the household. States electing this option 
must:
    (i) Apply the substituted TANF vehicle rules to all food stamp 
households in the State, whether or not they receive or are eligible to 
receive TANF assistance of any kind;
    (ii) Exclude from household resources any vehicles excluded by 
either the substituted TANF vehicle rules or the food stamp vehicle 
rules;
    (iii) Apply either the substituted TANF rules or the food stamp 
vehicle rules to each of a household's vehicles in turn, using 
whichever set of rules produces the lower attribution of resources to 
the household;
    (iv) Apply any vehicle exclusions allowed by their TANF vehicle 
rules to the vehicles with the highest values; and
    (v) Exclude any vehicle owned by any household in the State if it 
selects TANF vehicle rules that exclude all vehicles completely or 
contain no resource provisions at all.
* * * * *
    3. In Sec.  273.9, add two sentences after the second sentence of 
paragraph (d)(6)(ii) to read as follows:


Sec.  273.9  Income and deductions.

* * * * *
    (d) * * *
    (6) * * *
    (ii) * * * For fiscal year 2001, effective March 1, 2001, the 
maximum monthly excess shelter expense deduction limits are $340 for 
the 48 contiguous States and the District of Columbia, $543 for Alaska, 
$458 for Hawaii, $399 for Guam, and $268 for the Virgin Islands. FNS 
will set the maximum monthly excess shelter expense deduction limits 
for fiscal year 2002 and future years by adjusting the previous year's 
limits to reflect changes in the shelter component and the fuels and 
utilities component of the Consumer Price Index for All Urban Consumers 
for the 12 month period ending the previous November 30. * * *
* * * * *

    Dated: August 21, 2003.
Eric M. Bost,
Under Secretary, Food, Nutrition, and Consumer Services.

    Note: This appendix will not be published in the Code of Federal 
Regulations.

Appendix: Regulatory Impact Analysis

    1. Title: Vehicle and maximum excess shelter expense deduction 
provisions of the Agriculture, Rural Development, Food and Drug 
Administration, and Related Agencies Appropriations Act of 2001, 
Public Law 106-387.
    2. Action:
    (a) Nature: Proposed Rule
    (b) Need: This action is required as a result of the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act of 2001, Public Law 106-387.
    (c) Background: On October 28, 2000, the President signed the 
Agriculture, Rural Development, Food and Drug Administration, and 
Related Agencies Appropriations Act of 2001 (Agriculture 
Appropriations Act of 2001). This rule is being proposed to 
implement sections 846 and 847 of the Agriculture Appropriations Act 
of 2001. Section 846 increases the maximum amount of the food stamp 
excess shelter expense deduction for fiscal year 2001 and indexes it 
for future years to the Consumer Price Index. Section 847 allows 
State agencies the option to use their Temporary Assistance for 
Needy Families (TANF) Program vehicle allowance rules rather than 
the vehicle rules used in the Food Stamp Program (FSP) where doing 
so will result in a lower attribution of resources to food stamp 
households.
    3. Justification of Alternatives: These provisions are 
statutorily mandated and have already been implemented. In the case 
of the vehicle provision, FNS could have interpreted the statute to 
offer a more restrictive definition of TANF-funded programs, which 
would have limited the number of households gaining eligibility due 
to the provision. Instead, we propose a comprehensive definition of 
TANF-funded programs, which maximizes the benefits of the provision 
and is consistent with both our understanding of Congressional 
intent and prior policy guidance issued by the Food and Nutrition 
Service to States.
    4. Effects: (a) Effects on food stamp recipients, and (b) 
Program costs: These provisions are expected to increase Food Stamp 
Program costs by $335 million in FY 2004 and $1.82 billion over the 
five years FY 2004 to FY 2008. Likewise, these provisions are 
expected to add 243,000 new participants and increase benefits among 
1.65 million current participants in FY 2004. These impacts are 
already incorporated into the President's FY 2004 budget baseline.

Section 846: Increase the Excess Shelter Deduction Limits

    Discussion: Recognizing that shelter expenses reduce the amount 
of income available to purchase food, the Food Stamp Act of 1977 
(FSA) provides a deduction from income for households whose shelter 
expenses exceed 50 percent of their income, after other applicable 
deductions are made. Because households with larger shelter expenses 
relative to their income generally receive a larger excess shelter 
deduction for food stamp benefit determination, the deduction is a 
means of targeting benefits to those in need.
    The FSA also sets limits on how large the excess shelter 
deduction can be, often referred to as the ``excess shelter 
deduction cap.'' Since households with elderly or disabled members 
are not subject to the shelter deduction cap, most households 
affected by the cap are households with children. Legislation 
enacted since 1977 has adjusted the caps to the Consumer Price Index 
(Omnibus Budget Reconciliation Act of 1981); required that 
calculations of excess shelter deductions be rounded down to the 
next lower dollar (Omnibus Budget Reconciliation Act of 1982); 
removed the caps altogether (Omnibus Budget Reconciliation Act of 
1993, Mickey Leland Childhood Hunger Relief Act); and most recently, 
reset caps and froze them at current levels for households without 
elderly or disabled members (Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996). The excess shelter 
deduction caps in effect for FY 2001 were: $300, $521, $429, $364, 
and $221 respectively, for the 48 contiguous States and the District 
of Columbia, Alaska, Hawaii, Guam, and the United States Virgin 
Islands. Households with elderly or disabled members are not subject 
to the excess shelter caps.
    Since the caps were frozen by the 1996 legislation, many FSP 
participants, State agencies, and advocacy organizations have sought 
legislation that would bring the maximum excess shelter expense 
deduction more closely in line with current housing costs and index 
it to the cost of living. Section 846 of the Agriculture 
Appropriations Act of 2001 accomplishes those objectives by: (a) 
setting the fiscal year 2001 maximum excess shelter expense 
deductions at $340, $543, $458, $399, and $268 per month for, 
respectively, the contiguous 48 States and the District of Columbia, 
Alaska, Hawaii, Guam, and the Virgin Islands, effective March 1, 
2001; and (b) setting the maximum excess shelter expense deductions 
for fiscal year 2002 and beyond by adjusting the previous year's 
maximums to changes in the Consumer Price Index for All Urban 
Consumers for each 12-month period ending the preceding November 30.
    Effect on Low-Income Families: This provision will affect low-
income households without an elderly or disabled member, who certify 
or re-certify for food stamp benefits on or after March 1, 2001, and 
who have shelter expenses that are high enough relative to their net 
income to be eligible for the excess shelter deduction and subject 
to the current shelter cap. Most households affected by the 
provision are households with children. It will allow affected 
households to claim a larger income deduction for shelter expenses 
and to obtain higher food stamp benefits.
    Cost Impact: We estimate that the cost of this provision will be 
$119 million in FY 2004, and $705 million over the five years,

[[Page 51937]]

FY 2004 through FY 2008. These impacts are already incorporated into 
the President's FY 2004 budget baseline.
    Cost estimates were based on food stamp cost projections from 
the President's FY 2004 budget baseline of December 2002. While we 
recognize that the President's FY 2004 budget baseline is an 
imperfect baseline for this analysis because it already incorporates 
the impacts of this provision and subsequent legislation, it is 
preferable to the alternatives because it reflects the most recent 
economic and participation trends. The new values of the shelter cap 
for FY 2002 and beyond were calculated by inflating the FY 2001 
values, using actual and projected values of the Consumer Price 
Index for All Urban Consumers from the Office of Management and 
Budget's economic assumptions for the President's FY 2004 budget. 
The benefit and participation impacts of raising the shelter 
deduction cap to the new values were modeled using data from the 
2001 food stamp quality control sample regarding household 
characteristics, income and expenses. Using the 2001 quality control 
mini-model program, we were able to measure expected changes in 
household benefits resulting from the changes in the shelter cap. 
The program suggested that raising the cap would increase program 
benefits by less than one percent nationally. The estimated 
percentage increase was multiplied by the baseline cost projections 
to estimate the expected cost increase for each fiscal year. Because 
this provision became effective on March 1, 2001 for households who 
are newly certified or re-certified, the provision was considered 
fully implemented in FY 2004. Cost estimates were rounded to the 
nearest million dollars.
    Participation Impacts: We estimate that raising the shelter 
deduction cap will raise benefits among those households currently 
participating and subject to the shelter deduction cap. We do not 
expect any significant impacts on participation due to nature of the 
rule change and the small benefit increase per recipient. FY 2001 
quality control data indicate that 7.6 percent of food stamp 
participants will receive higher benefits due to this provision. 
(These are persons in households that claim the maximum shelter 
deduction but receive less than the maximum food stamp benefit. 
Households that already receive the maximum food stamp allotment 
cannot have their benefits raised as a result of this provision.) 
Applying this percentage to the participation projections for the 
President's FY 2004 budget baseline, we estimate that 1.65 million 
persons will each receive an average of $6.02 more per month in food 
stamp benefits in FY 2004.

Section 847: State Option To Use TANF Vehicle Rules

    Discussion: Since 1964, food stamp legislation has limited the 
value of resources households may own while remaining eligible for 
food stamps. The FSA specifically addresses the valuation of 
vehicles as resources that count toward the resource limit of $2,000 
per household, or $3,000 for households with one or more members who 
are disabled, or aged 60 years or over. In 1977, the FSA designated 
the fair market value (FMV) of vehicles in excess of $4,500 as a 
countable resource. Subsequent laws have raised the FMV limit to 
$4,650, excluded the value of vehicles used for various purposes 
from household resources, and designated vehicles whose sale would 
net no more than $1,500, after payment of liens, as inaccessible 
resources. Current food stamp vehicle rules apply the excess FMV 
test to one licensed vehicle per adult household member and any 
other licensed vehicle a teenager drives to work, school, job 
training, or job hunting. Additional non-exempt licensed vehicles 
are valued at the higher of excess FMV or equity value (fair market 
value minus any outstanding loan balance). Unlicensed vehicles are 
counted at their equity value.
    Section 847 of the Agriculture Appropriations Act of 2001 amends 
section 5(g)(2) of the Food Stamp Act of 1977 to allow States to 
substitute their TANF vehicle rules for the food stamp vehicle rules 
when doing so would result in a lower attribution of food stamp 
resources to households. In lieu of the food stamp vehicle rules at 
7 CFR 273.8(f), the Department proposes that States may substitute 
the vehicle rules from any program that receives TANF or TANF 
maintenance of effort funds and meets the definition of 
``assistance'' according to TANF regulations at 45 CFR 260.31. 
Implementation of section 847 will streamline the process of 
determining eligibility, make many more households eligible for food 
stamps, reduce errors, and facilitate processing of TANF and food 
stamp joint applications. The effect of section 847 will vary from 
State to State, according to the TANF vehicle rules developed by 
each State.
    Effect on Low-Income Families: This provision will allow States 
to adopt more generous vehicle rules from their TANF-funded programs 
for use in determining food stamp eligibility. By adopting more 
generous TANF vehicle rules, some income-eligible food stamp 
households who were previously ineligible because of the value of 
their vehicle(s), are made eligible to participate. Persons will be 
affected by the provision to the extent that States adopt this 
provision and to the extent that States have less restrictive 
vehicle rules in their relevant TANF-funded programs.
    Cost Impact: We estimate that the cost of implementing section 
847 will be $216 million in FY 2004 and $1.115 billion over the five 
years FY 2004 to FY 2008. These impacts are already incorporated 
into the President's FY 2004 budget baseline.
    As of FY 2003, 27 States reported adopting their more generous 
TANF-cash vehicle rules for the purpose of determining food stamp 
eligibility. Ten other States reported adopting vehicle rules from 
their TANF-funded child care and foster care programs for the 
purpose of determining food stamp eligibility. For the impact 
analysis, it is assumed that States interested in adopting vehicle 
rules from any of their TANF-funded programs have done so and that 
no additional States will switch to TANF vehicle rules in the 
future.
    In order to estimate the impact of this provision on food stamp 
participation and benefit costs, we used data from the 1997 Survey 
of Income and Program Participation (SIPP), which contains 
information about household characteristics, income and assets--
including vehicle ownership data. Using this dataset, we created the 
1997 MATH SIPP simulation program, which models food stamp 
eligibility, participation and benefits under regular FSP vehicle 
rules and allows us to compare them to participation and benefits 
under alternative vehicle rules. For each State that originally 
chose to adopt TANF vehicle rules for determining food stamp 
eligibility, we modeled their specific TANF vehicle rules and used 
the dataset to determine the cost and participation impacts on the 
Food Stamp Program. Information on State TANF vehicle rules was from 
a review of States in FY 2000 and is the most recent data available, 
as States are not required to regularly report such information to 
the U.S. Department of Health and Human Services. The cost and 
participation impacts were then adjusted to reflect the most recent 
choices States have made in FY 2003 regarding the adoption of TANF 
vehicle rules for determining food stamp eligibility. The adjustment 
reflected both the number of food stamp cases in each State and the 
relative generosity of their TANF vehicle rules.

                    FY 2003 State Vehicle Rules for Determining FSP Eligibility (as of 02/03)
----------------------------------------------------------------------------------------------------------------
                                                                    TANF child care or      Other: States with
    FSP vehicle rules (9 States)       TANF-cash vehicle rules     foster care vehicle     expanded categorical
                                             (27 States)            rules (10 States)     eligibility (7 States)
----------------------------------------------------------------------------------------------------------------
CA, GA, IA, MS, RI, TN, VI, VA, WA..  AL, AK, AZ, AR, CT, DC,    CO, ID, IN, MA, MO, NE,  DE, ME, MI, ND, OR,
                                       FL, GU, HI, IL, KS, KY,    NM, NY, WV, WI.          SC, TX
                                       LA, MD, MN, MT, NV, NH,
                                       NJ, NC, OH, OK, PA, SD,
                                       UT, VT, WY.
----------------------------------------------------------------------------------------------------------------

    The adjusted impact was calculated as a 2.00 percent expected 
increase in benefits. This impact was multiplied by expected 
benefits for each fiscal year, based on the President's FY 2004 
budget baseline of December 2002. While we recognize that the

[[Page 51938]]

President's FY 2004 budget baseline is an imperfect baseline for 
this analysis because it already incorporates the impacts of this 
provision and subsequent legislation, it is preferable to the 
alternatives because it reflects the most recent economic and 
participation trends. Based on a January 1999 FNS report, Relaxing 
the FSP Vehicle Asset Test: Findings from the North Carolina 
Demonstration, an additional adjustment was made. The report 
indicates that the participation effects of this type of policy 
reform are about half of what our model predicts on the basis of the 
characteristics of current participants, so the estimates were 
adjusted by half for all years. Given that this provision was 
effective on July 1, 2001, we considered it to be fully implemented 
in FY 2004 and no further adjustments were made. Cost estimates were 
rounded to the nearest million dollars.
    Participation Impacts: We estimate that this provision will 
increase average participation in the Food Stamp Program by 243,000 
persons in FY 2004 and that their average monthly food stamp benefit 
will be $74.11. These impacts are already incorporated into the 
President's FY 2004 budget baseline.
    Participation impacts were estimated using the same method as 
the cost impacts. The adjusted participation impact was calculated 
as a 2.25 percent expected increase in participation. This impact 
was multiplied by expected participation for each fiscal year, based 
on the President's FY 2004 budget baseline of December 2002. As with 
the cost estimate, participation estimates were adjusted by half to 
reflect the finding in the 1999 FNS vehicle report. Participation 
estimates were rounded to the nearest thousand persons.
    While this regulatory impact analysis details the expected 
impacts on Food Stamp Program costs and the number of participants 
likely to be affected by the food stamp provisions of the 
Agricultural Appropriation Act of 2001, it does not provide an 
estimate of the overall social costs of the provisions, nor does it 
include a monetized estimate of the benefits they bring to society. 
We anticipate that the provisions will improve program operations by 
providing States with the ability to coordinate food stamp and TANF 
vehicle rules. In addition, by increasing food stamp benefits to 
low-income families, we believe that these statutory changes will 
increase food expenditures, which may strengthen food security.

[FR Doc. 03-22144 Filed 8-28-03; 8:45 am]
BILLING CODE 3410-30-P