[Federal Register Volume 89, Number 222 (Monday, November 18, 2024)]
[Rules and Regulations]
[Pages 91198-91245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26845]
[[Page 91197]]
Vol. 89
Monday,
No. 222
November 18, 2024
Part VI
Department of Agriculture
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Food and Nutrition Service
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7 CFR Part 273
Supplemental Nutrition Assistance Program: Standardization of State
Heating and Cooling Standard Utility Allowances; Final Rule
Federal Register / Vol. 89 , No. 222 / Monday, November 18, 2024 /
Rules and Regulations
[[Page 91198]]
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DEPARTMENT OF AGRICULTURE
Food and Nutrition Service
7 CFR Part 273
[FNS-2019-0009]
RIN 0584-AE69
Supplemental Nutrition Assistance Program: Standardization of
State Heating and Cooling Standard Utility Allowances
AGENCY: Food and Nutrition Service (FNS), Department of Agriculture
(USDA).
ACTION: Final rule.
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SUMMARY: This rule finalizes changes proposed October 3, 2019, by the
Department to revise Supplemental Nutrition Assistance Program (SNAP)
regulations for calculating standard utility allowances (SUAs) and
expand allowable shelter expenses to include basic internet costs. It
requires State agencies to submit for FNS approval their SUA
methodologies at least every five years, and methodology submissions
must incorporate any revisions necessary to demonstrate that the
baseline expenditure data and underlying methodology reflect recent
trends and changes. This rule also provides State agencies with the
flexibility necessary to ensure that they meet households' needs while
also aligning SUAs with data on low-income household utility costs in a
more consistent manner. This rule also finalizes updates proposed April
20, 2016, regarding the treatment of Low Income Home Energy Assistance
Program or other similar energy assistance program payments, in
accordance with amendments made to the Food and Nutrition Act of 2008
by the Agricultural Act of 2014. The intent of this final rule is to
ensure consistency and integrity of SUAs across the country, which the
Department believes is good governance.
DATES:
Effective date: This final rule is effective January 17, 2025.
Compliance date: The compliance date for SUA changes is October 1,
2025.
ADDRESSES: SNAP Program Development Division, Food and Nutrition
Service, USDA, 1320 Braddock Place, Alexandria, Virginia 22314.
FOR FURTHER INFORMATION CONTACT: Catrina Kamau, Certification Policy
Branch, Program Development Division, Food and Nutrition Service, 1320
Braddock Place, Alexandria, Virginia 22314. Email:
[email protected]. Phone: (703) 305-2022.
SUPPLEMENTARY INFORMATION:
Acronyms or Abbreviations
American Community Survey, ACS
Code of Federal Regulations, CFR
Consumer Expenditure Survey, CEX
Consumer Price Index, CPI
Fiscal Year, FY
Food and Nutrition Act of 2008, the Act
Food and Nutrition Service, FNS
Heating and Cooling Standard Utility Allowance, HCSUA
Limited Utility Allowance, LUA
Low-Income Home Energy Assistance Act of 1981, LIHEAA
Low-Income Home Energy Assistance Program, LIHEAP
Residential Energy Consumption Survey, RECS
Short Term Energy Outlook, STEO
Standard Utility Allowance, SUA
State SNAP Agencies, State agencies or States
Supplemental Nutrition Assistance Program, SNAP
U.S. Department of Agriculture, the Department or USDA
References
Title 7 of the Code of Federal Regulations, part 273
Holleyman, Chris, Timothy Beggs, and Alan Fox. Methods to
Standardize State Standard Utility Allowances. Prepared by
Econometrica for the U.S. Department of Agriculture, Food and
Nutrition Service, August 2017. https://www.fns.usda.gov/snap/methods-standardize-state-standard-utility-allowances.
Holleyman, Chris, Pratima Damani, and Erick Torres.
Updating Standardized State Heating and Cooling Utility Allowance
Values. Prepared by SP Group, LLC for the U.S. Department of
Agriculture, Food and Nutrition Service, March 2023. https://www.fns.usda.gov/snap/updating-hcsua-values.
MD/DC/DE Broadcasters Ass'n v. F.C.C., 253 F.3d
732, 734 (D.C. Cir. 2001).
U.S. Department of Agriculture, Food and Nutrition Service,
Office of Policy Support, Characteristics of Supplemental Nutrition
Assistance Program Households: Fiscal Year 2022, by Mia Monkovic.
Project Officer, Aja Weston. Alexandria, VA, 2024. https://www.fns.usda.gov/research/snap/characteristics-fy22.
U.S. Department of Agriculture, Food and Nutrition Service,
Supplemental Nutrition Assistance Program--Section 4006 Agricultural
Act of 2014--Implementing Memorandum, 5 March 2014. Retrieved from:
https://www.fns.usda.gov/snap/eligibility/deduction/liheap-implementation-memo in November 2023.
U.S. Department of Health & Human Services. LIHEAP IM 1999-
10 on Federal Public Benefits Under the Welfare Reform Law--Revised
Guidance, June 15, 1999. Retrieved from https://www.acf.hhs.gov/ocs/policy-guidance/liheap-im-1999-10-federal-public-benefits-under-welfare-reform-law-revised in November 2023.
U.S. Energy Information Administration, 2015 Residential
Energy Consumption Survey in section, ``Electricity Use in Homes.''
Retrieved from https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php in November 2023.
U.S. Energy Information Administration, Residential Energy
Consumption Survey for indicated years (1980-2015). Retrieved from
https://www.eia.gov/energyexplained/use-of-energy/homes.php in
November 2023.
U.S. Energy Information Administration, Monthly Energy
Review, Table 2.2, April 2022, preliminary data for 2021. Retrieved
from https://www.eia.gov/energyexplained/use-of-energy/homes.php in
November 2023.
U.S. Energy Information Administration, U.S. Energy
Insecure Households were Billed More for Energy than Other
Households, May 23, 2023. Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=56640 in November 2023.
USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
Combined Final Rule
This final rule incorporates provisions originally proposed in two
separate notices of proposed rulemaking (NPRM): The October 3, 2019,
NPRM titled ``Supplemental Nutrition Assistance Program:
Standardization of State Heating and Cooling Standard Utility
Allowances'' (84 FR 52809), and the April 20, 2016, NPRM titled
``Supplemental Nutrition Assistance Program: Standard Utility
Allowances Based on the Receipt of Energy Assistance Payments Under the
Agricultural Act of 2014'' (81 FR 23189). While originally published as
separate NPRMs, the provisions contained in these rules both relate to
determining household shelter expenses, and therefore, the Department
is addressing the NPRMs in this single final rule. In this final rule,
the Department will refer to the October 3, 2019, NPRM as the SUA NPRM.
The Department will refer to the April 20, 2016, NPRM as the LIHEAP
NPRM.
The Department intends for the LIHEAP NPRM provisions of this final
rule and the SUA NPRM provisions to be separate and severable from one
another. If any provision related to the SUA NPRM is stayed or
determined to be invalid, it is the Department's intention that the
remaining provisions
[[Page 91199]]
related to the LIHEAP NPRM shall continue in effect. For example, if a
court were to invalidate the final rule's HCSUA standardization
provision, the provisions related to the LIHEAP NPRM would remain in
effect, as those provisions ``could function sensibly without the
stricken provision.'' \1\
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\1\ MD/DC/DE Broadcasters Ass'n v. F.C.C., 253 F.3d 732, 734
(D.C. Cir. 2001) (internal quotations omitted).
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This rule redesignates several regulatory citations to reflect
amendments to the regulatory text resulting from this final rule. Where
applicable, each redesignation is reflected explicitly in the
discussion of the corresponding provision.
Background on SUAs and the SUA NPRM
The Food and Nutrition Act of 2008 (the Act) establishes national
eligibility standards for SNAP, including net income standards, and
provides allowable deductions from gross income to determine the net
income of a household. Apart from a standard deduction for all
households, deductions are available to households based on their
circumstances. Some of these deductions include: earned income;
dependent care costs when needed for work, searching for work,
training, or education; medical expenses over $35 for elderly or
disabled households; and excess shelter costs.
The excess shelter deduction allows households to deduct shelter
expenses that exceed 50 percent of their income after all other
deductions are taken. For households without an elderly or disabled
member, the deduction must not exceed a maximum limit. Households with
elderly or disabled members are not subject to a limit. Shelter
expenses include the basic cost of housing as well as certain utilities
and other allowable expenses listed in 7 CFR 273.9(d)(6)(ii). To help
streamline the application and certification process, section 5(e)(6)
of the Act permits State agencies to develop SUAs to use in lieu of
actual utility expenses in determining a household's shelter costs for
the purposes of the excess shelter deduction. The Act requires that
State SUAs must be developed ``in accordance with regulations
promulgated by the [USDA].'' \2\
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\2\ 7 U.S.C. 2014(e)(6)(C)(i).
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Per USDA's regulations, at 7 CFR 273.9(d)(6)(iii), State agencies
may create three types of SUAs: a heating and cooling SUA (HCSUA); a
limited utility allowance (LUA); and single utility allowances (also
referred to as ``individual standards''). The HCSUA is the largest of
the SUAs and is available to households that incur heating or cooling
expenses separate from their rent or mortgage. The HCSUA is
comprehensive and includes costs for heating or cooling and all other
allowable utilities. The LUA includes expenses for at least two
utilities; single utility allowances may be used for stand-alone
utility costs. Neither the LUA nor single utility allowances include
costs for heating and/or cooling. Utility expenses captured in SUAs may
include: electricity or fuel for purposes other than heating or
cooling, water, sewerage, well and septic tank installation and
maintenance, telephone, and garbage or trash collection.\3\
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\3\ 7 CFR 273.9(d)(6)(ii)(C).
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A State agency may mandate use of SUAs for all households with
qualifying expenses if the State agency has developed one or more SUAs
that include the costs of heating and cooling and one or more SUAs that
do not include the costs of heating and cooling.\4\ Under this option,
households entitled to the SUA may not claim actual expenses, even if
the expenses are higher than the SUA. Households not entitled to the
SUA may claim actual allowable expenses.
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\4\ 7 U.S.C. 2014(e)(6)(C)(iii); 7 CFR 273.9(d)(6)(iii)(E).
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SNAP regulations require State agencies to review SUAs annually and
adjust to reflect changes in costs.\5\ State agencies must submit the
figures to FNS for approval at the annual update and whenever a State
agency changes methodologies (Office of Management and Budget (OMB)
Control Number 0584-0496; Expiration Date 7/31/2026). In developing
SUAs, program requirements do not prescribe a particular methodology or
data sources for State agencies to use. State agencies have a certain
amount of flexibility to tailor the program's administration to meet
the needs of their residents. SUAs embody this flexibility, as they
vary from State to State and reflect not only the different costs, but
the different utility needs in each State. For example, the heating and
cooling needs of Maine residents are not the same as those in
Mississippi as these States have differing climates, energy usage, and
commonly used energy sources. While this flexibility is critical and
each State's circumstances are unique, without consistent parameters
for SUA methodologies, the Department is concerned that the information
State agencies use to determine SUAs is outdated and may not reflect
low-income households' current utility costs.
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\5\ 7 CFR 273.9(d)(6)(iii)(B).
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Monthly shelter costs, such as rent, mortgage, and utilities,
comprise a significant share of most Americans' household budgets.
Similarly, in the SNAP benefit calculation, SUAs comprise a significant
share of household shelter costs. The use of SUAs allows for a
streamlined approach over an itemized, case-by-case approach to
determine household utility costs and is a substantial factor in
evaluating whether the household is eligible for the excess shelter
deduction. As such, SUAs can affect a household's eligibility for the
excess shelter deduction and, ultimately, the household's eligibility
for SNAP and their benefit amount. Aligning SUAs with current household
conditions, including in households with unusually high utility
expenses, is important to ensure that the application of the excess
shelter deduction adequately reflects household circumstances and
ultimately, the appropriateness of the benefit levels.
The Department explored options for standardizing State SUAs in a
2017 study, ``Methods to Standardize State Standard Utility
Allowances'' (Holleyman, et al., 2017) (2017 SUA Study).\6\ The 2017
SUA Study evaluated State agency methodologies and reviewed available
utility cost data sources. The study found that most of the
methodologies State agencies employ fall into one of two categories:
(1) those that rely on recent State-specific utility data; and (2)
those that adjust a base number using an inflation measure such as the
CPI of utility costs. Of the 19 State agencies that update a base
number, the study found that less than half (seven States) knew the
source of their base number, and many did not know when it was
established.
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\6\ Holleyman, Chris, Timothy Beggs, and Alan Fox. Methods to
Standardize State Standard Utility Allowances. Prepared by
Econometrica for the U.S. Department of Agriculture, Food and
Nutrition Service, August 2017.
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Further, the 2017 SUA Study noted that State HCSUAs differed
considerably from the average utility expenditures among low-income
households in their State. The authors speculated that State agencies
may set their SUAs higher than the average costs to minimize benefit
loss for households with very high utility expenses. In evaluating this
possibility, the authors compared State HCSUA values to values derived
from Federal survey data and found variation in the degree to which
State agencies set their HCSUAs compared to HCSUAs set at the 85th
percentile of utility costs for low-income households. The study used
the
[[Page 91200]]
85th percentile for illustrative purposes and not as a recommended
threshold, as the Department has not previously set a designated
threshold for SUAs and has allowed State agencies flexibility in this
area.
The authors found that most State agencies used HCSUAs below the
85th percentile of utility costs for low-income households in their
State based on the Federal survey data, meaning that their HCSUAs may
be under-representing the costs for households with high utility
expenses.
To ensure consistent and transparent application of the HCSUA
across the country, the Department proposed a methodology to
standardize the way State agencies calculate HCSUAs in the SUA NPRM
published October 3, 2019. The Department notes that it also used the
term ``benefit equity'' in the NPRM to describe the purpose of
standardizing SUA methodologies. Multiple commenters, described in more
detail below, raised concerns about the use of this term given that
benefit levels depend on household circumstances, including differences
in utility costs. This term, in addition to ``consistency'' and
``integrity,'' were used to describe the Department's goal of ensuring
each State's SUAs represent utility costs for low-income households in
the State by proposing clear data requirements to calculate them.
However, after considering this terminology, the Department agrees with
commenters that ``benefit equity'' is imprecise compared with the other
terms used. Therefore, the Department will use the terms
``consistency'' and ``integrity'' throughout to describe the purpose of
the SUA NPRM and the final rule.
The methodology in the proposed rule would establish each State
agency's HCSUA at the 80th percentile of low-income households' utility
costs in the State. The proposed rule would cap most LUAs and
individual standards for other utility costs at a percentage of the
State agency's HCSUA. The proposed rule would add the cost of basic
internet as an allowable utility expense and establish a national
maximum amount for a new telecommunications SUA that would include
internet and telephone costs. FNS would calculate the initial figures
and update them annually.
Summary of General Comments on the October 3, 2019, (SUA) NPRM
The Department received over 125,000 public comment submissions on
the SUA NPRM.\7\ Of these, approximately 6,500 were unique and nearly
118,800 were associated with form letter campaigns. The Department
reviewed and considered all comments received.
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\7\ Posted public comments may be found at regulations.gov
https://www.regulations.gov/document/FNS-2019-0009-0001/comment.
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Approximately 35 individual commenters expressed general support
for the proposed changes, citing concerns about increasing government
spending and the need to prevent fraudulent activity. A non-profit
organization argued that SUAs have led to significant distortions in
eligibility determinations and benefit levels between States and
significantly weaken program integrity. This commenter claimed that
State agencies frequently set SUA thresholds above what applicants are
paying for utilities, creating a greater risk for abuse and violating
the statutory intent of SUA policies. While the Department appreciates
these comments, the Department notes that setting SUAs above what some
applicants are paying for utilities is not fraudulent, as SUAs are not
meant to represent average household utility expenses.
In past guidance,\8\ the Department encouraged State agencies to
set SUAs high enough to ensure most households use the SUA rather than
claim actual utility costs, while also reflecting actual costs. Most
State agencies mandate the use of SUAs, as described above. The
flexibility State agencies have to set SUAs above the average
household's costs protects vulnerable households with higher-than-
average utility costs in mandatory SUA States. The Department proposed
changes to SUA methodologies out of concern that SUAs are outdated and
do not reflect recent trends and data on household utility costs,
leading to inconsistencies between State SUA values and the utility
costs SNAP households incur.
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\8\ U.S. Department of Agriculture, Food and Nutrition Service,
Food Stamp Program Standard Utility Allowances Requirements and
Methodologies, FNS Notice 79-47, May 1979. Retrieved from: https://www.fns.usda.gov/snap/sua-requirements-and-methodologies in December
2023.
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Additionally, approximately 15 commenters supported the proposed
update to the telephone standard to include basic internet services.
Multiple commenters, including advocacy groups, a policy advocacy
organization, multiple State government agencies, a religious
organization, and a trade association, agreed with the Department's
argument that internet is an essential service. Additional commenters,
including an advocacy group, a legal services organization, a policy
advocacy organization, and State government agencies generally
supported updating the telephone standard to include internet services.
Approximately 107,980 commenters, the majority of which were from
form letter campaigns, generally opposed the proposed changes in the
SUA NPRM. Many of these commenters expressed concerns that
standardizing HCSUAs at the 80th percentile would decrease benefits and
negatively impact the general health and well-being of certain
demographics, including women, elderly individuals, individuals with
higher-than-average shelter costs, individuals with disabilities, and
children. Some commenters also expressed concern over how the changes
might affect the stability of the economy.
One food bank, ten non-profit and advocacy organizations, six form
letter campaigns, one professional association, one religious
organization, one food service industry organization, and two local
governments expressed opposition to the proposed rule because it was
projected to cut SNAP benefits for a significant number of households.
The same religious organization and two other form letter campaigns
opposed the changes because they were projected to cause 8,000 people
to lose SNAP benefits. An advocacy group wrote that the proposed rule
would eliminate 18 percent of the average SNAP family's food budget.
The Department notes that most SNAP households (81 percent) would have
experienced no change to their benefits or a benefit increase under the
proposed rule, as noted in the Regulatory Impact Analysis (RIA). The
Department also notes that these projections are no longer accurate,
given the changes in the final rule, which are described in more detail
below.
Further, a form letter campaign, a State-elected official, three
advocacy organizations, one policy advocacy organization, and an
individual commented that the proposed rule would force struggling
families to choose between heating and cooling their homes and putting
food on the table. Two food banks, a form letter campaign, a religious
organization, a State government, a trade association, and four
advocacy groups cited evidence that suggests SNAP supports housing
stability and alleviates the trade-offs families often face between
purchasing food or other basic necessities, such as healthcare and
utilities. A form letter campaign wrote that the proposed rule
discriminates against families with high shelter costs.
Multiple commenters raised concerns about the proposed rule's cut
to SNAP benefits and the associated food security and health
implications. A food bank, a
[[Page 91201]]
healthcare association, and an individual expressed concerns regarding
the negative impacts of food insecurity on a person's health. A legal
services organization, four religious organizations, a healthcare
association, an educational institution, two advocacy groups, and a
policy advocacy organization commented that the proposed rule would
exacerbate food insecurity and significantly increase healthcare costs.
A form letter campaign stated that Congress authorized SNAP to
encourage participant households to consume nutritious foods and found
that limiting the purchasing power of low-income households contributed
to food insecurity and malnutrition.
Commenters also raised concerns regarding the overall impact of the
SUA NPRM in conjunction with the final rule published on December 5,
2019, entitled ``Supplemental Nutrition Assistance Program:
Requirements for Able-Bodied Adults Without Dependents'' (84 FR 66782),
and the proposed rule published on July 24, 2019, entitled ``Revision
of Categorical Eligibility in the Supplemental Nutrition Assistance
Program (SNAP)'' (84 FR 35570). Commenters expressed concern that these
regulatory changes proposed by the Department would adversely impact
households and their benefits, compounding the impact of the SUA NRPM
for some households. These comments are no longer relevant as the
Department rescinded (86 FR 34605) and withdrew (86 FR 30795) these
proposed and final changes to program rules.
Approximately 17,340 commenters discussed the proposed rule as it
relates to SNAP's statutory purpose and Congressional intent. Two food
banks, two religious organizations, three local/municipal governments,
a policy advocacy organization, a trade association, two legal services
groups, two form letter campaigns, a health care association, a
community organization, and seven advocacy groups claimed that the
proposed rule was an attempt to sidestep Congress and reduce SNAP
benefits. Many of these commenters, as well as two form letter
campaigns, two federally-elected officials, 11 advocacy groups, three
legal services groups, a religious organization, three food banks, an
academic, a trade association, and a community organization, argued
that the proposed rule subverts the 2018 Farm Bill, which made no
changes to SUAs.
Twelve commenters, including a policy advocacy organization, two
advocacy groups, a lawyer, four legal services groups, two individual
commenters, a local/municipal government, and a federally-elected
official, claimed the proposed rule was in violation of the
Administrative Procedure Act (APA). Two of the legal services
commenters alleged the proposed rule was arbitrary and capricious
because it did not provide adequate reasoned rationale to inform
meaningful comment, as required by the APA. A federally-elected
official and an advocacy group claimed the proposed rule violates the
APA because it failed to consider all relevant factors. A policy
advocacy organization said that the proposed rule does not provide
enough information for the public to meaningfully comment on the
proposed methodology. The commenter wrote that the proposed rule
violates the APA because it does not provide a justification for the
80th percentile HCSUA cap.
The Department appreciates the commenters' concerns about the
proposed rule's potential adverse impact on SNAP households and has
made changes in the final rule that may address these concerns. These
changes include the Department not finalizing the proposed HCSUA
methodology standardization provision and the proposed caps on LUAs and
individual standards. The Department still believes it is necessary to
ensure a clear justification for the any SUA that a State sets, and
therefore the Department is providing State agencies with the
flexibility to continue setting their own SUAs while standardizing the
data and methodology criteria that FNS will use to approve SUAs. As
noted above, commenters broadly supported accounting for basic internet
costs in SUAs. The final rule makes changes to treat basic internet
costs like any other allowable utility cost that can be included in the
HCSUA, LUA, and as an individual standard. The Department further
explains these changes and the accompanying rationale later in this
preamble.
The Department disagrees with commenters' claims that the
Department lacks the authority to standardize SUAs. While the
Department agrees that Congress did not make changes to SUAs during the
passage of the 2018 Farm Bill, the Department notes that Congress did
not change sec. 5(e)(6)(C)(i) of the Food and Nutrition Act of 2008
either, which gives the Secretary the authority to promulgate
regulations concerning how SUAs are set by State agencies.\9\ As such,
the Department maintains the authority to regulate SUAs within the
statutory framework.
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\9\ 7 U.S.C. 2014(e)(6)(C)(i) (``[A] State agency may use a
standard utility allowance in accordance with regulations
promulgated by the Secretary. . . .'').
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In the sections that follow, the Department presents each provision
of the proposed rule: the relevant, substantive comments related to the
provision; and any changes made to the final rule in a section-by-
section format. Throughout this comment analysis, the Department views
a comment as substantive if it provides an opinion or recommendation on
a specific policy and includes detailed reasoning.
Standardizing HCSUA Methodology
In the SUA NPRM, the Department proposed to amend SNAP regulations
at 7 CFR 273.9(d)(6)(iii) to create a new, standardized methodology for
calculating State HCSUAs. The proposed standardization set HCSUAs at
the 80th percentile of utility costs for low-income households in each
State, calculated annually by FNS.
The NPRM methodology would use best-available utility cost
information from nationally representative Federal sources that reflect
State-specific household expenses, such as the American Community
Survey (ACS), drawing on the recommendations of the 2017 SUA Study. The
methodology would also allow the Department to use other data sources
if such Federal sources are not available or if better data becomes
available. Under the SUA NPRM, FNS would calculate and provide States
with standardized HCSUAs using the following sources and set SUAs at
the 80th percentile of utility costs for low-income households:
ACS with adjustments based on the Residential Energy
Consumption Surveys (RECS) to derive the energy component of the HCSUA.
ACS and Consumer Expenditure Surveys (CEX) data to derive
the water, sewer, and trash component of the HCSUA.
Current pricing information on telecommunications services
from service providers.
As needed, FNS would adjust the estimates from the sources listed
above using utility expenditure growth rates and population growth
estimates in order to reflect the current fiscal year.
Since the proposed data sources do not collect information for
territories, such as Guam and the Virgin Islands, the Department
proposed to continue to allow these territories to use their own
methodologies, and conduct their own calculations, subject to FNS
approval.
Using the utility cost information from these sources, FNS would
set the standardized HCSUAs at the 80th percentile of utility costs for
low-income households in each state. In the
[[Page 91202]]
SUA NPRM, the Department explained that it chose the 80th percentile
because standardizing at this level would reduce the amount of
variation between utility costs and HCSUA amounts across States.
Additionally, the Department argued that setting HCSUA values at the
80th percentile would balance the need to create more accurate
standards while still capturing households that have higher than
average utility costs, as most States mandate SUAs in lieu of actual
costs.
Commenters expressed opposition to the proposed standardized HCSUA
methodology due to concerns about the following, which are discussed in
more detail in the paragraphs below:
Negatively impacting SNAP participants, especially among
certain demographics.
Setting HCSUAs at the 80th percentile of low-income
households' utility costs without clear rationale;
Limiting State agencies' flexibility to address their
unique needs; and
Using the data sources the Department proposed, in lieu of
other State-specific data sources.
Approximately 240 commenters expressed general opposition to the
proposal to set HCSUAs at the 80th percentile of low-income households'
utility costs in the State. Many of these commenters requested further
explanation for the Department's rationale for capping the HCSUA at the
80th percentile. These comments included those from form letter
campaigns, multiple members of the U.S. Congress, a legal center, a
legal services organization, a health care association, multiple local/
municipal commenters, a State agency, and advocacy groups.
Approximately 107,980 commenters expressed general opposition to
standardizing the HCSUA methodology process due to the potential
adverse effects on certain demographics. Three form letter campaigns, a
food bank, five advocacy groups, and an individual, discussed the
negative impacts of the proposed changes on people with disabilities.
Two of these form letter campaigns, the same individual, an additional
food bank, and an additional advocacy group stated that 11 percent of
SNAP households include a person with a disability, and those
households will be disproportionately impacted by the proposed rule.
Many of these same commenters, and an additional food bank and advocacy
group, argued that the proposed rule would similarly harm elderly SNAP
recipients. Another form letter campaign stated that households with a
family member with disabilities are two to three times more likely to
experience food insecurity than households without a family member with
disabilities. This form letter further claimed that the proposed rule
would force people with disabilities and their families to choose
between spending their limited resources on food or other necessities
such as housing, utilities, and medical expenses.
A policy advocacy organization and an advocacy group argued that
the rule would have a disproportionate negative impact on women because
women make up the majority of SNAP recipients. Comments from one
advocacy group and a policy advocacy organization argued the proposed
changes would increase food insecurity for children, and two food
banks, four advocacy groups, and a policy advocacy organization cited
the proposed rule's RIA, which estimated a 19 percent net reduction in
SNAP benefits for households with children, with an average annual loss
of $336 in food assistance. The Department notes that the proposed
rule's RIA did not estimate a 19 percent net reduction in SNAP benefits
for households with children. Rather, it noted that 19 percent of SNAP
households with children were expected to see a reduction in their SNAP
benefits under the proposed rule.
In addition to the impact on certain demographics, commenters
expressed concern that standardizing the HCSUA at the 80th percentile
would not adequately cover the lowest-income household's high utility
costs and would result in decreases to SNAP benefits. Two form letter
campaigns noted that the proposed rule would cut $4.5 billion over five
years in SNAP benefits. A community organization, multiple advocacy
groups, multiple State government agencies, a food bank, a professional
association, and a legal services organization criticized the proposed
methodology, writing that 19 percent, or approximately one in five, of
SNAP households would see a reduction in benefits under the proposed
rule. Three legal services organizations, one attorney, four advocacy
groups, four policy advocacy organizations, and one religious
organization stated that using the 80th percentile would result in
lower HCSUAs than the Department has allowed under long-standing
policy. Some commenters raised the potential for the Department to set
default HCSUAs at a different percentile and provided suggestions.
Advocacy groups and an attorney stated that, while interstate
inequities exist, it would be preferable for States with lower-than-
average utility allowances to raise them rather than standardizing all
States' HCSUAs.
The Department appreciates commenters' concerns about the proposed
rule's potential adverse impact on certain demographics. The Department
is aware of the potential negative impact on elderly and disabled
households since they do not have a cap on their excess shelter
deduction in the Act. Therefore, without the cap on shelter expenses
that all other households have, households with elderly or disabled
members are more likely to see a greater change in their benefit
amounts (both increases and decreases) due to any change in HCSUA
methodologies than households without elderly or disabled members. The
Department is committed to serving all households, including those with
elderly or disabled members who are most affected by changes to SUAs,
and will support State agencies' implementation of the final rule as
they help households understand any changes to their benefits and are
available for questions, as necessary.
Numerous commenters also expressed broader concerns about potential
SNAP benefit decreases under this rule. The Department understands the
importance of benefit stability for households, but also recognizes
that SUAs must reflect low-income household utility costs in order to
serve their purpose. SUAs may change as utility costs increase or
decrease, and those changes are reflected in the SNAP benefit level.
The impact that SUAs have on benefits is important, which is why the
SUA NPRM sought to bring more consistency to the SUA process and ensure
greater integrity in the data used to calculate them. The Department
has made changes in the final rule to allow State agencies more
flexibility in developing their SUA methodologies to ensure that they
meet households' needs in a more consistent manner. These changes also
address commenter concerns regarding the SUA NPRM's impact on SNAP
benefit levels. The Department will provide targeted technical
assistance to State agencies highlighting the flexibilities provided in
this final rule and considerations for minimizing potential negative
impacts on households, including the Department's waiver authority.
In addition to concerns regarding SNAP benefit impacts, many
commenters expressed concerns that standardizing HCSUA methodologies
would remove important, existing flexibility for State agencies to
address their residents' unique needs. An advocacy group argued that
the existing regulations provide State agencies the
[[Page 91203]]
flexibility to accurately address the needs of their residents as
energy prices vary by location and reflect differing climates. The
commenter added that the new process would remove State specificity in
relation to the State's unique circumstances and decrease the overall
precision of the HCSUAs. Similarly, a policy advocacy organization
argued that States are best positioned to develop and administer their
own methodologies and determine appropriate SUA amounts based on their
region and climate. A non-profit organization criticized the
Department's approach in trying to find data sets that fit all States,
and instead suggested allowing individual States to use data sets that
would best fit their needs.
In addition to State flexibility concerns, multiple commenters,
including two advocacy groups, three legal services organizations, a
religious organization, two policy advocacy groups, a trade
association, two State government agencies, and local government raised
concerns about the data sources the Department proposed using as part
of its methodology. Specifically, the commenters questioned: (1) the
multi-year lags in the availability of RECS data; (2) the effects of
possible recall bias on ACS-based cost estimates; (3) the rationale for
using RECS data which, at the time of the proposed rule, used regional
averages for some States when there was not enough information to
develop a State-level estimate; \10\ and (4) why the Department did not
consider using utility cost data sourced from State public service
commissions. Additionally, commenters requested that the Department
codify the proposed methodology in the rule and regulations, rather
than providing FNS with the flexibility to change it in the future.
---------------------------------------------------------------------------
\10\ The Department notes that RECS data is available for all
States now.
---------------------------------------------------------------------------
Commenters also expressed concern that State agencies with more
accurate data than the sources used in the Department's proposed
methodology would not have the opportunity to appeal or submit their
methodologies. Multiple commenters wrote that individual State agencies
will be able to develop much more accurate utility usage figures from
utility provider data in comparison to the proposed standardization
methodology. A State government agency commented that the Department
should allow State agencies to resubmit their HCSUA base methodology
with justification and data to support it. A legal services
organization and an advocacy group that opposed using RECS suggested
that the Department develop a process for State agencies and the public
to appeal or present alternative data in calculating HCSUA values.
Similarly, an advocacy group and a State agency criticized the
omittance in the proposed rule of any opportunity to provide more
accurate State data in lieu of the data sources used by the Department.
Finally, a non-profit organization suggested that the Department
provide technical assistance to State agencies to determine whether
their current HCSUA approach best reflects the needs of their
individual State, or if the proposed Department methodology would be a
better fit.
Lastly, the Department solicited comments specifically related to
the standardization exception made for territories for which ACS and
RECS do not collect data. The Department received one comment from an
advocacy group that supported this treatment of Guam and the Virgin
Islands. Another commenter stated that Puerto Rico is similar to Guam
and the Virgin Islands and should therefore also be allowed to use its
own SUA methodologies. The Department notes that currently, Puerto Rico
does not operate SNAP, so SUA policy does not impact this territory;
however, the Department agrees that it would treat all territories
subject to SUA policy similarly.
After careful consideration of the comments related to the
importance of State flexibility and concerns about the limitations of
the Department's proposed standardization methodology, the Department
is not finalizing the proposed HCSUA standardization as proposed. The
Department agrees that State agencies need flexibility to reflect their
households' unique utility needs and that, in some cases, State utility
data provides more specific, accurate information to inform HCSUA
methodologies. Rather than finalizing the proposed HCSUA
standardization, the Department will continue to allow State agencies
to set their own HCSUA methodology, subject to FNS approval.
Additionally, the Department understands commenters' concerns
regarding the rationale for setting HCSUAs at the 80th percentile and
the need for State flexibility in setting HCSUAs. As such, the
Department will not require State agencies to set HCSUAs at a specific
percentile of low-income households' utility costs in the State.
While the Department will no longer set HCSUA values based on a
standardized methodology or specific percentile across all States, the
Department maintains the purpose of the SUA NPRM is to improve
consistency and data integrity in State SUA calculations, albeit
through a different method. The Department maintains that there should
be clearer guidelines and requirements for State agencies to follow
when developing their HCSUAs to ensure these standards accurately
reflect low-income households' utility costs. Therefore, in lieu of the
proposed HCSUA methodology standardization, the Department is revising
7 CFR 273.9(d)(6)(iii) to allow States to continue to set their own
HCSUAs, while standardizing the data and methodology criteria that FNS
will use to approve SUAs. This standardization method includes two
requirements.
First, State agencies must submit for FNS approval their HCSUA
methodology at least every five years. Methodology submissions must
incorporate any revisions necessary to demonstrate that the baseline
expenditure data and underlying methodology reflect recent trends and
changes. The methodology update must include changes to the baseline
expenditure data and an explanation of the State agency's methodology
for deriving HCSUAs from such data.
The Department notes that this is in addition to the existing
requirement in regulations that State agencies must review their SUAs
annually and adjust to reflect changes in costs, such as by using
sources like CPI. This annual update to reflect changes in costs refers
to interim years between the State agency's full methodology update,
when new utility data may not be available yet. The Department is also
maintaining the existing regulatory requirement that State agencies
must submit their methodologies for FNS approval when the State agency
develops or changes its methodology.
This five-year period strikes an appropriate balance between
capturing changes to general trends in energy markets and utility
prices while minimizing the burden on State agencies or utility
providers. The Department considered requiring State agencies to revise
and submit their methodologies more often than every five years but
deemed the existing annual update requirement sufficient to capture
changes in interim years; however, State agencies may update their
HCSUA methodology more frequently if they wish.
Similarly, the Department considered a longer period between
methodology revisions. A longer period raised concerns about how well
State agencies could capture shifts in utility costs and account for
trends like changing climate
[[Page 91204]]
conditions' impact on energy sources. State agencies unable to source
data directly from utility providers are likely to rely on survey data,
which can lag behind current conditions by several years. As such,
allowing State agencies to update their methodologies every seven to
eight years could result in baseline methodologies reflecting
conditions that are a decade or more out-of-date. This five-year period
requirement ensures that State agencies electing to use survey sources
will use more recent ones.
Second, State agencies' methodologies must:
Reflect the entire State or geographic area the SUA
covers;
Use data sourced from utility providers or similarly
reliable source;
Reflect expenses incurred by low-income households,
Distinguish if the utility is for heating or cooling, if
applicable; and
Reflect residential utility expenses.
The Department chose these criteria to ensure HCSUAs accurately
represent the utility costs of low-income households, including
households with higher than average utility costs, in the designated
area while providing State agencies additional flexibility in creating
their standards. These criteria align with the goals of the data and
methodology the Department proposed to use in the SUA NPRM. The
Department notes that, for the purposes of these criteria, ``utility
providers'' includes any company or organization that supplies or sells
a utility allowed under 7 CFR 273.9(d)(6)(ii)(C).
The standardized criteria outlined above will ensure State agencies
are developing HCSUAs based in appropriate data to support the values;
however, it is important that HCSUAs reflect more than just the average
household's costs. SUAs need to also represent households with higher-
than-average utility costs since most State agencies mandate the use of
SUAs. The final rule is forgoing setting a specific percentile for
HCSUAs to provide State agencies with additional flexibility and to
avoid mandating significantly lower SUAs. While the NPRM proposed
requiring that HCSUAs be set at the 80th percentile, this final rule
modifies this approach. Under this final rule, State agencies may set
HCSUAs at levels higher than the 80th percentile. State agencies have
good reasons to take into account the need to capture utility expenses
for the vast majority of households, which requires including those
that have higher than average utility costs. This final rule allows
states this flexibility. Since most State agencies mandate the use of
SUAs, it is important that their values reflect more than just the
average household's costs and account for households with significant
utility expenses. The Department will provide State agencies with
technical assistance and support to assess appropriate distributions of
utility costs as part of its methodology review.
In developing or revising their HCSUA methodologies, State agencies
may select to use Federal sources to meet these requirements. While the
Department is no longer finalizing the use of ACS data, in conjunction
with RECS and CEX data, to standardize HCSUAs, the Department maintains
that this methodology is acceptable and based on the best currently
available, annually-updated national Federal surveys for determining
utility expenses for low-income households at the State level. For
example, RECS is the only source that validates households' reported
energy expenditures with data from their utility providers. It also
provides end-use information, which allows for estimation of energy
expenses by low-income households with heating and cooling expenses.
The Department also notes that ACS is updated annually and based on a
very large sample, which makes it valuable for producing
representative, recent estimates for every State.
The 2017 SUA Study, as well as a subsequent 2023 study \11\
conducted by the Department, found that combining this data with ACS
data offsets some of the limitations of each data source with the
advantages of the other. While not mandating their use, the Department
encourages State agencies without more recent and accurate State-
specific data to review and consider using Federal survey data, such as
ACS and RECS, to develop their HCSUAs. These sources would be
considered ``similarly reliable'' to utility provider data. The
Department will publish guidance and provide State agencies with
technical assistance in developing their HCSUA methodologies as needed.
As part of this technical assistance, FNS will provide factors for
State agencies to consider when identifying data sources and
establishing methodologies. FNS will also provide examples of approved
State agency methodologies for reference. FNS will work with State
agencies on a state-by-state basis to address their unique
circumstances and review flexibilities that may minimize potential
negative impacts on households.
---------------------------------------------------------------------------
\11\ Holleyman, Chris, Pratima Damani, and Erick Torres.
Updating Standardized State Heating and Cooling Utility Allowance
Values. Prepared by SP Group, LLC for the U.S. Department of
Agriculture, Food and Nutrition Service, March 2023.
---------------------------------------------------------------------------
While these criteria allow State agencies more flexibility than the
proposed standardization, the Department understands that some
commenters were wary of any changes to the current process. A State
government agency asked for the Department to simply maintain the
current system. A legal services organization wrote that the proposed
rule provides insufficient reasons for departure from prior policy in
removing States' ability to set their own SUAs. Multiple members of the
U.S. Congress, a State government agency, and a professional
association commented that the Department did not provide any evidence
as to why the proposed rule's standardization approach is preferable to
current State agency methodologies. Similarly, an advocacy group stated
that by nature of the SUA approval process and methodologies not being
public, the Department did not provide any insight into the SUA process
and what specific issues the Department has with State agencies'
methodologies as a rationale for the proposed rule. A legal services
organization asked why the Department has not altered or rejected State
agency SUAs, when it has the option to review them, if current
methodologies used by State agencies are objectionable.
The Department recognizes the impact of HCSUAs in determining
eligibility and benefit amounts and has provided additional information
to reiterate the purpose and rationale of the SUA NPRM below. Rather
than only adjusting certain State HCSUAs, the Department is making
changes through regulations because the Department's concerns with
HCSUAs are not specific to any one State agency, and the changes would
affect consistency and integrity throughout the program nationwide.
In response to comments asking for additional rationale and clarity
on issues with the current SUA methodologies, the Department reexamined
State agencies' HCSUA base methodologies. In line with the 2017 SUA
Study's findings, discussed above, the Department found several State
agencies adjusting a base number annually using an inflation measure
such as the CPI Fuels and Utilities index but could not locate the
underlying source or methodology behind their base number. Other State
agencies submitted methodologies based on old data (ranging from 10-47
years old), did not consider low-income households' utility costs, and/
or did not consider end-use for the utility. Only a few State agencies'
methodologies used more
[[Page 91205]]
recent data sourced from utility providers, but these often did not
account for low-income households' utility costs.
Prior to this rulemaking, the Department has provided State
agencies limited information on specific parameters or requirements for
calculating data-driven SUA methodologies. As a result, the Department
has approved changes to SUA methodologies and annual updates to SUA
values based on a variety of methodologies and data sources.
Since some State agencies continue to adjust historic base numbers
without an underlying, clear methodology, the Department has growing
concerns that some State agencies' data is outdated and may not reflect
low-income households' utility costs today. Since the mid-1970s, when
the Department first introduced SUAs, household utility usage and
composition has changed significantly. For example, the U.S. Energy
Information Administration found that energy use per household has
declined steadily between 1980-2015, due to improvements in building
insulation and materials and improved efficiencies of heating and
cooling equipment and other appliances.\12\ While there have been
improvements to building materials across all homes in the past few
decades, households that struggle to pay their energy costs are ``more
likely to report their homes are drafty or poorly or not insulated [. .
.] than households that did not experience energy insecurity.'' \13\
These same energy insecure households, some of which may also receive
SNAP benefits given their low-incomes, were billed more for energy than
other households in 2020.\14\
---------------------------------------------------------------------------
\12\ U.S. Energy Information Administration, Residential Energy
Consumption Survey for indicated years (1980-2015). Retrieved from
https://www.eia.gov/energyexplained/use-of-energy/homes.php in June
2022.
\13\ U.S. Energy Information Administration, U.S. Energy
Insecure Households were Billed More for Energy than Other
Households, May 23, 2023. Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=56640 in November 2023.
\14\ Ibid.
---------------------------------------------------------------------------
Further, residential energy sources have shifted from primarily
natural gas in 1970 to electricity in 2020.\15\ In this same period,
air conditioning has become ``one of the fastest growing energy uses in
homes.'' \16\ The U.S. Energy Information Administration found that
while in 1980, 57 percent of homes used air conditioning, 87 percent of
homes used air conditioning in 2015.\17\ Factors such as changing
climate conditions may continue to shift energy use, the mix of energy
sources used by households, and the prices of those energy sources over
time. The U.S. Global Change Research Program's Fourth National Climate
Assessment notes that ``by 2040, nationwide, residential, and
commercial electricity expenditures are projected to increase by six
percent to 18 percent under a higher [temperature increase] scenario
(RCP8.5), four percent to 15 percent under a lower scenario (RCP4.5),
and four percent to 12 percent under an even lower scenario (RCP2.6).''
\18\
---------------------------------------------------------------------------
\15\ U.S. Energy Information Administration, Monthly Energy
Review, Table 2.2, April 2022, preliminary data for 2021. Retrieved
from https://www.eia.gov/energyexplained/use-of-energy/homes.php in
June 2022.
\16\ U.S. Energy Information Administration, 2015 Residential
Energy Consumption Survey in section, ``Electricity Use in Homes.''
Retrieved from https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php in September 2022.
\17\ Ibid.
\18\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
---------------------------------------------------------------------------
These factors and changes confirm that State agencies must review
and revise their SUA methodologies as needed to accurately reflect low-
income households' utility costs and reflect current trends. Beyond
outdated source values, when HCSUA methodologies do not incorporate
changes in energy sources, the methodology can under (or over) count
the share of different utility expenses in a household's budget. The
Department recognizes that providing State agencies broad discretion
and allowing HCSUA updates based on outdated methodologies may have
embedded inconsistency into the process. Further, the Department
understands that while some State agencies have an HCSUA methodology
that is outdated, unknown, or unclear, other State agencies have State-
specific data sourced from utility providers that is more recent or
accurate than the proposed data sources used by FNS.
In acknowledgement of these issues, the Department is finalizing
revisions to the HCSUA methodology process, albeit with changes and
more State agency flexibility, to recalibrate the process. While the
Department is not finalizing the proposed HCSUA standardization
provision, the standardized criteria outlined above will ensure more
consistency between HCSUA methodologies across the nation.
Since the Department is no longer finalizing HCSUA standardization,
this final rule treats territories the same as all other States and
does not contain any special rules related to territories.
While the proposed rule included standardized HCSUA language at 7
CFR 273.9(d)(6)(iii)(B)(1), the final rule amends the proposed language
to remove HCSUA standardization and add methodology requirements and
redesignates this section at 7 CFR 273.9(d)(6)(iii)(C) for clarity.
Changes to Current SUA Options
The SUA NPRM proposed to eliminate State agency options to vary
SUAs by season, household size, or geographic area as part of the
Department's efforts to bring greater consistency across States and in
recognition of the low number of State agencies taking these options.
Currently, six State agencies vary their SUAs by household size, only
Alaska and New York vary by geographical area, and no State agencies
adjust their SUAs by season.
Approximately 75 commenters, including individuals, a legal
services association, a policy advocacy organization, community
organization, and State agencies, expressed opposition to eliminating
these options. Commenters shared concerns that removing these
flexibilities may cause harm to SNAP recipients by treating all States
and localities in the same manner when energy needs, heat sources,
climates, and housing types are varied. An individual commenter stated
that citizens burdened with paying very high heating and cooling bills
in certain regions are more likely to suffer because of a SUA
calculation that does not account for regional differences in poverty
and climate. Further, a legal services commenter stated that the
flexibility allowing State agencies to calculate utility costs and
rates is essential for States where heating costs, sources, and housing
types vary. A federally-elected official expressed concern that the
proposed rule would negatively impact the residents of the official's
State, who rely on SNAP benefits calculated using factors specific to
their community and costs associated with the disparate regions of
their State. Commenters also expressed that removing these options
would unduly restrict State agency flexibilities.
Two form letter campaigns noted that the proposal would force a
``one-size-fits-all'' policy for both shelter and utility costs across
the country. Several commenters, including multiple advocacy groups, a
federally-elected official, and an attorney highlighted specific
impacts the proposed rule would have on certain geographic areas. An
advocacy group and an attorney said that the proposed rule would harm
SNAP participants living in northern
[[Page 91206]]
and colder states, with specific mentions of Vermont and California. An
individual commenter stated that the proposed rule would harm SNAP
participants living in southern cities, such as Memphis, Tennessee,
where low-income households spend an average of 13.2 percent of their
income on energy. The commenter also cited the large energy burdens of
other southern cities, including Birmingham, Alabama; Atlanta, Georgia;
and New Orleans, Louisiana.
An advocacy group expressed disagreement with the concept in the
proposed rule that eliminating State agency options to vary SUAs by
season, household size, or geographic areas would bring greater benefit
equity across States. Similarly, a policy advocacy organization stated
that the Department failed to explain how eliminating an option
available to all State agencies (even if only adopted by a few States)
improves benefit equity and ignores the potential harm to low-income
households in rural areas that need the benefits. Further, an advocacy
group stated that incorrectly treating all States' and localities'
needs the same causes inequity. After considering the terminology and
these comments, the Department maintains the purpose of the SUA NPRM,
to improve the integrity and consistency of SUAs, but has decided to
use the term ``consistency'' rather than ``benefit equity'' throughout
the final rule to be more precise.
As noted above, one of the two State agencies that currently varies
its SUAs by geographical areas is Alaska. Program rules grant Alaska
and Hawaii additional considerations \19\ to account for cost-of-living
differences and provide further program flexibilities to Alaska because
of its extremely remote geography. The SUA NPRM did not include any
exceptions for Alaska and Hawaii. The Department solicited comments on
whether additional flexibilities for Alaska and Hawaii should be
included in the final rule.
---------------------------------------------------------------------------
\19\ For example, there are specific gross and net income
eligibility limits for Alaska and Hawaii. See 7 CFR 273.9(a)(1) and
(2).
---------------------------------------------------------------------------
The Department received comments in support of allowing exceptions
for Alaska and Hawaii. Alaska State government officials commented
explaining how their current SUA calculations use data from utility
companies to create region-specific values and that their methodology
allows for more accurate SUAs. An advocacy group also expressed
surprise that the SUA NPRM did not include special considerations for
Alaska and Hawaii. This advocacy group asked if the 2017 SUA Study
considered using ACS five-year data to develop SUAs at the sub-State
regional level. A policy advocacy organization also stated that it is
possible that States like Alaska, Minnesota, Nebraska, South Dakota,
Washington, and other States with sizable Tribal populations may want
the option to create a separate SUA for households that live on Tribal
lands. The commenter suggested Tribes could collect data on the utility
costs of their Tribal members living in remote areas, and such an
approach might allow State agencies to more adequately reflect the
utility costs of Tribal members who participate in SNAP in those areas.
The Department agrees with commenters that some States and
localities have unique needs related to energy use, climates,
remoteness, and heat sources and may have data to support an HCSUA
based on these factors. As described above, the final rule permits
State agencies to develop their own SUA methodologies subject to FNS
approval, while incorporating data and methodology requirements. To
align with that action, the Department will also maintain the option
for State agencies to vary SUAs by season, household size, or
geographic area, which will address concerns for Alaska and Hawaii in
particular. The Department will amend the proposed language at 7 CFR
273.9(d)(6)(iii)(A) to maintain the option for States to vary SUAs
based on these factors.
The SUA NPRM proposed changes to additional existing SUA options,
one of which was to eliminate the option for State agencies to include
the excess heating and cooling costs of public housing residents in the
LUA if they wish to offer the lower standard to such households. The
SUA NPRM also withdrew the option for State agencies to include the
cooling expense in the electricity utility allowance for States where
cooling expenses are minimal. Due to the changes proposed for
calculating HCSUAs and LUAs, the Department proposed to discontinue
these options to ensure all households that incurred heating and
cooling costs would be eligible to receive the HCSUA, and not a lower
LUA.
A State government supported the clarification that public housing
residents who incur heating or cooling costs in States that mandate
SUAs would receive the HCSUA. A legal services organization argued that
the Department provided insufficient rationale for this change, and an
individual commenter alleged that the proposal would harm public
housing residents and would enhance institutional discrimination
against people with disabilities, low-income seniors, African
Americans, Hispanics, Asian-Pacific Islanders, and Native Americans.
However, these households would actually receive a higher standard by
eliminating this option because HCSUAs encompass full heating and
cooling costs, and the Department's position is that all households
that incur heating or cooling costs in a State that mandates use of
SUAs should be entitled to the HCSUA to ensure consistency across
households and States. Therefore, the Department will finalize as
proposed, aside from a small technical correction to replace the word
``to'' with ``for'' in the sentence ``[. . .] it must use a standard
utility allowance that includes heating and cooling costs to residents
of public housing units [. . .].'' While the proposed rule included
this provision at 7 CFR 273.9(d)(6)(iii)(E)(2), the Department will
redesignate this section as 7 CFR 273.9(d)(6)(iii)(G)(2).
LUAs and Individual Standards
The Department proposed in the SUA NPRM that State agencies would
continue to use their own methodologies to determine LUA and individual
standard amounts, if amounts do not exceed maximum limits established
by the Department. State agencies would submit their annual LUA and
individual standard values to FNS for approval. The proposal would cap
LUAs at 70 percent of a State's HCSUA and individual standards at 35
percent of a State's HCSUA. When analyzing the SUA values developed as
part of the 2017 SUA Study, the researchers found that most States'
individual standards were near 35 percent of their HCSUA. Similarly,
most States' LUAs did not exceed 70 percent of their HCSUA. FNS would
issue the capped amounts via memo to the State agencies and provide the
values publicly on the FNS website.
In FY 2022, only 9.0 percent of households used a LUA or individual
standard when determining SNAP eligibility and benefit levels.\20\
Although they impact a small portion of SNAP participants, the
Department proposed to cap these standards at a percentage of the HCSUA
to extend standardization efforts and mitigate future inconsistencies.
---------------------------------------------------------------------------
\20\ U.S. Department of Agriculture, Food and Nutrition Service,
Office of Policy Support, Characteristics of Supplemental Nutrition
Assistance Program Households: Fiscal Year 2022, by Mia Monkovic.
Project Officer, Aja Weston. Alexandria, VA, 2024.
---------------------------------------------------------------------------
Five commenters opposed the proposed cap of LUAs and individual
standards. An advocacy group
[[Page 91207]]
expressed concern that the cap on LUAs would harm low-income families
and disproportionately impact the elderly and persons with
disabilities. One advocacy group and a public policy advocacy
organization stated that the Department's proposed caps were arbitrary
and that the SUA NPRM did not adequately explain the need to cap LUAs.
The same public policy advocacy organization and a legal service
organization questioned why the Department would standardize the HCSUA
methodology but allow State agencies to develop their own LUAs and
individual standards. Further, a State government official commented
that the 70 percent maximum is too low for their State's LUA and that
the cap does not relieve the administrative burden on State agencies.
One commenter, a State agency, proposed an alternative to the
proposed cap on LUAs and individual standards. The commenter expressed
support for the proposed methodology outlined in the rule since it
would result in a higher HCSUA and increase SNAP benefits for 35
percent of recipients in their State. However, the commenter
recommended that the Department either change the percentage cap
amount, calculate the cap on LUAs based on the total utility costs from
the ACS and RECS, or allow State agencies to use their own methodology
with Department approval.
Given the revisions to the proposed HCSUA standardization
provision, the Department also reevaluated the proposed caps to LUAs
and individual standards and whether they align with the purpose of the
SUA NPRM to increase SUA consistency and integrity through data-based
methodologies. The Department agrees with commenters that State
agencies should retain the flexibility to base LUA and individual
standard values in data reflective of the utility costs these standards
represent rather than uniformly cap them as a percentage of the HCSUA.
Retaining this flexibility also maintains consideration of the unique
aspects of each State, such as utility composition and trends.
As such, the Department will not finalize the proposed cap for LUAs
and individual standards. Instead, State agencies will continue to set
their own LUAs and individual standards and submit these figures to the
Department annually. Consistent with the revised requirements for HCSUA
methodologies, State agencies' must submit for FNS approval their LUA
and individual standard methodologies at least every five years.
Methodology submissions must incorporate any revisions necessary to
demonstrate that the baseline expenditure data and underlying
methodology reflect recent trends and changes. Additionally, State
agencies' methodologies must:
Reflect the entire State or geographic area the SUA
covers;
Use data sourced from utility providers or similarly
reliable source;
Reflect expenses incurred by low-income households,
Distinguish if the utility is for heating or cooling, if
applicable; and
Reflect residential utility expenses.
Like with HCSUA methodologies, the Department chose these criteria
to ensure LUAs and individual standards accurately represent the
utility costs of low-income households, including households with
higher than average utility costs, in the designated area while
providing State agencies additional flexibility in creating their
standards. The Department will publish guidance and provide State
agencies with technical assistance in developing their LUA and
individual standard methodologies as needed. As part of this technical
assistance, FNS will provide factors for State agencies to consider
when identifying data sources and establishing methodologies. FNS will
also provide examples of approved methodologies for reference.
The Department amended, combined, and redesignated this provision
from the proposed 7 CFR 273.9(d)(6)(iii)(B)(2) and (3) and finalizes at
7 CFR 273.9(d)(6)(iii)(B) and (C).
Including Basic Internet as an Allowable Shelter Cost and Updating SUAs
To Include Basic Internet Costs
In recognition of internet access as a necessity for school, work,
and job search, the Department proposed to amend 7 CFR
273.9(d)(6)(ii)(C) to add the cost of basic internet service. The
proposed changes would replace the telephone standard (i.e., the
individual standard for telephone costs) with a broader
telecommunications standard that includes costs for one telephone,
basic internet service, or both. The proposed rule would not allow an
individual standard for only basic internet service costs, as internet
costs could only be part of the new telecommunications standard. The
Department proposed to calculate the maximum telecommunications
standard amount annually by reviewing nationally available low-cost
plans for one telephone line and basic internet access for essential
services. Similar to LUAs and individual standards, State agencies
would still calculate their own telecommunications figures annually.
The Department would review and approve the methodology and final
figures, subject to the national cap. The Department estimated that the
telecommunications standard cap would be approximately $55 in FY 2020
based on a search of available resources for low-cost carriers.
As proposed, the new telecommunications standard would be available
to households with utility costs for one telephone, basic internet
service, or both. Households with basic internet and/or telephone costs
would either receive the telecommunications standard or use their
actual costs, subject to the national cap. For example, households with
more than basic internet packages, such as those combined with cable
television service, would not be able to count the cost of their entire
package. These households would instead either receive the
telecommunications standard or have their actual costs of phone and/or
basic internet counted, up to the amount of the standard, depending on
the option the State agency selects. Additionally, State agencies would
be allowed to include the telecommunications costs as part of their LUA
so long as the telecommunications share of the LUA would not exceed the
amount set for the telecommunications standard.
Approximately 15 commenters supported the proposed update to the
telephone standard. Multiple commenters, including advocacy groups, a
policy advocacy organization, multiple State government agencies, a
religious organization, and a trade association, agreed with the
Department's argument that internet is an essential service. Additional
commenters, including an advocacy group, a legal services organization,
a policy advocacy organization, and State government agencies generally
supported updating the telephone standard to include internet services.
Two advocacy groups and a legal services organization also
commented that the estimated $55 telecommunications standard cap is too
low. One recommended creating a separate internet standard from the
telephone standard rather than a combined telecommunications standard,
and others argued the cap should be set at the 80th or 95th percentile.
A food bank and a legal services organization argued that the
explanation for how the Department developed the $55 cap was
insufficient. A State agency recommended that State agencies should
have the option to either accept the maximum limit established for the
telecommunications standard or to use their own methodology, as
approved by the Department.
[[Page 91208]]
An advocacy group shared alternatives to the Department's proposed
telecommunications standard methodology, including comments on which
expenses should be allowable as a deduction. The commenter argued that
FNS should allow modem rentals, costs of hardware, and subscription
costs as allowable expenses and that State agencies should be able to
choose whether to offer a standalone internet individual standard, a
combined telecommunications standard, or both, depending on their
States' needs.
The Department appreciates commenters who supported and confirmed
the importance of including basic internet costs as an allowable
shelter cost. The Department agrees that this change is critical, as
the internet plays a pivotal role in Americans' daily lives, regardless
of income level, and is a necessary expense in a household's budget.
High-speed internet is a necessary utility for school, work, and job
searches. As such, the final rule allows the costs for basic internet
service as an allowable shelter cost.
The Department also appreciates the suggestions for alternative
ways of allowing basic internet costs. The Department agrees with
commenters that allowing State agencies to set a basic internet
individual standard, instead of a combined telecommunications standard,
is better aligned with how the Department treats other individual
standards. For instance, under current rules, State agencies may offer
all other utilities (including telephone) as individual standards but
may only combine them when using HCSUAs and LUAs. Therefore, the final
rule allows State agencies to develop a basic internet individual
standard, independent from the telephone standard, rather than as part
of a telecommunications standard. Under the final rule, State agencies
have the option to develop their own methodology for the basic internet
individual standard, similar to other individual standards, rather than
abiding by a national maximum amount proposed by the Department in the
SUA NPRM. State agencies that choose this option will calculate their
basic internet individual standards each fiscal year and submit them to
FNS for approval, similar to other LUAs and individual standards.
State agencies may also include basic internet costs in their LUAs
and HCSUAs. Rather than FNS incorporating a capped telecommunications
standard into a standardized HCSUA as proposed, the final rule allows
State agencies to incorporate basic internet costs in their HCSUA
methodologies in line with how other utility expenses are reflected in
the HCSUA.
Consistent with the revised requirements for other SUA
methodologies, including individual standards like telephone, State
agencies must submit for FNS approval their basic internet individual
standard methodology at least every five years. Methodology submissions
must incorporate any revisions necessary to demonstrate that the
baseline expenditure data and underlying methodology reflect recent
trends and changes. Additionally, State agencies' methodologies must:
Reflect the entire State or geographic area the SUA
covers;
Use data sourced from utility providers or similarly
reliable source;
Reflect expenses incurred by low-income households,
Distinguish if the utility is for heating or cooling, if
applicable; and
Reflect residential utility expenses.
Like with HCSUA methodologies, the Department chose these criteria
to ensure basic internet individual standards accurately represent the
utility costs of low-income households, including households with
higher than average utility costs, in the designated area while
providing State agencies additional flexibility in creating their
standards. the Department will publish guidance and provide State
agencies with technical assistance in developing their basic internet
methodology as needed. As part of this technical assistance, FNS will
provide factors for State agencies to consider when identifying data
sources and establishing methodologies. FNS will also provide examples
of approvable methodologies for reference.
In determining which costs to include in the basic internet
individual standard, the Department agrees with commenters on the need
to create consistency across similar utilities, such as telephone.
Program rules at 7 CFR 273.9(d)(6)(ii)(C) include the following
allowable costs for telephone: all service fees required to provide
service for one telephone, including, but not limited to, basic service
fees, wire maintenance fees, subscriber line charges, relay center
surcharges, 911 fees, and taxes; and fees charged by the utility
provider for initial installation of the utility. One-time deposits
cannot be included.
Therefore, the Department is finalizing the following costs as part
of the basic internet individual standard: all service fees required to
provide households with basic internet service, including but not
limited to, monthly subscriber fees for a basic internet connection
(i.e. the base rate paid by the household each month in order to
receive service, which may include high-speed internet); taxes and fees
charged to the household by the provider that recur on monthly bills;
and the cost of one modem rental.
The Department believes the abovementioned allowable costs are
consistent with the costs allowed for the telephone individual
standard. The Department also notes that if a household does not pay
any of its internet costs, including because those costs are paid in
full by a program similar to, for example, the Lifeline program or the
former Affordable Connectivity Program, then the household would not
qualify for the basic internet individual standard.
These changes, including the change to the basic internet
individual standard calculation and allowable costs are finalized by
amending the proposed 7 CFR 273.9(d)(6)(ii)(C); amending the proposed 7
CFR 273.9(d)(6)(iii)(A)(3); amending and redesignating the proposed 7
CFR 273.9(d)(6)(iii)(B)(3) as 7 CFR 273.9(d)(6)(iii)(B); and adding
methodology requirements at 7 CFR 273.9(d)(6)(iii)(C).
Compliance Dates for Implementing SUA NPRM Changes
The Department expects State agencies to need time to review their
current SUA methodologies and make updates to align with the new
requirements. Similarly, the Department will need time to review State
agencies' methodologies and work with each State agency to ensure they
meet the new requirements. As such, the compliance date for SUA changes
is October 1, 2025. The Department encourages State agencies to
implement changes at the beginning of the Federal fiscal year to
minimize disruption to SNAP households since State agencies typically
make changes to SUAs and Cost of Living Adjustments at this time. The
Department will provide State agencies with technical assistance to
revise and receive approval for SUA methodologies in advance of the
compliance date, including information on State flexibilities to ensure
that SUAs meet households' needs while also aligning with the data
available on low-income household utility costs in a more consistent
manner.
Background and Summary of Comments on the April 20, 2016, (LIHEAP) NPRM
In addition to the changes to HCSUA methodologies and SUA options,
the final rule will also update 7 CFR 273.9(d)(6)(iii)(C). These
changes
[[Page 91209]]
finalize revisions for how Low-Income Home Energy Assistance Program
(LIHEAP) payments are considered to confer eligibility for the HCSUA.
This update is consistent with requirements included in the
Agricultural Act of 2014 (Pub. L. 113-79).
Section 4006 of the Agricultural Act of 2014 amended requirements
for how payments issued under the Low-Income Home Energy Assistance Act
(LIHEAA), as amended, confer HCSUAs to households. These changes
require that State agencies confer the HCSUA to households receiving a
payment, or on behalf of which payments were made, under LIHEAA or
other similar energy assistance program, only when the payment is
greater than $20 annually and received in either the current month or
in the immediately preceding 12 months. The changes were effective with
the enactment of the Agricultural Act of 2014, and State agencies were
required to begin implementation on March 10, 2014. The Department
published an implementation memo,\21\ ``Supplemental Nutrition
Assistance Program--Section 4006 Agricultural Act of 2014--Implementing
Memorandum,'' on March 5, 2014, instructing State agencies to implement
the change.
---------------------------------------------------------------------------
\21\ U.S. Department of Agriculture, Food and Nutrition Service,
Supplemental Nutrition Assistance Program--Section 4006 Agricultural
Act of 2014--Implementing Memorandum, 5 March 2014. Retrieved from:
https://www.fns.usda.gov/snap/eligibility/deduction/liheap-implementation-memo in September 2022.
---------------------------------------------------------------------------
To make the corresponding update to SNAP regulations, the LIHEAP
NPRM titled ``Supplemental Nutrition Assistance Program: Standard
Utility Allowances Based on the Receipt of Energy Assistance Payments
Under the Agricultural Act of 2014,'' was published on April 20, 2016,
and proposed updates to 7 CFR 273.9(d)(6)(iii)(C). The Department
received a total of nine comments on the LIHEAP NPRM from five advocate
groups, two legal services organizations, and two nonprofit
organizations. The comments were generally favorable of the proposed
provisions, while also providing helpful feedback for consideration in
developing the final provisions in this rule. Six commenters in
particular were supportive of the rule overall. Several of these
commenters noted the real and helpful impact of conferring the HCSUA to
eligible LIHEAP receiving households. A more detailed discussion of the
comments regarding the NPRM and the changes made in the final rule
follows below.
Agricultural Act of 2014 Changes
For the purposes of the HCSUA, receipt of a LIHEAP payment serves
as a proxy for State agencies to determine if a household incurs
heating or cooling utility costs. Before the enactment of the
Agricultural Act of 2014, section 5(e)(6)(C)(iv) of the Act provided
that all households receiving a LIHEAP payment or all households on
behalf of which a LIHEAP payment was made automatically qualified for
the HCSUA, regardless of the amount of the LIHEAP payment. Some State
agencies used this policy to maximize use of the HCSUA by issuing a
nominal LIHEAP payment (generally around $1) to all SNAP households.
Receipt of the nominal payment allowed the household to receive the
HCSUA, even when the household would not have otherwise qualified for
the HCSUA because they did not pay for heating or cooling.
The Agricultural Act of 2014 amended section 5(e)(6)(C)(iv)(I) of
the Act to adjust how the HCSUA is applied to households receiving
LIHEAP payments. The amendment altered this process by requiring State
agencies to make the HCSUA available to households that received a
payment (or households on behalf of which a payment was made), in the
current month or in the immediately preceding 12 months, that was
greater than $20 annually under the LIHEAA, or other similar energy
assistance program. These requirements were effective March 10, 2014.
As a result, the current regulations at 7 CFR 273.9(d)(6)(iii)(C) must
be updated to reflect the Agricultural Act of 2014 changes.
As in the LIHEAP NPRM, in this discussion, the phrase ``qualifying
LIHEAP or other payment'' refers to those LIHEAP or other similar
energy assistance program payments that are in excess of $20 annually
and have been received by or made on behalf of the household in the
current or immediately preceding 12 months.
Other Similar Energy Assistance Programs
In the LIHEAP NPRM, the Department proposed that the statutory term
``other similar energy assistance program'' be defined as a separate
home energy assistance program designed to provide heating or cooling
assistance through a payment directly to or on behalf of low-income
households. Three commenters supported the proposed standard for what
constitutes an ``other similar energy assistance program.'' The
proposed definition is adopted as final in this rule.
One of those three commenters suggested adding this definition in
the general definitions section at 7 CFR 271.2. Although the Department
appreciates the suggestion, 7 CFR 271.2 contains more general
definitions relevant to the program overall, instead of issue-specific
areas such as this one. For example, Low Income Home Energy Assistance
Act of 1981 (LIHEAA) is referenced at the standard utility allowance
section of the regulations at 7 CFR 273.9 but not 7 CFR 271.2. As a
result, the Department did not add the definition to the general
definitions section at 7 CFR 271.2 in this final rule.
The above commenter also asked that the Department provide examples
of other similar energy assistance programs and include payments from
housing authorities to individually billed tenants, State fuel funds,
and State analogues to LIHEAP. The Department believes other similar
energy assistance programs could include (but are not limited to)
certain State-only funded programs designed to assist households with
heating or cooling expenses (separate from a household's rent or
mortgage), home energy bills, weatherization (see below for additional
discussion on weatherization payments) or energy-related minor home
repairs. The Department did not add examples of specific energy
assistance programs to the regulatory language because those programs
may change in the future and may no longer meet the definition of an
``other similar energy assistance program.'' The Department notes that,
in general, State agencies should evaluate a potentially eligible
program on a case-by-case basis. To ensure consistency and fairness
across the caseload, State agencies must establish clear and reasonable
standards for evaluating whether a program constitutes a similar energy
assistance program.
Finally, this commenter agreed with the Department's proposal to
allow people living in public housing, not just private housing, and
billed individually for heating and cooling costs to qualify for the
HCSUA. However, the commenter argued that the utility allowances that
individuals in public housing receive either as a rent reduction or a
cancellation of their cash rental obligation and a partial rebate are
energy assistance similar to LIHEAP. This commenter also suggested that
the entire amount of the allowance is energy assistance, not just the
smaller (or zero) amount that the household receives as a rebate after
the housing authority nets out the household's rental obligation.
Although the Department appreciates this comment, the Department
notes that section 5(e)(6)(C)(ii)(II) of the Act
[[Page 91210]]
prohibits the use of an HCSUA for households that incur a heating or
cooling expense but live in public housing that has central utility
meters and charges households only for excess utility costs. The
prohibition does not apply in States that have mandated the use of
SUAs, per section 5(e)(6)(C)(iii)(III) of the Act. Therefore, the
Department proposed at 7 CFR 273.9(d)(6)(iii)(C)(1)(ii) that households
in public housing units with central utility meters and who are charged
only for excess heating or cooling costs are not entitled to a standard
that includes heating or cooling costs, unless the State agency
mandates the use of SUAs in accordance with the proposed paragraph 7
CFR 273.9(d)(6)(iii)(E). This provision is adopted as proposed but
redesignated at 7 CFR 273.9(d)(6)(iii)(D)(2).
The definition of an ``other similar energy assistance program'' is
designed to provide parameters but also give State agencies flexibility
to determine what constitutes a potentially eligible program within the
confines of this definition. The Department maintains that the
definition provided in the final rule sufficiently addresses the
concerns noted by the commenter.
Current Month
The Agricultural Act of 2014 included a requirement at sec.
5(e)(6)(C)(iv)(I) of the Act that households receive an energy
assistance payment in the ``current month'' or the immediately
preceding 12 months in order to qualify for the HCSUA. The Department
proposed to define ``current month'' to refer strictly to the calendar
month, meaning from the first to the final day of a given month.
One commenter encouraged the Department to use a broader
interpretation of ``current month'' to mean the first full calendar
month of the certification period. Another commenter believed the
proposed definition of ``current month'' is too restrictive and
suggested the Department allow payments made within SNAP's 30-day
processing period to confer eligibility.
The Department appreciates the commenters' concerns; however, the
Agricultural Act of 2014 revised the Act to prohibit State agencies
from anticipating receipt of a LIHEAP or other qualifying payment to
confer a household's eligibility for the HCSUA. The changes allow a
household to be eligible for the HCSUA if it receives the qualifying
payment in the current month or immediately preceding 12 months. In the
LIHEAP NPRM, the Department proposed that the HCSUA may be applied only
if the household is scheduled to receive a payment in the current
calendar month to allow for some flexibility within the timeline set in
the Act. The proposed definition of ``current month'' balances
flexibility with the need to adhere to the timeline in the statutory
text. For these reasons, the Department adopts this provision as
proposed in the final rule.
Moving Households
In the LIHEAP NPRM, the Department indicated that State agencies
using HCSUAs would provide the standard to households who receive a
qualifying LIHEAP or other payment, regardless of any change in the
household's residence or address. One commenter suggested that the
Department incorporate this clarification into final regulatory text.
The Department agrees this change promotes consistency across States
and is making this revision to the regulations at 7 CFR
273.9(d)(6)(iii)(D)(3).
One commenter supported the proposal that if a State agency has an
indication that a household received a qualifying LIHEAP payment in
another State, the State agency should act on this information. The
Department reiterates that if, at the time of certification, the State
agency has an indication that a household received a qualifying LIHEAP
or other payment in another State, the new State agency should pursue
clarification. Procedures regarding acting on changes after
certification are already contained in 7 CFR 273.12 of the regulations,
and the Department did not make any changes to these existing
requirements in the final rule.
Overissuance
Section 4006 of the Agricultural Act of 2014 no longer allows a
State agency to use an HCSUA in determining eligibility and benefit
amount for a household that does not otherwise incur heating or cooling
costs based on the State agency's expectation that the household would
receive a qualifying LIHEAP or other payment in future months. The
Department proposed to only allow the HCSUA to be applied to a
household's case based on anticipated receipt if the payment is
scheduled to be received within the current calendar month. This allows
State agencies the option to consider a qualifying LIHEAP or other
payment received by the household for the purposes of conferring HCSUA
eligibility, so long as the payment is scheduled in the current month.
If the anticipated payment is not received within that month, benefits
received by the household would be considered an overissuance and the
State agency may be required to pursue a claim against the household.
The Department received adverse comments on this provision. One
commenter stated the language regarding claims is confusing and
inappropriate. Another commenter suggested removing claims language for
overissuance from the regulatory text since State agencies are already
responsible for determining overissuances. Another commenter believed
that the overpayments language suggests a lapse or delay in a payment
itself triggers an overpayment and suggested deleting this language and
indicating that State agencies must follow overpayment regulations at 7
CFR 273.18.
The Department agrees that 7 CFR 273.18 already requires State
agencies to collect overissuances and the proposed language is
unnecessary and potentially confusing. Therefore, the Department
revised 7 CFR 273.9(d)(6)(iii)(C)(1)(iii) in the final rule to remove
the reference to claims to avoid such confusion. State agencies will be
expected to pursue claims in these circumstances under existing
regulations at 7 CFR 273.18. State agencies are already aware of the
procedures and requirements regarding the establishment of a claim
against a household for any benefits issued in error under 7 CFR
273.18. Additionally, the Department has redesignated the proposed 7
CFR 273.9(d)(6)(iii)(C)(1)(iii) as 7 CFR 273.9(d)(6)(D)(3).
Proration
The Department proposed to revise language at 7 CFR 273.10(d)(6) to
reflect the requirement in section 5(e)(6)(C)(iv)(IV) of the Act that
assistance under LIHEAA be considered prorated over the heating or
cooling season for which the assistance was provided. One commenter
believed that the rule should reflect that a payment need not actually
be paid during the preceding 12 months, so long as one of those months
was in the heating season for which a LIHEAP payment was made and the
prorated amount of the grant exceeded $20.
The Act requires the receipt of a qualifying LIHEAP or other
program payment in the current month or immediately preceding 12 months
that was greater than $20 annually. State agencies are also expected to
prorate LIHEAP payments over an entire heating or cooling season. As
the commenter suggested, because State agencies must prorate LIHEAP
payments over a season, each month covered by the proration could be
used to confer eligibility for the HCSUA based on the receipt of a
LIHEAP
[[Page 91211]]
payment. For example, if a household receives a $150 LIHEAP payment in
October 2021, intended for the heating season in that State (from
October through February), the State agency would consider the payment
prorated to $30 per month from October 2021 through February 2022. If
the household applies for SNAP in January 2023, the household would be
eligible for the HCSUA based on the receipt of LIHEAP payment in the
immediately preceding 12 months.
Furthermore, the Act does not restrict proration to only one
heating or cooling season as the amount could qualify the household for
the HCSUA for multiple seasons. For example, if an existing SNAP
household received a $200 LIHEAP payment in October 2021, the household
could use the LIHEAP payment to qualify for the HCSUA from October 2021
through February 2022, as well as from October 2022 through February
2023 since the household received the payment within the immediately
preceding 12 months. In summary, the household's receipt of a $200
LIHEAP payment in October 2021 could effectively make the household
eligible for the HCSUA from October 2021 through February 2023.
As such, it is reasonable that a household could be eligible for
the HCSUA in more than one heating or cooling season, based on the
receipt of one LIHEAP payment. In order to clarify this, the final rule
revises the regulatory text at 7 CFR 273.10(d)(6) to specify that a
prorated qualifying LIHEAP may qualify an individual or household for
the HCSUA in more than one heating or cooling season, so long as the
payment was received within the last 12 months or the proration period
covered at least one month in the preceding 12 months.
The Department would also like to note that while the LIHEAP NPRM
preamble correctly stated that the statutory requirement to prorate
over the entire heating or cooling season only applied to assistance
provided under LIHEAA, this was not clearly reflected in the proposed
amendatory language. The final amended 7 CFR 273.10(d)(6) will reflect
this specification.
Quantifiable
As the Act requires LIHEAP or other payments to exceed $20 in order
to confer HCSUA eligibility, these payments must be quantifiable in
order to exceed this established threshold. The Department proposed
that State agencies must be able to quantify, in dollars, the amount of
the payment for purposes of granting the HCSUA.
Two commenters supported the Department's proposed definition of
``quantifiable.'' One commenter said the rule should be amended to make
clear that the provider of the energy assistance may provide the
assistance in the form of an in-kind benefit which may not have a
precise value and the State agency may rely on estimates to determine
if the $20 threshold has been exceeded (for example, if a household
receives firewood or coal).
The Department appreciates the concern that some households may
receive assistance in the form of in-kind items as opposed to receiving
a payment from LIHEAP or similar assistance programs. Organizations may
provide households with home heating oil, firewood, or coal, and other
goods which vary based on geographic area. The Act does not specify
that the payment be cash, and the Department agrees that State agencies
may include in-kind assistance as a qualifying LIHEAP or other payment
for purposes of conferring the HCSUA. The State agency must be
reasonably able to quantify that the amount of this assistance exceeds
the $20 threshold. State agencies must develop workable, reasonable
procedures to determine how in-kind assistance would be quantified,
including how to reasonably estimate the value of those goods, and must
apply those procedures consistently and fairly across the caseload. The
Department revises the regulations at proposed 7 CFR
273.9(d)(6)(iii)(C)(1)(iii) and redesignates this section to 7 CFR
273.9(d)(6)(iii)(D)(3), as described above, to incorporate this change.
Split Households
The Department proposed that if a household that received a
qualifying LIHEAP or other payment subsequently splits into two SNAP
households, State agencies must determine which household is eligible
for the HCSUA. The Department maintained the State agency is in the
best situation to determine which household would receive the HCSUA
based on the qualifying LIHEAP or other payment. The State's chosen
policy would need to be applied in a consistent and equitable way. The
Department proposed to revise 7 CFR 273.9(d)(6)(iii)(C) to incorporate
these standards.
Commenters expressed concern that the regulatory language in the
LIHEAP NPRM provided too much State discretion and could have error-
prone results. For example, one commenter argued that because there are
so many ways for a household to divide, State agencies will find it
difficult to apply the policy consistently, which could lead to quality
control errors. This commenter, in addition to others, suggested that
the fairest and most administratively straightforward way to apply this
policy is to make the HCSUA available to any member who lived in a
household that received a qualifying LIHEAP payment in the prior 12
months.
Due to concerns that the proposed regulatory language could lead to
inconsistent application and be unfair for households, the Department
is revising the regulations at proposed 7 CFR
273.9(d)(6)(iii)(C)(1)(iii) (redesignated at 7 CFR
273.9(d)(6)(iii)(D)(3) in this final rule). The Department is making
this change to require State agencies that elect to use the HCSUA to
grant the HCSUA to a household in which a member: (1) previously
received a qualifying LIHEAP payment as part of different household, or
(2) was previously a member of a different household on which behalf a
LIHEAP payment was made. While these individuals no longer reside in
the same household, they did receive a qualifying payment in the
preceding 12 months, and therefore are eligible for the HCSUA under the
Act. This procedure will allow for consistent treatment of all impacted
SNAP households.
Actions on Changes
The Department explained in the LIHEAP NPRM preamble that if a SNAP
household subsequently receives a qualifying LIHEAP or other payment
after certification, or if one is made on the household's behalf during
the certification period, the State agency must take action according
to the rules of their chosen reporting system under 7 CFR 273.12.
One commenter requested that the Department add this language to
the regulatory text. This commenter explained that it is not clear that
receipt of LIHEAP should be known to the State agency and acted on
during a certification period without further action from the
household. While the Department appreciates this feedback, provisions
regarding reporting and State agency actions on changes, including
unclear information, are addressed in 7 CFR 273.12, and this rulemaking
will not affect those provisions. Specifying the applicability of the 7
CFR 273.12 procedures to enumerated issues may cause confusion. The
provision is finalized as proposed.
Verification
Under Federal rules, households applying for SNAP do not need to
provide verification for utility costs unless questionable, if the
household is claiming expenses in excess of the
[[Page 91212]]
State's HCSUA, or in accordance with a State-specific verification
requirement. Similarly, the Department proposed that receipt of more
than $20 in qualifying LIHEAP or other payments would not require
verification for SNAP purposes unless questionable.
Two commenters commended the Department for codifying that LIHEAP
or similar energy assistance payments do not need to be verified for
SNAP unless questionable. One of those commenters also said when a
State agency learns of a payment from an energy assistance provider,
the information should be verified upon receipt and the State agency
should immediately change the benefit level. That commenter also
believes State agencies should be encouraged to develop regular
automated data feeds from energy assistance providers. Similarly, three
commenters requested clarification regarding the treatment of payments
received after certification and asked the Department to work with
States to develop best practices for prompt re-budgeting.
The Department appreciates these comments. Federal requirements at
7 CFR 273.2(f)(1)(iii) provide that utility costs must be verified only
if questionable, if the household is claiming expenses in excess of the
State's SUA, or in accordance with a State-specific verification
requirement. State agencies establish standards for what is
questionable. For purposes of LIHEAP payments, when the information is
received directly from an energy assistance provider by the State
agency, there is no Federal requirement for the State agency to request
additional information from the household unless it is considered
questionable. In limited situations, a household's receipt of a LIHEAP
payment may be considered questionable, and the State agency could
require a household to provide verification, for example, if the
household has moved. The existing regulations at 7 CFR 273.12(c)
provide State agency requirements for processing changes. Note that
although the regulations only require State agencies to verify utility
information if it is questionable, State agencies have the option under
7 CFR 273.2(f)(3) to choose to verify utility costs even if not
questionable. If a State agency chooses to verify non-questionable
utility costs, the State agency must ensure that procedures are
consistent across the caseload.
For the reasons stated above, the Department is finalizing this
provision as proposed.
Tracking
The Department proposed that State agencies would be responsible
for tracking the date of receipt of the qualifying LIHEAP or other
similar energy assistance payment to ensure the requirements are met.
At 7 CFR 273.9(d)(6)(iii)(C)(1)(iii), the Department proposed that the
State agency must document the date of receipt of a payment made under
LIHEAA or other similar energy assistance program to ensure the payment
was received in the current month or the immediately preceding 12
months and exceeded $20 annually. Five commenters found the use of the
term ``document'' confusing as it could be interpreted as
``verification''. They also requested clarification that the
documentation requirement is the responsibility of State agencies, not
the household.
The Department proposed to use the term ``document'' in the
regulatory text instead of the term ``verify'' intentionally.
Regardless of the State agency's choice on verification when the
information is not questionable, the State agency must document in the
case file the date of receipt of a qualifying payment. This will ensure
the payment was received in the current month or the immediately
preceding 12 months and exceeded $20 annually. State agencies have the
discretion to follow whatever procedure works best for them to ensure
that they accurately document this information in the case file beyond
the general requirement that the State agency document the receipt of
payment. This provision is finalized as proposed in the redesignated 7
CFR 273.9(d)(6)(iii)(D)(3)(iii).
Data Sharing Agreements
In the LIHEAP NPRM, the Department encouraged State agencies to
modify data sharing agreements with their respective LIHEAP agencies,
as appropriate, to ensure transmission of timely and accurate
information needed for SNAP eligibility and benefit determinations. One
commenter recommended that the final rule should include safeguards to
ensure that State agencies have data sharing agreements with LIHEAP
administrative agencies.
While the Department appreciates this suggestion, the Department
declines to finalize this requirement. The Agricultural Act of 2014
does not require State agencies to enter into data sharing agreements
with LIHEAP administrative agencies and requiring such agreements in
regulation may be unwieldy. Nevertheless, the Department believes these
agreements could be highly beneficial for both the State agencies and
the LIHEAP agencies. Such agreements could establish standard operating
procedures, expectations, and other details that would help ensure both
parties are clear on the terms of the relationship. The Department
encourages States to enter into data sharing agreements when possible.
States should modify their data sharing agreements with their
respective LIHEAP agencies as appropriate to ensure transmission of
timely and accurate information needed for SNAP eligibility and benefit
determination.
Weatherization
Because the Act requires that the LIHEAP or other payment must have
been received by or made on behalf of a household, the Department
proposed that weatherization payments paid to a landlord cannot confer
eligibility for the HCSUA. The Department declined to confer
eligibility for the HCSUA for households within a multi-family dwelling
when the multi-family dwelling receives weatherization project funding.
The Department explained that the Act does not explicitly address how
State agencies should evaluate LIHEAP funds that are used to pay for
weatherization projects in multi-family dwellings and noted that a June
15, 1999, Information Memorandum \22\ issued by the Department of
Health and Human Services (HHS), which oversees LIHEAP at the Federal
level, found that weatherization of multi-unit buildings ``is not a
benefit provided to an individual, household or family eligibility
unit.'' \23\ The Department requested comments on this issue and
potential alternative approaches.
---------------------------------------------------------------------------
\22\ U.S. Department of Health & Human Services. LIHEAP IM 1999-
10 on Federal Public Benefits Under the Welfare Reform Law--Revised
Guidance, June 15, 1999. Retrieved from https://www.acf.hhs.gov/ocs/policy-guidance/liheap-im-1999-10-federal-public-benefits-under-welfare-reform-law-revised in July 2022.
\23\ HHS has since confirmed that this guidance was issued
exclusively for a different purpose and requested its removal from
consideration. See preamble language for additional information.
---------------------------------------------------------------------------
Three commenters responded to the Department's request for feedback
on this issue. One commenter believed receipt of weatherization
assistance from a LIHEAP or other similar energy assistance program
should automatically confer the HCSUA to a household. Two commenters
encouraged the Department to allow multi-unit weatherization projects
to make all SNAP households within the multi-unit dwelling eligible for
HCSUA. To do so, these commenters suggested that State agencies could
divide the total value of a weatherization payment (or in-kind service,
per the discussion
[[Page 91213]]
above on quantifiable benefits) by the number of units in the multi-
unit dwelling to determine the payment received on behalf of each
household. One of these commenters argued that prohibiting
weatherization payments from conferring the HCSUA to households living
in multi-family dwellings would unfairly exclude these households since
LIHEAP funds often pay for weatherization programs.
The Department concurs with commenters that while the determination
may be more difficult for multi-family dwellings, weatherization
payments paid to a landlord could be considered a payment made on
behalf of the household depending on the circumstances. The Department
agrees that all households that receive a LIHEAP or other similar
energy assistance program payment that meets the statutory requirements
to confer HCSUA eligibility should be treated similarly. Further, HHS
has since confirmed that its June 15, 1999, Information Memorandum was
issued exclusively to assist in the application of rules under the
Personal Responsibility and Work Opportunity Reconciliation Act of 1996
and requested that the Department remove it from consideration in
determining whether weatherization payments for multi-unit buildings
can be considered a payment made ``on behalf of a household.'' As such,
the Department is revising its position on weatherization payments and
confirms that a household is eligible for the HCSUA if the household
lives in a multi-unit dwelling or an individual unit and receives a
qualifying weatherization program payment.
However, the Department maintains that prescribing how
weatherization payments are divided among households in a multi-unit
dwelling when they are paid directly to a building manager or
contractor would be administratively burdensome and restrictive. While
two commenters suggested a method for how State agencies could quantify
multi-unit dwelling weatherization payments for each household within
that dwelling, the Department understands that State SNAP agencies may
have different access to weatherization funding information depending
on the structure of the State, data sharing agreements, and eligibility
systems. Further, the Department establishing a methodology could
hinder State agencies from using more workable solutions based on the
information they have access to or require other State agencies to
establish complicated processes to meet this lone requirement.
Therefore, the Department is providing State agencies flexibility
to determine the method for assessing whether a weatherization payment
was received by (or on behalf of the household), in the current month
or in the immediately preceding 12 months, and that the payment was
greater than $20 annually, as required by the Act. State agencies must
develop workable, reasonable procedures to determine how multi-unit
dwelling weatherization payments would be quantified for households and
must apply those procedures consistently and fairly across the
caseload. The revised language is found at 7 CFR
273.9(d)(6)(iii)(D)(3)(vii).
Procedural Matters
Executive Order 12866, 13563, and 14094
Executive Orders 12866 and 13563 direct agencies to assess all
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). Executive
Order 13563 emphasizes the importance of quantifying both costs and
benefits, of reducing costs, of harmonizing rules, and of promoting
flexibility. Executive Order 14094 of April 6, 2023, focuses on
modernizing regulatory review and updates the definition of a
significant regulation.
This final rule has been determined to be significant under section
3(f)(1) of Executive Order (E.O.) 12866, as amended by E.O 14094, and
was reviewed by OMB in conformance with Executive Order 12866.
Regulatory Impact Analysis
The Department estimates the total increase in Federal SNAP benefit
spending associated with the SUA provisions of the final rule to be
approximately $5.4 billion over the five-year period FY 2025-FY 2029.
This represents an increase in Federal transfers (SNAP benefits).
Effects on Federal transfers are expected to begin in FY 2025. Effects
on Federal costs are expected to begin in FY 2025 and are estimated to
be approximately $612,000 over the 5-year period FY 2025-FY 2029.
Effects on State administrative costs are expected to begin in FY 2025
and are estimated to be approximately $561,000 over the five-year
period. The final rule will not affect household burden.
The Department estimates that approximately 29 percent of SNAP
households will see an average 6 percent increase in their monthly SNAP
benefit ($15 per month, per household) and 5 percent of SNAP households
will see an average 2.6 percent reduction their monthly SNAP benefit
($7 per month, per household). A very small number of households (less
than 0.01 percent of all SNAP households) are estimated to lose
benefits as a result of the final rule, losing an average of $30 in
monthly benefits. The remaining 66 percent of households will see no
change to their SNAP benefit. The rule is also expected to result in an
increase in ongoing administrative burden for most State SNAP
agencies.\24\
---------------------------------------------------------------------------
\24\ This rule will increase the existing burden currently
approved (OMB Control Number 0584-0496; Expiration Date 7/31/2026).
---------------------------------------------------------------------------
Regarding the LIHEAP provisions, the Department notes that States
were required by statute to implement the Agricultural Act of 2014's
change related to LIHEAP immediately for any household whose initial
certification period began on or after March 10, 2014. Therefore, any
reduction in transfers related to the LIHEAP provisions of this final
rule is assumed to be fully incorporated into the current SNAP
baseline.
Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies
to analyze the impact of rulemaking on small entities and consider
alternatives that would minimize any significant impacts on a
substantial number of small entities. Pursuant to that review, it has
been certified that this rule would not have a significant impact on a
substantial number of small entities.
The final rule primarily impacts SNAP households. Small entities,
such as smaller SNAP-authorized retailers, would not be subject to any
new requirement. On average, nationwide, SNAP retailers would likely
see an increase in the amount of SNAP benefits redeemed at stores under
this final rule as the final rule is expected to increase transfers
(SNAP benefit spending) by 1.3 percent. As of FY 2022, approximately 76
percent of authorized SNAP retailers (about 195,700 retailers) were
small groceries, convenience stores, combination grocery stores, and
specialty stores, store types that are likely to fall under the Small
Business Administration gross sales threshold to qualify as a small
business for Federal Government programs. While these stores make up
most authorized
[[Page 91214]]
retailers, collectively they redeem about 12 percent of all SNAP
benefits.
Amongst States, 43 States are expected to experience a net increase
in SNAP benefit as a result of the final rule, ranging from 0.1 percent
to 3.4 percent. In these States, small retailers may experience a small
increase in sales. The remaining 10 States are expected to see a net
decrease, ranging from -0.4 percent to -1.8 percent, in total SNAP
benefits because of the final rule. These States are: Maine,
Massachusetts, New Hampshire, New Jersey, New York, North Dakota, Ohio,
Rhode Island, South Dakota, and Vermont. Of the total 195,700
authorized SNAP retailers that likely qualify as a small business, 17
percent are located in these 10 States. They account for 16 percent of
redemptions among likely small, authorized SNAP retailers.
Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs has determined that
this rule meets the criteria set forth in 5 U.S.C. 804(2).
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and Tribal
governments and the private sector. Under section 202 of the UMRA, the
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 by State, local, or Tribal
governments, in the aggregate, or the private sector, of $100 million
or more in any one year. When such a statement is needed for a rule,
section 205 of the UMRA generally requires the Department to identify
and consider a reasonable number of regulatory alternatives and adopt
the most cost effective or least burdensome alternative that achieves
the objectives of the rule.
This final rule does not contain 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, the rule is not subject to the requirements of sections
202 and 205 of the UMRA.
Executive Order 12372
SNAP is listed in the Catalog of Federal Domestic Assistance under
No. 10.551. For the reasons set forth in the final rule codified in 7
CFR part 3015, subpart V, and a final rule related notice (48 FR 29115,
June 24, 1983), this Program is excluded from the scope of Executive
Order 12372, which requires intergovernmental consultation with State
and local officials.
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 implications, agencies are directed
to provide a statement for inclusion in the preamble to the regulations
describing the agency's considerations in terms of the three categories
called for under section (6)(b)(2)(B) of Executive Order 13132.
The Department has considered the impact of this rule on State and
local governments and has determined that this rule does not have
federalism implications. Therefore, under section 6(b) of the Executive
order, a federalism summary is not required.
Executive Order 12988, Civil Justice Reform
This final rule has been reviewed under Executive Order 12988,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any State or local laws, regulations or policies which
conflict with its provisions or which would otherwise impede its full
and timely implementation. This rule is not intended to have
retroactive effect unless so specified in the Effective Dates section
of the final rule. Prior to any judicial challenge to the provisions of
the final rule, all applicable administrative procedures must be
exhausted.
Civil Rights Impact Analysis
The Department has reviewed the final rule in accordance with the
Department Regulation 4300-004, ``Civil Rights Impact Analysis''
(CRIA), to identify and address any major civil rights impacts the
final rule might have on SNAP participants by gender, race, and
ethnicity, as well as impacts on children, the elderly, and persons
with disabilities. The final rule allows State agencies to continue to
set their own SUA methodologies, subject to FNS approval. State
agencies must submit for FNS approval their SUA methodologies at least
every five years. Methodology submissions must incorporate any
revisions necessary to demonstrate that the baseline expenditure data
and underlying methodology reflect recent trends and changes. State
agencies' methodologies must also meet certain criteria. The final rule
also expands allowable shelter expenses to include basic internet
costs. Finally, the final rule finalizes updates to the treatment of
LIHEAP payments, in accordance with the Agricultural Act of 2014 (2014
Farm Bill).
The Department ran a simulation using FY 2022 SNAP Quality Control
data to estimate how the final rule would impact SNAP participants by
gender, race, and ethnicity, as well as impacts on children, the
elderly, and persons with disabilities. SNAP participants identified as
female are slightly more likely to both gain and lose benefits than
SNAP participants identified as male. Households with children are
slightly less likely to gain or lose benefits than all households.
Households headed by a non-Hispanic White individual or Asian
individual are more likely to lose benefits under the final rule.
Households headed by an Asian individual are also slightly more likely
to gain benefits compared to all households. Households headed by a
non-Hispanic Black individual are slightly less likely to gain benefits
compared to all households. Among households expected to lose benefits
under the final rule, households headed by an Asian or Hispanic
individual are expected to experience a larger average benefit loss.
Additionally, households with elderly individuals or individuals with
disabilities are more likely to lose or gain benefits due to finalized
changes to SUAs because these households are not subject to the cap on
the allowable excess shelter deduction. Thus, these households with
elderly individuals and individuals with disabilities are more likely
to be impacted by changes to the HCSUA. The mitigation and outreach
strategies outlined in the regulation and this CRIA are intended to
minimize the impacts on the protected groups.
Finally, households that previously qualified for the HCSUA based
on receipt of a LIHEAP payment of less than $20 without actual costs
experienced a benefit change due to the provisions contained in 2014
Farm Bill. Due to the unavailability of data on the specific
individuals impacted by the LIHEAP provision within the final rule, the
Department is unable to determine whether this change had an adverse or
disproportionate impact on SNAP participants who are members of
protected classes.
Executive Order 13175
Executive Order 13175 requires Federal agencies to consult and
coordinate with Tribes on a government-to-government basis on policies
that have Tribal implications, including regulations, legislative
[[Page 91215]]
comments or proposed legislation, and other policy statements or
actions that have substantial direct effects on one or more Indian
Tribes, on the relationship between the Federal Government and Indian
Tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian Tribes.
This rule has potential Tribal implications. FNS provided an
opportunity for consultation on this issue on October 30, 2020. One
question was received and answered on the impact of the proposed
changes State-by-State and no additional requests for consultation were
received. If further consultation on the provisions of this final rule
is requested, the Office of Tribal Relations will work with FNS to
ensure quality consultation is provided.
Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35) requires
OMB to approve all collections of information by a Federal agency
before they can be implemented. Respondents are not required to respond
to any collection of information unless it displays a current valid OMB
control number.
In accordance with the Paperwork Reduction Act of 1995, this final
rule contains information collections that are subject to review and
approval by the Office of Management and Budget. The Department
solicited public comments in the respective NPRMs that were
incorporated into this final rulemaking regarding changes in the
information collection burden that would result from the finalization
of changes in the rule. The respective NPRMs were proposed on October
3, 2019, ``Supplemental Nutrition Assistance Program: Standardization
of State Heating and Cooling Standard Utility Allowances'' (RIN 0584-
AE69); and on April 20, 2016, ``Supplemental Nutrition Assistance
Program: Standard Utility Allowances Based on the Receipt of Energy
Assistance Payments Under the Agricultural Act of 2014'' (RIN 0584-
AE43). The Department will refer to the October 3, 2019, NPRM as the
SUA NPRM and the April 20, 2016, NPRM as the LIHEAP NPRM. The LIHEAP
NPRM finalized by this rulemaking does not have associated burden under
the Paperwork Reduction Act.
These changes are contingent upon OMB approval under the Paperwork
Reduction Act of 1995. Once the information collection request is
approved by OMB, the agency will publish a separate notice in the
Federal Register announcing OMB approval.
Due to the timeline of the SUA NPRM, the Department had initially
requested a new information collection (designated by OMB as Control
Number 0584-0651). However, there are no longer conflicts with the
0584-0496 revision timeline given changes to the final rule publication
date. Therefore, instead of creating a new information collection, the
Department is revising the existing information collection (0584-0496)
to reflect State agencies updating SUA baseline methodology at least
every five years; State agencies using contractors to support updates
to SUA baseline methodology; and State agencies establishing a basic
internet individual standard.
Title: Supplemental Nutrition Assistance Program (SNAP): State
Agency Options for Standard Utility Allowances and Self-Employment
Income.
OMB Number: 0584-0496.
Form Number: None.
Expiration Date: Previously approved through July 31, 2026.
Type of Request: Revision.
Abstract: Section 5 of the Food and Nutrition Act of 2008 (FNA), as
amended, permits States to use standard utility allowances (SUAs) in
lieu of actual utility expenses in determining a household's shelter
costs for the purposes of the excess shelter deduction. This final rule
revises SNAP regulations for calculating standard utility allowances
and expands allowable shelter expenses to include basic internet costs.
Commenters on the proposed rule explained that portions of the
proposed rule would not decrease or may increase State agency burden.
The Department agrees and is including additional burden to account for
changes in policy in the final rule, such as State agencies updating
SUA methodology to align with criteria in the final rule and State
agencies establishing SUAs including basic internet costs. The final
rule also adjusts the estimates for updating and reporting on SUAs to
reflect changes in the approved information collection during the 2023
revision of this information collection (OMB Control number: 0584-0496;
Expiration Date 7/31/2026).
The Department is revising the existing information collection
covering State agency reporting and recordkeeping for on SUAs (OMB
Control Number: 0584-0496, Expiration Date 7/31/2026) to reflect
changes from the final rule. There are no new or revised recordkeeping
burden or third-party disclosure requirements.
This rule also finalizes the updates to the treatment of Low-Income
Home Energy Assistance Program (LIHEAP) payments in accordance with
amendments made to the FNA by the Agricultural Act of 2014. These
changes do not have associated burden under the Paperwork Reduction Act
and are not reflected in this section.
PRA-Related Comments on Proposed Rule
Following publication of the SUA NPRM, the Department received
comments directly on the estimated cost and burden hours and comments
related to the underlying proposed program changes. As a result, the
Department has made changes to the estimated burden in the final rule.
Two State agencies agreed that the proposal for FNS to standardize and
calculate the Heating and Cooling Standard Utility Allowance (HCSUA)
would reduce the State administrative burden associated with
determining values and reporting to FNS. However, most comments
asserted that State agencies would experience more administrative
burden than reflected in the proposed rule.
Multiple commenters, representing two State agencies, a city
government, a congressional office and six advocacy organizations,
argued that due to the lower HCSUA because of the proposed rule, some
State agencies would switch from using a mandatory HCSUA to a voluntary
HCSUA. The commenters explained that these State agencies would have an
increase in administrative burden due to calculating households' actual
heating and cooling costs. Since the final rule does not require State
agencies adopt a lower HCSUA and instead allows State agencies to
continue calculating their own HCSUAs, subject to FNS approval, the
Department does not expect State agencies will switch from using a
mandatory HCSUA to a voluntary HCSUA.
A State agency and a non-profit organization commented that the
proposed standardization of the HCSUA and proposed caps on LUAs would
do little to relieve administrative burden on State agencies. The
commenters argued that State agencies will still be required to
calculate LUAs and that much of the data used to calculate LUAs are
from the same sources that are used to calculate the HCSUA. The final
rule requires State agencies to continue calculating all SUAs,
including the HCSUA, LUAs and individual standards. Therefore, the
Department increased the burden for State agencies to annually update
SUAs.
A State agency and a county government suggested that State
agencies and counties will incur administrative costs for policy and
system automation changes required to implement the proposed rule. The
[[Page 91216]]
Department agreed and added start-up burden for each State agency to
account for the hours they will spend establishing SUAs that include
the cost of basic internet. The Department also considered the burden
households may newly experience when reporting on applications or in
interviews whether they incur internet costs and verifying costs if the
State agency uses voluntary SUAs and the applicant wishes to claim
actual expenses in excess of the State SUA. Similarly, State agencies
will have burden associated with requesting such information. The
Department maintains this burden is already included in OMB-approved
ICR 0584-0064 (exp. 6/30/2027), which accounts for the burden on
households and State agencies associated with the SNAP application
process. This information collection includes burden for applications,
interviews, and verification. Therefore, the Department is not
including additional household or State burden related to these
activities in this information collection.
Additionally, one advocacy organization expressed opposition to the
proposed information collection due to their general opposition to the
proposed rule. The commenter explained that they think the
administrative burden component is irrelevant compared to the potential
negative impact on families losing benefits under the proposed rule.
The Department believes that the changes in the final rule, which give
States more flexibility to reflect their households' unique utility
needs, address the commenter's broad concerns.
Beyond specific comments on the information collection and
administrative burden, other comments impact the total burden under the
final rule. Commenters to the NPRM expressed concerns about the data
sources the Department intends to use to calculate HCSUA values. In
response to these and other comments, the Department is not finalizing
the proposed HCSUA methodology standardization. Instead, the Department
is providing State agencies with the flexibility to continue setting
their own SUAs while standardizing the data and methodology criteria
that FNS will use to approve SUAs. State agencies submit for FNS
approval their SUA methodologies at least every five years. Methodology
submissions must incorporate any revisions necessary to demonstrate
that the baseline expenditure data and underlying methodology reflect
recent trends and changes. The methodology update must include changes
to the baseline expenditure data and an explanation of the State
agency's methodology for deriving HCSUAs from such data. The Department
added to the burden to reflect burden hours incurred by State agencies
revising their SUA methodologies every five years. Additionally, given
the methodology criteria, the Department assumes that some State
agencies will choose to solicit contractor support to identify data
sources and revise SUA methodologies. The Department added to the
burden to reflect the time to solicit, award, and oversee such
contracts, as well as the estimated cost of the contracts.
Changes to Burden Estimates in the Final Rule
In this revision, the Department differentiates between annual
burden, burden incurred every five (5) years due to rule provisions,
and start-up burden for implementing rule provisions. For the first
year of implementation of the final rule, the reporting burden will
include the annual burden, burden incurred every five (5) years, and
start-up burden. The Department estimates the total first year
reporting burden will be 6,680 total annual burden hours and 275 total
annual responses from 53 State agencies. For subsequent years, the
burden will only include annual burden and one-fifth (\1/5\) of the
burden incurred every five (5) years. The Department estimates the
subsequent year reporting burden will be 2,118 total burden hours and
approximately 133 total annual responses from 53 State agencies. The
Department estimates that the total recordkeeping annual burden will be
13.25 total burden hours and 53 annual responses from 53 State
agencies.
In the proposed rule information collection request, the Department
estimated that State agencies that accept the FNS-calculated HCSUA
value would spend one (1) hour per State to update their existing LUAs
and individual standards and respond to this data collection. The final
rule requires that State agencies continue making annual updates to all
SUAs, including the HCSUA, instead of accepting an FNS-calculated
value. Therefore, the Department now estimates that all 53 State
agencies will submit two (2) responses, at ten (10) hours each to
update their SUAs annually. This includes burden to update SUAs based
on the consumer price index (CPI) or similar sources, correspond with
FNS, and update systems and policy materials.
Compared to the prior revision, this represents a decrease of 2.5
hours because the burden for updating SUA baseline methodology is now
accounted for separately, as discussed below. In alignment with the
prior revision, the burden now includes two responses to account for
State agencies' review of their preliminary SUA amounts and their final
SUA amounts. The estimated total burden for this provision is 1,060
hours (53 State agencies x 2 SUA requests per State agency x 10 hours
per request = 1,060 hours).
In addition to annual updates, the Department estimates that given
the requirements of the final rule to update SUA baseline methodology,
in the first year and every five (5) years thereafter, all 53 State
agencies will submit two (2) responses at 40 hours each. This includes
burden to gather and analyze data sources, calculate SUAs, and submit
revisions to SUA methodology to FNS. This includes two (2) responses to
account for State agencies' review of their preliminary methodology and
their final methodology. This estimate is based on the Department's
recent experience evaluating annual SUA updates and providing technical
assistance to State agencies, with additional time for State agencies
to ensure data sources and methodology meet the criteria in the final
rule. The estimated total burden for this provision is 4,240 hours (53
State agencies x 2 SUA methodology updates per State agency x 40 hours
per request = 4,240 hours). Since the Department estimates State
agencies will incur this burden every five (5) years, the average
annual burden is 848 hours (4,240 hours/5 years = 848 hours annually).
The Department estimates that in the first year and every five (5)
years thereafter, five (5) State agencies will solicit contractor
support to make required updates to SUA baseline methodology. This
estimate assumes that approximately one-fifth to one-quarter of the
State agencies FNS identified as likely to make substantial revisions
to their HCSUA methodology will solicit contractor support. Based on
prior review of State agency SUA submissions, the Department assumes
most State agencies will perform updates internally, but some may seek
contractor support. The Department estimates that each State agency
will spend approximately 160 hours soliciting, awarding, and managing
such contracts and spend approximately $100,000 on such contracts.
These estimates are based on the Department's experience with previous
Federal and State agency contracts for data analysis. The estimated
total burden for this provision is 800 hours (5 State agencies x 1
contract per State agency x 160 hours per request = 800 hours). Since
the Department estimates State agencies
[[Page 91217]]
will incur this burden every five (5) years, the average annual burden
is 160 hours (800 hours/5 years = 160 hours annually).
Additionally, there will be start-up responses for establishing
SUAs covering basic internet costs. The Department estimates that in
the first year all 53 States will submit one (1) response at ten hours
each to establish a basic internet individual standard and HCSUA or
LUAs covering basic internet costs. The includes the burden to gather
and analyze internet data sources and to build the ability to use the
basic internet individual standard into their systems and processes.
The estimated total burden for this provision is 530 hours (53 State
agencies x 1 response per State agency x 10 hours per request = 530
hours).
This rule also finalizes updates proposed on April 30, 2016, to the
treatment of Low-Income Home Energy Assistance Program (LIHEAP)
payments, in accordance with amendments made to the FNA by the
Agricultural Act of 2014. These changes do not have associated burden
under the Paperwork Reduction Act.
In addition to the program changes related to the final rule, this
information collection also covers the burden of State agency
methodologies for determining the cost of doing business in self-
employment cases. Current data indicates 23 out of 53 State agencies
have already incorporated a self-employment methodology. For this
revision, the Department continues to estimate that five (5) State
agencies will establish a new methodology for offsetting the cost of
producing self-employment income, either for the first time or as an
update to their current methodology. This estimate is consistent with
the estimate in the most recent approval of this information
collection, approved 7/7/2023. The Department has received few updates
to State agencies' self-employment methodologies over the last five
years, so five (5) States represents the high end of the estimate. The
Department estimates that each of these five (5) responses will have a
response time of 10 hours, for a total annual burden of 50 hours (5
State agencies x 1 request per State agency x 10 working hours per
request = 50 hours). This burden estimate is consistent with the prior
revision of this information collection.
Recordkeeping Burden
All 53 State agencies are required to keep and maintain one record
of the information gathered and submitted to FNS for SUA and self-
employment options, and the Department estimates this process takes 15
minutes (or 0.25 hours) per year. The total annual burden for this
provision is estimated at 13.25 hours (53 State agencies x 1 record per
State agency x 0.25 hours = 13.25 hours). This burden estimate is
consistent with the prior submission for this activity.
There are no new recordkeeping or third-party disclosure
requirements resulting from the final rule, and there have been no
other changes to this recordkeeping requirement since the Department
last consulted with State agencies on the estimate.
The full burden estimates are shown in the chart below:
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[[Page 91219]]
[GRAPHIC] [TIFF OMITTED] TR18NO24.038
BILLING CODE 3410-30-C
Estimated Number of Respondents: 53 State Agencies.
Estimated Frequency of Response: 5.19 (first year), 2.51
(subsequent years).
[[Page 91220]]
Estimated Total Annual Responses: 275 (first year), 133.20
(subsequent years).
Estimated Time per Response: 24.29 hours (first year), 15.90 hours
(subsequent years).
Estimated Total Annual Burden Hours: 6,680 (first year), 2,118
(subsequent years).
E-Government Act Compliance
The Department is committed to complying with the E-Government Act,
2002, to promote the use of the internet and other information
technologies to provide increased opportunities for citizen access to
Government information and services, and for other purposes.
List of Subjects in 7 CFR Part 273
Administrative practice and procedure, Claims, Employment, Food
stamps, Fraud, Government employees, Grant programs--social programs,
Supplemental Security Income, Wages.
Accordingly, 7 CFR part 273 is amended as follows:
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
0
1. The authority citation for part 273 continues to read as follows:
Authority: 7 U.S.C. 2011-2036.
0
2. In Sec. 273.9, revise paragraphs (d)(6)(ii)(C) and (d)(6)(iii) to
read as follows:
Sec. 273.9 Income and deductions.
* * * * *
(d) * * *
(6) * * *
(ii) * * *
(C) The cost of fuel for heating; cooling (i.e., the operation of
air conditioning systems or room air conditioners); electricity or fuel
used for purposes other than heating or cooling; water; sewerage; well
installation and maintenance; septic tank system installation and
maintenance; garbage and trash collection; all service fees required to
provide service for one telephone, including, but not limited to, basic
service fees, wire maintenance fees, subscriber line charges, relay
center surcharges, 911 fees, and taxes; service fees associated with
basic internet connection, including, but not limited to, monthly
subscriber fees (i.e., the base rate paid by the household each month
in order to receive service, which may include high-speed internet),
taxes and fees charged to the household by the provider that recur on
monthly bills, and the cost of one modem rental; and fees charged by
the utility provider for initial installation of the utility. One-time
deposits cannot be included.
* * * * *
(iii) Standard utility allowances. (A) A State agency may use
standard utility allowances (standards) in place of actual costs in
determining a household's excess shelter deduction. The State agency
may use different types of standards but cannot allow households the
use of two standards that include the same expense. The State agency
may vary the standards by factors such as household size, geographical
area, or season. Only utility costs identified in paragraph
(d)(6)(ii)(C) of this section may be used in developing standards
described in paragraphs (d)(6)(iii)(A)(1) through (3) of this section.
The following standards are allowable:
(1) An individual standard for each type of utility expense;
(2) A standard utility allowance for all utilities that includes
heating or cooling costs (HCSUA); and
(3) A limited utility allowance (LUA) that includes electricity and
fuel for purposes other than heating or cooling, water, sewerage, well
and septic tank installation and maintenance, and garbage or trash
collection. The LUA may also include telephone and/or internet costs.
The LUA must include expenses for at least two utilities.
(B) The State agency must review the standards annually and make
adjustments to reflect changes in costs, rounded to the nearest whole
dollar. State agencies must provide the amounts of standards to FNS
annually and submit methodologies to FNS for approval when the
methodologies are developed or changed.
(C) The State agency must submit for FNS approval their
methodologies at least every five years. Methodology submissions must
incorporate any revisions necessary to demonstrate that the baseline
expenditure data and underlying methodology reflect recent trends and
changes. State agencies' methodologies must:
(1) Reflect the entire State or geographic area the SUA covers;
(2) Use data sourced from utility providers or similarly reliable
source;
(3) Reflect expenses incurred by low-income households;
(4) Distinguish if the utility is for heating or cooling, if
applicable; and
(5) Reflect residential utility expenses.
(D) A standard with a heating or cooling component must be made
available to the following households:
(1) Households that incur heating or cooling expenses separately
from their rent or mortgage;
(2) Households in rental housing who are billed by their landlords
on the basis of individual usage or who are charged a flat rate
separately from their rent. However, households in public housing units
which have central utility meters and which charge households only for
excess heating or cooling costs are not entitled to a standard that
includes heating or cooling costs based only on the charge for excess
usage, unless the State agency mandates the use of standard utility
allowances in accordance with paragraph (d)(6)(iii)(G) of this section;
and
(3) Households that receive a payment or on behalf of which a
payment was made under the Low Income Home Energy Assistance Act of
1981 (LIHEAA) or other similar energy assistance program, if in the
current month or in the immediately preceding 12 months and such
payment was greater than $20 annually.
(i) Other similar energy assistance programs are separate home
energy assistance programs designed to provide heating or cooling
assistance through a payment received by or made on behalf of low-
income households. State agencies must establish clear and reasonable
standards for evaluating whether a program constitutes a similar energy
assistance program.
(ii) A payment received by a household or made on behalf of a
household under LIHEAA or other similar energy assistance program must
be quantifiable in order to confer eligibility for the heating and
cooling standard utility allowance. A quantifiable payment is one that
the State agency quantifies, in dollars. In-kind energy assistance,
such as firewood or coal, may be considered an other similar energy
assistance program payment if the State agency establishes reasonable
procedures for quantifying the payment in a manner that is applied
consistently across the caseload.
(iii) The State agency shall document the date and receipt of a
payment made under LIHEAA or other similar energy assistance program to
ensure the payment was received in the current month or the immediately
preceding 12 months and exceeds $20 annually.
(iv) State agencies shall not consider anticipated receipt of a
payment to be an actual payment received under the LIHEAA or other
similar energy assistance program when determining a household's
eligibility for the HCSUA. However, for purposes of this sub clause, a
State agency may consider a payment under the LIHEAA or other similar
energy assistance program to be received by the household, or on behalf
of the household, if the household is scheduled to receive the payment
in the current month.
[[Page 91221]]
(v) In a case where a payment is scheduled to be received in the
current month and the payment is not actually made within that month,
the State agency is responsible for determining whether an overissuance
has occurred.
(vi) A State agency must grant the HCSUA to individuals who
received a qualifying LIHEAP or other payment, regardless of changes in
residence or address. Individuals who live in a household that received
a qualifying LIHEAP or other payment who subsequently move into a
separate household are entitled to receive the HCSUA in their new,
separate households.
(vii) A household is eligible for the HCSUA if the household lives
in a multi-unit dwelling or individual unit and receives a qualifying
weatherization program payment. State agencies must develop workable,
reasonable procedures to determine how multi-unit dwelling
weatherization payments would be quantified for households and must
apply those procedures consistently and fairly across the caseload.
(E) A household that has both an occupied home and an unoccupied
home is only entitled to one standard.
(F) At initial certification, recertification, and when a household
moves, the household may choose between a standard or verified actual
utility costs for any allowable expense identified in paragraph
(d)(6)(ii)(C) of this section, unless the State agency has opted, with
FNS approval, to mandate use of a standard. Households certified for 24
months may also choose to switch between a standard and actual costs at
the time of the mandatory interim contact required by Sec.
273.10(f)(1) if the State agency has not mandated use of the standard.
(G)(1) A State agency may mandate use of standard utility
allowances for all households with qualifying expenses if the State
uses one or more standards that include the costs of heating and
cooling and one or more standards approved by FNS that do not include
the costs of heating and cooling, and the standards will not result in
increased program costs. The prohibition on increasing program costs
does not apply to necessary increases to standards resulting from
utility cost increases.
(2) If the State agency chooses to mandate use of standard utility
allowances, it must use a standard utility allowance that includes
heating or cooling costs for residents of public housing units which
have central utility meters and which charge the households only for
excess heating or cooling costs. The State agency also must not prorate
a standard utility allowance that includes heating or cooling costs
provided to a household that lives and shares heating or cooling
expenses with others.
(3) In a State that chooses this option, households entitled to the
standard may not claim actual expenses, even if the expenses are higher
than the standard. Households not entitled to the standard may claim
actual allowable expenses.
(H) If a household lives with and shares heating or cooling
expenses with another individual, another household, or both, the State
agency shall not prorate the standard for such households if the State
agency mandates use of standard utility allowances in accordance with
paragraph (d)(6)(iii)(G) of this section. The State agency may not
prorate the SUA if all the individuals who share utility expenses but
are not in the SNAP household are excluded from the household only
because they are ineligible.
0
3. In Sec. 273.10, revise paragraph (d)(6) to read as follows:
Sec. 273.10 Determining household eligibility and benefit levels.
* * * * *
(d) * * *
(6) Energy assistance payments. The State agency shall prorate
energy assistance payments as provided for in Sec. 273.9(d) over the
entire heating or cooling season the payment is intended to cover. Any
such prorated energy assistance payments may qualify an individual or
household for the HCSUA in more than one heating or cooling season.
* * * * *
Tameka Owens,
Acting Administrator and Assistant Administrator, Food and Nutrition
Service.
Note: The following appendix will not appear in the Code of
Federal Regulations.
Appendix A--Regulatory Impact Analysis
I. Statement of Need
The United States Department of Agriculture (the Department) is
finalizing this rule, which revises Supplemental Nutrition
Assistance Program (SNAP) regulations to expand allowable shelter
expenses to include basic internet costs and establish clearer
guidelines and requirements for State agencies to follow when
developing standard utility allowances (SUAs) to ensure consistency
and integrity in the application of SUAs across the country. While
the Department is not finalizing the proposed rule's provision
standardizing the methodology for calculating SUAs nor establishing
a percentile at which they must be calculated, the Department
maintains that clearer requirements will improve consistency and
integrity in the program, which the Department believes is good
governance. This rule also finalizes updates to the treatment of
Low-Income Home Energy Assistance Program (LIHEAP) payments or other
similar energy assistance program payments, in accordance with
amendments made to the Food and Nutrition Act of 2008 by the
Agricultural Act of 2014.
Without consistent parameters for SUA methodologies and the data
used to calculate SUAs, the Department is concerned that information
State agencies use to determine SUAs is outdated and may not reflect
low-income households' current utility costs. In a 2017 study,
``Methods to Standardize State Standard Utility Allowances''
(Holleyman, et al., 2017) (referred to in this analysis as the 2017
SUA Study), the Department found differences in how well State
heating and cooling standard utility allowance (HCSUA) values
reflected data on utility expenditures among low-income households
in each State. These findings persisted in a 2023 update, ``Updating
Standardized State Heating and Cooling Utility Allowance Values''
(Holleyman, et al., 2023) (referred to in this analysis as the 2023
SUA Study). Establishing clearer requirements for how States should
use data to establish SUAs is important to ensure SUAs are aligned
with current household conditions and that the application of the
excess shelter deduction reflects household circumstances and,
ultimately, the appropriateness of the benefit level.
II. Summary of Impacts
The Department estimates the total increase in Federal SNAP
benefit spending associated with the SUA provisions of the final
rule to be approximately $5.4 billion over the five-year period FY
2025-FY 2029, averaging $1.1 billion per year. This represents a
1.34 percent increase in Federal transfers (SNAP benefits) upon full
implementation. Effects on Federal transfers are expected to begin
in FY 2025. Effects on Federal costs are expected to begin in FY
2025 and are estimated to be approximately $612,000 over the 5-year
period FY 2025-FY 2029, averaging about $122,000 annually. Effects
on State administrative costs are expected to begin in FY 2025 and
are estimated to be approximately $561,000 over the five-year period
(an increase of less than 0.01 percent from baseline projections),
averaging $112,000 annually.
The Department estimates that approximately 29 percent of SNAP
households will see an average 6 percent increase in their monthly
SNAP benefit (averaging $15 per month, per household) and 5 percent
of SNAP households will see an average 2.6 percent reduction their
monthly SNAP benefit (averaging $7 per month, per household).
Benefit increases are primarily due to the inclusion of internet
service as an allowable shelter expense in SUAs. In addition, a
small share of households will experience a benefit gain due to
increases in some States' HCSUA values due to new data quality
standards and periodic methodology reviews, particularly in States
that have not updated their HCSUA methodologies or underlying data
in recent
[[Page 91222]]
years. Benefit losses are due to expected decreases in some States'
HCSUA values due to new data quality standards and periodic
methodology reviews, particularly in States that have not updated
their HCSUA methodologies or underlying data in recent years. The
remaining 66 percent of households will see no change to their SNAP
benefit. A very small number of households (less than 0.01 percent
of all SNAP households) are estimated to lose benefits as a result
of the final rule, losing an average of $30 in monthly benefits. The
rule is also expected to result in an increase in ongoing
administrative burden for most State SNAP agencies.\1\ The final
rule will not affect household burden.
---------------------------------------------------------------------------
\1\ This rule will increase the existing burden currently
approved (OMB Control Number 0584-0496; Expiration Date: July 31,
2026).
---------------------------------------------------------------------------
The final rule's effects are summarized in the following table
(Table 1). Increases in SNAP benefit payments are categorized as
transfers in the accounting statement (Table 2); increases in
administrative burden for States are categorized as costs; and
Federal costs to administer the provisions of the final rule are
categorized as Federal costs. Regarding the LIHEAP provisions of the
final rule, which finalize how LIHEAP payments are considered to
confer eligibility for the HCSUA, the Department notes that States
were required by statute to implement the Agricultural Act of 2014's
change related to LIHEAP immediately for any household whose initial
certification period began on or after March 10, 2014. For
households that were already certified for SNAP, States had some
flexibility in determining when to implement this change but were
required to implement no later than August 1, 2015, for most
households. Thus, reductions in transfers related to the LIHEAP
provisions of this final rule are assumed to be fully incorporated
into the current SNAP baseline, as noted in Table 1, and therefore
are not included in the accounting statement of transfer effects in
Table 2. This analysis focuses on effects over the five-year period
FY 2025-FY 2029. Ten-year estimates are available in Appendix Table
A.
BILLING CODE 3410-30-P
[[Page 91223]]
[GRAPHIC] [TIFF OMITTED] TR18NO24.039
BILLING CODE 3410-30-C
As required by OMB Circular A-4, in Table 2 below, the
Department has prepared an accounting statement showing the
annualized estimates of benefits, costs, and
[[Page 91224]]
transfers associated with the provisions of this rule. Increases in
SNAP benefit payments are categorized as transfers; increases in
administrative burden for State agencies, households, and the
Federal Government are categorized as costs.
[GRAPHIC] [TIFF OMITTED] TR18NO24.040
In the discussion that follows, there is a section-by-section
description of the impacts of each rule provision.
III. Proposed Rule and Comments Received
This final rule incorporates provisions originally proposed in
two separate notices of proposed rulemaking (NPRM): The October 3,
2019, NPRM titled ``Supplemental Nutrition Assistance Program:
Standardization of State Heating and Cooling Standard Utility
Allowances'' (84 FR 52809), and the April 20, 2016, NPRM titled
``Supplemental Nutrition Assistance Program: Standard Utility
Allowances Based on the Receipt of Energy Assistance Payments'' (81
FR 23189). While originally published as separate NPRMs, the
provisions contained in these rules both relate to calculating
household shelter expenses, and therefore the Department is
combining the provisions from each rule into a single final rule.
For clarity, provisions included in the October 3, 2019, proposed
rule are referred to throughout this analysis as SUA NPRM
provisions. Provisions included in the April 20, 2016, proposed rule
are referred to as LIHEAP NPRM provisions.
The Department received over 125,000 public comment submissions
on the SUA NPRM. Of these, approximately 6,500 were unique and
nearly 118,800 were associated with form letter campaigns. Comments
on the SUA NPRM came from a broad range of stakeholders, including
State SNAP agencies, elected officials, local governments, advocacy
groups, religious organizations, food banks, legal services
organizations, private citizens, and others. The Department received
nine comments on the LIHEAP NPRM from advocate groups, legal
services organizations, and nonprofit organizations.
A. Comments Related to Impacts of SUA NPRM
While most comments received were related to provisions of the
proposed rule that were expected to reduce monthly SNAP benefits for
some households, the Department also received comments on the
Regulatory Impact Analysis (RIA) published with the proposed rule.
Commenters did not suggest alternative, national datasets nor
alternative methods of analysis for use in the RIA. Many commenters
discussed the effects of the proposed rule in general terms, though
some commenters noted specific potential
[[Page 91225]]
costs that they did not believe were sufficiently addressed in the
RIA, including secondary impacts. Secondary impacts noted in the
received comments included:
Healthcare costs related to increases in food
insecurity and poverty;
Costs to the U.S. and local economies due to SNAP's
role in generating economic activity and acting as an economic
stabilizer; and
Impacts on other nutrition assistance programs or
providers, including food banks.
The Department notes, that while there are studies that describe
the relationships between SNAP, food security, poverty, and health
care costs, these studies do not allow the Department to estimate
potential costs specific to the impacts of the proposed rule, nor
the final rule. Therefore, secondary impacts of reduced SNAP
benefits are not assessed in this final rule RIA.
B. Comments Related to Administrative Costs of the Proposed Rule
Some commenters on the SUA NPRM stated that the Department had
not adequately addressed potential administrative costs to State and
local agencies of complying with the proposed rule. The final rule's
RIA includes additional detail and updates to reflect costs State
and local agencies will incur because of the final rule. The
Department anticipates that the final rule will cause a small,
intermittent increase in the administrative burden associated with
SUAs for most State agencies because they will be required to
periodically review and update their SUA methodology, making any
revisions necessary to demonstrate that the baseline data and
underlying methodology reflect low-income household utility costs,
rather than continuously adjusting the prior year's SUA values with
an index of inflation. Additionally, State agencies will experience
a one-time increase in burden due to the inclusion of basic internet
as an allowable shelter expense. These increases in administrative
burden are discussed in greater detail in the Section-by-Section
Analysis.
C. Comments Related to Impacts of the SUA NPRM on Vulnerable
Populations
Many comments on the SUA NPRM noted specific impacts the
proposed rule was anticipated to have on certain subgroups of SNAP
participants. These are summarized below:
Several commenters noted specific impacts on households
with elderly or disabled members. In the proposed rule RIA, the
Department discussed in-depth the impacts of the proposed rule,
including disparate impacts on households with elderly or disabled
members. The Department recognizes that households with individuals
who are elderly or who have a disability may see a greater change
(including increases and decreases) in their benefit amounts because
of any changes to SUA values as they are not subject to a cap on
their excess shelter deduction amount. The Department is committed
to serving households with elderly and disabled members and will
support State agencies' implementation of the final rule as they
help these households understand any changes to their benefits and
are available for questions, as necessary. The Department has made
changes to the final rule that give States more flexibility to set
SUA levels while also noting the expectation that SUAs will be
sufficient to account for the utility expenses of the vast majority
of households. The Department is not finalizing the requirement to
standardize HCSUAs nor the provision that would have capped limited
utility allowances (LUAs) and single utility allowances (also
referred to as ``individual standards'').
A legal services organization, trade association, and
advocacy groups stated that rural communities would be more likely
to be adversely impacted by the proposed rule because they spend a
disproportionately higher share of their income on utilities.
Approximately 6 percent of SNAP households live in a rural area.\2\
However, the Department does not currently have data available that
would allow it to determine if there is a meaningful difference
between rural and non-rural SNAP households' utility expenses.
Additionally, the Department is not finalizing the proposed rule's
provision to standardize HCSUAs as statewide values. Instead, State
agencies will retain the flexibility to develop SUAs for different
regions within their State.
---------------------------------------------------------------------------
\2\ Source: FY 2022 SNAP Quality Control data.
---------------------------------------------------------------------------
Advocacy groups stated that the proposed rule would
disproportionately and negatively impact renters as they have higher
utility costs than homeowners. As previously discussed, the
Department is not finalizing provisions included in the proposed
rule that would have standardized SUA values.
Advocacy groups stated the proposed rule would negatively affect
households with high housing costs and, by extension, households
living in areas with expensive housing markets. The Department notes
that the HCSUA and other SUAs are meant to represent utility costs
incurred by low-income households, rather than other expenses that
may be affected by living in an expensive housing market. Those
expenses, like rent and mortgage payments, will continue to be
accounted for in the excess shelter deduction calculation. However,
the Department acknowledges that some households incur high utility
expenses, and those expenses can vary by geographic region of a
State. In the final rule, the Department is retaining States'
flexibility to establish SUA values for different geographic regions
within each State.
D. Comments Related to the SUA NPRM's RIA Methodology and Proposed
Data Sources
The Department also received comments on the SUA NPRM that
expressed concerns with the data sources used in the proposed rule's
RIA and stated concerns that the methodology used in the RIA was not
sufficiently clear. A legal services group stated that the use of
data from the American Community Survey (ACS) is questionable
because it relies on customer recall of their utility expenses and
an advocacy group questioned the use of the Residential Energy
Consumption Survey (RECS) because the 2015 data release did not
provide individual estimates for every State. In addition, some
commenters raised concerns that the RECS is only administered every
four years, and there is a three- to four-year delay before the data
are published. Many commenters, including advocacy groups and State
government agencies expressed concerns that the data sources the
Department intended to use do not sufficiently capture climate
variations within States, cost variation within States (including in
Tribal areas) or are less accurate than sources State agencies may
currently use for their own methodologies.
The Department appreciates these comments and is making use of
Federal survey data, like ACS and RECS, an available option for
State agencies to use, rather than mandating their use. The
Department maintains that, as of FY 2025, the Federal survey data
sources used in the proposed rule's RIA methodology are the best
existing national data sources on the utility expenditures of low-
income households. Additionally, beginning with the 2020 RECS data
collection, the Department notes that RECS data are available for
each of the 50 States and the District of Columbia. These data
sources may be used by State agencies to calculate their SUAs.
As discussed in the 2017 and 2023 SUA studies, ACS and RECS data
each have strengths and limitations as sources of information about
low-income households' utility expenditures. When used together,
each survey's strengths can mitigate weaknesses in the other survey.
For example, RECS data are not subject to customer recall bias that
can affect ACS data because RECS collects billing data directly from
energy providers to validate the responses provided by surveyed
households. RECS data also specify whether a household incurred
heating or cooling expenses, permitting estimation of energy
expenditures specific to the households that would be eligible for
an HCSUA. However, RECS data are not published on an annual basis.
ACS data can provide a more recent estimation of low-income
households' utility expenditures because it is an annual survey. ACS
is also a larger survey than RECS, resulting in larger sample sizes
of low-income households in each state and the District of Columbia.
RECS and ACS both gather information about respondents' household
income, permitting estimates specific to the low-income households
who participate in SNAP. Further information about the strengths and
weaknesses of each of the Federal surveys used in the proposed rule
RIA can be found in the 2017 and 2023 SUA studies.
Although the Department is not finalizing the standardization
provision of the proposed rule, which relied on Federal survey data
sources to calculate States' HCSUA values, the Department maintains
that ACS, RECS, and Consumer Expenditure Survey data from the Bureau
of Labor Statistics remain reputable sources of data on low-income
households' utility expenditures in each State and the District of
Columbia.\3\
---------------------------------------------------------------------------
\3\ Data on utility expenditures in U.S. territories
administering SNAP (Guam and U.S. Virgin Islands) are not available
from these surveys. However, GU and U.S. VI do not currently use
HCSUAs.
---------------------------------------------------------------------------
[[Page 91226]]
The Department also received comments that expressed concerns
about how the proposed telecommunications SUA would be calculated
and how it was estimated in the proposed rule RIA. As proposed, the
telecommunications standard would have been available to households
with utility costs for one telephone, basic internet service, or
both. Households with basic internet and/or telephone costs would
either receive the telecommunications standard or use their actual
costs, subject to the proposed national cap. The final rule no
longer creates a telecommunications standard and, instead, includes
basic internet service as an allowable shelter cost and allows State
agencies to incorporate the cost of basic internet service into the
HCSUA. Additionally, the final rule provides States with the option
to develop a basic internet individual standard, independent from
the telephone individual standard. State agencies may also include
basic internet costs in their LUAs. The Department is not finalizing
a standardized method of calculating basic internet costs. State
agencies will develop their own methodology for including basic
internet expenses in the HCSUA. Additionally, States that choose to
include internet costs in their LUAs or as an individual standard
will develop their own methodology and calculate their basic
internet individual standards or LUAs containing the cost of basic
internet each fiscal year and submit them to FNS for approval, like
other individual standards or LUAs. Consistent with the requirements
for other SUA methodologies, including individual standards like the
telephone standard, State agencies must submit for FNS approval
their basic internet individual standard methodology every five
years, and data underlying these methodologies must meet certain
criteria.
E. Comments Related to LIHEAP NPRM
Comments on the LIHEAP NPRM were generally favorable of the
proposed provisions and did not directly address the LIHEAP NPRM's
RIA.
IV. Background
A. Shelter Expenses and Standard Utility Allowances in SNAP
The Food and Nutrition Act of 2008, as amended, establishes
uniform national eligibility standards for SNAP and defines the
parameters used to calculate SNAP benefits. Household benefits are
calculated by subtracting 30 percent of the household's total net
income from the maximum allowable benefit allotted for that
household's size. Net income is calculated by subtracting allowable
deductions from the household's gross monthly income.
One such deduction is an excess shelter expense deduction, which
is available to households with shelter costs exceeding 50 percent
of their adjusted gross income after other deductions. This
deduction has a maximum value for households that do not include
elderly or disabled members that is updated annually (sometimes
referred to as the ``shelter cap'').\4\ Shelter expenses include the
basic cost of housing like rent or mortgage payments, as well as
utilities and other allowable expenses. Most parameters for
eligibility are established at the Federal level, but States are
afforded limited discretion to establish SUAs which may be used in
place of actual utility expenses when calculating the excess shelter
deduction. Using SUAs can help simplify the certification process
for applicants and State agencies. State agencies have the option to
require that households with eligible utility expenditures use a SUA
rather than documenting actual utility costs; 48 State agencies have
opted to make the use of SUAs mandatory.5 6
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\4\ In FY 2024, the shelter deduction is capped at $672 in the
contiguous 48 States and the District of Columbia, $1,073 in Alaska,
$905 in Hawaii, $789 in Guam, and $529 in the U.S. Virgin Islands.
\5\ The five States without mandatory SUAs are Guam, Hawaii,
Tennessee, Virginia, and the U.S. Virgin Islands.
\6\ Throughout this analysis, the term ``State'' is used to
refer to the 50 States, as well as District of Columbia, Guam, and
the U.S. Virgin Islands (53 State agencies, in total).
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State agencies with mandatory SUAs must establish at least two
SUAs, one for households with heating and/or cooling expenses (the
HCSUA), and another for households without such expenses. State
agencies may establish multiple SUAs to reflect differences in
households' circumstances. Types of SUAs include:
A Heating and Cooling SUA (HCSUA), for households that
pay heating and/or cooling expenses separate from their rent or
mortgage;
A Limited Utility Allowance (LUA), for households with
expenses for at least two allowable utility costs, but no heating
and/or cooling costs;
A telephone-only allowance, for households that have no
utility expenses other than telephone; and
Other individual standards, for households with one
utility expense, such as water, that is separate from rent or
mortgage.
Nearly all State agencies have an HCSUA and a telephone
individual standard. Most have LUAs and about half have at least one
other individual standard. Appendix Table B contains the FY 2024 SUA
values for each State. Table 3, below, provides information about
the share of SNAP households that claim each type of SUA.
[GRAPHIC] [TIFF OMITTED] TR18NO24.041
Households that receive LIHEAP payments greater than $20
annually are eligible for the HCSUA and do not need to demonstrate
actual utility costs. Section 4006 of the Agricultural Act of 2014
mandates that those State agencies electing to use an HCSUA may only
offer the HCSUA to households receiving LIHEAP or other similar
energy assistance if the household received a payment greater than
$20 in the current month or in the immediately preceding 12 months.
Prior to the Agricultural Act of 2014, HCSUAs were available to
households that received any payment, or were eligible for a payment
if not yet received, under LIHEAP
[[Page 91227]]
or a similar energy assistance program, regardless of the size of
the payment.
State agencies must update SUAs annually, but are not directed
to use specific data sources, and can revise their methodology at
any time so long as they receive FNS approval. In practice, most
States update their SUAs each October, at the start of the fiscal
year,\7\ and the values remain constant throughout the fiscal year.
SUAs are not required to be benchmarked to a particular percentile,
and State agencies may opt to set them at a higher percentile to
ensure the SUA's value is sufficient for a large portion of the SNAP
caseload.
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\7\ All States except for Indiana and Maryland follow the
Federal fiscal year calendar for their HCSUA updates. Indiana's
update occurs in May and Maryland's update occurs in January.
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Most State agencies use one of two different types of
methodologies when calculating their SUAs. The first is a
methodology that relies on State-specific recent utility data, often
from a sample of areas and/or providers throughout the State. The
second is a methodology that adjusts a base number using an
inflation measure such as the Consumer Price Index (CPI). Some State
agencies use a methodology that combines both approaches. A review
of information available to FNS about how State agencies most
recently updated their SUA values indicates that at least 10 States
have not updated the utility data used to calculate their HCSUA in
10 or more years. These State agencies have adjusted their HCSUA on
an annual basis using CPI-based inflation factors. However,
inflationary adjustments alone cannot account for broader changes in
the household utility expenditures, like the mix of energy sources
households use, nor the quantity of energy used. They also are not
specific to the circumstances of low-income households and may miss
trends in spending among low-income households that diverge from
trends among higher-income households.
While the use of SUAs simplifies the application process from
the perspective of both the State agency and the applicant, the
Department believes program simplification needs to be balanced with
ensuring consistency and integrity in how SUAs are calculated. SUAs
must align with low-income households' utility costs to ensure that
the application of the excess shelter deduction reflects household
circumstances and ultimately, the appropriateness of the benefit
levels.
B. HCSUA Values and Utility Expenditures
The 2017 SUA Study and the 2023 SUA Study found that States'
HCSUA values differed considerably from data on what low-income
households \8\ paid for utilities, using different illustrative
benchmarks.\9\ The studies also revealed that HCSUA values may not
respond to changes in low-income households' utility expenses. In
particular, the 2023 SUA Study examined ACS data and found that
average monthly energy costs for low-income households in States
with HCSUAs were lower in 20 States in 2019 than in 2014.\10\
However, 18 of the 20 State agencies had higher HCSUAs in FY 2019
than in FY 2014, with an average increase of $56. The 2023 Study
also found that the range of utility expenses incurred by low-income
households narrowed since FY 2014 in 48 States, meaning fewer
households experienced extremely high monthly utility expenses.\11\
These findings from FY 2014-FY 2019 suggest that there have been
fundamental shifts in the energy market, like improvements in energy
efficiency, changes in the types of energy used (e.g., lower
reliance on high-cost fuels), and changes in prices that have
affected low-income households' utility expenses within the past 10
years. While CPI-based inflationary adjustments to base values may
account for overall changes in expenses for a wide range of
consumers, they are not specific to the expenses incurred by low-
income households, are not responsive to changes in the mix of
energy sources low-income households use, and are not responsive to
increases or decreases in the number of low-income households who
incur extremely high expenses (i.e., the spread of expenses a SUA
seeks to accommodate). This illustrates why the Department believes
it is problematic for State agencies to rely on outdated
methodologies and/or data sources to calculate their SUA values,
which may not reflect current conditions. If the base-year data
underlying a State agency's SUA calculation is outdated, the SUA
will be reflective of outdated patterns in consumption, efficiency,
and prices.
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\8\ The studies defined ``low-income'' as households with
incomes at or below 150 percent of the Federal poverty level.
\9\ The 2023 SUA study primarily examined low-income households'
average expenditures, as well as expenses at the 80th percentile,
90th percentile and 95th percentile. The 2017 SUA Study looked at
average expenses for low-income households, as well as the 85th
percentile.
\10\ See Appendix Table F-1. Holleyman, Chris, Pratima, Damani,
and Torres, Erick. Updating Standardized State Heating and Cooling
Utility Allowance Values. Prepared by SP Group LLC. for the U.S.
Department of Agriculture, Food and Nutrition Service, March 2023.
\11\ This is indicated by what the report authors described as
``a slightly negative difference in the scaling factors used to
escalate the average utility expenditures of low-income households
to the 80th percentile of low-income households.'' In other words,
the 80th percentile of low-income households had moved closer to the
median, indicating that fewer households had expenses near the top
of the range of all low-income households' expenses.
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Internet as a Utility Expense
Under current SNAP regulations, internet service is not an
allowable shelter cost that can be deducted from a SNAP household's
gross income. However, internet access has become a necessity for
school, work, and job search activities. As such, internet has
become a necessary expense in SNAP households' monthly budgets and
the Department is designating it as an allowable shelter cost in the
final rule. To understand the costs incurred by low-income
households for basic internet access, FNS's 2023 SUA Study included
a methodology for developing a basic internet individual standard
using estimates of typical costs for internet access in each State.
Broadband was used to represent a level of service that is conducive
to economically important household activities, like job searching
and virtual education, in contrast to dial-up internet service. The
study determined that no national, public database of household
broadband expenditures is available at this time. The final rule
will permit States to develop their own methodology to estimate
internet costs for inclusion in SUAs.
In addition to geographic variation in the availability and
price of internet service, the 2023 SUA study also found that
understanding the costs low-income families incur for internet
service requires evaluating participation in government programs
that reduce the cost of internet for many low-income households. The
Department notes that if a household does not pay any of its
internet costs, including because those costs are paid in full by a
program such as the Lifeline program or the former Affordable
Connectivity Program (ACP), then the household would not qualify for
the basic internet individual standard.
[[Page 91228]]
C. Baseline and Time Horizon for Analysis
Our baseline for measuring the costs, benefits, and transfers
associated with this final rule is the Department's estimated SNAP
participation and benefit spending for FYs 2025-2029, shown in Table
4 below.\12\ This regulatory impact analysis (RIA) uses FY 2025-FY
2029 as the time horizon to measure the effects of the final rule.
The Department chose this timeframe as it will permit assessment of
all start-up costs as well as analysis of the ``steady state'' of
the final rule's full implementation, expected to occur in FY 2027.
A ten-year cost estimate (FY 2025-FY 2034) is provided as a
supplementary resource in Appendix Table A. Additionally, changes in
State administrative expenses (SAE) are compared to the Department's
baseline projections.
[GRAPHIC] [TIFF OMITTED] TR18NO24.042
As previously noted, the LIHEAP NPRM provisions finalized in
this rule have been in effect since FY 2015 and are therefore
considered to be fully incorporated in the SNAP baseline presented
above. This RIA uses FY 2013 as a reference year to estimate the
impacts of the LIHEAP NPRM provisions of the final rule.
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\12\ Each year as part of the process of developing the
President's Budget, the Department produces estimates of expected
SNAP participation and benefit spending over a 10-year period.
Transfer estimates in this Regulatory Impact Analysis are based on
Department estimates for the FY 2025 Mid-session Review of the
President's Budget. Estimates related to State administrative
expenses (SAE) are compared to the Department's FY 2025 President's
Budget baseline estimates.
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D. Methodology
i. Measuring Transfer Changes
The SNAP QC Minimodel is one of the microsimulation models
maintained by FNS to estimate the impacts of changes in policy on
current SNAP households. The FY 2022 SNAP QC Minimodel uses SNAP QC
data from all States from October 2021, through September 2022. SNAP
QC data are collected annually as part of the ongoing effort to
determine the accuracy of SNAP certification actions.\13\ Data are
collected for a sample of SNAP households that is statistically
representative at both the national and State levels. It includes
data from 41,391 households, including information on household
income, income sources, expenses, household composition, and utility
allowances to simulate the impact of various policy changes to SNAP
on current SNAP participants. The FY 2022 SNAP QC data and Minimodel
are the most recent data available to FNS for microsimulation. The
data are weighted to be representative of the SNAP caseload
nationally and in each State. Like all microsimulation models, this
model simulates the effects of program changes at the ``micro''
level (in this case, SNAP households). These micro-level effects on
SNAP eligibility and benefit amounts are combined to estimate the
total effect of program changes at the State and national level.
Although most households received emergency allotments related to
COVID-19 which supplemented their benefit amounts in FY 2022, this
analysis uses households' certified, pre-supplement SNAP benefit
amounts. Therefore, estimated benefit effects in this RIA are not
affected by emergency allotments.
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\13\ Detailed information on the QC review process, including
sampling requirements and procedures for conducting QC reviews, can
be found on the FNS website here: http://www.fns.usda.gov/snap/quality-control.
---------------------------------------------------------------------------
To estimate the impact on SNAP benefit spending (transfers) of
the final rule, the FY 2022 QC Minimodel baseline was adjusted to
better reflect current program operations. As all the income,
deduction, and benefit data in the model, including HCSUA values,
are from FY 2022, a revised baseline was created to reflect changes
in the value of States' HCSUAs between FY 2022 and FY 2024, relative
to the cap on shelter expense deductions. FNS determined that the FY
2022 HCSUA values in the model were not reflective of FY 2024 HCSUA
values in some States because some States have made significant
changes to their HCSUA values between FY 2022 and FY 2024 (see next
paragraph for an illustrative example). As the changes to HCSUA
values in this 2-year period were greater than changes to other
parameters in the model, the marginal effect of a State's HCSUA in
FY 2022 on a household's SNAP benefit calculation may not reflect
its marginal effect in FY 2024, which is the outcome of interest for
the purposes of this RIA.
To provide an example of how some State agencies' HCSUAs have
changed substantially since FY 2022, State A, whose FY 2022 HCSUA
was valued at 98 percent of the FY 2022 cap on the excess shelter
deduction, has an FY 2024 HCSUA valued at 126 percent of the FY 2024
cap, a difference of 29 percent. To control for this type of change
in States' behavior since FY 2022, the FY 2022 HCSUA values pre-
programmed into the QC Minimodel were replaced by adjusted HCSUAs
set to reflect the FY 2024 relationship between HCSUAs in each State
and the shelter cap. To return to the example of State A, its HCSUA
in the QC Minimodel was adjusted to equal 126 percent of the FY 2022
shelter cap.
Simulations of further changes to SUA values, reflecting changes
caused by provisions of the final rule, were run against the revised
baseline. A brief description of our methodology to measure the
transfer effect of each provision of the final rule follows. Against
the adjusted baseline described above, separate simulations
individually evaluated each SUA-related provision of the final
rule:\14\
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\14\ As noted previously, the LIHEAP provisions of the final
rule are considered fully incorporated in the SNAP baseline due to
their implementation in FY 2015.
---------------------------------------------------------------------------
1. Establishing standards for the quality of data used in SUA
calculations and requiring updates at a minimum of 5-year intervals:
To simulate the effects of this provision, we assume that 10 States
will lower their HCSUAs by 10 percent and 6 States will increase
their HCSUAs by 10 percent, on average, because of the final rule's
data and methodological update requirements. This assumption was
informed by a review of States' FY 2024 HCSUAs and information
available to FNS about the methodologies and data used to produce
those values. In some cases, FNS has limited information about the
methodologies and data used because of the age of some State
agencies' methodologies and/or the information shared with FNS lacks
a robust description. The 16 States selected for adjustment in this
simulation are those identified by FNS as most likely to require a
significant revision to their current HCSUA calculation to meet the
final rule's data and methodological update requirements.
Additionally, these 16 States were determined to have HCSUAs with
the greatest deviation from Federal survey data on average State-
level utility expenditures among low-income households, defined as
households below 150 percent of the Federal poverty level. These
data are sources States may use to calculate their SUAs and are of
the quality that State agencies will be required to use when
developing SUAs. FNS made this determination by examining the
Federal data sources examined in FNS's 2017 and 2023 SUA studies
(ACS, RECS, and CEX). Some of these 16 States may need to make
larger or smaller changes to their HCSUA as a result of the data
quality and methodological review provision, but the Department is
[[Page 91229]]
estimating a 10 percent average change to the HCSUA in each of the
16 States. We assume 10 States will decrease their HCSUA by 10
percent and 6 States will increase their HCSUA by 10 percent. No
States were assumed to change their LUA or individual standard
values because of the final rule's data and methodological update
provisions.\15\ Alternative assumptions are tested in the
sensitivity analysis of this RIA.
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\15\ FNS does not anticipate that these changes will result in
similar decreases or increases to LUA and individual standard values
because FNS's review of States' current LUA and individual standard
values indicates that these standards do not display the same degree
of variability between States and misalignment with current utility
data for low-income households that is present among current HCSUA
values.
---------------------------------------------------------------------------
2. Requiring basic internet expenses as an allowable shelter
expense within the HCSUA. To simulate changes to HCSUA values due to
incorporating basic internet expenses into the allowance, we assumed
States would increase their HCSUAs by an average of $50. This is
based on two States which currently have approval from FNS to
provide a basic internet individual standard through an
administrative waiver. Both States use a $50 standard to represent
internet expenses, providing an indication of how other State
agencies may behave. While some States may use higher or lower
values to approximate low-income households' internet expenses, $50
is used in this analysis to approximate the average value FNS
estimates States will use. We assume that all States with an HCSUA
choose to incorporate internet into the HCSUA. Alternative
assumptions are tested in the sensitivity analysis of this RIA.
3. Providing States with the option of incorporating basic
internet expenses in the LUA and as an individual standard: To
simulate State-calculated internet allowances in the LUA and a new
basic internet individual standard, we simulated a $50 average
increase to LUA values for households that currently receive the LUA
and estimated that about 5 percent of SNAP households would take-up
a new basic internet individual standard.\16\ We also assumed
households using actual utility expenses would have an increase of
$50 in utility expenses if they can newly claim basic internet
expenses. We assume all State agencies will take the option to
include internet expenses in the LUA and establish a basic internet
individual standard, given expressed interest by State SNAP agencies
in establishing internet allowances.
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\16\ Five percent was selected as an estimate, informed by the
share of SNAP households that use a telephone individual standard,
to approximate how many households might use a basic internet
standard. In the absence of more precise data, the Department
estimates that the share of households that may pay an internet
bill, but not other utilities which would make them eligible for a
LUA or HCSUA, may be similar to the share of household that only pay
a telephone bill.
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In each simulation, household benefits were recalculated for
each household that claimed utility expenses and then aggregated to
estimate the percentage change in total benefit spending and changes
to eligibility. The percentage change applicable to each rule
provision was applied to the baseline benefit spending (Table 4
above) to estimate the annual change in SNAP benefit spending
(transfers) resulting from each rule provision.
An additional simulation was conducted to estimate the impact of
the LIHEAP NPRM. A brief description of the methodology follows:
1. The QC Minimodel includes a variable that indicates whether
the household received the HCSUA because they also received LIHEAP.
This variable was used to estimate the annual benefit impact on
households and total SNAP benefits if all households flagged as
receiving a HCSUA due to receipt of LIHEAP no longer received the
HCSUA.\17\
---------------------------------------------------------------------------
\17\ This simulation used 2013 QC data as that was the period
prior to implementation of the Agricultural Act of 2014's LIHEAP
change.
---------------------------------------------------------------------------
2. Because only 17 States providing energy assistance payments
that conferred HCSUA eligibility and were affected by the
Agricultural Act of 2014 provision, the simulated impacts were
adjusted to remove the effects in the 34 unaffected States. The
annual benefit impact was further adjusted because 13 of the 17
States that issued affected LIHEAP payments to their SNAP caseload
opted to increase those payments above the $20 threshold. Therefore,
the impact within these 13 States was removed from the initial
estimate, leaving only the effects in the four States that did not
increase their LIHEAP payments. These results were then used to
estimate the average, per household benefit impact for households
affected by the Agricultural Act of 2014's LIHEAP change.
Households that no longer receive LIHEAP payments may continue
to receive a SUA (the HCSUA, the LUA, or a different utility
standard) if they qualify based on incurred utility expenses. To
estimate the proportion of households in the affected States that
continued to be eligible for a SUA after discontinuation of LIHEAP
payments that conferred HCSUA eligibility, we used SNAP QC data from
before and after implementation of the Agricultural Act of 2014 to
tabulate how many households in the affected States received the
various types of SUAs. Table 5 shows how those percentages changed
in the four States that discontinued use of LIHEAP payments to
confer HCSUA eligibility.
[GRAPHIC] [TIFF OMITTED] TR18NO24.043
3. Based on this re-distribution, we see that 54 percent of
households no longer receive the HCSUA based on LIHEAP receipt.
These households are redistributed into the other SUA categories,
with some households no longer receiving any SUA, some continuing to
receive the HCSUA, and others receiving a different SUA (a LUA or
individual standard).
4. Overall, of the 54 percent of households that no longer
receive the HCSUA based on
[[Page 91230]]
receipt of LIHEAP, 43.8 percent no longer receive any SUA
(calculated as 23.7/54.0), 39.2 percent continue to receive the
HCSUA, 6.0 percent receive the LUA or an individual standard, and
10.6 percent receive only the telephone individual standard.\18\
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\18\ These percentages vary from the percentages used in the
proposed rule RIA because the final rule RIA uses actual changes in
SUA receipt documented in the SNAP QC data, rather than estimated
changes used before actual data were available. The proposed rule
RIA assumed that 55 percent of households would no longer be coded
as receiving the HCSUA due to LIHEAP. Of those, we estimated that 36
percent would receive no SUA, 55 percent would continue to receive
the HCSUA, 1 percent would receive the LUA or an individual
standard, and 7 percent would receive the telephone individual
standard.
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5. Benefit impacts were adjusted as follows:
a. Households no longer eligible for any SUA were allocated 100
percent of the per-household benefit impact of this provision (0.438
x # affected households x per-household benefit impact x 1.00).
b. Households eligible for a LUA were allocated 50 percent \19\
of the per-household impact of the provision (0.060 x # affected
households x per-household benefit impact x 0.50).
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\19\ We chose 50 percent based on the relative size of the LUA,
compared to a HCSUA at the time the LIHEAP change went into effect.
On average, the HCSUA value was about twice that of the LUA, so the
benefit impact would be reduced by roughly 50 percent. Similarly, we
chose 75% based on the relative size of a single utility allowance
or telephone allowance, compared to a HCSUA. On average, the HCSUA
value was about four times that of an individual or telephone
standard, so the benefit impact would be reduced by roughly 75%.
Information on the relative size of different utility allowances in
FY 2024 can be found at: https://www.fns.usda.gov/snap/eligibility/deduction/standard-utility-allowances.
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c. Households eligible for a telephone individual standard were
allocated 75 percent of the per-household impact of the provision
(.106 x # affected households x per-household benefit impact x
0.75).
d. These amounts were totaled to get the annual SNAP benefit
impact due to discontinued LIHEAP payments.
ii. Measuring Changes to State and Federal Costs
State administrative costs, burden estimates, and Federal costs
(non-transfer) are estimated using information from revisions to a
currently approved Information Collection Request (ICR) (OMB Control
Number 0584-0496; Expiration Date 7/31/2026). This information
collection addresses the State agency reporting burden associated
with State options under SNAP for developing SUAs and a methodology
for offsetting the cost of producing self-employment income, as
required in 7 CFR part 273. The revision accounts for requirement in
the final rule. The value of State administrative costs and Federal
costs in future years are adjusted annually for inflation using the
Consumer Price Index for Urban Wage Earners and Clerical Workers
(CPI-W) fiscal year-over-fiscal year projections from OMB's Economic
Assumptions for the Mid-session Review of the FY 2025 President's
Budget.
V. Section-by-Section Analysis
The costs and savings associated with each provision of the
final rule are discussed separately in this section of the RIA. The
section-by-section analysis often uses FY 2026 as a reference year
to discuss the transfer and cost impacts of the final rule, given
that FY 2026 is when all provisions of the final rule are expected
to be fully implemented.
A. Requirement To Update SUA Calculation Methodology Every 5 Years
and Meet Data Quality Specifications
Discussion: While the Department is not adopting the proposed
rule's provisions to standardize the calculation of HCSUAs, nor cap
LUAs and individual standards as a percentage of the HCSUA, it
maintains that there should be clearer guidelines and requirements
for State agencies to follow when developing their SUAs to ensure
SUAs accurately reflect low-income households' utility costs.
Therefore, the Department is establishing new requirements to guide
State agencies' calculation of SUAs. These requirements apply to
HCSUAs, LUAs, and individual standards. State agencies must submit
for FNS approval their SUA methodologies at least every 5 years and
make any revisions necessary to demonstrate that the baseline
expenditure data and underlying methodology reflect low-income
household utility costs along with recent trends and changes. The
methodology update must include updated baseline expenditure data,
per certain data criteria, and an explanation of the State agency's
methodology for deriving HCSUAs from such data. In interim years,
State agencies must continue to review and adjust their SUAs
annually to reflect changes in costs, in line with existing
regulations. State agencies may use appropriate indices of
inflation, like the Consumer Price Index (CPI) values specific to
the utilities incorporated into an HCSUA, to perform these interim,
annual updates. State agencies must also continue to submit their
methodologies for FNS approval any time the State agency develops or
changes a methodology.
Additionally, State agencies' methodologies must:
Reflect the entire State or geographic area the SUA
covers;
Use data sourced from utility providers or similarly
reliable source;
Reflect expenses incurred by low-income households;
Distinguish if the utility is for heating or cooling,
if applicable; and
Reflect residential utility expenses.
The Department chose these criteria to ensure HCSUAs accurately
represent the utility costs of low-income households, including
households with higher-than-average utility costs, in the designated
area while providing State agencies additional flexibility in
creating their standards. These criteria align with the goals of the
data and methodology the Department proposed to use in the SUA NPRM.
The Department notes that, for the purposes of these criteria,
``utility providers'' includes any company or organization that
supplies or sells a utility allowed under 7 CFR 273.9(d)(6)(ii)(C).
Additional SUA provisions in the final rule that are expected to
have minimal effects include:
Eliminating the option for State agencies to use a LUA
instead of the HCSUA for public housing residents with excess
heating and cooling costs, as proposed in the SUA NPRM.
Eliminating the option for State agencies to use a LUA
instead of the HCSUA for States where cooling expenses are minimal,
as proposed in the SUA NPRM.
Effect on SNAP Participants: The Department anticipates that new
guidelines directing States to update their SUA methodologies at
least once every 5 years and establishing data quality requirements
will result in changes to HCSUA values in States which currently use
methodologies or data sources that would not meet the requirements
of the final rule. The Department estimates that 10 States will
reduce their HCSUAs and 6 States will increase their HCSUAs as a
result of this provision, each by an average of 10 percent. These
changes will reduce the monthly SNAP benefits of approximately 5.2
percent of all SNAP households by an average of 7.5 percent, or
about $21 and will increase the monthly SNAP benefits of
approximately 2.1 percent of all SNAP households by an average of
3.5 percent, or about $10. A small number of households (less than
0.01 percent) would no longer be eligible for SNAP if this provision
was implemented without the internet provision, discussed later in
this RIA, resulting in an average monthly benefit loss of $45. These
households have a low average monthly benefit because they have
monthly incomes close to the maximum allowed for SNAP eligibility.
Affected households live in 16 States that FNS has identified as
those most likely to require significant revisions to their HCSUA to
meet the new data quality and recency guidelines. No effects are
anticipated for SNAP households in the other 37 States.
[[Page 91231]]
[GRAPHIC] [TIFF OMITTED] TR18NO24.044
Effect on Federal Spending: The data quality and methodological
revision provision of the final rule is expected to decrease SNAP
benefit payments (transfers) by $293 million in FY 2026 and by $1.2
billion over 5 years (FY 2025-FY 2029). Effects on transfers will
not be fully phased-in until FY 2026 because FNS expects that States
may need until the start of FY 2026 to revise their SUA
methodologies and underlying data. This provision results in a 0.3
percent decrease in SNAP benefit payments when fully implemented.
The decrease in transfers in 10 States that are estimated to reduce
their HCSUAs is larger than the increase in transfers in 6 States
that are estimated to increase their HCSUAs, resulting in a net
decrease in transfers.
Additionally, Federal administrative burden and the Federal
share of States' administrative expenses for this provision of the
final rule are expected to increase. The Federal share of States'
administrative expenses for initial implementation of this provision
is estimated to be about $438,000 in FY 2025. The Federal share of
all State agencies' ongoing administrative expenses caused by this
provision of the final rule are estimated to be about $152,000 over
five years (FY 2025-FY 2029), averaging about $30,000 annually.
Federal administrative burden is expected to increase on an ongoing
basis due to this provision of the final rule. Every 5 years, the
Department expects FNS staff will spend a total of 689 hours
reviewing and approving State agencies' methodological updates and
providing technical assistance to State agencies as they make those
updates. This is expected to cost about $51,000 in FY 2025, the
first year in which a methodological update is expected to occur.
Effect on State Agencies: This provision of the final rule is
expected to create start-up costs, in addition to recurring
increases in State agency burden. FNS estimates 5 State agencies
will opt to solicit contractor support to update their SUA
methodologies, resulting in about $21,000 in staff costs and
$250,000 in contract costs after 50 percent Federal reimbursement
over FYs 2024 and 2025 ($271,000 total for 5 state agencies). Non-
contract State costs associated with implementation burden and
system changes are estimated to be about $145,000 after 50 percent
Federal reimbursement across all 53 State agencies.
State agencies are not expected to incur annual increased
administrative burden or costs because of this provision. However,
every 5 years, State agencies will experience a greater increase in
burden, when they will be required to conduct a full review of their
SUA methodologies and update the base data used to calculate their
SUAs.
B. Allow Basic Internet Costs as an Allowable Shelter Expense
Discussion: The final rule designates basic internet service as
an allowable shelter cost and gives State agencies the option to
include basic internet costs in their HCSUAs and LUAs and to develop
a basic internet individual standard. State agencies will be
expected to develop their own methodology for including the cost of
basic internet service in the HCSUA, LUA, and as a standalone basic
internet individual standard, as they are expected to do for all
other allowable utility expenses. The Department assumes that 25
percent of the SNAP caseload lives in States that will establish an
individual internet SUA in FY 2025, and all States will implement an
individual internet SUA in FY 2026. We assume that all States will
implement an HCSUA that incorporates internet expenses in FY 2026.
Effect on SNAP Participants: By allowing basic internet expenses
to be incorporated into SUAs, SNAP households using the HCSUA or LUA
will be eligible for a larger allowance, which can increase the
excess shelter deduction for households that are not at the shelter
cap. SNAP households that receive a larger excess shelter deduction
may also see their benefits increase, depending on other household
circumstances.
Additionally, a portion of SNAP households that do not use a SUA
will be eligible for a basic internet individual standard or to
claim the value of their actual expenses for basic internet if they
incur out-of-pocket expenses for basic internet service. The
Department expects the share of households that will claim a basic
internet individual standard to be approximately 5 percent of all
SNAP households, informed by the share of SNAP households that
currently receive a telephone-only utility allowance (see Table 3).
These households may also see their excess shelter deduction
increase if they are not affected by the shelter cap, potentially
increasing their benefits.
Inclusion of basic internet as an allowable utility expense is
expected to increase SNAP benefits for an additional 27.1 percent of
SNAP households (29.2 percent, total). This provision will not
result in benefit losses for any SNAP households. Among households
gaining benefits, because of this provision, monthly SNAP benefits
will increase by an average of $15. No households are expected to
lose eligibility because of this provision. Some of the <0.01
percent of households estimated to lose eligibility due to the
previously discussed data quality and methodological review
provision (if, hypothetically, that provision were finalized on its
own) retain eligibility because of the inclusion of internet
expenses in SUAs. Sample sizes for this group are too small for the
Department to be more precise in its estimates for this group.
Effect on Federal Spending: Including basic internet as an
allowable shelter expense is expected to increase SNAP benefit
payments (transfers) by $1.6 billion upon full implementation in FY
2026 and by $6.6 billion over five years (FY 2025-FY 2029). This
represents a 1.6 percent increase in SNAP benefit payments when
fully implemented. On average, the Department estimates that
including basic internet expenses will increase State-calculated
HCSUA values by $50, though the amount is expected to vary by State.
Additionally, the Federal share of States' administrative expenses
to incorporate a basic internet individual standard is estimated to
be a one-time expense of about $14,000. The Department does not
estimate a measurable change in ongoing Federal burden or costs
related to this provision.
Effect on State Agencies: The Department expects it will take
each State agency approximately 10 hours to establish a new basic
internet individual standard and include basic internet in their
HCSUA and LUA calculations. States' share of this expense is
estimated to be a total annual cost of about $14,000. The Department
does not estimate a measurable change in State agencies' ongoing
administrative expenses due to the new inclusion of basic internet
as an allowable shelter cost.
[[Page 91232]]
C. LIHEAP Provisions
Discussion: The rule also finalizes how Low-Income Home Energy
Assistance Program (LIHEAP) payments are considered to confer
eligibility for the HCSUA, in accordance with amendments made to the
Food and Nutrition Act of 2008 by the Agricultural Act of 2014.
While originally published as a separate 2016 NPRM, the LIHEAP
provisions are integrally linked to the SUA provisions, and
therefore the Department is combining the provisions from each
proposed rule into a single rule.
In accordance with the Agricultural Act of 2014, the final rule
no longer allows States to confer HCSUAs to households receiving a
payment, or on behalf of which payments were made, under the Low
Income Home Energy Assistance Act (LIHEAA) or similar programs
unless the payment is greater than $20 annually and received in
either the current month or in the immediately preceding 12 months.
This provision's effects are discussed in the following paragraphs.
Additional LIHEAP provisions which are expected to result in
minimal effects include:
Requiring State agencies to confer HCSUA eligibility to
both households if a household receiving a qualifying LIHEAP payment
splits into two households.
Allowing weatherization payments to confer eligibility
for the HCSUA in limited circumstances.
As previously discussed, the LIHEAP provisions of this final
rule were self-implementing as of 2014 and are therefore fully
captured in one of the SNAP participation and benefits baselines
relevant to this regulatory analysis.
Effect on SNAP Participants: At the time of implementation, the
Department estimates that one-third of SNAP households were affected
in States that have a minimum LIHEAP payment below the $20 threshold
when this change went into effect beginning in 2014. Most of these
households remained eligible for SNAP but may have received a lower
monthly benefit. Less than 0.1 percent of all SNAP households are
estimated to have lost eligibility. Affected households with an
elderly or disabled member generally saw greater reductions in their
monthly benefit because they do not face a cap on the amount of
their excess shelter expenses deduction. If they were no longer
eligible for the HCSUA, their shelter deduction may have become
smaller, resulting in a smaller monthly benefit.
Effect on Federal Spending: The Department estimates that these
statutory changes reduced Federal transfers (SNAP benefit payments)
by approximately $2.2 billion over the 5-year period of FY 2025-FY
2029. Because these provisions were implemented shortly after
passage of the Agricultural Act of 2014, this reduction in transfers
is already fully captured in one of the SNAP participation and
benefits baselines relevant to this analysis and will not result in
a reduction, as compared with that baseline, in predicted SNAP
spending in future years relevant to this regulatory analysis.
Effect on State Agencies: Among the 17 States that issued LIHEAP
payments to confer eligibility for the HCSUA prior to the amendments
made by the Agricultural Act of 2014, the four States that opted not
to raise those payments to meet the new threshold were required to
make minimal, one-time changes to their eligibility systems,
manuals, and training procedures for staff. Other minimal burdens
imposed on State agencies, such as documenting LIHEAP receipt, were
already required as part of the certification process and are
considered usual and customary within the course of States' normal
administrative activities. States had flexibility in terms of when
they made the change for their current caseload, reducing
administrative burden.
D. Combined Effects of the Final Rule
Effect on SNAP Participants: The Department estimates that most
SNAP households will experience either an increase or no change to
their SNAP benefit because of the final rule (see Table 7). Upon
full implementation of the rule, about 4.9 percent of SNAP
households are expected to receive, on average, 2.6 percent lower
monthly benefits (an average monthly decrease of $7). An estimated
29.2 percent of SNAP households are expected to receive, on average,
6.0 percent higher monthly benefits (an average monthly increase of
$15). The remaining two-thirds of SNAP households will see no change
to their monthly benefits.
The internet provision of the final rule reduces the monthly
benefit losses experienced by households in the States that are
expected to reduce their HCSUAs because of the data quality and
methodological review provision of the final rule. The internet
provision reduces the share of households losing benefits under the
final rule by 0.4 percentage points. Among households losing
benefits due to the data quality and methodology requirements
established by the final rule, the marginal effect of including
internet expenses in SUAs reduces their average monthly benefit loss
from $21 to $7.
[GRAPHIC] [TIFF OMITTED] TR18NO24.045
Effect on Federal Spending: The Department estimates full
implementation of the final rule will increase SNAP benefit spending
(transfers) by $1.3 billion in FY 2026 and $5.4 billion over the 5-
year period FY 2025-FY 2029. This increase in spending is primarily
driven by the rule's provision to allow internet as an allowable
shelter expense. The full cost of the internet provision ($6.6
billion over 5 years) is partially offset by savings (-$1.2 billion
over 5 years) due to establishing data quality and update frequency
requirements for SUAs.
Total Federal non-transfer costs associated with the final rule
are estimated to be about $612,000 over 5 years (FY 2025-FY 2029).
Non-transfer costs will be higher at implementation in FY 2025
(about $489,000) and every 5 years thereafter, when State agencies
are expected to conduct a complete review and resubmission of their
SUA calculations. In intervening years, Federal non-transfer costs
will be about $31,000.
Effect on State Agencies: The Department expects full
implementation of the final rule will increase State agency costs by
about $561,000 over 5 years (FY 2025-FY 2029) after 50 percent
Federal reimbursement. Most of this cost (about $438,000 in FY 2025)
is associated with staff burden and contract costs State agencies
are expected to incur every 5 years, when they will be required to
conduct a full review and update of their SUA calculations.
VI. Distributive Impacts
A. Differences in State-Level impacts
Effects of the final rule vary by State. The 4.9 percent of
households expected to see
[[Page 91233]]
reduced SNAP benefits under the final rule are in 10 States, based
on FNS's assessment of the likelihood that those 10 State agencies'
HCSUA methodologies will require significant revisions to meet the
guidelines established by the final rule. Within these 10 States,
the share of households estimated to lose a portion of their SNAP
benefits ranges from 21.5 percent to 44.9 percent. Among these 10
States, 9 are also expected to have a small share of their SNAP
households gaining benefits because of the final rule, ranging from
0.3 percent to 11.6 percent. Simulation results indicated that one
State agency is expected to have no households gaining benefits
because of the final rule, however this result may be due to small
sample sizes in that State, and it is possible that a small number
of households in that State could see increased benefits. In the
remaining 52 States, the share of households expected to gain
benefits under the final rule in each State ranges from a high of
47.6 percent to a low of 0.3 percent. The share of households
expected to be unaffected by the final rule ranges from 98.4 percent
to 52.5 percent. The LIHEAP provisions of the final rule primarily
affect just 4 States that previously issued LIHEAP payments to their
SNAP caseloads to confer HCSUA eligibility and did not opt to
increase those payments above the $20 threshold.\20\
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\20\ The four States that chose not to increase their LIHEAP
payments to greater than $20.00 at the time of implementation are
Delaware, New Hampshire, New Jersey, and Wisconsin.
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[[Page 91234]]
[GRAPHIC] [TIFF OMITTED] TR18NO24.046
The average household monthly benefit gain within each State
(among States with households gaining benefits) ranges from a low of
$12 to a high of $23 among households that see larger benefits.
Among all households expected to gain benefits
[[Page 91235]]
under the final rule, the nationwide average gain is about $15. The
average household monthly benefit loss per State (among the 10
States with households losing benefits) ranges from -$4 to -$11
among households that see smaller benefits. Among all households
expected to lose benefits under the final rule, the nationwide
average loss is about -$7 per month. See Appendix Table C for
estimates in each State.
[GRAPHIC] [TIFF OMITTED] TR18NO24.047
B. Differences Among Subgroups Resulting From Changes to SUA
Methodology
The final rule's changes to SUAs have the greatest impact on
households that contain an elderly or disabled individual. These
households are not subject to the cap on the excess shelter
deduction, and thus are more likely to be affected by changes to the
HCSUA, as larger HCSUAs result in a larger shelter deduction.\21\
Households with elderly members and households with disabled members
make up a disproportionate share of those who gain benefits as well
as of those who lose benefits, as shown in Table 10, below.
Households with members who are elderly or disabled are more likely
than other households to claim an excess shelter deduction, and
those deductions are larger on average than the shelter deductions
of other households (Table 11). More households with members who are
elderly or disabled are expected to gain benefits under the final
rule than to lose benefits. Additionally, the average benefit gain
for these households is more than twice the average benefit loss.
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\21\ All other things being equal, households containing elderly
or disabled individuals may qualify for a larger shelter deduction
than a similar household without an elderly or disabled member
because their shelter deduction is not capped. As a result, the
household with an elderly or disabled member has lower net income,
resulting in a larger SNAP benefit.
---------------------------------------------------------------------------
SNAP households with children are slightly less likely than all
SNAP households to gain benefits because of the final rule (27.3
percent, compared to 29.2 percent for all households) and are
slightly less likely to lose benefits of the final rule (3.8
percent, compared to 4.9 percent for all households). SNAP
households with children who gain or lose benefits because of the
final rule are estimated to experience similar average changes in
their monthly benefits as all SNAP households (see Table 10).
[[Page 91236]]
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[GRAPHIC] [TIFF OMITTED] TR18NO24.049
Households headed by a non-Hispanic white or Asian individual
are more likely to lose benefits (about 7 percent, v. about 5
percent for all households). Households headed by an Asian
individual are also slightly more likely to gain benefits due to the
final rule (about 31 percent, v. about 29 percent for all
households). Households headed by a non-Hispanic black individual
are slightly less likely to gain benefits under the final rule
(about 27 percent, v. about 29 percent for all households).
Households headed by an Asian or Hispanic individual are expected to
experience a larger average benefit loss (about -$9, v. about -$7
for all households). Average benefit gains are consistent across the
protected class subgroups examined in this analysis (see Table 10).
VII. Uncertainties
Uncertainties related to this regulatory impact analysis include
the following:
A. Changes in SNAP Caseload Numbers and Composition
This analysis estimates the economic circumstances of SNAP
households based on historical data. Macroeconomic trends in
employment, wage growth, and inflation may alter household incomes
and expenses in future years in a way that differs significantly
from the SNAP caseload in FY 2022. Households that gain or lose
benefits under this rule do so because the changes to SUA values
result in changes to households' net
[[Page 91237]]
incomes, which are used to calculate their SNAP allotments. Smaller
SUAs mean households have higher net incomes and thus receive lower
benefits; higher SUAs have the opposite effect. If SNAP households'
shelter expenses rise faster than their incomes due to inflation in
the housing market, they may be more likely to be subject to the cap
on shelter expense deductions in the future and may not be impacted
by changes to SUA values. Similarly, if SNAP households' gross
incomes rise, the excess shelter deduction could have a more limited
impact on their SNAP benefit calculation, as only those shelter
expenses that exceed 50 percent of net income after other deductions
may be deducted. As net income rises, the share of shelter expenses
that can be deducted can decrease. In this scenario, changes in SUA
values could have a more limited impact on their benefit
calculation. It should be noted that households with elderly or
disabled members are not subject to the cap on shelter expense
deductions and would be less impacted by this uncertainty.
Additionally, State agencies have changed their SUA values, some
in significant ways since FY 2022. The model used in this analysis
attempted to control for these changes by adjusting each State's FY
2022 HCSUA value to proportionately reflect the relationship between
each State's FY 2024 HCSUA and the FY 2024 shelter cap. The
Department believes the methodology in this analysis controls for
changes to HCSUA values since FY 2022 to the greatest extent
feasible.
B. Values of Internet Component of HCSUAs and LUAs and Values of
Internet Single Utility Allowances
It is possible that some State agencies may establish
significantly higher or lower allowances for internet expenses than
the Department anticipates. If States implement values that skew the
average across States higher or lower than the $50 average value
used in this RIA, the cost of the final rule could increase or
decrease. Two alternative scenarios are explored in the following
Sensitivity Analysis section. The Department does not currently have
information about how each State agency may choose to calculate
internet allowances in reaction to this rule.
C. Share of State Agencies That Opt To Include Internet in Their
SUAs
While FNS expects all State agencies will choose to account for
internet expenses in their HCSUAs, they are not required to do so.
If fewer State agencies opt to include basic internet expenses in
their SUAs, then the cost of the proposed rule will be lower.
However, most of the final rule's cost is due to the mandatory
inclusion of internet within States' HCSUAs. Therefore, States'
individual decisions about including internet in the LUA or as an
individual standard would likely have small effects on the rule's
overall cost. An alternative scenario, in which 15 percent of the
SNAP caseload lives in a State that chooses not to include internet
expenses in its SUAs, is explored in the following Sensitivity
Analysis section. The Department does not currently have information
about whether some States will opt to only include internet expenses
in their HCSUA.
D. Share of States That Issue LIHEAP Payments Greater Than $20
to Their SNAP Caseload
The estimates in this analysis are based on 4 of 17 States that
discontinued LIHEAP payments to their SNAP caseloads that conferred
HCSUA eligibility and 13 States continuing to provide payments above
the $20 threshold. It is possible that more or fewer State agencies
will issue LIHEAP payments above the $20 threshold in the future.
VIII. Sensitivity Analysis
Table 12, below, illustrates how the RIA's estimates of the
finalized SUA NPRM provisions might change if different assumptions
regarding the uncertainties discussed above were used. Sensitivity
analysis estimates were produced using the same methodology as was
used for the RIA estimates. Alternative assumptions used for the
sensitivity analysis include:
A. Assume the average internet allowance value States calculate
for their HCSUAs, LUAs, and basic internet individual standard is
$40, rather than $50.
B. Assume the average internet allowance value States calculate
for their HCSUAs, LUAs, and basic internet individual standard is
$60, rather than $50.
C. Assume the average reduction in 10 States' HCSUAs and average
increase in 6 States' HCSUAs due to the final rule's data quality
and 5-year update requirements is lower, 5 percent rather than 10
percent.
D. Assume the average reduction in 10 States' HCSUAs and average
increase in 6 States' HCSUAs due to the final rule's data quality
and 5-year update requirements is higher, 15 percent rather than 10
percent.
E. Assume the average reduction in 10 States' HCSUAs and average
increase in 6 States' HCSUAs due to the final rule's data quality
and 5-year update requirements is higher, 20 percent rather than 10
percent.
F. Assume the average reduction in 10 States' HCSUAs is higher
(20 percent) and the average increase in 6 States' HCSUAs remains 10
percent.
G. Assume the average reduction in 10 States' HCSUAs remains 10
percent and the average increase in 6 States' HCSUAs is higher (20
percent).
H. Assume 15 percent of the SNAP caseload lives in a State where
the State agency does not opt to incorporate basic internet into
their SUAs.
[[Page 91238]]
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The simulations that assessed Scenarios A and B (see table 12)
indicate that, on average, a $10 change in the average internet
allowances implemented by State agencies will result in
approximately a corresponding one-third of a percentage point change
in the final rule's effect on transfer spending. In the RIA, as
finalized, the final rule results in a 1.34 percent increase in
total SNAP benefit spending. If the average value of internet
standards is $10 higher than anticipated, the final rule would be
estimated to result in a 1.66 percent increase in total SNAP benefit
spending. Similarly, if the average value of internet standards is
$10 lower than anticipated, the final rule would be estimated to
result in a 1.01 percent increase in total SNAP benefit spending. A
one-third of a percentage point change in the overall impact of the
final rule would result in approximately a $322 million increase or
decrease in the cost of final rule in FY 2026.
Given that the Department cannot precisely estimate which States
will change their HCSUA values because of the final rule, nor the
degree to which they will increase or decrease their HCSUAs, several
different scenarios were tested (see Table 12, Scenarios C-G).
Across these scenarios, the transfer cost of the final rule in FY
2026 ranges from a low of $939 million to a high of $1.6 billion.
Over the 5-year period FY 2025-FY 2029, the transfer cost of the
final rule in scenarios C through G ranges from a low of $3.8
billion to a high of $6.6 billion.
Finally, if some State agencies decide not to incorporate basic
internet expenses into their SUAs (Scenario H in Table 12), the
Department estimates there would be a corresponding 0.2 percentage
point decrease in the estimated transfer cost of the final rule.
This would result in approximately a $197 million decrease in the
transfer cost of the final rule in FY 2026 and approximately an $800
million decrease in the transfer cost of the final rule of the 5-
year period FY 2025-FY 2029. To produce this estimate, the
Department assumes 15 percent of SNAP households may live in a State
that will choose not to include basic internet expenses in their
SUAs.
X. Alternatives
The Department used the same methodology (as applicable) and FY
2022 SNAP QC Minimodel to assess the final rule and to assess the
alternatives presented in this section.
A. Finalizing LIHEAP and Internet Provisions, Only
The Department considered finalizing the LIHEAP provisions of
the 2016 NPRM and finalizing internet as an allowable shelter
expense for the purposes of calculating the excess shelter expense
deduction, without making any additional changes to SUA regulations.
This alternative would have made no changes to how States calculate
their HCSUAs, LUAs, and individual standards, except for permitting
standard allowances to incorporate basic internet expenses. States
would retain full flexibility in how they calculate SUAs.
Under this approach, no household would experience reduced
monthly SNAP benefits, in comparison to the 4.9 percent of
households estimated to lose an average of $7 in monthly benefits
under the rule, as finalized. The transfer cost of the final rule
would be higher ($6.6 billion over five years FY 2025- FY 2029,
compared to $5.4 billion), as there would be no savings due to data
quality and methodological requirements.
The Department determined this approach would not address
concerns about consistency and data integrity in how States
calculate their SUAs, and therefore was an insufficient alternative.
B. Standardizing HCSUAs at the 90th Percentile
The Department considered retaining the proposed rule's
provision to standardize HCSUAs, though at the 90th percentile of
low-income households' expenses, rather than the 80th percentile as
proposed. Under this approach, the Department would have also
finalized the LIHEAP provisions of the final rule and added internet
as an allowable expense for the purposes of calculating the excess
shelter expense deduction. It also would have retained the final
rule provisions to make HCSUAs statewide values, calculated by FNS.
The Department considered this approach as it would have addressed
concerns about fairness and transparency in how SUAs are calculated,
while also mitigating benefit losses to households if the 80th
percentile was used, as proposed. The Department estimates that this
approach would have resulted in a 2.8 percent reduction in SNAP
benefit spending (-$11.2 billion over five years if implemented in
FY 2026), compared to the 1.3 percent increase ($5.4 billion over
five years) estimated for the final rule.
Although this approach would address concerns about consistency
and transparency in calculating SUAs, the Department
[[Page 91239]]
determined that this approach would constrain States' flexibility in
developing SUAs that utilize local utility provider data and respond
to within-State variations in expenses, to a greater degree than
necessary. It also would have resulted in approximately five times
as many households losing benefits (25 percent, v. 5 percent) and
about seven times larger average household benefit losses (-$41, v.
-$6) than the final rule, resulting in disruption, confusion, and
negative consequences for households' food budgets. See Table 13,
below, for further details about this alternative's estimated
effects on SNAP households.
[GRAPHIC] [TIFF OMITTED] TR18NO24.051
C. Permitting State Agencies a Longer Timeframe Between
Methodological Updates
The Department considered permitting States to conduct
methodological updates of their SUAs less frequently than every five
years. If States were allowed to update their SUA methodologies and
base data every seven years, State agencies would experience a
reduced administrative burden due to conducting the updates. Less
frequent methodological updates could also affect benefit spending
if States continued to use SUAs that were out of alignment with
households' current circumstances for a longer period of time.
However, the Department cannot predict if less-frequent SUA updates
in the future would be more likely to result in SUAs being
inappropriately high or low, and therefore is unable to estimate if
benefit spending would have increased or decreased under this
alternative.
The Department determined that a five-year update requirement
was more appropriate than a longer timeframe because it strikes an
appropriate balance between ensuring SUAs remain responsive to
current trends in consumption, efficiency, and utility prices, while
minimizing the burden on State agencies to conduct frequent,
extensive updates of their SUA methodologies. The Department
believes a longer period between updates could result in SUAs become
outdated, particularly if a State bases its SUA calculations on
survey data, rather than data sourced directly from utility
providers. Survey data from sources like ACS and RECS can lag behind
current conditions by multiple years, and their publication does not
always take place in time for an annual SUA update. As a result,
allowing State agencies to update their methodologies every seven
years could result in baseline SUA data that are a decade or more
out-of-date.
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[FR Doc. 2024-26845 Filed 11-15-24; 8:45 am]
BILLING CODE 3410-30-C