Subchapter C—Food Stamp and Food Distribution Program

SUBCHAPTER C—FOOD STAMP AND FOOD DISTRIBUTION PROGRAM

EDITORIAL NOTE: Nomenclature changes to subchapter C appear by Amdt. 381, 65 FR 64586, Oct. 30, 2000.

PART 271—GENERAL pate in the program. Part 273 describes INFORMATION AND DEFINITIONS the eligibility criteria to be applied by State agencies and related processing Sec. requirements and standards. Part 274 271.1 General purpose and scope. provides requirements for the issuance 271.2 Definitions. of coupons to eligible households and 271.3 Delegations to FNS for administra- establishes related issuance respon- tion. sibilities. Part 275 sets forth guidelines 271.4 Delegations to State agencies for ad- for monitoring the food stamp pro- ministration. gram, analyzing the results and formu- 271.5 Coupons as obligations of the United lating corrective action. Part 276 estab- States, crimes and offenses. lishes State agency liability and cer- 271.6 Complaint procedure. 271.7 Allotment reduction procedures. tain Federal sanctions. Part 277 out- 271.8 Information collection/record- lines procedures for payment of admin- keeping—OMB assigned control numbers. istrative costs of State agencies. Part 278 delineates the terms and conditions AUTHORITY: 7 U.S.C. 2011–2036. for the participation of retail food § 271.1 General purpose and scope. stores, wholesale food concerns, meal services, and insured financial institu- (a) Purpose of the food stamp program. tions. Part 279 establishes the proce- The food stamp program is designed to dures for administrative and judicial promote the general welfare and to reviews requested by food retailers, safeguard the health and well being of food wholesalers, and meal services. the Nation’s population by raising the Part 280 explains procedures for issuing levels of nutrition among low-income emergency coupon allotments to cer- households. Section 2 of the Food tain victims of disasters unable to pur- Stamp Act of 1977 states, in part: chase adequate amounts of food. Part Congress hereby finds that the limited food 281 sets forth guidelines for designating purchasing power of low-income households Indian tribes as State agencies. Part contributes to hunger and malnutrition 282 provides guidelines for initiation, among members of such households. Con- selection, and operation of demonstra- gress further finds that increased utilization tion, research, and evaluation projects. of food in establishing and maintaining adequate national levels of nutrition will pro- Part 284 provides for a nutrition assist- mote the distribution in a beneficial manner ance program for the Commonwealth of of the Nation’s agricultural abundance and the Northern Mariana Islands (CNMI). will strengthen the Nation’s agricultural Part 285 describes the general terms economy, as well as result in more orderly and conditions under which grant funds marketing and distribution of foods. To al- are provided to the Commonwealth of leviate such hunger and malnutrition, a food Puerto Rico. stamp program is herein authorized which will permit low-income households to obtain [Amdt. 132, 43 FR 47882, Oct. 17, 1982, as a more nutritious diet through normal chan- amended by Amdt. 216, 47 FR 23461, May 28, nels of trade by increasing food purchasing 1982; Amdt. 248, 48 FR 16832, Apr. 19, 1983; power for all eligible households who apply Amdt. 356, 59 FR 29713, June 9, 1994] for participation. (b) Scope of the regulations. Part 271 § 271.2 Definitions. contains general information, defini- Access device means any card, plate, tions, and other material applicable to code, account number, or other means all parts of this subchapter. Part 272 of access that can be used alone, or in sets forth policies and procedures gov- conjunction with another access de- erning State agencies which partici- vice, to obtain payments, allotments,

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benefits, money, goods, or other things Allotment means the total value of of value, or that can be used to initiate coupons a household is authorized to a transfer of funds under the Food receive during each month or other Stamp Act of 1977, as amended. time period. Active case means a household which Application form means: (1) The appli- was certified prior to, or during, the cation form designed or approved by sample month and issued food stamp FNS, which is completed by a house- benefits for the sample month. hold member or authorized representa- Active case error rate means an esti- tive; or mate of the proportion of cases with an (2) For households consisting solely error in the determination of eligi- of public assistance or general assist- bility or basis of issuance. This esti- ance recipients, it may also mean the mate will be expressed as a percentage application form used to apply for pub- of the completed active quality control lic assistance or general assistance, in- reviews excluding all results from cases processed by SSA personnel or cluding attachments approved by FNS, participating in a demonstration which is completed by a household project identified by FNS as having member or authorized representative. certification rules that are signifi- Assessment an in-depth evaluation of cantly different from standard require- employability skills coupled with ments. counseling on how and where to search Adequate notice in a periodic report- for employment. If combined with ing system such as monthly reporting work experience, employment search or quarterly reporting means a written or training, an assessment of this na- notice that includes a statement of the ture could constitute part of an ap- action the agency has taken or intends provable employment and training to take; the reason for the intended ac- component. tion; the household’s right to request a Authorization document means an fair hearing; the name of the person to intermediary document issued by the contact for additional information; the State agency and used in an issuance availability of continued benefits; and system to authorize a specific benefit the liability of the household for any amount for a household. overissuances received while awaiting Authorization to participate card (ATP) a fair hearing if the hearing official’s means a document which is issued by decision is adverse to the household. the State agency to a certified house- Depending on the timing of a State’s hold to show the allotment the house- system and the timeliness of report hold is authorized to receive on presen- submission by participating house- tation of such document. holds, such notice may be received Base period means the first 6-month prior to agency action, at the time re- reporting period of each fiscal year. duced benefits are received, or, if benefits are terminated, at the time bene- Beginning month(s) in a Monthly Re- fits would have been received if they porting and Retrospective Budgeting had not been terminated. In all cases, system means either the first month however, participants will be allowed for which the household is certified for ten days from the mailing date of the food stamps (where the State agency notice to contest the agency action and has adopted a one month accounting to have benefits restored to their pre- system) or the first month for which vious level. If the 10-day period ends on the household is certified for food a weekend or a holiday and a request is stamps and the month thereafter received the day after the weekend or (where the State agency has adopted a holiday, the State agency shall con- two month accounting system). Except sider the request to be timely. for beginning months in sequence as Alien Status Verification Index (ASVI) described in the preceding sentences, a means the automated database main- beginning month cannot be any month tained by the Immigration and Natu- which immediately follows a month in ralization Service which may be which a household is certified. The accessed by State agencies to verify month following the month of termi- immigration status. nation resulting from a one-month

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temporary change in household cir- for, or to which it has assigned respon- cumstances shall not be considered a sibility for, the issuance of coupons to beginning month. households. Budget month in a Monthly Reporting Deficiency means any aspect of a and Retrospective Budgeting system State’s program operations determined means the fiscal or calendar month to be out of compliance with the Food from which the State agency uses in- Stamp Act, FNS Regulations, or pro- come and other circumstances of the gram requirements as contained in the household to calculate the household’s State agency’s manual, the State agen- food stamp allotment to be provided cy’s approved Plan of Operation or for the corresponding issuance month. other State agency plans. Bulk storage point means an office of Department means the U.S. Depart- the State agency or any person, partment of Agriculture. nership, corporation, organization, po- Direct access system means an litical subdivision, or other entity with issuance system in which benefits are which a State agency has contracted issued directly to the household, with- for, or to which it has assigned respon- out the use of an intermediary docu- sibility for, the security and storage of ment, based on the issuance agent’s di- food coupons. rect access to information in the means any of- Claims collection point household’s individual record on the fice of the State agency or any person, master issuance file, which may be a partnership, corporation, organization, card document or an on-line computer political subdivision or other entity system. with which a State agency has contracted, or to which it has assigned re- Drug addiction or alcoholic treatment sponsibility for the collection of and rehabilitation program means any claims. drug addiction or alcoholic treatment Communal dining facility means a pub- and rehabilitation program conducted lic or nonprofit private establishment, by a private, nonprofit organization or approved by FNS, which prepares and institution, or a publicly operated com- serves meals for elderly persons, or for munity mental health center, under supplemental security income (SSI) re- part B of title XIX of the Public Health cipients, and their spouses, a public or Service Act (42 U.S.C. 300x et seq.). private nonprofit establishment (eat- Under part B of title XIX of the Public ing or otherwise) that feeds elderly per- Health Service Act is defined as meet- sons or SSI recipients, and their ing the criteria which would make it spouses, and federally subsidized hous- eligible to receive funds, even if it does ing for the elderly at which meals are not actually receive funding under part prepared for and served to the resi- B of title XIX. dents. It also includes private estab- Elderly or disabled member means a lishments that contract with an appro- member of a household who: (1) Is 60 priate State or local agency to offer years of age or older; meals at concessional prices to elderly (2) Receives supplemental security persons or SSI recipients, and their income benefits under title XVI of the spouses. Social Security Act or disability or Coupon means any coupon, stamp, blindness payments under titles I, II, type of certificate, authorization card, X, XIV, or XVI of the Social Security cash or check issued in lieu of a cou- Act; pon, or access device, including an (3) Receives federally or State-ad- electronic benefit transfer card or per- ministered supplemental benefits sonal identification number issued pur- under section 1616(a) of the Social Se- suant to the provisions of the Food curity Act provided that the eligibility Stamp Act of 1977, as amended, for the to receive the benefits is based upon purchase of eligible food. the disability or blindness criteria used Coupon issuer means any office of the under title XVI of the Social Security State agency or any person, partner- Act; ship, corporation, organization, polit- (4) Receives federally or State-ad- ical subdivision, or other entity with ministered supplemental benefits which a State agency has contracted under section 212(a) of Pub. L. 93–66;

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(5) Receives disability retirement tablished by the State agency which benefits from a governmental agency are at least as stringent as those used because of a disability considered per- under title XVI of the Social Security manent under section 221(i) of the So- Act (as set forth at 20 CFR part 416, cial Security Act. subpart I, Determining Disability and (6) Is a veteran with a service-con- Blindness as defined in Title XVI). nected or non-service-connected dis- Eligible foods means: (1) Any food or ability rated by the Veteran’s Adminis- food product intended for human con- tration (VA) as total or paid as total sumption except alcoholic beverages, by the VA under title 38 of the United tobacco, and hot foods and hot food States Code; products prepared for immediate con- (7) Is a veteran considered by the VA sumption; to be in need of regular aid and attend- (2) Seeds and plants to grow foods for ance or permanently housebound under the personal consumption of eligible title 38 of the United States Code; households; (8) Is a surviving spouse of a veteran (3) Meals prepared and delivered by and considered by the VA to be in need an authorized meal delivery service to of regular aid and attendance or per- households eligible to use coupons to manently housebound or a surviving purchase delivered meals; or meals child of a veteran and considered by served by an authorized communal din- the VA to be permanently incapable of ing facility for the elderly, for SSI self-support under title 38 of the United households or both, to households eligi- States Code; ble to use coupons for communal din- (9) Is a surviving spouse or surviving ing; child of a veteran and considered by (4) Meals prepared and served by a the VA to be entitled to compensation drug addict or alcoholic treatment and for a service-connected death or pen- rehabilitation center to narcotic ad- sion benefits for a nonservice-con- dicts or alcoholics and their children nected death under title 38 of the who live with them; United States Code and has a disability (5) Meals prepared and served by a considered permanent under section group living arrangement facility to 221(i) of the Social Security Act. ‘‘En- residents who are blind or disabled as titled’’ as used in this definition refers defined in paragraphs (2) through (11) to those veterans’ surviving spouses of the definition of ‘‘Elderly or disabled and surviving children who are receiv- member’’ contained in this section; ing the compensation or pension bene- (6) Meals prepared by and served by a fits stated or have been approved for shelter for battered women and chil- such payments, but are not yet receiv- dren to its eligible residents; ing them; or (7) In the case of certain eligible (10) Receives an annuity payment households living in areas of Alaska under: section 2(a)(1)(iv) of the Rail- where access to food stores is ex- road Retirement Act of 1974 and is de- tremely difficult and the households termined to be eligible to receive Medi- rely on hunting and fishing for subsist- care by the Railroad Retirement ence, equipment for the purpose of pro- Board; or section 2(a)(1)(v) of the Rail- curing food for eligible households, in- road Retirement Act of 1974 and is de- cluding nets, lines, hooks, fishing rods, termined to be disabled based upon the harpoons, knives, and other equipment criteria used under title XVI of the So- necessary for subsistence hunting and cial Security Act. fishing but not equipment for the pur- (11) Is a recipient of interim assist- pose of transportation, clothing or ance benefits pending the receipt of shelter, nor firearms, ammunition or Supplemented Security Income, a re- other explosives; cipient of disability related medical as- (8) In the case of homeless food stamp sistance under title XIX of the Social households, meals prepared for and Security Act, or a recipient of dis- served by an authorized public or pri- ability-based State general assistance vate nonprofit establishment (e.g. soup benefits provided that the eligibility to kitchen, temporary shelter), approved receive any of these benefits is based by an appropriate State or local agen- upon disability or blindness criteria es- cy, that feeds homeless persons; and

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(9) In the case of homeless food stamp store accept food coupons as shown by households, meals prepared by a res- the actions of the personnel at the taurant which contracts with an appro- time of the investigation. priate State agency to serve meals to FNS means the Food and Nutrition homeless persons at concessional (low Service of the U.S. Department of Agri- or reduced) prices. culture. Employment and training (E&T) compo- Food Stamp Act means the Food nent a work experience, work training Stamp Act of 1977 (Pub. L. 95–113), in- or job search program, as described in cluding any subsequent amendments section 6(d)(4)(B)(iv) of the Food Stamp thereto. Act of 1977 (7 U.S.C. 2014(2)(4)(B)) de- General assistance (GA) means cash or signed to help food stamp recipients another form of assistance, excluding move promptly into unsubsidized employment. in-kind assistance, financed by State Employment and training (E&T) man- or local funds as part of a program datory participant a Food Stamp Pro- which provides assistance to cover liv- gram applicant or participant who is ing expenses or other basic needs in- required to work register under 7 tended to promote the health or well- U.S.C. 2014(d)(1) or (2) and who the being of recipients. State determines should not be ex- Group living arrangement means a empted from participation in an em- public or private nonprofit residential ployment and training program. setting that serves no more than six- Employment and training (E&T) pro- teen residents that is certified by the gram a program operated by each State appropriate agency or agencies of the agency consisting of one or more work, State under regulations issued under training, education or job search com- section 1616(e) of the Social Security ponents. Act or under standards determined by Error for active cases results when a the Secretary to be comparable to determination is made by a quality standards implemented by appropriate control reviewer that a household State agencies under section 1616(e) of which received food stamp benefits the Social Security Act. To be eligible during the sample month is ineligible for food stamp benefits, a resident of or received an incorrect allotment. such a group living arrangement must Thus, errors in active cases involve be blind or disabled as defined in para- dollar loss to either the participant or graphs (2) through (11) of the definition the government. For negative cases, an of ‘‘Elderly or disabled member’’ con- ‘‘error’’ means that the reviewer deter- tained in this section. mines that the decision to deny, sus- Homeless individual means an indi- pend, or terminate a household was in- vidual who lacks a fixed and regular correct. nighttime residence or an individual Exempted for purposes of § 273.7 ex- whose primary nighttime residence is: cluding paragraphs (a) and (b)—this (1) A supervised shelter designed to term refers to a work registered person provide temporary accommodations or persons excused by the State, under (such as a welfare hotel or congregate the conditions in § 273.7(e) from partici- shelter); pation in an employment and training (2) A halfway house or similar insti- program. tution that provides temporary resi- Exercises governmental jurisdiction means the active exercise of the legis- dence for individuals intended to be in- lative, executive or judicial powers of stitutionalized; government by an Indian tribal organi- (3) A temporary accommodation for zation. not more than 90 days in the residence Federal fiscal year means a period of of another individual; or 12 calendar months beginning with (4) A place not designed for, or ordi- each October 1 and ending with Sep- narily used, as a regular sleeping ac- tember 30 of the following calendar commodation for human beings (a hall- year. way, a bus station, a lobby or similar Firm’s practice means the usual man- places). ner in which personnel of a firm or Homeless meal provider means:

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(1) A public or private nonprofit es- et month. In prospective budgeting, the tablishment (e.g., soup kitchens, tem- budget month and issuance month are porary shelters) that feeds homeless the same. In retrospective budgeting, persons; or the issuance month follows the budget (2) A restaurant which contracts with month and the issuance month shall an appropriate State agency to offer begin within 32 days after the end of meals at concessional (low or reduced) the budget month. prices to homeless persons. Large project area means those project House-to-house trade route means any areas/management units with monthly retail food business operated from a active caseloads of more than 15,000 truck, bus, pushcart, or other mobile households based on the most current vehicle. information available at the time the Identification (ID) card means a card large project area review schedule is which identifies the bearer as eligible developed. to receive and use food coupons. Low-income household means a house- Immigration and Naturalization Service hold whose annual income does not ex- (INS) means the Immigration and Nat- ceed 125 percent of the Office of Man- uralization Service, U.S. Department agement and Budget poverty guide- of Justice. lines. Indian tribe means: (1) Any Indian Management Evaluation (ME) reviews tribe, Band, Nation, or other organized means reviews conducted by States at Indian group on a reservation for ex- the project area level to determine if ample, a Rancheria, Pueblo or Colony, State agencies are administering and and including any Alaska Native Vil- operating the Food Stamp Program in lage or regional or village corporation accordance with program require- (established pursuant to the Alaska ments. Native Claims Settlement Act (85 Stat. 688)), that is on a reservation and is Management unit means an area based recognized as eligible for Federal pro- on a welfare district, region, or other grams and services provided to Indians administrative structure designated by because of their status as Indians; or the State agency and approved by FNS (2) any Indian tribe or Band on a res- to be reviewed for ME review purposes. ervation holding a treaty with a State Master issuance file means a cumu- government. lative file containing the individual Indian tribal organization (ITO) records and status of households, and means: (1) The recognized governing the amount of benefits, if any, each body of any Indian tribe on a reserva- household is authorized to receive. tion; or (2) the tribally recognized Meal delivery service means a political intertribal organization which the rec- subdivision, a private nonprofit organi- ognized governing bodies of two or zation, or a private establishment with more Indian tribes on a reservation au- which a State or local agency has con- thorizes to operate the Food Stamp tracted for the preparation and deliv- Program or a Food Distribution Pro- ery of meals at concessional prices to gram on their behalf. elderly persons, and their spouses, and Insured financial institution means a to the physically or mentally handi- financial institution insured by the capped and persons otherwise disabled, Federal Deposit Insurance Corporation and their spouses, such that they are (FDIC) or financial institutions which unable to adequately prepare all of are insured under the Federal Credit their meals. Union Act and which have retail food Medicaid means medical assistance stores or wholesale food concerns in under title XIX of the Social Security their field of membership. Act, as amended. Issuance month in a Monthly Report- Medium project area means those ing and Retrospective Budgeting sys- project areas/management units with tem means the fiscal or calendar monthly active caseloads of 2,001 to month for which the State agency shall 15,000 households based on the most issue a food stamp allotment. Issuance current information available at the is based upon income and cir- time the medium project area review cumstances in the corresponding budg- schedule is developed.

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Minimum benefit means the minimum of all allotments issued to completed monthly amount of food stamps that active sample cases, excluding those one- and two-person households re- cases processed by SSA personnel or ceive. The amount of the minimum participating in certain demonstration benefit shall be $10. projects designated by FNS. National standard payment error rate Placed in an employment and training means the weighted mean of all States’ (E&T) program means a State agency payment error rates during a base pe- may count a person as ‘‘placed’’ in an riod. E&T program when the individual com- Negative case means a household mences a component. whose application for food stamp bene- Program means the food stamp pro- fits was denied or whose food stamp gram conducted under the Food Stamp benefits were suspended or terminated Act and regulations. by an action in the sample month or by Project area means the county or an action effective for the sample similar political subdivision designated month. by a State as the administrative unit Negative case error rate means an esti- for program operations. Upon prior mate of the proportion of denied, sus- FNS approval, a city, Indian reserva- pended, or terminated cases where the tion, welfare district, or any other en- household was incorrectly denied, sus- tity with clearly defined geographic pended, or terminated. This estimate boundaries, or any combination of such will be expressed as a percentage of entities, may be designated as a project completed negative quality control re- area, or a State as a whole may be des- views excluding all results from cases ignated as a single project area. processed by SSA personnel or participating in a demonstration project iden- Prospective budgeting in a Monthly tified by FNS as having certification Reporting and Retrospective Budgeting rules that are significantly different system means the computation of a from standard requirements. household’s food stamp allotment for Newly work registered food stamp par- an issuance month based on an esti- ticipants work registered at the point mate of income and circumstances of application. which will exist in that month. Nonprofit cooperative food purchasing Public assistance (PA) means any of venture means any private nonprofit as- the following programs authorized by sociation of consumers whose members the Social Security Act of 1935, as pool their resources to buy food. amended: Old-age assistance, Tem- Offset year means the calendar year porary Assistance for Needy Families during which offsets may be made to (TANF), including TANF for children collect certain recipient claims from of unemployed fathers, aid to the blind, individuals’ Federal income tax re- aid to the permanently and totally dis- funds. abled and aid to aged, blind, or dis- Overissuance means the amount by abled. which coupons issued to a household Quality control review means a review exceeds the amount it was eligible to of a statistically valid sample of active receive. and negative cases to determine the ex- Overpayment error rate means the per- tent to which households are receiving centage of the value of all allotments the food stamp allotments to which issued in a fiscal year that are either: they are entitled, and to determine the (1) Issued to households that fail to extent to which decisions to deny, sus- meet basic program eligibility require- pend, or terminate cases are correct. ments, or Record-for-issuance file means a file (2) Overissued to eligible households. which is created monthly from the Payment error rate means the sum of master issuance file, which shows the the point estimates of two component amount of benefits each eligible house- error rates: an overpayment error rate hold is to receive for the issuance and an underpayment error rate. Each month, and the amount actually issued component error rate is the value of al- to the household. lotments either overissued or Regulations means the provisions of underissued expressed as a percentage this subchapter. Regulatory citations

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refer to provisions of this subchapter (low or reduced) prices to homeless unless otherwise specified. food stamp households; Reservation means the geographically (3) Any stores selling equipment for defined area or areas over which an procuring food by hunting and fishing ITO exercises governmental jurisdic- to eligible households in Alaska, as tion so long as such area or areas are specified in the definition of eligible legally recognized by the Federal or a foods; State government as being set aside for (4) Any private nonprofit cooperative the use of Indians. food purchasing venture, including Retail food store means: those whose members pay for food (1) An establishment or house-to- prior to receipt of the food; and house trade route that sells food for (5) A farmers’ market. home preparation and consumption Retrospective budgeting in a Monthly normally displayed in a public area, Reporting and Retrospective Budgeting and either offers for sale, on a contin- system means the computation of a uous basis, a variety of foods in suffi- household’s food stamp allotment for cient quantities in each of the four cat- an issuance month based on actual in- egories of staple foods including perish- come and circumstances which existed able foods in at least two such cat- in a previous month, the ‘‘budget egories (Criterion A) as set forth in month.’’ § 278.1(b)(1) of this chapter, or has more than 50 percent of its total gross retail Review date for quality control active sales in staple foods (Criterion B) as set cases means a day within the sample forth in § 278.1(b)(1) of this chapter as month, either the first day of the cal- determined by visual inspection, mar- endar or fiscal month or the day a cer- keting structure, business licenses, ac- tification action was taken to author- cessibility of food items offered for ize the allotment, whichever is later. sale, purchase and sales records, count- The ‘‘review date’’ for negative cases, ing of stockkeeping units, or other in- depending on the characteristics of inventory or accounting recordkeeping dividual State systems, could be the methods that are customary or reason- date on which the eligibility worker able in the retail food industry as set makes the decision to suspend, deny, or forth in § 278.1(b)(1) of this chapter. En- terminate the case, the date on which tities that have more than 50 percent the decision is entered into the com- of their total gross retail sales in hot puter system, the date of the notice to and/or cold prepared, ready-to-eat foods the client or the date the negative ac- that are intended for immediate con- tion becomes effective. For no case is sumption either for carry-out or on- the ‘‘review date’’ the day the quality premises consumption, and require no control review is conducted. additional preparation, are not eligible Review period means the 12-month pe- for FSP participation as retail food riod from October 1 of each calendar stores under § 278.1(b)(1) of this chapter. year through September 30 of the fol- (2) Public or private communal din- lowing calendar year. ing facilities and meal delivery serv- Sample frame means a list of all units ices; private nonprofit drug addict or from which a sample is actually se- alcoholic treatment and rehabilitation lected. programs; publicly operated commu- Sample month means the month of the nity mental health centers which con- sample frame from which a case is se- duct residential programs for drug ad- lected (e.g., for all cases selected from dicts and/or alcoholics; public or pri- a frame consisting of households par- vate nonprofit group living arrange- ticipating in January, the sample ments; public or private nonprofit shel- month is January). ters for battered women and children; Screening an evaluation by the eligi- public or private nonprofit establish- bility worker as to whether a person ments, approved by an appropriate should or should not be referred for State or local agency, that feed home- participation in an employment and less persons; or a restaurant that con- training program. This activity would tracts with an appropriate State agen- not be considered an approvable E&T cy to provide meals at concessional component.

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Secretary means the Secretary of the States, and the reservation of an In- U.S. Department of Agriculture. dian tribe whose ITO meets the re- Shelter for battered women and children quirements of the Food Stamp Act for means a public or private nonprofit participation as a State agency. residential facility that serves battered State agency means: (1) The agency of women and their children. If such a fa- State government, including the local cility serves other individuals, a por- offices thereof, which is responsible for tion of the facility must be set aside on the administration of the federally a long-term basis to serve only bat- aided public assistance programs with- tered women and children. in the State, and in those States where Small project area means those project such assistance programs are operated areas/management units with monthly on a decentralized basis, it includes the active caseloads of 2,000 households or counterpart local agencies which ad- fewer based on the most current infor- minister such assistance programs for mation available at the time the small the State agency, and (2) the Indian project area review schedule is devel- tribal organization of any Indian tribe oped. determined by the Department to be SSA processed/demonstration case capable of effectively administering a means a case that is participating or Food Stamp Program or a Food Dis- has been denied based upon processing tribution Program in accordance with by SSA personnel or is participating or provisions of the Food Stamp Act of has been denied/terminated based upon 1977. the rules of a demonstration project State Income and Eligibility Verification with significantly different certifi- System (IEVS) means a system of infor- cation rules (as identified by FNS). mation acquisition and exchange for Staple food means those food items purposes of income and eligibility intended for home preparation and con- verification which meets the require- sumption in each of the following food ments of section 1137 of the Social Se- categories: meat, poultry, or fish; curity Act, generally referred to as the bread or cereals; vegetables or fruits; IEVS. and dairy products. Commercially State Wage Information Collection processed foods and prepared mixtures Agency (SWICA) means the State agen- with multiple ingredients shall only be cy administering the State unemploy- counted in one staple food category. ment compensation law, another agen- For example, foods such as cold pizza, cy administering a quarterly wage re- macaroni and cheese, multi-ingredient porting system, or a State agency ad- soup, or frozen dinners, shall only be ministering an alternative system counted as one staple food item and which has been determined by the Sec- will normally be included in the staple retary of Labor, in consultation with food category of the main ingredient as the Secretary of Agriculture and the determined by FNS. Hot foods are not Secretary of Health and Human Serv- eligible for purchase with food stamps ices, to be as effective and timely in and, therefore, do not qualify as staple providing employment related income foods for the purpose of determining and eligibility data as the two just eligibility under § 278.1(b)(1) of this mentioned agencies. chapter. Accessory food items includ- Sub-units means the physical location ing, but not limited to, coffee, tea, of an organizational entity within a cocoa, carbonated and uncarbonated project area/management unit involved drinks, candy, condiments, and spices in the operation of the Food Stamp shall not be considered staple foods for Program, excluding Post Offices. the purpose of determining eligibility Supplemental Security Income (SSI) of any firm. However, accessory foods means monthly cash payments made that are offered for sale in authorized under the authority of: (1) Title XVI of retail food stores are eligible food the Social Security Act, as amended, items which may be purchased with to the aged, blind and disabled; (2) sec- food stamp benefits. tion 1616(a) of the Social Security Act; State means any one of the fifty or (3) section 212(a) of Pub. L. 93–66. States, the District of Columbia, Systematic Alien Verification for Enti- Guam, the Virgin Islands of the United tlements (SAVE) means the INS program

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whereby State agencies may verify the § 271.3 Delegations to FNS for adminis- validity of documents provided by tration. aliens applying for food stamp benefits (a) Delegation. Within the Depart- by obtaining information from a cen- ment, FNS acts on behalf of the De- tral data file. partment in the administration of the Thrifty food plan means the diet re- Food Stamp Program with the excep- quired to feed a family of four persons tion of those functions, which may be consisting of a man and a woman 20 delegated to other agencies within the through 50, a child 6 through 8, and a Department. The right is reserved at child 9 through 11 years of age, deter- any time to withdraw, modify, or mined in accordance with the Sec- amend any delegation of authority. retary’s calculations. The cost of such When authority is delegated to FNS, diet shall be the basis for uniform al- the responsibilities may be carried out lotments for all households regardless by the Administrator or by another of- of their actual composition. In order to ficial of FNS, or by State agencies with develop maximum food stamp allot- respect to claims against households, ments, the Secretary shall make as designated. household size and other adjustments (b) Claims settlement. FNS shall have in the Thrifty Food Plan taking into the power to determine the amount of account economies of scale and other and to settle and adjust any claim aris- adjustments as required by law. ing under the provisions of the act or Trafficking means the buying or sell- this subchapter, and to compromise or ing of coupons, ATP cards or other ben- deny all or part of any claim. efit instruments for cash or consideration other than eligible food; or the (c) Demonstration authority. FNS is exchange of firearms, ammunition, ex- authorized to undertake demonstration plosives, or controlled substances, as projects which test new methods de- defined in section 802 of title 21, United signed to improve program administra- States Code, for coupons. tion and benefit delivery. FNS is au- Underissuance means the amount by thorized to initiate program research which the allotment to which the and evaluation efforts for the purposes household was entitled exceeds the al- of improving and assessing program ad- lotment which the household received. ministration and effectiveness. The Underissuance error rate. (See Under- procedure for initiating and conducting payment error rate.) these projects is established in part 282. Underpayment error rate means the [Amdt. 132, 43 FR 47882, Oct. 17, 1982] ratio of the value of allotments underissued to recipient households to § 271.4 Delegations to State agencies the total value of allotments issued in for administration. a fiscal year by a State agency. (a) General delegation. The State Universe means all units for which in- agency shall be responsible for the ad- formation is desired. ministration of the program within the Variance means the incorrect applica- State, including, but not limited to: tion of policy and/or a deviation be- (1) Certification of applicant house- tween the information that was used to holds; authorize the sample month issuance (2) Issuance, control, and account- and the verified information that ability of coupons; should have been used to calculate the (3) Developing and maintaining com- sample month issuance. plaint procedures; Wholesale food concern means an es- (4) Developing, conducting, and eval- tablishment which sells eligible food to uating training; retail food stores or to meal services (5) Conducting performance reporting for resale to households. reviews; [Amdt. 132, 43 FR 47882, Oct. 17, 1978] (6) Keeping records necessary to determine whether the program is being EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 271.2, see the List of CFR conducted in compliance with these Sections Affected, which appears in the regulations; and Finding Aids section of the printed volume (7) Submitting accurate and timely and on GPO Access. financial and program reports.

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(b) Claims delegation. FNS delegates authorization cards are of a value of less to the State agency, subject to the than $100, or if the item used, transferred, standards in § 273.18, the authority to acquired, altered, or possessed is an access device that has a value of less than $100, determine the amount of, and settle, shall be guilty of a misdemeanor, and upon adjust, compromise or deny all or part the first conviction thereof, shall be fined of any claim which results from fraud- not more than $1000 or imprisoned for not ulent or nonfraudulent overissuances more than one year or both, and upon the to participating households. second and any subsequent conviction thereof, shall be imprisoned for not more than one [Amdt. 132, 43 FR 47882, Oct. 17, 1978, as year and may also be fined not more than amended by Amdt. 207, 47 FR 52333, Nov. 19, $1000. In addition to such penalties, any per- 1982] son convicted of a felony or misdemeanor violation under this subsection may be sus- § 271.5 Coupons as obligations of the pended by the court from participation in United States, crimes and offenses. the food stamp program for an additional pe- (a) Coupons as obligations. Pursuant riod of up to eighteen months consecutive to to section 15(d) of the Food Stamp Act, that period of suspension mandated by sec- coupons are an obligation of the United tion 6(b)(1) of this Act. States within the meaning of 18 United (2) Section 15(b)(2) of the Food Stamp States Code (U.S.C.) 8. The provisions Act reads as follows: of Title 18 of the United States Code, In the case of any individual convicted of ‘‘Crimes and Criminal Procedure,’’ rel- an offense under paragraph (b)(1) of this sec- ative to counterfeiting, misuse and al- tion, the court may permit such individual teration of obligations of the United to perform work approved by the court for States are applicable to coupons. the purpose of providing restitution for (b) Penalties. Any unauthorized losses incurred by the United States and the issuance, redemption, use, transfer, ac- State agency as a result of the offense for quisition, alteration, or possession of which such individual was convicted. If the court permits such individual to perform coupons, ATP cards, or other program such work and such individual agrees there- access device may subject an indi- to, the court shall withhold the imposition vidual, partnership, corporation, or of the sentence on the condition that such other legal entity to prosecution under individual perform the assigned work. Upon sections 15 (b) and (c) of the Food the successful completion of the assigned Stamp Act or under any other applica- work the court may suspend such sentence. ble Federal, State or local law, regula- (3) Section 15(c) of the Food Stamp tion or ordinance. Act reads as follows: (1) Section 15(b)(1) of the Food Stamp Act reads as follows: Whoever presents, or causes to be presented, coupons for payment or redemption Subject to the provisions of paragraph (2) of the value of $100 or more, knowing the of this subsection, whoever knowingly uses, same to have been received, transferred, or transfers, acquires, alters, or possesses cou- used in any manner in violation of the provi- pons, authorization cards, or access devices sions of this Act or the regulations issued in any manner contrary to this Act or the pursuant to this Act, shall be guilty of a fel- regulations issued pursuant to this Act shall, ony and, upon the first conviction thereof, if such coupons, authorization cards, or ac- shall be fined not more than $20,000 or im- cess devices are of a value of $5000 or more, prisoned for not more than five years, or be guilty of a felony and shall be fined not both, and upon the second and any subse- more than $250,000 or imprisoned for not quent conviction thereof, shall be impris- more than twenty years, or both, and shall, oned for not less than one year nor more if such coupons or authorization cards are of than five years and may also be fined not a value of $100 or more but less than $5000 or more than $20,000 or if such coupons are of a if the item used, transferred, acquired, al- value of less than $100, shall be guilty of a tered or possessed is an access device that misdemeanor and, upon the first conviction has a value of $100 or more but less than thereof, shall be fined not more than $1,000 $5000 be guilty of a felony and shall upon the or imprisoned for not more than one year, or first conviction thereof, be fined not more both, and upon the second and any subse- than $10,000 or imprisoned for not more than quent conviction thereof, shall be impris- five years, or both, and upon the second and oned for not more than one year and may any subsequent conviction thereof, shall be also be fined not more than $1,000. In addi- imprisoned for not less than six months nor tion to such penalties, any persons convicted more than five years and may also be fined of a felony or misdemeanor violation under not more than $10,000 or, if such coupons or this subsection may be suspended by the

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court from participation in the food stamp USDA, and by other authorized Federal program for an additional period of up to law enforcement agencies. eighteen months consecutive to that period (iii) These forfeiture and denial of of suspension mandated by section 6(b)(1) of property rights provisions shall not this Act. apply to property exchanged or in- (c) Security for coupons and ATP’s. All tended to be exchanged during the individuals, partnerships, corporations, course of internal investigations by re- or other legal entities including State tail firms, during investigations con- agencies and their delegatees (referred ducted solely by State and local law to in this paragraph as ‘‘persons’’) hav- enforcement agencies and without the ing custody, care and control of cou- participation of an authorized Federal pons and ATP’s shall, at all times, take law enforcement agency, or during all precautions necessary to avoid ac- compliance investigations conducted ceptance, transfer, negotiation, or use by the Food and Nutrition Service. of spurious, altered, or counterfeit cou- (2) Custodians and their responsibil- pons and ATP’s and to avoid any unau- ities. (i) The Inspector General, USDA, thorized use, transfer, acquisition, al- the Inspector General’s designee, and teration or possession of coupons and other authorized Federal law enforce- ATP’s. These persons shall safeguard ment officials shall be custodians of coupons and ATP’s from theft, embez- property acquired during investiga- zlement, loss, damage, or destruction. tions. (d) Coupon issuers. (1) Any coupon (ii) Upon receiving property subject issuer or any officer, employee or to forfeiture the custodian shall: agent, thereof convicted of failing to (A) Place the property in an appro- provide the monthly reports required priate location for storage and safe- in § 274.5 or convicted of violating part keeping, or 274 shall be subject to a fine of not (B) Request that the General Serv- more than $1,000, or imprisoned for not ices Administration (GSA) take posses- more than 1 year, or both. sion of the property and remove it to (2) Any coupon issuer or any officer, an appropriate location for storage and employee or agent, thereof convicted of safekeeping. knowingly providing false information (iii) The custodian shall store prop- in the reports required under § 274.5 erty received at a location in the judi- shall be subject to a fine of not more cial district where the property was ac- than $10,000, or imprisoned not more quired unless good cause exists to store than 5 years, or both. the property elsewhere. (e) Forfeiture and denial of property (iv) Custodians shall not dispose of rights. (1) General. (i) Any nonfood property prior to the fulfillment of the items, moneys, negotiable instruments, notice requirements set out in para- securities, or other things of value fur- graph 3, or prior to the conclusion of nished or intended to be furnished by any related administrative, civil, or any person in exchange for food cou- criminal proceeding, without reason- pons, authorization cards, or other pro- able cause. Reasonable cause to dis- gram benefit instruments or access de- pense with notice requirements might vices in any manner not authorized by exist, for example, where explosive ma- the Food Stamp Act or regulations terials are being stored which may issued pursuant to the Act, shall be present a danger to persons or prop- subject to forfeiture and denial of property. erty rights. Such property is deemed (v) Custodians may dispose of any forfeited to the United States Depart- property in accordance with applicable ment of Agriculture (USDA) at the statutes or regulations relative to dis- time it is either exchanged or offered position. The custodian may: in exchange. (A) Retain the property for official (ii) These forfeiture and denial of use; property rights provisions shall apply (B) Donate the property to Federal, to property exchanged or offered in ex- State, or local government facilities change during investigations con- such as hospitals or to any nonprofit ducted by the Inspector General, charitable organizations recognized as

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such under section 501(c)(3) of the In- (4) Administrative review. (i) The ac- ternal Revenue Code; or tual or apparent owner(s) of or per- (C) Request that GSA take custody of son(s) with possessory interests in the the property and remove it for disposi- property shall have 30 days from the tion or sale. date of the delivery of the notice of for- (vi) Proceeds from the sale of forfeiture to make a request for an admin- feited property and any moneys for- istrative review of the forfeiture. feited shall be used to pay all proper (ii) The request shall be made in expenses of the proceedings for for- writing to the Assistant Inspector Gen- feiture and sale including expenses of eral for Investigations, Office of In- seizure, maintenance of custody, trans- spector General, USDA, or to his/her portation costs, and any recording fees. designee, hereinafter referred to as the Moneys remaining after payment of reviewing official. such expenses shall be deposited into (iii) A request for an administrative the general fund of the United States review of the forfeiture of property Treasury. shall include the following: (3) Notice requirements. (i) The cus- (A) A complete description of the todian shall make reasonable efforts to property, including serial numbers, if notify the actual or apparent owner(s) any; of or person(s) with possessory inter- (B) Proof of the person’s property in- ests in the property subject to for- terest in the property; and, feiture except for the good cause excep- (C) The reason(s) the property should tion if the owner cannot be notified. not be forfeited. (ii) The notice shall: (iv) The requestor may, at the time (A) Include a brief description of the of his/her written request for adminis- property; trative review, also request an oral (B) Inform the actual or apparent hearing of the reasons the property owner(s) of or person(s) with possessory should not be forfeited. interests in the property subject to for- (v) The burden of proof will rest upon feiture of the opportunity to request an the requestor, who shall be required to administrative review of the forfeiture; demonstrate, by a preponderance of the (C) Inform the actual or apparent evidence, that the property should not owner(s) of or person(s) with possessory be forfeited. interests in the property subject to for- (vi) Should the administrative deter- feiture of the requirements for request- mination be in their favor, the actual ing administrative review of the for- or apparent owner(s) of or person(s) feiture; and with possessory interests in the prop- (D) State the title and address of the erty subject to forfeiture may request official to whom a request for adminis- that forfeited items be returned or that trative review of the forfeiture may be compensation be made if the custodian addressed. has already disposed of the property. (iii) Except as provided in paragraphs (vii) The reviewing official shall not (e)(3) (iv) and (v) of this section, notice remit or mitigate a forfeiture unless shall be given within 45 days from the the requestor: date the United States convicts, ac- (A) Establishes a valid, good faith quits, or declines to act against the property interest in the property as person who exchanged the property. owner or otherwise; and (iv) Notice may be delayed if it is de- (B) Establishes that the requestor at termined that such action is likely to no time had any knowledge or reason endanger the safety of a law enforce- to believe that the property was being ment official or compromise another or would be used in violation of the ongoing criminal investigation con- law; and ducted by OIG, the United States Se- (C) Establishes that the requestor at cret Service, the United States Postal no time had any knowledge or reason Inspection Service, or other authorized to believe that the owner had any Federal law enforcement agency. record or reputation for violating laws (v) Notice need not be given to the of the United States or of any State for general public. related crimes.

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(viii) The reviewing official may System coordinator for appropriate ac- postpone any decision until the conclu- tion, and for inclusion, if appropriate, sion of any related administrative, in the State Corrective Action Plan in civil, or criminal proceeding. accordance with § 275.16 of this chapter. (ix) The decision of the reviewing of- The information provided to the Per- ficial as to the disposition of the prop- formance Reporting System Coordi- erty shall be the final agency deter- nator shall include the identification, mination for purposes of judicial re- if any, of potential or actual patterns view. of deficiencies in local offices, project [Amdt. 132, 43 FR 47882, Oct. 17, 1978, as areas, or throughout the State, and amended by Amdt. 221, 47 FR 35168, Aug. 13, any identification of causes of these 1982; Amdt. 269, 51 FR 10782, Mar. 28, 1986; problems. Amdt. 334, 57 FR 3911, Feb. 3, 1992; 59 FR (4) Monitoring. FNS shall monitor 51354, Oct. 11, 1994] State compliance with these requirements through the Performance Re- § 271.6 Complaint procedure. porting System. (a) State agency responsibility—(1) Gen- (b) Regional office responsibility. (1) eral scope. The State agency shall Persons or agencies desiring program maintain a system of its choosing for information or wishing to file a com- handling program complaints filed by plaint may contact the appropriate participants, potential participants, or FNS Regional Office. other concerned individuals or groups. (i) For Delaware, the District of Co- This shall not include complaints al- lumbia, Maryland, New Jersey, Penn- leging discrimination on the basis of sylvania, Puerto Rico, Virginia, the race, sex, age, religious creed, national Virgin Islands of the United States, origin, political beliefs or handicap; and West Virginia: Mid-Atlantic Re- such complaints shall be handled in ac- gional Office, U.S. Department of Agri- cordance with § 272.6. This procedure culture, Food and Nutrition Service, also need not include complaints that CN 02150, Trenton, NJ 08650. can be pursued through a fair hearing. (ii) For Alabama, Florida, Georgia, Complaints regarding such areas as Kentucky, Mississippi, North Carolina, processing standards and service to South Carolina, and Tennessee: South- participants and potential participants east Regional Office, U.S. Department would generally be handled under this of Agriculture, Food and Nutrition complaint procedure. Service, 77 Forsyth Street SW., suite (2) Minimum requirements. The State 112, Atlanta, GA 30303-3427. agency shall follow up on complaints, (iii) For Illinois, Indiana, Michigan, resolve complaints and take corrective Minnesota, Ohio and Wisconsin: Mid- action where warranted, and respond to west Regional Office, U.S. Department the complainant on the State agency’s of Agriculture, Food and Nutrition disposition of the complaint. The State Service, 77 West Jackson Blvd., 20th agency shall make information on the Floor, Chicago, IL 60604-3507. complaint system and how to file a (iv) For Arkansas, Louisiana, New complaint available to participants, Mexico, Oklahoma, and Texas: South- potential participants and other inter- west Regional Office, U.S. Department ested persons. The State agency may of Agriculture, Food and Nutrition make the information available Service, 1100 Commerce Street, suite 5– through written materials or posters at C–30, Dallas, TX 75242. certification offices or other appro- (v) For Alaska, Arizona, California, priate means. Guam, Hawaii, Idaho, Nevada, Oregon (3) Complaint analysis. The State and Washington: Western Regional Of- agency shall maintain records of com- fice, U.S. Department of Agriculture, plaints received and their disposition, Food and Nutrition Service, 550 Kearny and shall review records at least annu- Street, room 400, San Francisco, CA ally to assess whether patterns of prob- 94108. lems may be present in local offices, (vi) For Connecticut, Maine, Massa- project areas, or throughout the State. chusetts, New Hampshire, New York, The results of this review shall be pro- Rhode Island, and Vermont: Northeast vided to the Performance Reporting Regional Office, U.S. Department of

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Agriculture, Food and Nutrition Serv- largest households. Since the dollar ice, 10 Causeway St., Boston, MA 02222- amount would be the same for all 1069. households of the same size, the rate of (vii) For Colorado, Iowa, Kansas, Mis- reduction would be lowest for zero net souri, Montana, Nebraska, North Da- income households and greatest for the kota, South Dakota, Utah, and Wyo- highest net income households. All ming: Mountain Plains Regional Office, one- and two-person households af- U.S. Department of Agriculture, Food fected by a reduction action shall be and Nutrition Service, 1244 Speer Blvd., guaranteed the minimum benefit un- suite 903, Denver, CO 80204-3581. less the action is a cancellation of ben- (2) Complainants shall be advised of efits, a suspension of benefits, or a re- the appropriate State complaint han- duction of benefits of 90 percent or dling and fair hearing procedures. Upon more of the total amount of benefits household request, other complaints projected to be issued in the affected shall be pursued by the Department month. rather than the State agency, unless (c) Reduction method. If a reduction in the complaint is one upon which the allotments is deemed necessary, the complainant wishes to request a fair maximum food stamp allotments hearing. amounts for all household sizes shall be reduced by a percentage specified by [Amdt. 132, 43 FR 47882, Oct. 17, 1978, as FNS. For example, if it is determined amended at 45 FR 71350, Oct. 28, 1980; Amdt. 187, 45 FR 85699, Dec. 30, 1980; Amdt. 211, 47 that a 25 per cent reduction in the FR 53315, Nov. 26, 1982; Amdt. 237, 47 FR maximum food stamp allotments 57668, Dec. 28, 1982; Amdt. 250, 48 FR 22130, amount is to be made, the reduction May 17, 1983; Amdt. 269, 51 FR 10782, Mar. 28, for all four-person households would be 1986; Amdt. 356, 59 FR 29713, June 9, 1994] calculated as follows: The maximum food stamp allotments amount for a § 271.7 Allotment reduction proce- four-person household ($209 in Novem- dures. ber 1980) would be reduced by 25% to (a) General purpose. This section sets $157. Then 30 percent of the household’s forth the procedures to be followed if net food stamp income would be de- the monthly food stamp allotments deducted from the reduced maximum termined in accordance with the provi- food stamp allotments amount. For ex- sions of § 273.10 must be reduced, sus- ample, 30 per cent of a net food stamp pended, or cancelled to comply with income of $200, $60, would be deducted section 18 of the Food Stamp Act of from the reduced maximum food stamp 1977, as amended. The best available allotments amount ($157), resulting in data pertaining to the number of peo- a reduced allotment of $97. ple participating in the program and (d) Implementation of allotment reduc- the amounts of benefits being issued tions—(1) Reductions. (i) If a decision is shall be used in deciding whether such made to reduce monthly food stamp al- action is necessary. lotments, FNS shall notify State agen- (b) Nature of reduction action. Action cies of the date the reduction is to take to comply with section 18 of the Food effect and by what percentage max- Stamp Act of 1977, as amended, may be imum food stamp allotments amounts a suspension or cancellation of allot- are to be reduced. ments for one or more months, a reduc- (ii) Upon receiving notification that tion in allotment levels for one or more a reduction is to be made in an upcom- months or a combination of these three ing month’s allotment, State agencies actions. If a reduction in allotments is shall act immediately to implement deemed necessary, allotments shall be the reduction. Such action could differ reduced by reducing maximum food from State to State depending on the stamp allotments amounts for each nature of the issuance system in use. household size by the same percentage. Where there are computerized issuance This results in all households of a systems, the program used for calcu- given size having their benefits reduced lating allotments shall be altered to re- by the same dollar amount. The dollar flect the appropriate percentage reduc- reduction would be smallest for one- tion in the maximum food stamp allot- person households and greatest for the ments for each household size and the

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computer program shall be adjusted to for the designated month. However, allow for the minimum benefit for one- any household with one or two mem- and two-person households. The com- bers whose reduced benefits would be puter program shall also be adjusted to less than the minimum benefit shall re- provide for the rounding of benefit lev- ceive the minimum benefit except as els of $1, $3 and $5 to $2, $4 and $6, re- provided in § 273.10(e)(2). Allotments or spectively. FNS will provide State portions of allotments representing re- agencies with revised issuance tables stored or retroactive benefits for a reflecting the percentage reductions to prior unaffected month would not be be made in the maximum food stamp reduced, suspended, or cancelled even allotments amounts and reduce max- though they are issued during an af- imum food stamp allotments levels. In fected month. States where manual issuance is used, (4) Notification of eligible households. State agencies shall reproduce the Reductions, suspensions and cancella- issuance tables provided by FNS and tions of allotments shall be considered distribute them to issuance personnel. to be Federal adjustments to allot- State agencies shall ensure that the re- ments. As such, State agencies shall vised issuance tables are distributed to notify households of reductions, sus- issuance agents and personnel in time pensions and cancellations of allot- to allow benefit reductions during the ments in accordance with the notice month ordered by FNS. In an HIR card provisions of § 273.12(e)(1), except that system State agencies have the option State agencies shall not provide no- of enacting the reduction in benefits tices of adverse action to households either by changing all HIR cards before affected by reductions, suspensions or issuance activity for the affected cancellations of allotments. month begins or by adjusting allot- (5) Restoration of benefits. Households ments at the point of issuance as each whose allotments are reduced or can- household appears at the issuance of- celled as a result of the enactment of fice. these procedures are not entitled to the (2) Suspensions and cancellations. (i) If restoration of the lost benefits at a fu- a decision is made to suspend or cancel ture date. However, if there is a surplus the distribution of food stamp benefits of funds as a result of the reduction or in a given month, FNS shall notify cancellation, FNS shall direct State State agencies of the date the suspen- agencies to provide affected households sion or cancellation is to take effect. In with restored benefits unless the Sec- the event of a suspension or cancella- retary determines that the amount of tion of benefits, the provision for the surplus funds is too small to make this minimum benefit for households with practicable. The procedures imple- one or two members only shall be dis- mented by State agencies for reducing regarded and all households shall have and cancelling benefits shall be de- their benefits suspended or cancelled. signed so that in the event FNS directs Upon receiving notification that an up- the restoration of benefits, such bene- coming month’s issuance is to be sus- fits are issued promptly. pended or cancelled, State agencies (e) Effects of reductions, suspensions shall take immediate action to effect and cancellations on the certification of the suspension or cancellation. This ac- eligible households. (1) Except as pro- tion would involve making necessary vided in paragraph (e)(2) of this sec- computer adjustments, and notifying tion, determinations of the eligibility issuance agents and personnel. of applicant households shall not be af- (ii) Upon being notified by FNS that fected by reductions, suspensions or a suspension of benefits is over, State cancellations of allotments. State agencies shall act immediately to re- agencies shall accept and process appli- sume issuing benefits to certified cations during a month(s) in which a households and shall resume benefit reduction, suspension or cancellation is issuance as soon as practicable. in effect in accordance with the re- (3) Affected allotments. Whenever a requirements of part 273. Determinations duction of allotments is ordered for a of eligibility shall also be made accord- particular month, reduced benefits ing to the provisions of part 273. If an shall be calculated for all households applicant is found to be eligible for

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benefits and a reduction is in effect, whose certification periods expire dur- the amount of benefits shall be cal- ing a month in which allotments have culated by reducing the maximum food been reduced, suspended or cancelled stamp allotments amount by the ap- shall be recertified according to the propriate percentage for the appli- provisions of § 273.14. Households found cant’s household size and then deduct- eligible to participate during a month ing 30 percent of the household’s net in which allotments have been reduced, food stamp income from the reduced suspended or cancelled shall have cer- maximum food stamp allotments tification periods assigned in accord- amount. If an applicant is found to be ance with the provisions of § 273.10. eligible for benefits while a suspension (f) Fair hearings. Any household that or cancellation is in effect, no benefits has its allotment reduced, suspended or shall be issued to the applicant until cancelled as a result of an order issued issuance is again authorized by FNS. by FNS in accordance with these rules (2) Expedited service. (i) Households el- may request a fair hearing if it dis- igible to receive expedited processing agrees with the action, subject to the who apply for program benefits during following conditions. State agencies months in which reductions or suspen- shall not be required to hold fair hear- sions are in effect, shall have their ings unless the request for a fair hear- cases processed in accordance with the ing is based on a household’s belief expedited processing provisions of that its benefit level was computed in- § 273.2(i). correctly under these rules or that the (A) Those households that receive ex- rules were misapplied or misinter- pedited service in months in which re- preted. State agencies shall be allowed ductions are in effect and that are de- to deny fair hearings to those house- termined to be eligible shall be issued holds who are merely disputing the allotments that are reduced in accord- fact that a reduction, suspension or ance with the reduction in effect. cancellation was ordered. Furthermore, These reduced allotments shall be since the reduction, suspension or can- made available to the households with- cellation would be necessary to avoid in the benefit delivery timeframe spec- an expenditure of funds beyond those ified in § 273.2(i). appropriated by Congress, households (B) Those households that receive ex- do not have a right to a continuation pedited service in months in which sus- of benefits pending the fair hearing. A pensions are in effect and that are de- household may receive retroactive ben- termined to be eligible shall have bene- efits in an appropriate amount if it is fits issued to them within the time- determined that its benefits were re- frame specified in § 273.2(i). However, if duced by more than the amount by the suspension is still in effect at the which the State agency was directed to time issuance is to be made, the reduce benefits. issuance shall be suspended until the (g) Issuance services. State agencies suspension is ended. must have issuance services available (ii) Households eligible to receive ex- to serve housholds receiving restored pedited processing who apply for Pro- or retroactive benefits for a prior, un- gram benefits during months in which affected month. cancellations are in effect shall receive (h) Penalties. Notwithstanding any expedited service. However, the dead- other provision of this subchapter, FNS line for completing the processing of may take one or more of the following such cases shall be five calendar days actions against a State agency that or the end of the month of application, fails to comply with a directive to re- whichever date is later. All other rules duce, suspend or cancel allotments in a pertaining to expedited service, con- particular month. tained in § 273.2(i), shall be applicable (1) If FNS ascertains that a State to these cases. agency does not plan to comply with a (3) The reduction, suspension or can- directive to reduce, suspend or cancel cellation of allotments in a given allotments for a particular month, a month shall have no effect on the cer- warning will be issued advising the tification periods assigned to house- State agency that if it does not com- holds. Those participating households ply, FNS may cancel 100 percent of the

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Federal share of the State agency’s ad- 7 CFR section where requirements are de- Current ministrative costs for the affected OMB control scribed no. month(s). If, after receiving such a warning, a State agency does not com- 0584–0334 ply with a directive to reduce, suspend 0584–0336 0584–0339 or cancel allotments, FNS may cancel 272.2 (a), (c), (d), (e), (f) ...... 0584–0083 100 percent of the Federal share of the 272.5 (c) ...... 0584–0083 State agency’s administrative costs for 272.3 (a), (b), (c) ...... 0584–0083 272.6 (g), (h) ...... 0584–0025 the affected month(s). 272.7 (f), (g), (h), (i), (j), (k), (m) ...... 0584–0064 (2) If FNS ascertains after warning a 273.1 (f), (g) ...... 0584–0064 State agency as provided in paragraph 273.2 (b), (c), (f), (g), (h), (i), (j), (k) ...... 0584–0064 273.4 (e) ...... 0584–0274 (h)(1) of this section, that the State 273.5 (b) ...... 0584–0064 agency does not plan to comply with a 273.6 (a), (b), (g) ...... 0584–0064 directive to reduce, suspend or cancel 273.7 (a), (d), (e) ...... 0584–0339 allotments, a court injunction may be 273.7 (c) ...... 0584–0064 0584–0083 sought to compel compliance. 0584–0339 (3) If a State agency fails to reduce, 273.7 (f) ...... 0584–0064 suspend or cancel allotments as di- 273.7 (m) ...... 0584–0285 rected, FNS will bill the State agency 273.8 (b), (c), (e), (g), (h), (i) ...... 0584–0064 273.9 (d) ...... 0584–0064 for all over issuances that result. If a 273.10 (a), (c), (e), (f), (g)(1) ...... 0584–0064 State agency fails to remit the billed 273.10 (g)(3) ...... 0584–0124 amount to FNS within a prescribed pe- 273.11 (a), (b), (c), (d), (e), (f), (h) ...... 0584–0064 273.11 (g) ...... 0584–0334 riod of time the funds will be recovered 273.11 (i) (1)–(4) ...... 0584–0080 through offsets against the Federal 0584–0081 share of the State agency’s administra- 273.11 (i)(5) ...... 0584–0009 tive costs, or any other means avail- 0584–0081 273.11 (i)(6) ...... 0584–0009 able under law. 0584–0080 0584–0081 [Amdt. 146, 46 FR 1426, Jan. 6, 1981, as amend- 273.12 (a), (b), (c), (d), (e), (f) ...... 0584–0064 ed by Amdt. 207, 47 FR 52333, Nov. 19, 1982; 273.13 (a) ...... 0584–0064 Amdt. 211, 47 FR 53315, Nov. 26, 1982; Amdt. 273.14 (a), (b), (c) ...... 0584–0064 233, 47 FR 53830, Nov. 30, 1982; Amdt. 269, 51 273.15 (a), (c), (d), (f), (i), (k), (l), (m), (q) ...... 0584–0064 FR 10782, Mar. 28, 1986; 54 FR 24154, June 6, 273.16 (a), (b), (d), (e), (f), (g), (h), (i) ...... 0584–0064 1989; 56 FR 63596, Dec. 4, 1991; Amdt. 356, 59 273.17 (h) ...... 0584–0301 FR 29713, June 9, 1994] 273.18 (a), (c), (d), (e), (f), (g), (k) ...... 0584–0064 273.18 (h) ...... 0584–0069 273.18 (i) ...... 0584–0053 § 271.8 Information collection/record- 273.21 (a), (c), (e), (f), (g), (h), (i), (j), (m), (p), keeping—OMB assigned control (q) ...... 0584–0064 numbers. 274.1 (c) ...... 0584–0009. 274.3 (d) ...... 0584–0009, 0584–0069, 7 CFR section where requirements are de- Current scribed OMB control 0584–0080. no. 274.4 (a) ...... 0584–0080. 274.4 (b) ...... 0584–0009, 271.7 (d) ...... 0584–0064 0584–0015, 272.1 (d) ...... 0584–0274 0584–0080, 272.1 (f) ...... 0584–0009 0584–0081. 0584–0010 274.4 (f) ...... 0584–0009, 0584–0015 0584–0053. 0584–0022 274.6 (a), (b) and (e) ...... 0584–0080, 0584–0025 0584–0081. 0584–0034 0584–0037 274.7 (a) ...... 0584–0009. 0584–0052 274.7 (c) ...... 0584–0022. 0584–0053 274.8 (a)–(c) ...... 0584–0009. 0584–0064 274.8 (e) ...... 0584–0053. 0584–0069 274.9 (a)–(d) ...... 0584–0009. 0584–0074 274.11 ...... 0584–0009. 0584–0080 275.2 (a) ...... 0584–0010 0584–0081 0584–0303 0584–0083 275.4 (a) ...... 0584–0010 0584–0124 0584–0303 0584–0274 275.4 (b) ...... 0584–0010 0584–0285 275.4 (c) ...... 0584–0034 0584–0299 0584–0074 0584–0301 0584–0299 0584–0303 275.5 (a), (b) ...... 0584–0010 0584–0333 275.6 (b) ...... 0584–0010

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272.10 ADP/CIS Model Plan. 7 CFR section where requirements are de- Current scribed OMB control 272.11 Systematic Alien Verification for En- no. titlements (SAVE) Program. 275.8 (a) ...... 0584–0010 AUTHORITY: 7 U.S.C. 2011–2036. 275.9 (b), (g) ...... 0584–0010 275.10 (a) ...... 0584–0074 EDITORIAL NOTE: OMB control numbers re- 0584–0299 lating to this part 272 are contained in § 271.8. 0584–0303 275.11 (a) ...... 0584–0303 § 272.1 General terms and conditions. 275.12 (b), (c), (d), (e) ...... 0584–0074 275.12 (f), (g) ...... 0584–0299 (a) Coupons do not reduce benefits. The 275.13 (b), (d), (e) ...... 0584–0034 coupon allotment provided any eligible 275.14 (c), (d) ...... 0584–0034 household shall not be considered in- 0584–0074 0584–0299 come or resources for any purpose 275.16 (b), (c), (d) ...... 0584–0010 under any Federal, State, or local laws 275.17 (a), (b) ...... 0584–0010 including, but not limited to, laws on 275.18 (a), (b) ...... 0584–0010 taxation, welfare, and public assistance 275.19 (a), (b), (c) ...... 0584–0010 275.20 (a) ...... 0584–0010 programs. No participating State or 275.21 (b) ...... 0584–0034 political subdivision shall decrease any 0584–0074 assistance otherwise provided an indi- 0584–0299 275.21 (c), (d), (e) ...... 0584–0034 vidual or individuals because of the re- 275.22 (a), (b) ...... 0584–0010 ceipt of a coupon allotment. 275.23 ...... 0584–0010 (b) No sales taxes on food stamp pur- 0584–0034 chases. (1) A State shall not participate 0584–0074 0584–0299 in the Food Stamp Program if State or 276.2 (b) ...... 0584–0015. local sales taxes or other taxes or fees, 277.12 (a) ...... 0584–0341 including but not limited to excise 277.14 (b), (c), (d), (h), (i), (j), (k) ...... 0584–0341 taxes, are collected within the State on 277.15 (c) ...... 0584–0064 277.17 (a), (b), (c), (d), (e), (f), (g) ...... 0584–0341 purchases made with food stamp cou- 277.18 (a), (c), (d), (e), (g), (h) ...... 0584–0083 pons. ‘‘Purchases made with food cou- 278.1 (a), (b), (l) ...... 0584–0008 pons’’ for purposes of this provision 278.1 (e), (f) ...... 0584–0064 278.4 (b), (c) ...... 0584–0085 shall refer to purchases of ‘‘eligible 278.5 (a) ...... 0584–0085 foods’’ as defined in § 271.2. Where the 0584–0314 total value of groceries being bought 278.5 (c), (d), (f) ...... 0584–0008 by the recipient is larger than the 278.6 (b) ...... 0584–0008 278.7 (b), (c) ...... 0584–0008 amount of coupons being presented by 278.8 (a) ...... 0584–0008 the recipient, only the portion of the 280.7 (c), (d), (g) ...... 0584–0336 sale made in exchange for food stamps 280.9 (b) ...... 0584–0009 0584–0037 must be exempt from taxation in order 280.10 (a) ...... 0584–0336 for a State to satisfy the requirements of this provision. Although a food [50 FR 2660, Jan. 18, 1985, as amended at 54 stamp recipient may use a combination FR 7002, Feb. 15, 1989; 54 FR 24527, June 7, of cash and food stamps in making a 1989; 56 FR 55059, Oct. 24, 1991; 67 FR 41603, food purchase, only the dollar amount June 19, 2002] represented by the food coupons needs to be exempt from taxation. PART 272—REQUIREMENTS FOR (2) State and/or local law shall not PARTICIPATING STATE AGENCIES permit the imposition of tax on food paid for with coupons. FNS may termi- Sec. nate the issuance of coupons and dis- 272.1 General terms and conditions. allow administrative funds otherwise 272.2 Plan of operation. payable pursuant to part 277 in any 272.3 Operating guidelines and forms. State where such taxes are charged. 272.4 Program administration and personnel Action to disallow administrative requirements. funds shall be taken in accordance with 272.5 Program informational activities. the procedures set forth in § 276.4. 272.6 Nondiscrimination compliance. (3) A State or local area which taxes 272.7 Procedures for program administration in Alaska. some, but not all, eligible food items 272.8 State income and eligibility shall ensure that retail food stores in verification system. that locale sequence purchases of eligi- 272.9 Approval of homeless meal providers. ble foods paid for with a combination

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of coupons and cash so as to not di- Food Stamp Act or regulation. The rectly or indirectly charge or assign a written request shall include the iden- tax to food stamp recipients on eligible tity of the individual requesting the in- food items purchased with coupons. formation and his authority to do so, Prohibited methods include, but are violation being investigated, and the not limited to, the allocation of cou- identity of the person on whom the in- pons first to non-taxable eligible items, formation is requested. and the application of cash, rather (vii) Local, State or Federal law en- than coupons, to taxable eligible food. forcement officers, upon written re- (c) Disclosure. (1) Use or disclosure of quest, for the purpose of obtaining the information obtained from food stamp address, social security number, and, if applicant or recipient households shall available, photograph of any household be restricted to: member, if the member is fleeing to (i) Persons directly connected with avoid prosecution or custody for a the administration or enforcement of crime, or an attempt to commit a the provisions of the Food Stamp Act crime, that would be classified as a fel- or regulations, other Federal assist- ony (or in the State of New Jersey, a ance programs, federally-assisted State high misdemeanor), or is violating a programs providing assistance on a condition of probation or parole im- means-tested basis to low income indi- posed under a Federal or State law. viduals, or general assistance programs The State agency shall not require a which are subject to the joint proc- household to present photographic essing requirements in § 273.2(j)(2). identification as a condition of eligi- (ii) Persons directly connected with bility and must accept any document the administration or enforcement of that reasonably establishes the appli- the programs which are required to cant’s identity. The State agency shall participate in the State income and also provide information regarding a eligibility verification system (IEVS) household member, upon the written as specified in § 272.8(a)(2), to the extent request of a law enforcement officer the food stamp information is useful in acting in his or her official capacity, establishing or verifying eligibility or where such member has information benefit amounts under those programs; necessary for the apprehension or in- (iii) Persons directly connected with vestigation of another member who is the verification of immigration status fleeing to avoid prosecution or custody of aliens applying for food stamp bene- for a felony, or has violated a condition fits, through the Systematic Alien of probation or parole. If a law enforce- Verification for Entitlements (SAVE) ment officer provides documentation Program, to the extent the information indicating that a household member is is necessary to identify the individual fleeing to avoid prosecution or custody for verification purposes. for a felony, or has violated a condition (iv) Persons directly connected with of probation or parole, the State agen- the administration of the Child Sup- cy shall terminate the participation of port Program under part D, title IV of the member. A request for information the Social Security Act in order to as- absent documentation would not be sist in the administration of that pro- sufficient to terminate the member’s gram, and employees of the Secretary participation. The State agency shall of Health and Human Services as nec- disclose only such information as is essary to assist in establishing or necessary to comply with a specific verifying eligibility or benefits under written request of a law enforcement titles II and XVI of the Social Security agency authorized by this paragraph. Act; (2) Recipients of information released (v) Employees of the Comptroller under paragraph (c)(1) of this section General’s Office of the United States must adequately protect the informa- for audit examination authorized by tion against unauthorized disclosure to any other provison of law; and persons or for purposes not specified in (vi) Local, State, or Federal law en- this section. In addition, information forcement officials, upon their written received through the IEVS must be request, for the purpose of inves- protected from unauthorized disclosure tigating an alleged violation of the as required by regulations established

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by the information provider. Informa- fiscal records and accountable docu- tion released to the State agency pur- ments for 3 years from the date of fis- suant to section 6103(l) of the Internal cal or administrative closure. Fiscal Revenue Code of 1954 shall be subject to closure means that obligations for or the safeguards established by the Sec- against the Federal government have retary of the Treasury in section 6103(l) been liquidated. Administrative clo- of the Internal Revenue Code and im- sure means that the State agency has plemented by the Internal Revenue determined and documented that no Service in its publication, Tax Informa- further action to liquidate the obligation and Security Guidelines. tion is appropriate. Fiscal records and (3) If there is a written request by a accountable documents include, but responsible member of the household, are not limited to claims and docu- its currently authorized representa- mentation of lost benefits. Retention tive, or a person acting on its behalf to methods for ATP cards are provided in review material and information con- part 274. tained in its casefile, the material and (g) Implementation. The implementa- information contained in the casefile tion schedule for any amendment to shall be made available for inspection the regulations shall be specified in the during normal business hours. How- amendment. ever, the State agency may withhold (1) Amendment 132. Program changes confidential information, such as the required by Amendment 132 to the food names of individuals who have dis- stamp regulations shall be imple- closed information about the household mented as follows: without the household’s knowledge, or (i) State agencies shall eliminate the the nature or status of pending crimi- purchase requirement for all house- nal prosecutions. holds on or before January 1, 1979. The (d) Information available to the public. State agency shall designate the (1) Federal regulations, Federal proce- month the purchase requirement is to dures embodied in FNS notices and pol- be eliminated. If the month designated icy memos, State Plans of Operation, is other than January 1979, the State and corrective action plans shall be agency shall obtain prior approval of available upon request for examination FNS. FNS shall approve the designa- by members of the public during office tion of months prior to January 1979, if hours at the State agency headquarters the State agency demonstrates that an as well as at FNS regional and national accounting procedure for the new offices. State agency handbooks shall issuance system will be in place. The be available for examination upon re- submission dates for the forms FNS–250 quest at each local certification office and FNS–256, stipulated in § 274.8(a), within each project area as well as at shall be effective with the reports for the State agency headquarters and the first month of issuance without a FNS Regional offices. State agencies, purchase requirement. For example, if at their option, may require other of- EPR is implemented in January, the fices within the State to maintain a FNS–250 and FNS–256 for January copy of Federal regulations. would be due by March 17, 1979. The (2) Copies of regulations, plans of op- FNS–259 shall be submitted in accord- eration, State manuals, State correc- ance with § 274.8(a)(3) starting with the tive action plans, and Federal proce- quarter beginning January 1979. dures may be obtained from FNS in ac- (ii) State agencies may implement cordance with part 295 of this chapter. all eligibility rules contained in part (e) Records and reports. Each State 273 and all issuance rules contained in agency shall keep such records and part 274 at the same time the purchase submit such reports and other informa- requirement is eliminated, but in no tion as required by FNS. case shall eligibility and issuance rules (f) Retention of records. Each State be implemented prior to elimination of agency shall retain all program records the purchase requirement. State agen- in an orderly fashion, for audit and re- cies may also implement portions of view purposes, for a period of 3 years part 273 and part 274 separately after from the month of origin of each the purchase requirement is elimi- record. The State agency shall retain nated, provided that the eligibility

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rules setting the income standards, the these regulations. The procedures for income deductions and the household calculating lost benefits or allotment calculation are implemented overissuances as specified in §§ 273.17 at the same time, and all rules are im- and 273.18 shall be applied to any case plemented no later than 3 months after found to be in error after the imple- the purchase requirement is elimi- mentation of these procedures, even nated. However, if a State agency im- though the action which caused the plements EPR after December 1, 1978, error may have occurred prior to the it shall implement the certification date of implementation. Notwith- and other issuance regulations for all standing anything to the contrary in new applications and recertifications the preceding provisions of this para- no later than March 1, 1979. graph, State agencies shall have up to (iii) State agencies shall have up to 4 four months following the first day months following the first day that ap- that applications are taken under the plications are taken under the new new rules, to convert the current case- rules, to convert the current caseload load to the new program. Households to the new program. Households com- coming due for recertification during ing due for recertification during this this time shall be converted to the new time will be converted to the new pro- Program at recertification. However, if gram at recertification. Remaining the State agency elects to schedule a households shall be converted by a desk review for these households ear- desk review during that 4-month pe- lier in the four-month period, conver- riod. The new income definition, deduc- sion shall take place after the desk re- tions, and allotment calculation shall view. Further, State agencies may be completed for all households which elect to do a point-in-time computer are converted through a desk review. conversion in lieu of individual desk To the extent that the case file and reviews. Such a computer conversion other information available to the must cover entire categories of house- State agency permit, other eligibility holds, such as public assistance house- criteria, such as work registration, re- holds, all households in a particular sources, tax dependency, and alien sta- project area, all households currently tus, shall be considered during the desk in the computer files, etc., and the review. Otherwise, nonincome eligi- State agency may not elect to post- bility factors shall be deferred until pone the conversion of certain cases the household’s scheduled recertifi- until recertification. cation. In no event shall a household’s (iv) State agencies shall implement certification period be extended as a § 273.17 on the restoration of lost bene- result of the desk review. Until recer- fits on or before March 1, 1979. State tified or converted by a desk review, a agencies are encouraged to implement household shall continue to receive the restoration of lost benefits concurrent bonus portion of the allotment, cal- with the elimination of the purchase culated in accordance with the income, requirement, especially as they relate deduction, and basis of issuance to households which are entitled to provisons of the Food Stamp Act of lost benefits but which have been un- 1964. During the case file conversion pe- able to receive them because the riod, some households may be partici- households are currently ineligible. pating on the basis of the old program State agencies shall notify currently rules and some on the new rules. ineligible households of the avail- Claims against households and restora- ability of their lost benefits by using tion of benefits shall not be assessed one of the following procedures: provided that whichever program rules (A) State agencies which can readily are in use for a particular case are cor- identify the ineligible households rectly applied during the conversion which are entitled to lost benefits shall period. However, errors caused by mis- notify these households and restore the calculations based on the old or new lost benefits within 4 months of the program rules which result in an enti- date restoration of lost benefits is im- tlement to restoration of lost benefits plemented. or an overissuance shall be assessed in (B) Other State agencies shall issue a accordance with §§ 273.17 and 273.18 of one-time-only press release notifying

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ineligible households that benefits can provide notice pursuant to paragraph be restored. The press release shall ad- (g)(1)(iv)(A) of this section, in any or vise households to contact the local all project areas within the State. food stamp office for more information. (v) State agencies shall assume the In addition, State agencies issuing the authority to settle or adjust recipient press release shall request the assist- claims delegated under § 271.4(b) on or ance of local Community Action Pro- before July 1, 1979. grams, general assistance agencies, (vi) State agencies without a cur- legal services programs funded by the rently approved utility standard re- Legal Services Corporation, State em- quired in § 273.9(d)(5) shall develop and ployment service and unemployment implement an FNS approved utility compensation offices and other State and Federal governmental agencies standard on or before October 1, 1979. providing services to low-income The State agency shall notify house- households, such as the Social Security holds certified at the time the utility Administration or the Community standard is implemented of the avail- Services Administration. FNS shall ability of the standard and the condi- provide the State agency with copies of tions for its use in lieu of actual ex- the letter to be used to request assist- penses. Households qualified to use the ance from outreach organizations and standard and which elect to do so shall governmental agencies, and the fliers have the standard applied as any other and posters which will be distributed change in circumstances. Otherwise, upon request to such organizations and actual utility expenses shall continue agencies. The language of the request to be used for households qualified for for assistance, the notice to households the standard until their next recertifi- and the poster is contained in the ap- cation. pendix to this rulemaking. State agen- (vii) State agencies shall advise FNS cies shall mail the request for assist- of their determination of the need for ance and display posters in all local bilingual services as required by agency food stamp certification and § 272.4(c) on or before December 1, 1978. issuance offices and welfare offices If the State agency cannot determine, within 30 days of receipt from FNS. In based on available information sources, project areas subject to the bilingual whether or not bilingual services are requirements of § 272.4(c), State agen- required in particular project areas, it cies shall provide translations of the posters and fliers. Upon request, FNS shall so advise FNS on or before De- shall provide Spanish posters and fli- cember 1, 1978. The State agency shall ers. FNS shall reimburse State agen- then develop procedures to record the cies for all costs of providing trans- number of non-English-speaking low- lations of the posters and fliers in lan- income households which make contact guages other than Spanish. The State with its offices in these project areas agency shall display the posters in its as required by § 272.4(c)(6). These proce- offices for six months. Households dures shall be implemented on or be- whose entitlement to benefits has been fore March 1, 1979, and shall continue clearly established may apply for res- for 6 months. The State agency shall toration of lost benefits under this submit to FNS its determination(s) of paragraph for an indefinite period. the need for bilingual services not later Households whose entitlement to res- than 60 days following the end of the 6- toration of lost benefits was estab- month period. Bilingual outreach ma- lished more than three years prior to terials shall be available for distribu- application for retroactive benefits tion within 90 days of the State agen- under this paragraph shall be per- cy’s determination that such materials mitted to document entitlement if en- are required. When the State agency titlement cannot be verified from determines that bilingual staff and cer- State agency records. Such households tification materials are required, it shall sign an affidavit under penalty of shall also make a determination of perjury explaining their entitlement. whether volunteers or paid staff will be In lieu of the requirements of this paragraph, State agencies may elect to used. When volunteers are to be used,

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the State agency shall provide the ma- tribal organizations of the reservations terials and arrange for volunteers with- within their jurisdiction as soon as in 90 days. Paid staff and materials possible after the effective date of this shall be provided within 180 days. amendment. Portions of the State Plan (viii) Prior to the certification of of Operation to be submitted for fiscal households under these regulations, year 1980 shall be subject to ITO com- State agencies shall implement staff ment as required by § 281.2(a). The fund- training for the transition as required ing authority in § 281.9 shall apply to in § 272.4(e)(3), and training for out- budgets beginning with the fourth reach workers, receptionists, and oth- quarter of fiscal year 1979. ers, as required in § 272.4(e)(1) (v) and (5) Amendment 211. State agencies (vi). Beginning with these training ses- shall implement the new Social Secu- sions for the transition, State agencies rity Number (SSN) provisions for new shall implement the requirements for applicants no later than February 1, public participation at training ses- 1983 and convert the current caseload sions, as specified in § 272.4(e)(1)(iv). at recertification or when the case is State agencies shall designate a train- otherwise reviewed, whichever occurs ing coordinator and develop and imple- first. The citizenship provisions must ment the ongoing training program re- be implemented on or before April 1, quired by § 272.4(e) on or before July 1, 1983. All other provisions shall be im- 1979. plemented at State agency discretion. (ix) Elimination of the purchase re- (6) Amendment 149. Changes to States’ quirement and the implementation of Quality Control systems as required by the basic financial and nonfinancial this amendment shall be implemented eligibility criteria and other coupon as follows: issuance criteria shall not be extended (i) All State agencies shall continue for any reason. FNS may grant exten- conducting modified QC reviews [in ac- sions for other provisions contained in cordance with regulations published these rules, provided that the State February 9, 1979 (43 FR 8548)] through agency presents compelling justifica- August 31, 1979 and submit Form FNS– tion for a delay and establishes an ac- 133 to FNS by September 15. ceptable alternative schedule in ad- (ii) State agencies shall implement vance of the implementation deadline. the requirements in subpart C of part In no event will FNS grant an exten- 275 for conducting QC reviews no later sion in excess of 120 days from the spec- than October 1, 1979. A quality control ified implementation date. In those sampling plan (as specified in § 275.11(a) cases where extensions are granted, the of these regulations) must be sub- relevant Department regulations under mitted by each State to the appro- the Food Stamp Act of 1964 shall re- priate FNS Regional Office no later main in effect until superseded by im- than September 1, 1979 (30 days prior to plementation of the new rules. implementation). This will allow time (2) Amendment 137. Program changes necessary for approval of the plans required by Amendment 137 to the food prior to the October 1 implementation stamp regulations shall be imple- date. mented for all households initially ap- (iii) State agencies are encouraged to plying for food stamp benefits no later implement QC September 1, if possible. than 90 days following the publication States opting to implement early of this amendment. would not be required to operate for (3) Amendment 146. The procedures this month under an approved sampling contained in Amendment 146 shall be plan. These States must, however, sub- implemented by State agencies in time mit sampling plans in accordance with to be able to issue reduced food stamp paragraph (g)(6)(ii) of this section. The allotments or to suspend or cancel al- month of September (sampling month) lotments within 60 days after the date would serve as a test phase. Therefore, of publication of this amendment in data collected for the sample month the FEDERAL REGISTER. would not be required to be submitted (4) Amendment 141. State agencies to FNS or used in determining a shall begin planning for and conducting State’s cumulative allotment error ongoing consultations with the Indian rate.

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(iv) Regulations published October 17, be submitted within 10 days of the re- 1978 (43 FR 47846) which implement quest. major aspects of the Food Stamp Act (7) Amendment 151. (i) State agencies of 1977 provide for the conversion of shall implement the program changes cases via a desk review required by amendment for all new ap- (§ 272.1(g)(1)(iii)). Desk converted cases plications and recertifications no later would be converted to the new eligi- than January 1, 1980. Currently eligible bility criteria for income and deduc- households shall be converted at recer- tions but may not have been converted tification or when they request conver- to the new criteria for resources, work sion to the new deduction system by registration, tax dependency, etc. responding to the notice required in Therefore, States will have households paragraph (g)(7)(iii) of this section or participating in the program based on by otherwise requesting recomputa- some of the eligibility criteria of the tion. 1964 Food Stamp Act. Desk converted (ii) State agencies may but are not cases as provided in § 272.1(g)(1)(iii) and required to convert the current case- cases which should have been con- load to the shelter deduction system verted via desk review (some cases may provided for in § 273.9(d)(5) through not undergo the conversion process as desk reviews or by computer search. required), shall be subject to standard State agencies are encouraged to con- QC review procedures. When the QC revert eligible households to the new viewer detects a variance in one of shelter deduction as soon as possible to these cases which results from an ele- allow these households to benefit dur- ment of eligibility which was not con- ing the winter months. verted and was not required to have (iii) Notices explaining the changes been converted, the reviewer shall dis- and their applicability shall be avail- regard the variance. When the reviewer able at all food stamp certification of- detects a variance in a case when an fices and shall also be mailed or other- element of eligibility was, or should wise provided individually to all cur- have been converted, the reviewer shall rently certified households at least handle the variance like any other QC once prior to implementation. At a variance as identified in § 275.12 of minimum, these notices shall be dis- these regulations. It is possible that tributed in the month prior to imple- desk converted cases may continue to mentation either with the ATP card or show up in QC samples through Feb- separately but no later than the 15th of ruary 1980. the month. The notice shall advise the (v) State agencies shall submit re- household of the availability of the ports of QC review activity (one copy new deductions and the procedures for to the appropriate FNS Regional Office reporting medical and shelter expenses. and one copy to the Deputy Adminis- If the State agency can identify those trator for Family Nutrition Programs, households to which this amendment Washington, DC) as follows: would apply, only these households (A) Each State agency shall report need to receive the notice. the monthly progress of sample selec- (iv) Fliers advising of the changes tion and completion on a form provided contained in this amendment shall be by FNS. This report shall be submitted made available to public and general to FNS so that it is received no later assistance offices, local Social Security than 10 days after the end of each offices, and any interested organiza- month, beginning December 10, 1979. tions, particularly those dealing with Each report shall reflect sampling and the elderly or disabled or those places review activity for the previous month. where the elderly or disabled con- (B) Each State agency shall report gregate, such as housing units. Also, the results of QC review activity on a posters explaining the changes shall be form provided by FNS. This report displayed in food stamp certification shall be submitted to FNS so that it is offices and shall be made available to received no later than 90 days from the public and general assistance offices, end of the reporting period. local Social Security offices and any (C) Corrections to information on the other interested groups. State agencies above reports requested by FNS must shall notify all organizations on its

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outreach contact list of the changes month the change would have become and of the availability of posters and effective under the normal processing fliers. State agencies shall issue press standards in § 273.12(c). After this ini- releases to the news media advising of tial period, no household shall be enti- the impending program changes. tled to restoration of lost benefits un- (v) For the first two months of imple- less the State agency does not act on mentation, State agencies shall have reported changes in accordance with up to 30 days to process changes in the timeliness standards in § 273.12(c) or medical and shelter costs reported in the household is otherwise entitled conjunction with this amendment. The under the provisions of § 273.17. change shall be effective for the first (viii) Implementation of these pro- issuance following that 30-day period gram changes falls in the last three with restoration of lost benefits to the months of the October 1979 to March point at which the change would nor- 1980 reporting period for quality con- mally become effective under § 273.12. trol. For the months of January, Feb- The State agency may request an ex- ruary and March 1980, all cases in tension of processing time of up to 60 which a household member is either 60 days to act on these changes. The years of age or over, receives SSI, or State agency shall submit appropriate disability benefits under title II of the documentation to FNS for the State or Social Security Act will be subject to any part of the State for which such an standard quality control review proce- extension is requested. After the first dures, except that any varying infor- two months the State agency shall act mation regarding medical deductions on these changes in accordance with and/or shelter deductions in excess of the normal processing standards in the cap found in the review shall be § 273.12(c). For changes reported during a period of two months following a disregarded in determining errors. State agency’s implementation of this Such information shall be noted on the amendment, verification of shelter and Face Sheet of Form FNS–245 under medical expenses required by § 273.2(f) part VII, Discrepancies and Other In- must be obtained prior to the issuance formation, and reported to the State of the third normal monthly allotment agency for appropriate action on an in- after the change is reported. If the dividual case basis. Starting with the household does not provide April-September 1980 reporting period, verification, the household’s benefits when the reviewer detects a variance in will revert to the original level. State the medical deduction and/or the shel- agencies are encouraged to complete ter deduction in excess of the cap, and such verification and, if needed, con- these expenses were reported at appli- duct an interview prior to processing cation, recertification or during the the change. After this initial period, certification period, the reviewer shall State agencies will verify these ex- handle the variance like any other QC penses in accordance with the normal variance as identified in § 275.12 of the timeliness standards. Performance Reporting System regula- (vi) Medical expenses shall be subject tions. to the same rounding procedures used (8) Amendment 152. The rounding pro- for shelter expenses in § 273.10(e)(1)(ii). cedure set forth in § 273.10(e) shall be in This procedure shall be in effect until effect for new applications and recer- implementation of amendments to tifications no later than July 1, 1980. § 273.10(e)(1)(ii). The State agency shall have up to 12 (vii) No household shall be entitled to months following the implementation restoration of lost benefits under this date of final regulations to convert the amendment for any period prior to the current caseload to the rounding proce- time the State agency has imple- dure that is chosen under mented its provisions. For the initial § 273.10(e)(1)(ii). The State agency shall months after implementation, during have a choice of the following three op- which the longer processing time al- tions in converting households that are lowed under this amendment is in ef- already participating at the time the fect, a household shall be entitled to new rounding procedure goes into ef- restoration of lost benefits back to the fect:

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(i) Convert households at recertifi- from fraud claims. Any collection ac- cation; (ii) convert households by con- tion on fraud claims after implementa- ducting a desk review; or (iii) convert tion is subject to the fifty percent re- all households, or all households in a tention including claims established certain category, at a point-in-time. under the Food Stamp Act of 1964 as For example, the State agency may amended and under the Food Stamp convert all public assistance house- Act of 1977, as amended. However, only holds or all households in a project individuals found guilty of fraud area by computer. Point-in-time mass through an administrative fraud hear- conversions shall be conducted no later ing or through a court of law under than July 1, 1980. In any case, the State regulations promulgating the Food agency shall advise FNS regarding Stamp Act of 1977, as amended, are sub- which rounding and caseload conver- ject to the recovery provisions in sion procedures are chosen and when §§ 273.16 and 273.18 retroactive to imple- the conversion will be completed. mentation of fraud claim provisions (9) Amendment 154. State agencies under the 1977 Act. shall implement the program changes (10) Amendment 207. State agencies required by Amendment 154 as follows: shall implement the changes in the (i) State agencies shall begin requir- rules required by Amendment 207 no ing social security numbers for all new later than January 1, 1983. Disabled applications and recertifications no parents who requested and were denied later than the first day of the first separate household status on or after month which commences 120 days from September 8, 1982, will be entitled to the date of publication of final rules. benefits retroactive to the dates of Participating households shall be re- their applications for separate house- quested to provide or apply for social hold status. security numbers (SSN) for appropriate (11) Amendment 160. State agencies household members at recertification, shall implement the provisions of this or at the time of office contact for any amendment as follows: other reason. The State agency shall (i) State agencies shall submit the provide advance notification of this re- initial State corrective action plans so quirement and the consequences of they are received by FNS within 90 noncompliance by sending an indi- days of publication of these regulations vidual notice to all participating as required in § 275.22(a) of this chapter. households and by providing press re- This initial plan shall contain all leases for dissemination through the known deficiencies in the State which media. The individual notices may be meet the criteria set forth in § 275.16(b) sent as either a one-time notice prior of this chapter and shall identify, for to implementation and/or with the no- each such deficiency, the items re- tices of expiration of a certification pe- quired in § 275.17(b) of this chapter. riod. Project areas also shall prepare and (ii) If any affected member(s) of a submit to the State corrective action household does not have his or her SSN plans for all identified deficiencies. readily available at the time of appli- These plans shall be submitted within cation, recertification, or any office 60 days of identification of a deficiency contact, he or she shall follow the pro- and shall include any deficiencies cedures for furnishing an SSN in ac- known to the project area prior to pub- cordance with § 273.6 as amended. lication of these regulations for which (iii) State agencies shall implement corrective action has not been com- the fraud claims procedures contained pleted. Ninety days after publication of in §§ 273.16 and 273.18. Implementation these regulations, all provisions of shall be no later than the first of the §§ 275.15, 275.16, 275.17, 275.18, 275.19 and month following the 120th day from the 275.22 of this chapter shall be imple- date of publication of final rules. By mented. implementation the State agency shall (ii) State agencies shall have sub- also have an approved system for han- mitted management evaluation (ME) dling claims, including a method for review schedules within 90 days of pub- accounting for the fifty percent reten- lication of these regulations as re- tion of the value of funds collected quired by § 275.20 of this chapter. These

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review schedules shall contain all in- holds who had their eligibility or ben- formation required by § 275.20 of this efit levels adversely affected because chapter and shall be adhered to unless Federal energy assistance payments a change is necessary. If a modification were counted as income and/or re- to an ME review schedule is necessary sources. Entitlement to restoration of at any time in the review period, the lost benefits shall be retroactive to Oc- State shall notify the appropriate FNS tober 1, 1979 for payments received Regional Office of the modification. under CSA’s ECAP; to November 27, (iii) State agencies shall implement 1979 for payments received under ME reviews within 90 days of publica- DHEW’s EAP; and to January 7, 1980 tion of these regulations, following the for the one-time-only energy assist- provisions of §§ 275.5, 275.6, 275.7, 275.8, ance payments to SSI households in ac- and 275.9 of this chapter. Any waiver cordance with Pub. L. 96–126. from the requirements of § 275.7 or (ii) State agencies shall use the fol- § 275.9 must be requested 60 days prior lowing procedures for notifying house- to its implementation as identified in holds of entitlement to restoration of § 275.5(c). Development or submission of benefits under Amendment 142: requests for a deviation shall not delay (A) State agencies which can readily implementation of the ME review sub- identify those SSI households who re- system past the required implementa- ceived the one-time payment and those tion date. households who received payments (iv) All provisions of these regula- under the Energy Crisis Assistance or tions which are not addressed in para- Energy Allowance Programs which lost graphs (g)(11) (i) and (ii) of this section benefits because their energy assist- shall be implemented within 90 days of ance payment was counted as income publication of these regulations. While and/or resources must notify such this includes the requirements for a households of entitlement to restora- Performance Reporting System Coordi- tion of lost benefits. nator and designation of an organiza- (B) State agencies which cannot tional entity for effecting corrective readily identify households entitled to action as identified in § 275.2(a) of this restoration of lost benefits due to the chapter, this position and designation circumstances described in may be established on an interim basis; § 272.1(g)(14)(i) must issue a one-time- provided that the provisions of § 275.2(a) only press release to notify households of this chapter are fully implemented which have participated since October by October 1, 1980. During this interim 1, 1979 of possible entitlement to res- period States shall ensure that all re- toration of lost benefits. State agencies sponsibilities of the coordinator or en- may, at their option, use additional tity are adhered to. means of notification such as posters. (12) [Reserved] (15) Amendment 163. State agencies (13) Amendment 162. Program changes shall implement the provisions in this required by Amendment 162 of the Food amendment no later than July 1, 1980. Stamp Program regulations shall be (16) Amendment 174. State agencies implemented as follows: shall implement the program changes (i) The fee agent system for con- required by Amendment 174 as follows: ducting interviews is currently in use (i) State agencies shall implement and its continuing use is approved. the income/resource disregard provi- (ii) All other rules except paragraph sion for Federal, State, and local en- (p) of § 272.8 shall be implemented as ergy assistance payments (§§ 273.8 and soon as practical but no later than 90 273.9 of this subchapter) no later than days following the date of final rule- October 1, 1981. making. A fee agent training plan must (ii) State agencies shall implement be submitted within 45 days of the date the new maximum resource limit and of final rulemaking. Paragraph (p) of the exemption of vehicles for the phys- § 272.8 concerning points and hours ically disabled (§ 273.12 of this sub- shall be implemented following the chapter) no later than October 1, 1981 time standards contained therein. for all new applicants. State agencies (14) Amendment 142. (i) State agencies shall convert the current caseload to shall restore lost benefits to house- the new resource limit at the time of

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recertification, or at any other time tions, particularly those dealing with the casefile is reviewed prior to recer- the elderly or disabled, and those tification. places where the elderly or disabled (iii) State agencies shall implement congregate, such as housing units sen- the student participation provisions of ior citizens centers, and elderly feeding this amendment (§§ 273.1, 273.2, 273.5, programs. Also, posters explaining the 273.7 and 273.11 of this subchapter) no changes shall be displayed in food later than October 1, 1981 for all new stamp certification offices and shall be applicants. Current caseload shall be made available to public and general converted at the time of recertification assistance offices, local Social Security or any time the casefile is reviewed offices and any other interested groups. prior to recertification. State agencies shall notify all organi- (17) Amendment 158. (i) The procedures zations on their outreach contact lists contained in part 273 regarding SSI of the changes and of the availability food stamp joint application processing of posters and fliers. State agencies shall become effective on August 1, 1980 shall issue press releases to the news for all State agencies except that: media advising of the impending pro- (A) In those areas designated as SSI/ gram changes. FNS will supply State Elderly Cash-out Demonstration agencies with model language describ- Project Sites or Demonstration Project ing the changes which State agencies Comparison Sites, implementation of may use in their publications. these provisions will be delayed. In ad- (18) Amendment 168. The provisions of dition, Social Security office service Amendment 168 shall be effective on areas which contain either demonstra- the thirtieth day following their publi- tion projects sites or demonstration cation. Any claims filed against State comparison sites will be temporarily agencies for incidents that occur after exempted, in their entirety, from im- the publication of this amendment plementation of these provisions shall be filed in accordance with the whether or not their boundaries are co- provisions of this amendment. Any terminous with demonstration project claims filed against State agencies for sites and/or demonstration comparison incidents that occurred prior to the site boundaries. This temporary ex- publication of this amendment shall be emption removes the administrative filed in accordance with the rules in ef- problem of the same SSA office simul- fect at the time they occurred. How- taneously operating under both joint ever, the administrative review proce- processing and cash-out regulations. dures contained in this amendment The procedures contained in this rule- shall be applicable to all claims that making shall become effective for are filed after the effective date of this these project areas on the first day of the month following the ninetieth day amendment. after the termination of the dem- (19)–(20) [Reserved] onstration project. (21) Amendment 178. State agencies (B) State agencies in SSI cash-out shall implement the provisions of States as defined in § 273.20 shall not §§ 273.8 and 273.9 of this amendment for implement the provisions of this rule- all new applicants no later than Feb- making. In the event an SSI cash-out ruary 1, 1981. States shall convert the State loses that status, the State agen- current caseload to the new rules at re- cy shall implement the provisions of certification or at the time the case is this rulemaking on the first day of the otherwise reviewed, whichever comes month following the ninetieth day first. after the Secretary of Health and (22) Amendment 179. State agencies Human Services determines that the shall implement those verification pro- State no longer qualifies for cash-out cedures mandated in §§ 273.2 and 273.8 status. no later than the first of the month 120 (ii) State agencies shall distribute days following publication of final reg- fliers advising of the changes contained ulations. State agencies may imple- in this amendment to public and gen- ment those provisions allowed at State eral assistance offices, local Social Se- agency option in §§ 273.2 and 273.12, curity offices, any interested organiza- once the options have been approved by

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FNS and the State certification manu- (28) Amendment 156. State agencies als have been revised to incorporate shall implement the program changes the options. required by Amendment 156 within 120 (23) Amendment 171. (i) All States op- days after publication of these regula- erating an ATP issuance system shall tions, meeting the submittal deadlines submit the first Form FNS–46, Food outlined in §§ 272.2 and 272.3. Stamp Reconciliation Report, in ac- (29) Amendment 190. State agencies cordance with Amendment No. 171, for shall implement these regulations no the month of February 1981. This re- later than January 1, 1982. The rules port shall be submitted to the FNS Re- are effective November 9, 1981. gional Office within 90 days from the (30) Amendment 191. Areas subject to end of the report month. the photo ID card requirement must (ii) All States shall submit the Form have issued photo ID cards (or cards FNS–388, State Coupon Issuance and annotated to indicate that the card is Particpation Estimates, for February valid without a photograph, in accord- 1981 and each month thereafter. Those ance with § 273.10(g)(4)(ii)(C)) to all par- States that have not submitted proce- ticipating households, and shall require dures for estimating program partici- presentation of photo ID cards (or the pation, shall submit them to the FNS annotated cards) at issuance points as Regional Office on or before February a precondition of issuing coupons to 9, 1981. households, no later than the first of (24) Amendment 186. The procedures of the month that is 12 months after the part 275 regarding SSA/food stamp publication of final regulations. Any joint processing and demonstration areas that become subject to the photo cases shall become effective on August ID card requirement at a later date 1, 1980 for all applicable State agencies. shall also come into full compliance no These procedures must be implemented later than the first of the month that by October 1, 1980. occurs 12 months after FNS notifies (25) Amendment 187. State agencies the State agency that the area is sub- shall implement the complaint proce- ject to the requirement. dures required by § 271.6(a) no later than 180 days following publication of (31) Amendment 169. The provisions of final regulations. Amendment 169 shall be effective (26) Amendment 165. State welfare March 30, 1981. These provisions shall agencies and State employment agen- apply to the period beginning October cies shall implement the provisions of 1, 1980, except that the provisions of Amendment 165 no later than the first § 277.4(b)(2) shall apply to the period Oc- of the month following 120 days from tober 1, 1978 through October 1, 1980. No publication of amendment 165 in the State shall be subject to sanctions FEDERAL REGISTER as follows: based upon quality control error rates (i) Both agencies shall begin imme- for any period prior to October 1, 1980. diately to develop the work registra- No State shall receive enhanced fund- tion plan and agreements discussed in ing based upon quality control data for § 273.7(c) and (d) of Amendment 165. The a period prior to the date upon which plan and agreements must be approved its quality control system was in oper- and implemented within the 120 day ation. timeframe established for implementa- (32)–(33) [Reserved] tion of all provisions of the final rule. (34) Amendment 198. State agencies (ii) The provisions of amendment 165 opting to match earnings data provided shall be applied to households at the by applicants and participants with in- time of initial application, recertifi- formation maintained by the Social cation, or reregistration, beginning no Security Administration shall first later than the first of the month fol- execute data exchange agreements lowing 120 days from publication of the with the Social Security Administra- amendment. tion. After the effective date of this (27) Amendment 189. State agencies rule and after execution of this agree- shall implement the provisions of ment, State agencies may implement Amendment No. 189 no later than July wage match provisions at their discre- 1, 1982. tion.

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(35) Amendment 202. State agencies at any time, but shall implement this shall implement the provisions of rule no later than January 1, 1984. Amendment No. 202 as follows: Prior to January 1, 1984, this rule may (i) The rules shall be implemented no be implemented Statewide, in only later than October 1, 1981, including part of a State (such as in certain the provisions for a medical deduction, project areas), or for only certain rea- separate dependent care deduction, and sonable classifications of households uncapped shelter expense deduction for (such as for only households receiving the elderly and disabled in Puerto Temporary Assistance for Needy Fami- Rico, Guam, and the Virgin Islands. All lies) so long as the implementation is households who apply October 1 or completed by January 1, 1984. State later and those households who are re- agencies shall have begun to send certified October 1, 1981 or later shall monthly reports to households so that be processed in accordance with these they can report their January 1984 cir- provisions. The proration of initial cumstances in accordance with month benefits shall begin no later § 273.21(h). However, the changes in the than October 1, 1981. interim provisions made by this final (ii) Conversion of the current case- rule need not be implemented on Janu- load to the new gross income test and ary 1, 1984. The changes made by this earned income deduction amount shall final rule shall be implemented no be completed no later than 90 days later than May 1, 1984. Unless other- from October 1, 1981, or 90 days from wise specified in § 273.21 of this chapter, the date of implementation approved all other food stamp regulations shall through waiver requests in accordance apply to State agencies and to applying with paragraph (g)(35)(vi) of this sec- or participating households. tion. (37) Amendment 205. The procedures (iii) Conversion of the current case- extending eligibility to otherwise eligi- load to the new household definition; ble residents of shelters for battered ineligibility of strikers and boarders; women and children contained in and, in Puerto Rico, Guam, and the Amendment 205 shall be implemented Virgin Islands, a medical deduction, by State agencies no later than April 1, separate dependent care deduction, and 1982. uncapped excess shelter expense deduc- (38)–(39) [Reserved] tion shall be completed at or before re- (40) Amendment 213. All State agen- certification. In no event shall the new cies shall execute the appropriate data medical, dependent care, and excess exchange agreements and implement shelter provisions for Guam, Puerto the provisions of this amendment not Rico and the Virgin Islands be imple- later than January 1, 1983. State agen- mented prior to October 1, 1981. cies may opt to match earnings data (iv) Notification to affected house- with information maintained by the holds of these changes shall be done, at Social Security Administration upon a minimum, in the same manner re- publication of final regulations pro- quired for mass changes in public as- vided they have executed data ex- sistance grants prescribed in change agreements with the Social Se- § 273.12(e)(2)(ii). curity Administration. State agencies (v) Beginning October 1, 1981, out- which are not prohibited by State law reach activities engaged in by State from wage matching with agencies ad- agencies shall be ineligible for Federal ministering unemployment compensa- matching funds. tion may do so upon publication of (vi) FNS will consider requests for final regulations, provided they have waivers to these timeframes, except for executed the appropriate data ex- the timeframe in paragraph (g)(35)(v) of change agreements. this section, on a state-by-state basis, (41) State agencies shall implement if good cause can be established and the provisions of Amendment 215 upon justified, in writing, for the need for a publication. longer timeframe. (42) Amendment 217. The regulations (36) Amendment 259. State agencies concerning the optional workfare pro- may implement this Monthly Report- gram contained in Amendment 217 ing and Retrospective Budgeting rule shall be in effect November 8, 1982.

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Workfare programs may be imple- days following publication of the final mented after this date provided FNS rule. has approved the workfare plan. (47) Amendment 227. (i) In accordance (43) Amendment 220. State agencies with § 276.2(b)(3) (iii), FNS will hold shall implement Amendment 220 on Oc- State agencies strictly liable for losses tober 1, 1982. by issuance agents where reconcili- (44) Amendment 221. State agencies ation shows noncompliance with photo- shall implement on a case by case basis graphic identification (photo ID) card the provisions of this rule, excluding requirements beginning with the fiscal the provision which revises the applica- quarter that begins January 1, 1983. tion form, beginning the first of the (ii) State agencies shall include pro- month 30 days from the date of publica- visions establishing the liability to the tion. The provision requiring a notice State agency of an issuing agent for of verification on the application form the issuance losses covered in shall be implemented on or before the § 274.1(b)(6) in the next contract or first day of the month beginning at agreement between the State agency least 90 days from the date of publica- and the issuing agent that is entered tion. If the State agency has not de- into or renewed after publication of pleted its existing supply of applica- this rule. Not later than one year fol- tion forms, the State agency may opt lowing such publication, all contracts to implement this provision by pro- or agreements shall contain the re- viding an insert to the application quired provision establishing the liability. However, failure of State agencies form containing the notice of to include this language in contracts verification. will not absolve the State agencies of (45) This amendment Amendment 222. the liability referred to in paragraph shall be implemented by the first day (g)(47)(i) of this section. of the month following the 30th day (48) Amendment 228. FNS will consider after publication. As of that date prior requests for waivers to monthly report- approval of forms, manuals, instruc- ing requirements beginning November tions, or any other type of operating 5, 1982. guidelines will no longer be required (49) Amendment 245. The mail issuance and waivers will be granted or denied loss rates of 0.75 percent and $2,250 are based on the new criteria contained effective January 1, 1983. The mail herein. Additionally, as of that date issuance loss rate of 0.5 percent and State agencies shall inform FNS of $1,500 are effective October 1, 1983. For changes, as they occur, in their organi- the second quarter of fiscal year 1983 zational outline and agreements with only, FNS will look at Statewide loss other agencies. The submission re- rates and the loss rates of individual quirement for the Budget Projection reporting units within the State. Statement, Form FNS–366A, as set Where the loss rate for individual re- forth in § 272.2(e) shall become effective porting units within the State is over on August 15, 1983, for the 1984 Federal the tolerance in that quarter and the fiscal year beginning October 1, 1983 Statewide loss rate is also over toler- through September 30, 1984. ance, FNS will assess liability for (46) Amendment 225. The State agency losses exceeding the tolerance reported shall obtain FNS approval for the ex- for the second quarter of 1983. Where clusion of energy assistance provided the loss rate for individual reporting under any State or local program, in units within a State are over tolerance accordance with the criteria set forth for the second quarter, but the State- in §§ 273.8(e)(14) and 273.9(c)(11), within wide loss rate is under tolerance, State six months of the date of publication of agencies shall have one additional the final rule. State or local energy as- quarter (the third Fiscal Year 1983 sistance which is not approved during quarter) to bring such individual re- this six month period shall cease to be porting units’ loss rates into compli- excluded at the end of the period. The ance with the tolerance levels. Thus for new provisions concerning restoration these reporting units, FNS will assess of lost benefits in § 273.17 (a) and (e) liability beginning with the fourth shall be implemented no later than 120 quarter of fiscal year 1983 and each

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quarter thereafter for losses which ex- fraud disqualification provisions of the ceed the tolerance levels, regardless of Food Stamp Act of 1977. The disquali- Statewide loss rate. FNS will bill State fication procedures for intentional Pro- agencies for losses on a semiannual gram violation in § 273.16 shall apply to basis. any individual alleged to have com- (50) Amendment 230. State agencies mitted one or more acts of intentional shall implement the provisions of Program violation since the implemen- Amendment 230 no later than January tation of the fraud disqualification pro- 1, 1983. visions under the Food Stamp Act of (51)–(52) [Reserved] 1977. However, the disqualification pen- (53) Amendment 233. State agencies alties in § 273.16(b) shall apply only to shall implement these regulations no individuals disqualified for acts of in- later than February 1, 1983. tentional Program violation which (54) Amendment 234. The provisions of occur after implementation of this Amendment 234 shall apply to those amendment. In addition, the disquali- sponsored aliens on behalf of whom the fication penalties in § 273.16(b) shall sponsor signed an affidavit of support apply only to individuals disqualified or similar statement (as a condition of for acts of intentional Program viola- the alien’s entry into the United States tion which occurred either during a as a lawful permanent resident) on or certification period based on an appli- after February 1, 1983. cation form containing these penalties (55) Amendment 235. Except for the or after receipt of written notification provisions which simply extend options from the State agency of these pen- to State agencies, State agencies shall alties. Recurring acts of intentional implement the changes made by Program violation which occur over a Amendment 235 no later than February period of time prior to and after imple- 1, 1983. Elderly/disabled persons who re- mentation of this final rule shall not quested and were denied separate be separated. Only one penalty can be household status or other consider- imposed for such recurring violations ations granted disabled persons on or and the household member shall be dis- after September 8, 1982, will be entitled qualified in accordance with the dis- to benefits retroactive to the dates of qualification penalties specified in this their applications for separate house- amendment. The reporting require- hold status or other special consider- ments of § 273.16(i) shall become effec- ations. tive upon implementation, however, (56) [Reserved] the State agency shall have until Octo- (57) Amendment 240. The provisions of ber 1, 1983, to submit such reports on Amendment 240 shall be effective on individuals disqualified under previous January 11, 1983. The enhanced funding, regulations implementing the Food which the amendment implements, is Stamp Act of 1977. available to political subdivisions ret- (ii) The recovery provisions for roactive to October 1, 1982. The en- claims against households in § 273.18 hanced funding is available to a polit- shall apply to any overissuance caused ical subdivision for a workfare partici- by an action which occurred after im- pant who begins working on or after plementation of regulations promul- October 1, 1982. gating the Food Stamp Act of 1977, as (58) Amendment 242. State agencies amended. And, the procedures for cal- shall implement the disqualification culating the amount of overissuances penalties for intentional Program vio- as specified in § 273.18(c) shall apply to lation, and the improved recovery of any month in which an overissuance overpayments provisions contained in occurred retroactive to March 1, 1979. Amendment 242 no later than April 1, However, State agency retention of 50 1983. percent of the value of collected inten- (i) The provision in § 273.11(c) for han- tional Program violation claims and 25 dling the income and resources of an percent of the value of collected inad- individual disqualified for intentional vertent household error claims as pro- Program violation shall apply to any vided in § 273.18(h) shall apply to any individual disqualified for such a viola- collection action retroactive to Janu- tion since the implementation of the ary 1, 1982. The State agency shall have

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the option of reinstating any claim amending portions of § 273.7, to new ap- previously suspended, but not termi- plicants no later than January 2, 1985. nated, under the recovery provisions of The provisions shall apply to partici- regulations implementing the Food pating households at recertification or Stamp Act of 1977 and, once reinstated, at the time of office contact for any such claims shall be subject to the re- other reason. covery provisions contained in this (64) Amendment 252. (i) The sanction/ amendment. However, the State agen- incentive provisions of § 275.25 were ef- cy shall not reinstate any amount of a fective October 1, 1982. The previous claim compromised or any claim ter- provisions of § 275.25 shall continue to minated under previous regulations im- apply to the review periods prior to Oc- plementing the Food Stamp Act of tober 1982. 1977, as amended. The submission re- (ii) The funding provisions of quirements for the Form FNS–209, Sta- § 277.4(b)(2) were effective on October 1, tus of Claims Against Households, as 1982, and shall apply to the October set forth in § 273.18(h) shall become ef- 1982, through September 1983, review fective with the quarter ending March period and every review period there- 31, 1983. after. (59) Amendment 243. (i) State agencies (iii) The revised funding provisions of shall implement the provisions con- § 277.4(b)(7) shall apply to the 6-month tained in § 274.1(d) statewide no later review periods October 1, 1981 through than October 1, 1983. FNS will consider March 1982 and April through Sep- requests for waivers to this timeframe tember 1982. on a State-by-State basis if the State agency establishes good cause through (65) Amendment 253. The provisions of submission of written justification of § 274.8(a)(6) (i), (ii), and (iii) shall be im- the need for a longer timeframe and plemented the first month beginning submits a plan that shows when the on or after the 90th day following pub- system will be implemented. lication of this final rule. In that (ii) State agencies shall implement month, the FNS–388 report shall pro- the correction made to § 273.1(a)(1)(iv) vide the actual second preceding month retroactive to September 8, 1982. data. The initial semiannual coupon (iii) The Commonwealth of Puerto issuance and NA/PA household and per- Rico shall implement the changes to son participation data shall be pro- part 285 on January 1, 1984, as pub- vided in September 1985 for the month lished in the FEDERAL REGISTER for De- of July 1985. State agencies will cease cember 21, 1984. submission of the FNS–256 report as of (60) Amendment 244. State agencies July 1985. shall implement the provisions regard- (66) Amendment 254. State agencies ing joint food stamp/public assistance shall implement the provisions of case processing at State agency discre- Amendment 254 no later than October tion. The provisions regarding certifi- 19, 1983. cation periods must be implemented at (67) [Reserved] time of application or at recertifi- (68) Amendment 260. (i) The quality cation no later than July 1, 1983. control review provisions contained in (61) [Reserved] Amendment 260 are effective starting (62) Amendment 247. State agencies with the beginning of Fiscal Year 1984, must implement the provisions rel- except as provided in the following sen- ative to noncompliance with other pro- tences. All cases sampled for the six grams no later than April 1, 1985. The months October 1983 through March provisions relative to disclosure of in- 1984 shall be disposed of and reported formation must be implemented no within 95 days of March 31, 1984. Cases later than February 1, 1985. sampled for April 1984 and for months (63) Amendment 251. State agencies thereafter shall be disposed of and re- shall implement the program changes ported according to § 275.21. For exam- required by this amendment as follows: ple, 90 percent of April cases are due (i) State agencies shall apply the within 75 days of April 30, and 100 per- work registration, job search, and vol- cent are due within 95 days of that untary quit provisions of this rule, date. The structure of sample frames

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specified in § 275.11(e) must be imple- routinely requesting and using, or shall mented no later than the sample show the dates when it will begin rou- month of October 1984. tinely to request the use, information (ii) Starting with the October 1983 from the various data sources specified sample month, cases must be deter- in § 272.8(a) according to the fre- mined complete, not complete, or not quencies for requests, timeframes and subject to review according to other requirements of § 272.8(e), (f) and §§ 275.12(g) and 275.13(e). As of the be- (g). Full implementation shall include ginning of Fiscal Year 1984 the sample requests for available information from sizes stated in § 275.11(b) and related the Social Security Administration for sampling plan requirements are effec- all recipients for which such informa- tive, and State agencies are required to tion has not been previously requested. meet the completion standard stated in The 30-day timeframe specified in § 275.11(d). State agencies currently § 272.8(g) is effective for applicant sampling at the levels provided in households which become recipients as § 275.11(b)(1)(iii) must submit to their discussed in § 272.8(e)(1) as soon as a respective FNS Regional Offices the re- State agency begin receiving informa- liability statement required by tion from particular data sources. § 275.11(a)(2) within 30 days of the publi- (i) A Plan describing good faith ef- cation of this rule, or no later than the forts shall at a minimum document second month after publication of this that the State agency is currently in rule begin sampling at the levels speci- compliance with wage match criteria fied in § 275.11(b)(1)(ii). as specified in the final rulemaking of (69) Amendment 261. State agencies November 5, 1982 (47 FR 50180), assure shall implement this amendment es- that such compliance will continue at tablishing the Alaska urban and rural current levels until such time as these allotment levels and the new cap for provisions are implemented, and pro- Guam no later than August 1, 1984. vide an implementation schedule that Households in rural Alaska which re- reflects full compliance in the min- quest retroactive benefits by February imum amount of additional time. Re- 1, 1985 will be entitled to retroactive quests for delays of implementation be- benefits for the period after September 8, 1982, during which they lived in rural yond May 29, 1986 shall identify the ap- Alaska and participated in the Food plicable regulation part, the date for Stamp Program in that area. These implementation, justification for the retroacive benefits will be provided delay, and the implementation plan. over a period of time not to exceed one (ii) The Secretary shall consult with year. The amount provided each month the Secretary of the Department of will be the higher of $50 or one-twelfth Health and Human Services and with of the total amount due. Households in the Secretary of the Department of Guam which request retroactive bene- Labor prior to the approval of Plans of fits by February 1, 1985 will be entitled Operation documenting good faith ef- to retroactive benefits for the period forts. In no event shall the Secretary October 1, 1982, through September 30, approve a delay of the provisions of in- 1983, during which they lived in Guam, dividual notification in § 273.2(f)(9) be- participated in the Food Stamp Pro- yond the initial implementation date gram in that area, and were in house- of any of these new provisions. hold sizes two, five, or eight or more. (iii) Implementation schedules be- (70) Amendment 264. These rules are yond September 30, 1986 are not approv- effective on May 29, 1986. No later than able, with the following exception: If that date State agencies are required on April 1, 1985 no SWICA exists in a to submit the attachment to their particular State, the provisions of the State Plan of Operation specified in rule as they relate to SWICAs shall be § 272.2 and in § 272.8(i), documenting ei- effective upon the designation of a ther full implementation of these rules SWICA. Implementation of a SWICA or good faith efforts to implement after April 1, 1985 shall take place as them. The documentation of full imple- soon thereafter as possible but in no mentation or of good faith efforts shall event later than September 30, 1988. All show either that the State agency is SWICAs with delayed implementation

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shall be in operation so that wage in- any reason, a State agency fails to im- formation is reported to them starting plement these provisions on that date, with the month of October 1988. households shall be provided the lost (71) Amendment No. 266. The provi- benefits which they would have re- sions contained in Amendment No. 266 ceived if the State agency had imple- shall be implemented by March 6, 1987. mented these provisions as required. (i) All Fiscal Year 1987 review sched- (ii) The provisions of § 272.1(b) regard- ules shall continue in force despite the ing the prohibition of State or local implementation of these provisions. sales taxes on foods purchased with However, a State agency may, at its food stamp coupons shall be imple- option, seek a change in that schedule. mented on October 1 of the calender (ii) Waivers shall remain in force year during which the first regular ses- until their expiration. If a State agen- sion of each State’s Legislature is con- cy wishes to cancel a waiver it should vened following enactment of Pub. L. contact its Regional Office and nego- 99–198 (enacted December 23, 1985). A tiate whatever change it needs. ‘‘regular session’’ means a scheduled (iii) The first periodic Corrective Ac- session of a State’s legislature con- tion Plan update required by this vened to address the usual range of amendment shall be submitted by May statutory and budgetary issues. A 1, 1987. ‘‘budgetary’’ session of a legislature (72) Amendment 267. State agencies shall be considered a ‘‘regular session’’ shall implement the eligibility require- if State rules allow for statutory issues ments of this rulemaking as they apply to be introduced at these ‘‘budgetary’’ to offsetting farm self-employment sessions even if rules governing these losses and publicly operated commu- special procedures are stringent. nity mental health centers not later (A) FNS may approve a delay in the than March 27, 1986. State agencies above implementation date if a State must begin taking applications from provides FNS a request documenting residents of publicly operated commu- that such date would either: nity mental health centers (as defined (1) Have an adverse and disruptive ef- in § 271.2) not later than March 27, 1986. fect on the administration of the Food FNS field offices may authorize these Stamp Program in such State; or centers to act as retail food stores on (2) would provide inadequate time for February 25, 1986. retail stores to implement required (73) Amendment 269. The correction to changes in sales tax policy. § 273.7(n)(1)(v) outlined in amendment (B) FNS has no authority to approve 269 is effective retroactively to October any State implementation schedule 3, 1984. State agencies which may have with an effective date later than Octo- implemented the voluntary quit error ber 1, 1987. prior to receiving FNS notification not (75) Amendment 273. The State agency to effectuate the change, shall issue shall implement this amendment es- lost benefits to affected households, tablishing Alaska urban, Rural I, and but not prior to November 2, 1984 (the Rural II allotment levels by April 1, effective date of the October 3, 1984 1986. final rule). State agencies shall imple- (76) Amendment 274. (i) The provisions ment the revisions to the rules out- of this amendment at §§ 271.2, 273.2, lined in amendment 269 for all new ap- 273.5, 273.9, 273.10(d)(6), and 273.21(b) plicants no later than the first day of shall be implemented for all new appli- the month following June 26, 1986. Any cations and the current caseload no conversion of the current caseload ne- later than August 1, 1986. If, for any cessitated by this amendment shall be reason, a State agency fails to imple- done at recertification or at the time ment these provisions on this date, the case is next reviewed, whichever households shall be provided lost bene- occurs first. fits which they would have received if (74) Amendment 270. (i) State agencies the State agency had implemented shall implement the earned income and these provisions as required. dependent care deduction amounts and (ii) The provisions of this amendment the resource limit provisions of at § 273.18 and part 285 shall be imple- Amendment 270 on May 1, 1986. If, for mented June 20, 1986.

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(iii) The provisions of this amend- (80) [Reserved] ment at § 273.21(a)(4)(i)(A) and the sec- (81) Amendment 279. (i) For State ond sentence in § 273.10(f)(7) are effec- agencies which elected to implement a tive retroactive to August 31, 1981. Sec- $160 dependent care deduction limit for tion § 273.21(a)(4)(ii)(A) and the first all households prior to October 18, 1986, two sentences of § 273.21(a)(4)(ii)(B) de- the dependent care deduction provision scribed in this amendment are retro- of Amendment No. 279 is effective ret- active to September 8, 1982. The provi- roactive to May 1, 1986 in accordance sions of this amendment at §§ 272.3, with section 638 of Pub. L. 99–500. In 273.21(a), 273.21(a)(3), 273.21(a)(4)(i)(B), such States, for QC purposes only, QC the third sentence at § 273.10(f)(7), and reviewers shall not include in the error the last two sentences of determination variances which re- § 273.21(a)(4)(ii)(B) are effective retro- sulted from early implementation by active to December 2, 1983. The provi- these States of the deduction limit pro- sion of this amendment at § 276.7(j) is vided the implementation occurred effective retroactive to December 23, during the period beginning May 1, 1986 1985. through October 1986. (77) Amendment 275. The program (ii) For all other State agencies, the change in § 273.2(l) of Amendment 275 $160 dependent care deduction provi- shall be effective October 1, 1986. sion of Amendment No. 279 shall be im- (78) Amendment 276. (i) This rule is ef- plemented for elderly and disabled ap- fective retroactively to December 23, plicant and participating households 1985. Any household that applied and on December 1, 1986. State agencies was denied benefits from that date shall implement the provision as a until implementation of this rule is en- mass change in accordance with titled to restored benefits if it: § 273.12(e), except that affected house- (A) Was categorically eligible as de- holds in Alaska, Hawaii and Guam fined in this rule; shall be issued an individual notice (B) Is otherwise entitled to benefits; which, at a minimum, informs the and households of the general nature of the (C) Requests a review of its case or if mass change, the effect of the deduc- the State agency otherwise becomes tion limit on the household’s allot- aware that a review is needed. ment, and the month the change will Restored benefits for these households take effect. If for any reason the State shall be made available, if appropriate, agency fails to implement the provi- in accordance with § 273.17 back to the sion on the required date, affected date of the food stamp application or households shall be provided restored December 23, 1985, whichever is later. benefits, back to December 1, 1986. For The State agency shall implement the QC purposes only in such States, QC re- changes in this rule immediately upon viewers shall not include in the error publication and any eligibility deter- determination variances which re- mination or issuance made on or after sulted solely from a State agency’s im- that date shall be made in accordance plementation or nonimplementation of with this rule. the deduction limit between December (ii) For quality control (QC) purposes 1, 1986 and January 1, 1987. only, QC reviewers shall not identify (82) Amendment 281. State agencies variances resulting solely from either shall implement the provisions of this implementation or nonimplementation amendment no later than April 1, 1987. of this rule in cases with review dates (83) Amendment 282. The changes to between December 23, 1985 and October § 273.2(i)(3)(i) contained in Amendment 31, 1986, inclusive. No. 282 are effective January 12, 1987 (79) Amendment 277. State agencies and shall be implemented no later than shall implement the provisions of February 11, 1987. Amendment 277 on August 22, 1986. If, (84) Amendment 285. (i) The provisions for any reason, a State agency fails to of Amendment No. 285 at implement the provisions, affected §§ 273.9(d)(6)(i), 273.9(d)(6)(ii), households shall be entitled to restored 273.9(d)(6)(v)(B), 273.10(d)(1)(i) and benefits but not prior to August 22, 273.10(d)(6) are retroactively effective 1986. to October 1, 1986. The State agency

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shall implement the provisions imme- spective dates as they pertain to the diately upon publication and any eligi- eligibility or ineligibility of applicant bility determination made on or after aliens. that date shall be made in accordance (89) Amendment No. 293. The provi- with this rule. The State agency shall sions of Amendment No. 293 are effec- review a case to determine if the tive retroactively to October 17, 1986 household was denied benefits under and shall be implemented as follows: these amendments whenever the house- (i) State agencies shall implement hold requests a review or the State the provisions of this amendment for agency becomes aware that such a de- new applicant households which apply nial may have occurred. Any household for program benefits on or after June 1, that was denied benefits as a result of 1987. an eligibility or benefit calculation (ii) State agencies shall convert their (e.g., processed change report) made on affected current caseload to the provi- or after October 1, 1986 is entitled to re- sions of this amendment at household stored benefits. Restored benefits for request, at recertification, or when the these households shall be made avail- case is next reviewed, whichever occurs able, if approporiate, in accordance first and provide restored benefits, if with § 273.17 back to: (A) October 1, 1986 appropriate, back to the date of appli- or the date of application whichever is cation of October 17, 1986, whichever later for new applications; or (B) Octo- occurred later. ber 1, 1986 or the first month in which (iii) Any affected household that ap- the application of these amendments plied for Program benefits from Octo- would have affected the household’s ber 17, 1986 until implementation of benefits, whichever is later, for cer- this rule and was denied benefits is en- tified households. titled to restored benefits back to the (ii) For quality control (QC) purposes date of application or October 17, 1986, only, a variance resulting solely from whichever occurred later, if the house- either the implementation or non-im- hold: plementation of this rule shall not be (A) Is otherwise entitled to benefits, identified between October 1, 1986 and and April 1, 1987. (B) Requests a review of its case or (85) Amendment No. 286. (i) The provi- the State agency otherwise becomes sions of Amendment No. 286 which per- aware that review is needed. mit homeless meal providers to apply (iv) For quality control (QC) purposes for authorization to accept food stamps only, QC shall not identify variances were effective March 11, 1987. resulting solely from either implemen- (ii) All other provisions of this tation or nonimplementation of the amendment were effective April 1, 1987. provisions of this amendment for cases (86) Amendment No. 287. The provi- with review dates between October 17, sions of this amendment are effective 1986 (the date of enactment of Pub. L. April 7, 1987. 99–498) and August 31, 1987. (87) Amendment No. 288. The removal (90) Amendment No. 294. State agen- of the word ‘‘funded’’ from the last sen- cies shall implement the Title IV-D tence in § 273.11(e)(1), the amendments child support income exclusion provi- to the first and fourth sentences in sion of Amendment No. 294 at its own § 278.1(e), and the revision of paragraph option, provided it has procedures in (a)(2)(iii) in § 273.11 are effective Feb- place, at the time of implementation, ruary 25, 1986 and shall be implemented for applying the provision to all af- not later than March 27, 1986. fected households and for calculating (88) Amendment No. 292. (i) The effec- and reimbursing FNS as required under tive date of the provisions of this the provision. State agencies shall im- amendment is retroactive to November plement the remaining provisions of 6, 1986. Amendment No. 294 retroactively to (ii) The actual dates upon which April 1, 1987. State agencies shall pro- aliens may become eligible under vide restored benefits, if appropriate, § 273.4(a) (8), (9), (10), and (11) are speci- back to the date of application or April fied in those paragraphs. State agen- 1, 1987, whichever occurred later. Any cies must inform their staff of the re- affected household that applied for

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Program benefits from April 1, 1987 of FNS comments but no later than until implementation of this rule and March 1, 1988. State agencies must was denied benefits is entitled to re- begin to implement provisions con- stored benefits back to the date of ap- tained in their approved plans by Octo- plication or April 1, 1987, whichever oc- ber 1, 1988. curred later, if the household is other- (93) Amendment No. 298. The provi- wise entitled to benefits and requests a sions of Amendment No. 298 are effec- review of its case or the State agency tive, and shall be implemented, as fol- otherwise becomes aware that a review lows: is needed. The provision at 7 CFR (i) The provision in § 271.2 of this 273.17, limiting restored benefits to 12 amendment which defines ‘‘General as- months, shall not apply to households sistance’’ and the provisions contained entitled to resorted benefits under the in § 273.9(b)(2)(i), § 273.9(c)(1)(ii)(A), provisions of Amendment No. 294. For (c)(1)(ii)(B), and (c)(1)(ii)(C), regarding QC purposes, implementation variances exclusion of certain PA/GA vendor pay- shall not be identified unless a case ments are effective retroactively to meets all four of the following condi- April 1, 1987. The provision in tions: the case’s review date is after § 273.9(c)(1)(iv)(B), exclusion of emer- August 31, 1987; the State agency cer- gency/special PA/GA vendor payments, tified or recertified the case (or was re- is also effective retroactive to April 1, quired to recertify the case) after Au- 1987, however, this provision reflects gust 31, 1987; the certification or recer- current policy and requires no imple- tification was effective for the review mentation efforts by State agencies. date (or the required recertification State agencies shall immediately im- should have been effective for the re- plement the other provisions listed view date); and in a retrospective budg- above. Affected households shall be en- et system, the household’s budget titled to restored benefits back to the month was September 1987 or later or date of application or April 1, 1987, in a prospective budget system, the whichever occured later. household’s issuance month was Sep- (ii) The technical amendment to part tember 1987 or later. For the purpose of 277 is effective September 29, 1987, and this amendment, State agencies shall does not require implementation ef- not establish a claim against any forts by State agencies. The remaining household which received overissued provisions of Amendment No. 298 are benefits resulting solely from retro- effective, and must be implemented, as active implementation of the JTPA in- follows: come provision in § 273.9(b)(1)(v). (A) Section 271.2, definition of (91) Amendment No. 295—(i) Automated ‘‘Homeless individual,’’ effective July Federal information exchange systems. 22, 1987. State agencies shall imme- States’ QC liability exemption for er- diately inform caseworkers of the new rors resulting from proper use of a Fed- definition. No other implementation eral automatic information exchange efforts are required to the State agen- system is effective beginning with the cies. Fiscal Year 1986 reporting period. (B) Section 273.9(c)(1)(ii)(D), the in- (ii) FNS timeframes. The timeframes come exclusion of certain PA/GA ven- for notifying States of their payment dor payments, is effective and shall be error rates and payment error rate li- implemented for new applicant house- abilities, if any, and the timeframe by holds which apply for benefits during which FNS must initiate collection ac- the period beginning October 20, 1987 tion on claims for such liabilities are and ending September 30, 1989. This effective beginning with the Fiscal provision does not apply to allotments Year 1986 reporting period. issued to any household for any month (92) Amendment No. 284. State agen- beginning before the effective period of cies shall submit their ADP/CIS plans the provision. State agencies shall con- to FNS for approval no later than Oc- vert their affected current caseload to tober 1, 1987. Portions of ADP/CIS plans this provision, if otherwise eligible, at may be submitted no later than Janu- recertification, when the household re- ary 1, 1988. Plans must be approvable quests a review of its case, or when the within 60 days of State agency receipt State agency otherwise becomes aware

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that a review is needed but not prior to (H) Section 273.9(d)(7)(i), the change October 20, 1987. in the standard deduction method- (C) Section 272.5, the financial reim- ology, is effective October 1, 1987. bursement for Program informational (I) The last sentence of § 273.9(d)(8)(i), activities for the homeless, is effective the change in the excess shelter deduc- July 22, 1987. tion methodology, is effective, October (D) Section 273.1(a)(2)(i)(C), 1, 1988. § 273.1(a)(2)(i)(D), § 273.10(f)(2), the ex- (J) Section 273.18(c)(2)(ii), the earned ception to certain household composi- income deduction penalty, is effective tion requirements, and the rule regard- on September 5, 1987. State agencies ing recertification of households sub- which issue on a calendar month basis, ject to the exception, are effective and shall apply this provision to allotments must be implemented on October 1, issued for October 1987 and all allot- 1987. Households which apply for bene- ments for subsequent months. State fits on or after October 1, 1987 may be agencies which issue on other than a granted separate household status calendar month basis shall apply the under this provision. Current partici- provision to the issuance for the first pants which may be eligible for sepa- issuance month beginning after Sep- rate household status under this provi- tember 5, 1987. sion, may be granted separate status, (iii) State agencies must implement but not prior to October 1, 1987, if the the provisions as outlined in paragraph household requests separate status and (g)(93)(ii) of this section on the specific the State agency determines that the dates required for each provision. If, household meets the requirements of for any reason, the State agency fails this provision. to implement the provisions on the re- (E) Section 273.2(i), the expansion of quired date, affected households, if ap- expedited service, is effective, and propriate, shall be entitled to restored must be implemented, for affected benefits back to the date of application households applying for Program bene- or the effective date of the provision fits on or after December 1, 1987. involved, whichever occurred later. (F) Section 273.9(a)(3), regarding the (iv) Quality control variance exclusion. date of making the annual adjustment (A) For QC purposes only, QC review- to the income standards, is effective ers shall not identify variances result- with the 1988 annual adjustment. The ing solely from implementation or non- July 1, 1987 income limits will remain implementation of the following provi- in effect until October 1, 1988. sions in cases with review dates during (G) The first three sentences of the periods indicated: § 273.9(d)(8)(i), the raising of the shelter (1) Sections 273.9(b)(2)(i), 273.9(c)(1) deduction limit for the 48 States and (ii)(A), 273.9(c)(1)(ii)(B), 273.9(c)(1)(ii)(C) DC., Alaska, Hawaii, Guam and Virgin and 273.9(c)(1)(iv)(B), concerning PA/GA Islands, are effective October 1, 1987. vendor payments, from April 1, 1987 to State agencies shall implement the December 31, 1987; higher deduction limits appearing in (2) Section 271.2, concerning the defi- the first sentence of § 273.9(d)(8)(i) on nition of ‘‘Homeless individual’’, from October 1, 1987 only for households July 22, 1987 to December 31, 1987; whose certification periods begin on or (3) Section 273.9(c)(1)(ii)(D), con- after October 1, 1987. State agencies cerning PA/GA vendor payments for shall implement the lower deduction certain housing assistance provided on limits appearing in the second sentence behalf of households residing in tem- of § 273.9(d)(8)(i) on October 1, 1987 only porary housing, from October 20, 1987 for households whose certification peri- to December 31, 1987; ods begin before October 1, 1987. The (4) Sections 273.1(a)(2)(i) (C) and (D), State agency shall implement the concerning household composition, higher deduction limits for households from October 1, 1987 to December 31, whose certification periods begin be- 1987; fore October 1, 1987 beginning with the (5) Section 273.2(i), concerning enti- month in which such household is re- tlement to expedited service, from De- certified after October 1, 1987. cember 1, 1987 to December 31, 1987;

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(6) Section 273.9(d)(8)(i), the first or when the State agency otherwise be- three sentences only, concerning the comes aware that a review of a par- shelter deduction limit, from October ticular case is needed. 1, 1987 to December 31, 1987. (iii) Benefits shall be restored back (B) State agencies may choose to ex- to February 1, 1988 or the date of the clude these variances in Federal sub- food stamp application, whichever sample reviews; State agencies are not occured later. Restoration shall be required to do so. To exclude the made in accordance with § 273.17 except variances, they shall provide FNS with that the twelve-month limit for restor- the following information by April 1, ing benefits shall not apply. 1994: The review number of each af- (iv) For Quality Control (QC) pur- fected Federal subsample review, the poses only, QC reviewers shall not iden- sample month, the reason and justify variances resulting solely from im- tification for excluding the variance, plementation or nonimplementation of and the revised finding. Amendment No. 303 for cases with re- (94) Amendment No. 299. The changes view dates between February 1, 1988 to § 273.2(i)(3)(ii) are effective January and August 31, 1988. For retrospectively 12, 1987 and shall be implemented no budgeted cases, QC reviewers shall later than February 11, 1987. begin identifying variances when Sep- (95) Amendment No. 268. The QC arbi- tember becomes the budget month. tration provisions shall be imple- Variances shall not be identified in mented by State agencies on February cases where Amendment No. 303 was not 22, 1988, for all cases for which the re- implemented prior to the QC review gional case findings or the regional ar- when the State agency correctly fol- bitrator’s decision are received on or lowed the implementation provisions after February 22, 1988. of this section. (96) Amendment 301. This rule pertains (99) [Reserved] to the Income and Eligibility (100) Amendment 289. Verification System (IEVS). It is effec- (i) This rule is effective August 11, tive March 18, 1988, except for para- 1988. graphs 272.8(i) (3) and (4) and 272.8(j)(1) (ii) State agency Work Plans setting which will be effective upon publica- forth proposals for conducting Sim- tion in the FEDERAL REGISTER of the plified Application/Standardized Ben- approval of the information collection efit Projects must be postmarked no burden by the Office of Management later than November 9, 1988. Local and Budget (OMB). agency Work Plans must be post- (97) Amendment No. 278. State agen- marked no later than December 9, 1988. cies shall implement the provisions of (101) Amendment No. 291. The provi- this amendment no later than October sions of Amendment No. 291 are effec- 18, 1988. tive September 19, 1988. (98) Amendment No. 303. The income (102) Amendment No. 307. The provi- exclusion provision § 273.9(c) of Amend- sions of this amendment are effective ment No. 303 shall be implemented im- immediately and shall be implemented mediately upon publication of the as follows: Amendment as follows: (i) No later than October 1, 1988, for (i) State agencies must apply the pro- all new applicants, and no later than vision of this amendment for any eligi- the first recertification on or after Oc- bility or benefit calculation made on or tober 1, 1988, for the participating case- after February 1, 1988. load, State agencies shall implement (ii) Affected households which were the provisions of § 272.2(b) relating to denied benefits because the household’s the alien/citizenship statement and no- eligibility or benefit calculation during tification of verification with INS; the the second Federal fiscal year quarter provisions of § 273.1(b) relating to non- of 1988 (but not prior to February 1, household members; the provisions of 1988) did not include the income exclu- § 273.2(f)(1)(ii) relating to the manda- sion provision of this amendment shall tory verification of alien status; the be entitled to restored benefits at the provisions of § 273.2(h)(3) relating to time of recertification, whenever the delays in application processing; and household requests a review of its case, the provisions of § 272.11(c) relating to

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the treatment of income and resources nate or otherwise slightly modify the of nonhousehold members; and July 17 interim provisions for clarity (ii) Unless a waiver has been ap- only are effective retroactively to proved by FNS by October 1, 1988, State April 1, 1987. The conforming amend- agencies shall implement all other pro- ment at § 273.11(e)(7) is effective retro- visions of this rule no later than Octo- actively to February 25, 1986. The re- ber 1, 1988. Implementation by October maining technical amendments con- 1, 1988 shall be accomplished either by tained in this amendment at obtaining FNS approval to a Plan of §§ 273.2(e)(2), 273.7(b)(1)(vii), Operation as required in the rule at 273.9(b)(1)(iii), 276.2(d) and 278.1(e) are § 272.11(e) or by submitting to FNS a effective April 24, 1989. These provi- substantially approvable Plan of Oper- sions do not alter or change current ation as described in material which policy or procedures under which State FNS Regional Offices provided State agency are operating or do not require agencies on or about September 2, 1988. special implementation efforts by That material provided points for State agencies. State agencies to consider relative to (ii) The provision in § 273.9(b)(1)(v) requesting waivers. State agencies which limits application of the provi- should contact FNS Regional Offices if sion to on-the-job training programs they need further guidance on waivers. under section 204(5), Title II, of the Job (103) Amendment No. 308. The quality Training Partnership Act is effective control changes to § 275.12(d)(2) shall be retroactively to April 1, 1987 and shall implemented for the quality control re- be implemented as follows: view period beginning October 1, 1988. (A) State agencies shall implement (104) Amendment No. 300. State agen- the provision for all new applicant cies shall implement the requirements households no later than June 1, 1989. of this rulemaking no later than May 1, Affected applicant households which 1989. applied for Program benefits during the (105) Amendment No. 271. This rule be- period April 1, 1987 and the date the comes effective April 1, 1989, and the State agency implemented this change State agencies shall implement all pro- and were denied benefits shall be provisions on that date, with the excep- vided restored benefits, if applicable, tion of the following provisions: the back to April 1, 1987 or the date of the new provisions on replacement food stamp application, whichever oc- issuances shall be implemented by Oc- curs later, if the household is otherwise tober 1, 1989; the new liabilities for entitled to benefits and requests a re- State agencies using authorization doc- view of its case or the State agency ument issuance systems shall be imple- otherwise becomes aware that a review mented on October 1, 1989; the new mail is needed. issuance reporting and liability assess- (B) All other households shall be con- ments shall be implemented on October verted to the provision at household re- 1, 1989; State agencies wanting to quest, at recertification, or when the change their current unit-level of mail case is next reviewed, whichever occurs issuance loss reporting must submit first. Restored benefits shall be pro- their initial plans by May 15, 1989; the vided, if applicable, for such house- new provision on quality control case holds back to April 1, 1987 or the date reviews shall be implemented for fed- of the food stamp application, which- eral Fiscal Year 1990; State agencies ever occurs later. shall begin to use the revised Form (C) The provision at 7 CFR 273.17, FNS–46, Issuance Reconciliation Re- limiting restored benefits to 12 months, port, to report figures for the month of does not apply for households entitled October 1989; and, provisions pertaining to restored benefits under Amendment to staggered issuance contained in any No. 310. currently-approved waivers will auto- (107) Amendment No. 313. The perform- matically be cancelled April 1, 1989. ance-based funding provisions for Em- (106) Amendment No. 310. (i) The provi- ployment and Training programs shall sions of this amendment which adopt, be effective October 1, 1989. as final, interim provisions published (108) Amendment No. 314. (i) The provi- July 17, 1987 and those which redesig- sion of Amendment No. 314 which adds

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five sentences to § 273.2(j)(1)(iv) and the household. (For example, a change re- provisions which add a new paragraph ported by a nonmonthly reporting ret- § 273.2(j)(2)(iii)(B) and amend §§ 273.17 rospectively budgeted household was to and 273.18 are effective July 7, 1989 and be implemented in accordance with 7 shall be implemented no later than CFR 273.12.) The Department was not September 1, 1989. requiring State agencies to conduct a (ii) All remaining provisions of casefile review to implement monthly Amendment No. 314, which adopt the in- reporting and retrospective budgeting terim provisions of August 5, 1986 as changes for currently participating final without change or modify the in- households. Monthly reports submitted terim provisions for clarity only, are by households which became exempt effective retroactively to December 23, from MRRB as a result of the Hunger 1985 (the effective date of the interim Prevention Act, such as non-migrant rulemaking). These provision do not re- seasonal farmworkers or the homeless, flect a change in intended policy and, were to be treated as change reports therefore, do not require special imple- and processed prospectively in accord- mentation efforts by State agencies. ance with 7 CFR 273.12(c). (109) Amendment No. 315. Program (v) State agencies were required to changes required by Amendment No. implement the provisions of this rule 315 to the food stamp regulations shall concerning the exclusion of advance be implemented as follows: payment of earned income tax credits, (i) The provisions relating to migrant 7 CFR 273.8(c)(1) and 273.9(c)(14), on and seasonal farmworkers (7 CFR January 1, 1989. Households applying 273.9(c)(1)(ii)(E) and 273.10(a)(1)(ii)) are subsequent to December 31, 1988 should effective September 1, 1988 for all have had this provision applied to them households applying or certified subse- as of their date of application. Changes quent to August 31, 1988. Changes af- affecting households participating as of fecting currently participating house- December 31, 1988 were to be imple- holds are to be implemented at recer- mented upon recertification, at the tification or when it is necessary to household’s request, or when it was implement other changes affecting the necessary to implement other changes household. affecting the household. (ii) State agencies were required to implement the provision of this rule (vi) All other provisions of this rule, regarding a technical correction con- relating to technical corrections concerning energy assistance payments (7 cerning the urban Alaska TFP (7 CFR CFR 273.9(c)(11)) on September 19, 1988. 272.7(c)), Alaska proration (7 CFR (iii) State agencies were required to 272.7(f)(3)(iii)), and the dependent care implement revised food stamp allot- deduction (7 CFR 273.11(c)(2)(iii) and ments on October 1, 1988 (7 CFR 271.2, 273.12(e)(1)(i)(C)), are to be imple- 271.7, 273.10(e)(2), 273.10(e)(4)(ii), and mented August 1, 1989. 273.12(e)). Revised allotments were im- (vii) Quality control errors made as a plemented as mass changes in accord- result of this rule’s changes to §§ 273.9, ance with 7 CFR 273.12(e). 273.10, and 273.21 during the required (iv) State agencies were required to implementation time frame established implement the provision relating to by this rulemaking shall be handled in the dependent care deduction, 7 CFR accordance with interim regulations 273.9(d)(4), 273.10(d)(1)(i), and published at 53 FR 44171, dated Novem- 273.10(e)(1)(i)(E), and monthly reporting ber 2, 1988. Food stamp allotment and retrospective budgeting, 7 CFR changes are not covered by the interim 273.21(a) and (b), on October 1, 1988. regulation because this is a mass These provisions were immediately ef- change. fective for all households certified sub- (viii) State agencies which failed to sequent to September 30, 1988. Changes implement any of these provisions by affecting currently participating the required dates shall provide af- households were to be implemented fected households with the lost benefits upon recertification, at the household’s they would have received if the State request, or when it was necessary to agency had implemented these provi- implement other changes affecting the sions as required.

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(110) Amendment No. 316. State wel- (§ 273.18(k)(5)), adverse action notice on fare agencies shall implement the pro- claim demand letters (§ 273.18(d)(3)), no- visions of Amendment No. 316 as follows: tices of fair hearings (§ 273.18(d)(3)), and (i) The provisions contained in the results of geographic error prone § 274.2(b) of Amendment No. 316 are effec- profiles (§ 275.15(g)) shall be imple- tive retroactively to January 1, 1989 mented no later than July 2, 1990. The and shall be implemented by State wel- provision relating to fraud detection fare agencies no later than January 1, units (§ 272.4(h)) shall be implemented 1990 for all households which newly no later than September 4, 1990. State apply for Program benefits or apply for agencies shall complete the first re- recertification on or after that date. view of food stamp office hours (ii) The remaining provisions are ef- (§ 272.4(g)) during Federal Fiscal Year fective July 1, 1989 and must be imple- 1990. mented on that date for all households which newly apply for Program bene- (iii) State agencies may submit at- fits or apply for recertification on or tachments to their Plans of Operation after that date. The current caseload pertaining to the intercept of unem- shall be converted to these provisions ployment compensation benefits to at household request, at the time of re- repay intentional Program violations certification, or when the case is next claims as specified in §§ 272.2 (a) and (d) reviewed, whichever occurs first and and 272.12(a) of this amendment as of restored benefits shall be provided, if February 22, 1990. appropriate, back to July 1, 1989 or the (114) Amendment No. 322. The changes date of the application, whichever is contained in this amendment are effec- later. Additionally, households which tive October 15, 1990 and shall be imple- applied for Program benefits between mented no later than that date. The July 1, 1989 and the date the State changes to 7 CFR 273.11 contained in agency implemented these provisions, this amendment will apply only to dis- and were denied benefits, shall be enti- qualifications imposed after the effec- tled to restored benefits back to July 1, tive date of this rulemaking. 1989 or the date of the application, (115) Amendment No. 324. The quality whichever occurred later, if the house- control changes to § 275.12 that are hold: made by Amendment No. 324 shall be (A) Is otherwise entitled to benefits, implemented for the quality control re- and (B) Requests a review of its case or view period beginning January 1, 1991. the State agency otherwise becomes (116) Amendment No. 330. The provi- aware that a review is needed. sions of Amendment No. 330 are effec- (111) Amendment No. 296. The provi- tive and must be implemented on Au- sions of Amendment 296 are effective gust 1, 1991. Any variance resulting July 5, 1989. from implementation of the provisions (112) Amendment No. 309. (i) The State of this amendment shall be excluded agency shall have until June 18, 1990, to from error analysis for 90 days from request regional arbitration of regional this required implementation date in office case findings which the State re- accordance with 7 CFR 275.12(d)(2)(vii). ceived before February 22, 1988. The provisions must be implemented (ii) The State agency shall have until for all households that newly apply for June 18, 1990, to request national office Program benefits on or after the re- arbitration of regional arbitration de- quired implementation date. The cur- cisions which the State agency re- rent caseload shall be converted to ceived before February 22, 1988. these provisions at household request, (113) Amendment (320). (i) The provi- at the time of recertification, or when sions of this rule are effective April 2, the case is next reviewed, whichever 1990. occurs first, and the State agency must (ii) The provisions relating to the Ex- provide restored benefits back to the panded Food and Nutrition Education required implemention date. If for any Program (§ 272.5(b)(1)(iv)), the collection of fraud claims § 273.18, the moni- reason a State agency fails to imple- toring of claims against households ment on the required implementation

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date, restored benefits shall be pro- (119) Amendment No. 328. (i) The re- vided, if appropriate, back to the requirements for State agencies to begin quired implementation date or the date implementation or corrective action of application, whichever is later. for deficiencies which are the cause for (117) Amendment No. 332. The provi- non-entitlement to enhanced funding sion of Amendment No. 332 regarding the for the Fiscal Year 1986 review period, resource exemption for PA and SSI re- and review periods thereafter were ef- cipients is effective and must be imple- fective as of October 1, 1985, pursuant mented no later than February 1, 1992. to section 604 of Public Law 100–435. Any variances resulting from imple- (ii) The requirements for State agen- mentation of the provisions of this cies to begin the implementation of amendment shall be excluded from corrective action for deficiencies which error analysis for 90 days from this re- result in underissuances, improper de- quired implementation date, in accord- nials or improper terminations of bene- ance with 7 CFR 275.12(d)(2)(vii). The fits to eligible households where such provision must be implemented for all errors are caused by State agency households that newly applied for Pro- rules, practices or procedures were ef- gram benefits on or after the required fective July 1, 1989, pursuant to section implementation date. The current 320 of Public Law 100–435. The correc- caseload shall be converted to these tive action must address all such defi- provisions at household request, at the ciencies which occurred on or after time of recertification, or when the July 1, 1989. case is next reviewed, whichever occurs (iii) The State agency shall have first, and the State agency must pro- until December 27, 1991, to implement vide restored benefits back to the re- changes in the development of quality quired implementation date. If for any control sampling plans, such that only reason a State agency fails to imple- those State agencies proposing non- ment on the required implementation proportional integrated, or other alter- date, restored benefits shall be pro- native sampling plan designs must: vided, if appropriate, back to the re- (A) Demonstrate that the alternative quired implementation date or the date design provides payment error rate es- of application whichever is later. timates with equal-or-better predicted (118) Amendment No. 321. (i) The provi- precision than would be obtained had sions contained in §§ 273.7(d)(1)(ii)(A) the State agency reviewed simple ran- and 273.9(c)(5)(i) (A) and (F) of Amend- dom samples of the sizes specified in ment No. 321, which implement section § 275.11(b)(1) of the regulations, 404(c) of the Hunger Prevention Act of (B) Describe all weighting, and esti- 1988, are effective and must be imple- mation procedures if the sample design mented retroactively to July 1, 1989. is non-self-weighted, or uses a sampling (ii) The remaining provisions of technique other than systematic sam- Amendment No. 321 are effective Octo- pling, ber 1, 1988 and must be implemented no (C) Demonstrate that self-weighting later than March 1, 1992. State agencies is actually achieved in sample designs may implement the conciliation proce- claimed to be self-weighting. dure provisions contained in (iv) The State agency shall have § 273.7(g)(1)(ii) immediately upon publi- until January 27, 1992, to request re- cation of Amendment No. 321. However, gional arbitration of any federally sub- in no case shall the conciliation proce- sampled underissuance cases for which dures be implemented any later than the State agency received FNS re- March 1, 1992. By implemented, the De- gional office QC findings on or after partment means that the State agency February 22, 1988. shall begin to use conciliation proce- (v) The State agency shall have until dures in all cases where the State agen- January 27, 1992, to request national cy has determined on or after the arbitration of any regional arbitration above implementation date that an in- decisions involving underissuance dividual has refused or failed to comply cases for which the State agency re- with an E&T requirement under ceived FNS regional arbitration find- § 273.7(f). ings on or after February 22, 1988.

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(120) Amendment No. 335. The provi- State agencies as the provisions reflect sions contained in Amendment No. 335 current policy. are effective and shall be implemented (iii) Any variance resulting from im- as follows: plementation of the provisions of this (i) The provisions contained in amendment shall be excluded from §§ 271.2, 271.7, 273.1(e)(1)(iii), quality control error analysis for 90 273.2(k)(1)(i)(H), 273.2(m), 273.10, 273.18 days from the required implementation and 278.1 of Amendment No. 335 are ef- date which shall be handled in accord- fective on February 1, 1992 and shall be ance with 7 CFR 275.12(d)(2)(vii). implemented on that date as follows: (121) Amendment No. 336. The provi- (A) The Guam and Virgin Islands sions of Amendment No. 336 are effec- State agencies shall communicate the tive and must be implemented as fol- two new group home provisions lows: (§§ 271.2, 273.1(e)(1)(iii) and 278.1) to (i) The provision that gives State group homes in their areas by this date agencies the option of using retrospec- so that they can apply for the appro- tive budgeting for nonmonthly report- priate certification and residents can ing households other than those ex- apply for food stamps without delay. empt from monthly reports (7 CFR All State agencies shall implement the 273.21(b) introductory text) was effec- expanded group home provisions for ap- tive as of November 28, 1990, the date of plicants newly applying for program enactment of the Leland Act. benefits on or after February 1, 1992 for (ii) The delegation of the responsi- approved group homes. bility for design of the monthly report (B) No special implementation efforts form (§ 273.21(h)(3) and § 273.21(j)(1)(ii) of are required with regard to the provi- this chapter) must be implemented by sions in §§ 273.2(k)(1)(i)(H) and 273.2(m) February 1, 1992. about informing SSI applicants about (iii) The remaining provisions are ef- the Food Stamp Program and the fective January 3, 1992 and must be im- availability of an application at the so- plemented by July 1, 1992. cial security office. (iv) Any variances resulting from im- (C) State agencies are not required to plementation of the provisions of this adjust their computers or train their amendment shall be excluded from caseworkers immediately in order to error analysis for 90 days from the re- implement the provisions in §§ 271.2, quired implementation dates in accord- 271.7, 273.10 and 273.18 relative to the ance with 7 CFR 275.12(d)(2)(vii). minimum benefit for one- and two-per- (122) Amendment No. 337. The provison households because the method- sions of Amendment No. 337 are effec- ology for annually adjusting the min- tive and must be implemented as fol- imum benefit will not result in an in- lows: crease in the minimum benefit for (i) State agencies shall implement some time. However, State agencies the provisions of Amendment No. 337 on are expected to have the capability of February 1, 1992, except as provided in implementing a change in the min- paragraph (g)(122)(ii) of this section. imum benefit in a timely manner when (ii) The amendments to revise the in- such a change in announced and, there- troductory text of § 273.2(j) and fore, shall not wait until an actual § 273.2(j)(3) as they relate to categorical change in the minimum benefit to ad- eligibility and the amendment adding just computers and train caseworkers. § 273.2(j)(4) are effective and must be (ii) The remaining provisions of implemented February 1, 1992 for re- Amendment No. 335 are effective Feb- cipients of GA from a State program. ruary 1, 1992. The provisions which re- They are effective and must be imple- flect that a joint application is no mented August 1, 1992 for recipients of longer required for SSI applicants GA from a local program. §§ 273.2 (c)(1), 273.2(i)(3)(i), and (iii) Any variance resulting from im- 273.2(k)(1)(i)(D) do not require imple- plementation of the provisions of this mentation efforts by State agencies. amendment shall be excluded from The remaining provisions (§§ 273.4, error analysis in accordance with 7 273.9(b) and 273.9(c)) also do not require CFR 275.12(d)(2)(vii) for 90 days from special implementation efforts by the required implementation date. The

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provisions must be implemented for all onstration project does not comply households that newly apply for Pro- with the provisions of this rule and gram benefits on or after the required how the State agency plans to bring its implementation date. If for any reason system into compliance. The State a State agency fails to implement on agency shall submit a schedule of any the required implementation date, re- actions it proposes to take and when stored benefits shall be provided, if ap- they are to be completed. Compliance propriate, back to the required imple- with the provisions of this final regula- mentation date, the date of the food tion shall occur within two years from stamp application or the date the the effective date unless approved by household was determined categori- FNS to continue operations under the cally eligible in accordance with authority of section 17 of the Act (7 § 273.2(j)(4), whichever is later. U.S.C. 2026) as a demonstration project. (iv) The current caseload shall be In seeking FNS approval to continue converted to these provisions at house- under Section 17 authority, the State hold request, at the time of recertifi- agency shall state what research value cation, or when the case is next re- would be obtained in continuing the viewed, whichever occurs first. The demonstration. State agency must provide restored (ii) For State agencies that have pro- benefits back to the required imple- posals or planning documents cur- mentation date. rently under review by the Depart- (123) Amendment No. 338. The provi- ment, the State agencies and the De- sions of Amendment No. 338 are effective partment shall establish at what point and must be implemented on February the State agency is in the planning 1, 1992. The provisions must be imple- process and how the State agency will mented for all households that newly fit into the approval process of these apply for Program benefits on or after rules. All such State agencies will be the required implementation date of expected to comply with the standards February 1, 1992. The current caseload of these rules. shall be converted to these provisions (iii) A State agency that wishes to at household request, at the time of re- obtain approval for an EBT system certification, or when the case is next shall submit a Planning Advanced reviewed, whichever occurs first. If, for Planning Document for FNS approval any reason, a State agency fails to im- as prescribed herein. plement by the required implementa- (126) Amendment No. 327. (i) The statu- tion date, restored benefits shall be tory provision reflected in provided, if appropriate, back to the re- § 275.23(e)(6)(v) of Amendment No. 327 quired implementation date or the date was effective October 1, 1985 pursuant of the food stamp application, which- to Public Law 100–435. ever is later. Any variances resulting (ii) The remaining provisions are ef- from implementation of the provisions fective October 28, 1992. of this amendment shall be excluded (127) Amendment No. 340. (i) The provi- from error analysis for 90 days from sions at § 273.7(d)(1)(i)(A) and this required implementation date in § 273.7(d)(1)(i)(B) are effective retro- accordance with 7 CFR 275.12(d)(2)(vii). active to October 1, 1991. (124) Amendment No. 325. The quality (ii) The provision at § 273.7(c)(4)(viii) control changes to § 275.23 that are is effective and must be implemented made by Amendment No. 325 shall be by August 15, 1993, the date E&T plans implemented effective January 24, 1992. must be submitted to FNS. (125) Amendment No. 345. The provi- (iii) The provision at § 273.10(d)(1)(i) is sions of Amendment No. 345 are effec- effective January 19, 1993 and must be tive on April 1, 1992, and shall be imple- implemented by March 1, 1993. mented as follows: (iv) The remaining provisions of (i) Currently operating demonstra- Amendment No. 340 are effective and tion projects shall submit to FNS for must be implemented retroactively to approval a plan no later than June 30, February 1, 1992. 1992, to satisfy the requirements of this (v) Any variances resulting from im- regulation. The plan shall address the plementation of the provision at areas in which the State EBT dem- § 273.10(d)(1)(i) shall be excluded from

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error analysis for 90 days from the re- fected households, such benefits shall quired implementation date in accord- be provided back to the effective date ance with 7 CFR 273.12(d)(2)(vii). of the provision or the date of the (128) Amendment No. 326. The provi- household’s first initial application, sions of this amendment are effective whichever occurs later; and must be implemented no later than (ii) The remaining provisions of December 1, 1993. Any variance result- Amendment No. 349 adopt as final, with- ing from implementation of the provi- out change, interim provisions pub- sions of this amendment shall be ex- lished September 29, 1987 and are effec- cluded from quality control error anal- tive as of the date the corresponding ysis for 60 days from the required im- interim provision became effective as plementation date which shall be han- established at 7 CFR 272.1(g)(93). These dled in accordance with 7 CFR 275.12(d)(2)(vii). provisions and the effective dates are: (129) Amendment No. 349. The provi- § 271.2, definition of ‘‘Homeless indi- sions of Amendment No. 349 are effec- vidual,’’ July 22, 1987; § 272.5, July 22, tive, and shall be implemented, as fol- 1987; § 273.9(a)(3), October 1, 1988; § 271.2, lows: definition of ‘‘General assistance,’’ (i) § 273.1(a)(2)(i)(C), § 273.1(a)(2)(i)(D) April 1, 1987; § 273.9(b)(2)(i), April 1, 1987; and § 273.10(f)(2) are effective as of Oc- § 273.9(c)(1) (ii)(A), (ii)(B) and (ii)(C), tober 1, 1987; § 273.2(i)(1) (iii) and (iv) April 1, 1987; § 273.9(d)(7)(i), October 1, are effective as of December 1, 1987; the 1987; § 273.9(d)(8)(i), October 1, 1987 (ex- new § 273.9(c)(1)(ii)(G) is effective as of cept for the last sentence, which is ef- April 1, 1987. However, application of fective October 1, 1988). The provisions § 273.9(c)(1)(ii)G) in conjunction with do not change policy or procedures the provisions at § 273.9 (c)(1)(ii) (A) under which State agencies are cur- through (F) and (c)(5)(i)(F) is effective rently operating and, therefore, do not as of the date the individual provisions require specific implementation efforts at 7 CFR 273.9 (c)(1)(ii) (A) through (F) by State agencies. and (c)(5)(i)(F) became effective. Those (130) Amendment No. 342. The provi- dates are: § 273.9(c)(1)(ii) (A), (B), and sion relating to household election of (C), April 1, 1987; § 273.9(c)(1)(ii)(D), Oc- repayment method for IPV claims at tober 20, 1987; § 273.9(c)(1)(ii)(E), Sep- § 273.18(d)(4)(ii) is effective retroactive tember 1, 1988, and § 273.9(c)(1)(ii)(F), to November 28, 1990. The provision re- August 1, 1991. The amendment to the lating to household election of repay- first sentence of § 273.9(c)(1)(iv)(B) to include a regulatory reference to 7 CFR ment method for IHE claims at 273.9(c)(5)(i)(F) is effective as of August § 273.18(d)(4)(i) is effective December 13, 1, 1991 (the date the individual provi- 1991. The provisions for State agency sion at 7 CFR 273.9(c)(5)(i)(F) became retention rates on claim collections at effective), and § 273.18(c)(2)(ii) is effec- § 273.18(h)(2) and (i) are effective retro- tive as of September 5, 1987. To the ex- active to October 1, 1990. The provi- tent that these provisions represent sions at § 277.18 which reduce the en- new or different policy from that under hanced funding level for ADP is effec- which the State agency is currently op- tive October 1, 1991, for costs incurred erating, the State agency shall imple- on that date and thereafter and does ment the provisions not later than not apply to ADP funding approved April 1, 1994 for households newly ap- prior to November 28, 1990. plying for Program benefits on or after (131) Amendment No. 347. The provi- such implementation date. State agen- sions of this amendment are effective cies shall convert their affected cur- as specified in paragraphs (g)(131)(ii) rent caseload to these provisions (ex- (A), (B), and (C) of this section. State cept for § 273.18(c)(2)(ii)) at recertifi- agencies are not required to do file cation, when the household requests a searches for cases relating to PASS review of its case, or when the State households unless the question on an agency otherwise becomes aware that a income exclusion for PASS had been review is needed, whichever occurs raised with the State agency prior to first. To the extent that the provisions will result in restored benefits for af- December 13, 1991.

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(i) The provisions at §§ 271.2, 273.1, and as modified by section 13951(c)(2) of 273.11 were effective and had to be im- Pub. L. 103–66. The provisions must be plemented no later than February 1, implemented for all households that 1992. newly apply for Program benefits on or (ii) The provision at § 273.9(c)(17) is ef- after the required implementation fective the earlier of: date. The current caseload shall be (A) December 13, 1991, the date of en- converted to these provisions at house- actment of Pub. L. 102–237; hold request, at the time of recertifi- (B) October 1, 1990, for food stamp cation, or when the case is next re- households for which the State agency viewed, whichever occurs first, and the knew, or had notice, that a household State agency must provide restored member had a PASS; or benefits back to the required imple- (C) Beginning on the date that a fair mentation date. If for any reason a hearing was requested contesting the State agency fails to implement on the denial of an income exclusion for required implementation date, restored amounts provided for a PASS. benefits shall be provided, if appro- (132) Amendment No. 316. The provi- priate, back to the required implemen- sions of this final rule that amend 7 tation date or the date of application, CFR 273.2(b)(3), 273.2(c)(5), whichever is later. 273.2(f)(8)(i)(A) and (ii), and paragraph (135) Amendment No. 348. The provi- (11) of the ‘‘Elderly or disabled mem- sions of Amendment No. 348 are effec- ber’’ definition in 7 CFR 271.2 are effective August 5, 1994 and must be imple- tive as of May 6, 1994. The State agency mented for all QC billing actions begin- shall implement the provisions not ning with Fiscal Year 1986. later than September 5, 1994 for all (136) Amendment No. 346. The provi- households newly applying for Program sion of Amendment No. 346 regarding benefits on or after such implementa- an income exclusion for homeless tion date. The current caseload shall be households living in transitional hous- converted to these provisions at house- ing is effective and must be imple- hold request, at the time of recertifi- mented no later than September 1, cation, or when the case is next re- 1994. Any variances resulting from im- viewed, whichever occurs first, and the plementation of the provisions of this State agency must provide restored amendment shall be excluded from benefits back to the required imple- error analysis for 120 days from this re- mentation date. If for any reason a quired implementation date in accord- State agency fails to implement on the ance with 7 CFR 275.12(d)(2)(vii). The required implementation date, restored provision must be implemented for all benefits shall be provided, if appro- households that newly apply for Pro- priate, back to the required implemen- gram benefits on or after the required tation date or the date of application implementation date. The current whichever is later. Any variances re- caseload shall be converted to these sulting from implementation of the provisions at the household’s request, provisions of this amendment shall be at the time of recertification, or when excluded from error analysis for 90 the case is next reviewed, whichever days from this required implementa- occurs first. The State agency must tion date in accordance with 7 CFR provide restored benefits to such 275.12(d)(2)(vii). households back to the required imple- (133) Amendment No. 352. The provi- mentation date or the date of applica- sions of this amendment are effective tion whichever is later. If for any rea- April 11, 1994. son a State agency fails to implement (134) Amendment No. 355. The provi- on the required implementation date, sions of Amendment No. 355 are effec- restored benefits shall be provided, if tive and must be implemented on Au- appropriate, back to the required im- gust 1, 1994. Any variance resulting plementation date or the date of appli- from implementation of the provisions cation, whichever is later. of this amendment shall be excluded (137) Amendment No. 350. The provi- from error analysis for 120 days from sions of Amendment No. 350 are effec- this required implementation date in tive and must be implemented as fol- accordance with 7 CFR 275.12(d)(2)(vii) lows:

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(i) The provision at § 273.8(e)(12)(i) of (i) The provisions relating to aggre- this chapter is effective and must be gated (combined) allotments to house- implemented according to statute ret- holds applying after the 15th of the roactive to January 1, 1991. month and mail issuance in rural areas (ii) The provision at § 273.8(e)(12)(ii) of where households experience transpor- this chapter will be effective and must tation difficulties in obtaining benefits be implemented on September 1, 1994. are effective and must be implemented (iii) The provision at § 273.21(b) of this by statute retroactive to February 1, chapter against establishing new 1992. monthly reporting requirements for (ii) The provision relating to stag- households residing on Indian reserva- gered issuance on Indian reservations tions if no monthly reporting system was in place on March 25, 1994, is effec- was in place on March 25, 1994 is effective and must be implemented accord- tive and must be implemented according to statute retroactive to March 25, ing to statute retroactive to March 25, 1994. 1994. (iii) The remaining provisions are ef- (iv) The provision in § 273.2(j) of this fective and must be implemented Sep- chapter concerning categorical eligi- tember 1, 1995. bility for GA recipients is effective and (141) Amendment No. 360. This provi- must be implemented according to sion is effective September 20, 1995, and statute retroactive to February 1, 1992. must be implemented no later than the (v) The remaining provisions are ef- first day of the first month beginning fective and must be implemented Octo- December 19, 1995. ber 28, 1994. (142) The provi- (138) Amendment No. 359. The provi- Amendment No. 357. sions of Amendment No. 357 are effec- sion of Amendment No. 359 regarding the medical expense deduction is effective tive and must be implemented as fol- and must be implemented no later than lows: October 1, 1994. Any variances resulting (i) The provision relating to the in- from implementation of the provisions creased penalties at 7 CFR 273.16(b) is of this amendment shall be excluded effective and must be implemented ret- from error analysis for 120 days from roactive to September 1, 1994. This in- this required implementation date in cludes providing notification of the in- accordance with 275.12(d)(2)(vii) of this creased penalties on the application chapter. The provision must be imple- form. mented for all households that newly (ii) The remaining provisions are ef- apply for Program benefits on or after fective and must be implemented Octo- the required implementation date. ber 23, 1995. State agencies must notify households (143) Amendment 367. The provisions of eligible for the deduction of the change Amendment 367 must be implemented in medical deduction reporting require- no later than October 2, 1995 except ments and the right of the household that State agencies currently partici- to be converted to those new proce- pating in the Federal Income Tax Re- dures immediately. The current case- fund Offset Program (FTROP) must im- load shall be converted to these provi- plement section 272.2(d)(1)(xii), which sions at the household’s request, at the relates to the submission of the Plan of time of recertification, or when the Operations, within November 30, 1995. case is next reviewed, whichever occurs (144) Amendment No. (370). The provi- first. sions of Amendment No. (370) are effec- (139) Amendment No. 351. The provi- tive and must be implemented as fol- sions of Amendment No. 351 to amend 7 lows: CFR 273.7(d) are effective October 1, (i) Sections 273.5(b)(1), (b)(4), and 1993. State agencies are not required to (b)(9) are effective February 1, 1992. The take any action to implement these introductory paragraph of 273.5(b)(6) is provisions. effective February 1, 1992. The intro- (140) Amendment No. 333. The provi- ductory paragraph of 273.5(b)(10) is ef- sions of Amendment No. 333 are effec- fective February 1, 1992. Sections tive and must be implemented as fol- 273.5(b)(11)(ii), (b)(11)(iii), and (b)(11)(iv) lows: are effective February 1, 1992.

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(ii) Sections 273.5(b)(6)(i) and (b)(6)(ii) priate, back to the required implemen- and sections 273.5(b)(10)(i) and (b)(10)(ii) tation date or the date of application and the remaining provisions of this whichever is later, but for no more regulation are effective November 1, than 12 months in accordance with 1995 and shall be implemented no later § 273.17(a) of this chapter. Any than February 1, 1996. variances resulting from implementa- (iii) The current caseload shall be tion of the provisions of this amend- converted to these provisions at the ment shall be excluded from error anal- household’s request, at the time of re- ysis for 120 days from this required im- certification, or when the case is next plementation date in accordance with reviewed, whichever occurs first. The § 275.12(d)(2)(vii) of this chapter and 7 State agency shall provide restored U.S.C. 2025(c)(3)(A). benefits back to the effective date. (148) Amendment No. 362. The provi- (iv) Any variance resulting from im- sion of section 13921 of Public Law 103– plementation of a provision in this rule 66 establishing a child support deduc- shall be excluded from error analysis tion was effective September 1, 1994, for 120 days from the required imple- and was required to be implemented no mentation date of that provision. later than October 1, 1995. The provi- (145) Amendment No. 369. The provisions of Amendment No. 362 are effec- sions of Amendment No. 369 are effective tive December 16, 1996 and must be im- May 31, 1996. State agencies must implemented no later than May 1, 1997. plement no later than November 27, State agencies shall implement the 1996. The provisions of this amendment provisions no later than the required are applicable for determinations of in- implementation date. The provisions tentional failure to comply made on or must be implemented for all house- after the effective date of the amend- holds that newly apply for Program ment. benefits on or after either the required (146) Amendment No. 368. The provi- implementation date or the date the sions of Amendment No. 368 are effec- State agency implemented the provi- tive on July 29, 1996. sion prior to the required implementa- (147) Amendment No. 364. Except for tion date, whichever is earlier. State the provisions of § 273.14(b)(2), the pro- agencies are required to adjust the visions of Amendment No. 364 are effec- cases of participating households at tive November 18, 1996 and must be im- the next recertification, at household plemented no later than May 1, 1997. request, or when the case is next re- The effective date and implementation viewed, whichever comes first. State date of the provisions of § 273.14(b)(2) agencies which fail to implement or ad- will be announced in a document in the just cases by the required implementa- FEDERAL REGISTER. The provisions tion date shall provide restored bene- must be implemented for all house- fits as appropriate. For quality control holds that newly apply for Program purposes, any variances resulting from benefits on or after either the required implementation of the provisions are implementation date or the date the excluded from error analysis for 120 State agency implements the provision days from the required implementation prior to the required implementation date, in accordance with 7 CFR date. The current caseload shall be 275.12(d)(2)(vii) and 7 U.S.C. converted to these provisions following 2025(c)(3)(A). State agencies which im- implementation at the household’s re- plement prior to the required imple- quest, at the time of recertification, or mentation date must notify the appro- when the case is next reviewed, which- priate regional office prior to imple- ever occurs first. The State agency mentation that they wish the variance must provide restored benefits to re- exclusion period to begin with actual quired implementation date or the date implementation, as provided in 7 CFR the State agency implemented the pro- 275.12(d)(2)(vii)(A). Absent such notifi- vision prior to the required implemen- cation, the exclusionary period will tation date. If for any reason a State begin with the required implementa- agency fails to implement by the re- tion date. quired implementation date, restored (149) Amendment No. 374. The Higher benefits shall be provided, if appro- Education Act Amendments of 1986, as

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amended in 1987, were effective and re- time of recertification, or when the quired to be implemented for the 1988– case is next reviewed, whichever occurs 89 school year; the Perkins Act was ef- first, and the State agency must pro- fective and required to be implemented vide restored benefits, as may be appro- on July 1, 1991; the Mickey Leland Act priate under the Food Stamp Act, back (as amended by the 1991 Technical to the appropriate required implemen- Amendments to the Food Stamp Act) tation date. If for any reason a State was effective and required to be imple- agency fails to implement on the ap- mented on February 1, 1992, and the ex- propriate implementation date, re- clusions contained in the Higher Edu- stored benefits shall be provided, if ap- cation Act Amendments of 1992 for the propriate, back to the appropriate re- Tribal Development Student Assist- quired implementation date or the date ance Revolving Loan Program were ef- of application, whichever is later. Any fective and required to be implemented variances resulting from implementa- on October 1, 1992, and for Title IV and tion of this amendment shall be ex- BIA student assistance on July 1, 1993. cluded from quality control error anal- The provisions of Amendment No. 374 ysis for 120 days from March 1, 1997. are effective December 16, 1996 and (152) Amendment No. 361 The provi- must be implemented by March 1, 1997. sions of Amendment No. 361 are effective The current caseload shall be con- December 26, 1996, and must be imple- verted to these provisions at the house- mented May 27, 1997. Any variances re- hold’s request, at the time of recertifi- sulting from implementation of the cation, or when the case is next re- provisions of this amendment shall be viewed, whichever occurs first. If im- excluded from error analysis for 120 plementation of the acts referenced in days from this required implementa- this paragraph or this amendment is tion date in accordance with 7 CFR delayed, benefits shall be restored, as 275.12(d)(2)(vii). The provision must be appropriate, in accordance with the implemented for all households that Food Stamp Act. Any variance result- newly apply for Program benefits on or ing from implementation of this after the required implementation amendment shall be excluded from date. The current caseload shall be error analysis for 120 days from March converted to these provisions at the 1, 1997. household’s request, at the time of re- (150) Amendment No. 365. This provi- certification, or when the case is next sion is effective December 16, 1996 and reviewed, whichever occurs first. The must be implemented no later than State agency must provide restored March 1, 1997. Any variances resulting benefits to such households back to the from implementation of the provisions required implementation date or the of this amendment shall be excluded date of application whichever is later. from error analysis for 120 days from If for any reason a State agency fails this required implementation date in to implement on the required imple- accordance with § 275.12(d)(2)(vii) of mentation date, restored benefits shall this chapter. be provided, if appropriate, back to the (151) Amendment No. 375. Public Law required implementation date or the 103–66, the Mickey Leland Childhood date of application whichever is later, Hunger Relief Act, was effective and but for no more than 12 months in ac- required to be implemented on Sep- cordance with § 273.17(a) of this chap- tember 1, 1994. The provisions of ter. Amendment No. 375 are effective De- (153) Amendment No. 366. (i) With the cember 16, 1996, and must be imple- exception of the changes to § 275.3(c)(4) mented by March 1, 1997. The State [Arbitration], § 275.23(e)(5) [State agen- agency shall implement the provisions cies’ liabilities for payment error-Fis- of this amendment no later than the cal Year 1992 and beyond], § 275.23(e)(7) appropriate required implementation [Good Cause], and § 275.23(e)(9) [time- date for all households newly applying frames], all quality control changes for Program benefits on or after such that are made by Amendment No. 366 implementation date. The current shall be implemented July 2, 1997. caseload shall be converted to these (ii) The quality control changes to provisions at household request, at the § 275.3(c)(4) [Arbitration], § 275.23(e)(5)

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[State agencies’ liabilities for payment (i)(3)(ii) were to be implemented Au- error-Fiscal Year 1992 and beyond], gust 22, 1996; § 275.23(e)(7) [Good Cause], and (ii) The amendments to § 273.8(f)(1) § 275.23(e)(9) [Timeframes], shall be im- and § 273.10(e)(4)(ii) were to be imple- plemented after approval of the provi- mented October 1, 1996; sions at § 275.3(c)(4) [Arbitration], and (iii) The amendment to § 273.9(d)(8) § 275.23(e)(7) [Good Cause] by the Office was to be implemented January 1, 1997; of Management and Budget under the (iv) The amendments to Paperwork Reduction Act of 1995. FNS § 273.1(b)(1)(iii) and § 273.8(e)(3)(i)(A) will publish a notice in the FEDERAL must be implemented no later than REGISTER announcing the implementa- March 1, 2001; and tion date. It shall be a date occurring after the publication date of the notice. (v) All remaining amendments must (154) Amendment No. 386. The provi- be implemented no later than January sions of Amendment No.386 are effec- 1, 2001. tive August 4, 2000. State agencies may (158) Amendment No. 382. The provi- begin implementing the rule August 4, sions of Amendment No.379 are effec- 2000 but not later than January 2, 2001. tive and must be implemented March State agencies that have already im- 30, 2000. plemented EBT shall have one year in (159) Amendment (385). The provisions which to grandfather adjustment dis- in § 277.11(d) regarding time limits for closure into their training materials State agencies to file claims to amend according to 7 CFR 274.12(f)(10)(viii). a prior expenditure report to request (155) Amendment No. 373. The provi- retroactive funding for costs previously sion at § 275.23(e)(5)(iii) is effective and incurred are effective October 1, 2000. is to be implemented on July 16, 1999. The conforming amendments to Food The following provisions are effective Stamp Program regulations in on October 1, 1999 and are to be imple- §§ 272.1(g), 272.2(c)(3), 272.11(d) and (e), mented on October 1, 2000, with the 274.12(k), 277.4(b) and (g), 277.9(b), start of the Fiscal Year 2001 quality 277.18(b), (d), (e), (g) and (p)(5), and Ap- control review period: § 271.2; pendix A to Part 277 and the removal of § 275.3(c)(3)(ii); § 275.10(a); § 275.11(c)(1); §§ 277.15 and 277.19 are effective June 23, § 275.11(e)(2); § 275.11(f)(2); § 275.13(a); 2000. § 275.13(b); § 275.13(c)(1); § 275.13(c)(2); (160) Amendment 389. The Personal § 275.13(f)(2) and § 275.23(c)(4). The re- Responsibility and Work Opportunity maining provisions of this rule are ef- Reconciliation Act of 1996, Pub. L. 104– fective and are to be implemented Oc- 193, (PRWORA) set the date of enact- tober 1, 1999, with the start of the Fis- ment, August 1, 2000, as the effective cal Year 2000 quality control review pe- date for the provisions of the law relat- riod, which begins with the October ing to recipient claims. These non-dis- 1999 sample month. cretionary provisions of this rule are at (156) Amendment No. 379. The provi- § 273.18(c)(1)(ii)(B), § 273.18(f) and sion of Amendment No. 379 regarding the § 273.18(g) and are effective retroactive 15-percent exemption and additional funding for E&T is effective and must to August 1, 2000. The remaining be implemented no later than Novem- amendments of this rule are effective ber 2, 1999. Any variances resulting and must be implemented no later than from implementation of the provisions August 1, 2000. of this amendment shall be excluded (161) Amendment No. 388 The provi- from error analysis for 120 days from sions of Amendment No. 388 are imple- this required implementation date in mented as follows: accordance with § 275.12(d)(2)(vii) of (i) State agencies may implement the this chapter. following amendments at their discre- (157) Amendment No. 381. The provi- tion at any time on or after the effec- sions of Amendment 381 are imple- tive date: § 272.8; § 272.11(a); mented as follows: § 273.2(f)(9)(i); § 273.2(f)(10); (i) The definition of ‘‘Homeless indi- § 273.2(j)(2)(ii); § 273.9(d)(6)(i); vidual’’ in § 271.2, and the amendments § 273.9(d)(6)(iii)(E); § 273.11(a)(3)(v); to § 273.1(b)(1)(ii), § 273.2(i)(3)(i) and § 273.12(a)(1)(vii); § 273.25; and § 277.4(b).

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(ii) State agencies may implement for interoperability and portability the following amendment at their dis- which include an implementation date cretion at any time after the effective for this functionality no later than Oc- date established by OMB approval of tober 1, 2002, except under the fol- the associated information collection lowing circumstances: burden: § 273.12(f)(4). (A) State agencies with contracts en- (iii) State agencies must implement tered into before October 16, 2000, are the following amendments no later not required to re-negotiate their EBT than 180 days after the effective date services contract to include interoper- established by OMB approval of the as- ability and portability, even if the con- sociated information collection burden tract expires after the October 1, 2002 for all households newly applying for deadline; such State agencies are ex- Program benefits: § 273.2(c)(2)(i), empt from the interoperability require- § 273.2(e)(1), § 273.2(e)(2)(i), ment until they re-negotiate or re-pro- § 273.2(e)(2)(ii), § 273.2(e)(3), cure their EBT contract. § 273.4(c)(3)(iv); and § 273.12(c)(3). State (B) Smart Card systems are not re- agencies must convert current case- quired to be interoperable with other loads no later than the next recertifi- State EBT systems until such time cation following the implementation that the Department determines a date. practicable technological method is (iv) State agencies must implement available for interoperability with on- the amendment to § 273.2(b)(4)(iv) no line EBT systems. later than August 1, 2001, for all house- (ii) Enhanced funding is available for holds newly applying for Program ben- interoperability costs incurred after efits. February 11, 2000, and before October 1, (v) State agencies must implement 2002, for State agencies which have im- all remaining amendments no later plemented standards of interoper- than June 1, 2001, for all households ability and portability adopted by a newly applying for Program benefits. majority of State agencies, and for State agencies must convert current caseloads no later than the next recer- such costs incurred after September 1, tification following the implementa- 2002, for State agencies that have tion date. adopted standards for interoperability (vi) Acting under policy guidance the and portability in accordance with this Department issued previous to the pub- regulation at 7 CFR 274.12. lication of this final rule, several State (163) [Reserved] agencies that have identified programs (164) Amendment No. 390. The provi- to confer categorical eligibility for sions of Amendment No. 390 are effec- food stamps that do not meet the cri- tive November 3, 2000. State agencies teria established at §§ 273.2(j)(2)(i)(B), may implement the provisions anytime 273.2(j)(2)(i)(C), 273.2(j)(2)(ii)(A), or after the effective date. However, Elec- 273.2(j)(2)(ii)(B) of this chapter. Any tronic Benefit Transfer (EBT) systems such State agency may continue to use must be in place statewide no later these programs to confer categorical than October 1, 2002, as required by the eligibility for food stamp purposes Personal Responsibility and Work Op- until September 30, 2001. portunity Reconciliation Act of 1996. (vii) A State agency which first im- (165) Amendment No. 387—This rule is plements option 1 under 7 CFR effective no later than {insert the first 273.11(c)(3)(ii), and then decides at a day of the month 60 days after publica- later date to implement option 2 under tion of the final rule, except for the that same paragraph is entitled to a amendment to 7 CFR 272.2(d)(1)(xiii) second variance exclusion period under which is effective August 1, 2001. State 7 CFR 275.12(d)(2)(vii). agencies must implement the provi- (162) Amendment No. 384. The provisions in this final rule no later than sions of Amendment No. 384 are effec- August 1, 2001. tive September 14, 2000, and must be (166) Amendment No. 393. The provi- implemented as follows: sions of Amendment No. 393, regarding (i) Any new contract executed after the Work Provisions of the Personal October 16, 2000, must have provisions Responsibility and Work Opportunity

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Reconciliation Act of 1996 are effective Sections Affected, which appears in the August 19, 2002. Finding Aids section of the printed volume (167) Amendment No. 376. The provi- and on GPO Access. sions of Amendment No. 376 are effective May 29, 2003 and must be imple- § 272.2 Plan of operation. mented no later than November 1, 2003. (a) General purpose and content—(1) The provisions must be implemented Purpose. State agencies shall periodi- for all households that newly apply for cally plan and budget program oper- Program benefits on or after either the ations and establish objectives. When required implementation date or the planning and budgeting for program date the State agency implements the operations for the next year, State provision prior to the required imple- agencies shall consider major correc- mentation date. The current change re- tive action objectives, existing pro- porting caseload shall be converted to gram strengths and deficiencies, and these provisions no later than the re- other factors anticipated to impact on quired implementation date in accord- the operation of the State’s Food ance with procedures established by Stamp Program and on projected ex- the State agency. However, for house- penditures. holds subject to the reporting require- (2) Content. The basic components of ments at § 273.12(a)(1)(i)(C)(1) or (2) of the State Plan of Operation are the this chapter, the State agency has Federal/State Agreement, the Budget until January 1, 2004 to convert house- Projection Statement, and the Pro- holds to 6 month certification periods. gram Activity Statement. In addition, Monthly reporting households shall be certain attachments to the Plan are converted in accordance with § 273.21(r) specified in this section and in § 272.3. of this chapter. For quality control The requirements for the basic compo- purposes, any variances resulting from nents and attachments are specified in the implementation of this rule shall § 272.2(c) and § 272.2(d) respectively. The be excluded from error analysis for 120 Federal/State Agreement is the legal days from the required implementation agreement between the State and the date, in accordance with Department of Agriculture. This § 275.12(d)(2)(vii) of this chapter. Agreement is the means by which the (168) Amendment No. 394. The interim State elects to operate the Food Stamp and final provisions of Amendment No. Program and to administer the pro- 394 are effective May 11, 2005. State gram in accordance with the Food agencies may implement the provisions Stamp Act of 1977, as amended, regula- anytime after May 11, 2005 but no later tions issued pursuant to the Act and than October 11, 2005. the FNS-approved State Plan of Oper- (169) Amendment No. 395. The provi- ation. The Budget Projection State- sions of Amendment 395 are effective ment and Program Activity Statement December 15, 2003. provide information on the number of (170) Amendment No. 396. The provi- actions and amounts budgeted for var- sions of amendment number 396 are ef- ious functional areas such as certifi- fective April 8, 2005. cation and issuance. The Plan’s attach- (171) Amendment No. 397. The provisions of Amendment No. 397 are effec- ments include the Quality Control tive January 4, 2006. State agencies Sample Plan, the Disaster Plan (cur- may implement the provisions anytime rently reserved), the Employment and after the rule is published but no later Training Plan, the optional Nutrition than June 5, 2006. Education Plan, the optional plan for (172) Amendment No. 400. The provi- Program informational activities di- sions of Amendment No. 400, regarding rected to low-income households, the the Employment and Training Pro- optional plan for intercepting Unem- gram Provisions of the Farm Security ployment Compensation (UC) benefits and Rural Investment Act of 2002 are for collecting claims for intentional effective August 8, 2006. Program violations, the Systematic Alien Verification for Entitlements [Amdt. 132, 43 FR 47884, Oct. 17, 1978] (SAVE) Plan, and the plan for the EDITORIAL NOTE: For FEDERAL REGISTER ci- State Income and Eligibility tations affecting § 272.1, see the List of CFR Verification System. The State agency

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shall either include the Workfare Plan eration pertaining to the implementation of in its State Plan of Operation or ap- the Program for members of the tribe on res- pend the Workfare Plan to the State ervations. Plan of Operation, as appropriate, in FNS agrees to: 1. Pay administrative costs in accordance with the Food Stamp Act, im- accordance with § 273.22(b)(3) of this plementing regulations, and an approved chapter. The Workfare Plan shall be Cost Allocation Plan. submitted separately, in accordance 2. Carry-out any other responsibilities del- with § 273.22(b)(1) of this chapter. The egated by the Secretary in the Food Stamp ADP/CIS Plan is considered part of the Act of 1977, as amended. State Plan of Operation but is sub- Date lllllllllllllllllllll mitted separately as prescribed under Signature llllllllllllllllll § 272.2(e)(8). State agencies and/or polit- (Governor or Authorized Designee) ical subdivisions selected to operate a Date lllllllllllllllllllll Simplified Application/Standardized Signature llllllllllllllllll Benefit Project shall include that (Regional Administrator, FNS) Project’s Work Plan in the State Plan (2) The State agency may propose al- of Operation. The Plan’s attachments ternative language to any or all the shall also include the Mail Issuance provisions listed in paragraph (b)(1) of Loss Reporting Level Plan. this section. The alternative language (b) Federal/State Agreement. (1) The is subject to approval by both parties wording of the pre-printed Federal/ before signature. State Agreement is as follows: (c) Budget Projection Statement and The State of lll and the Food and Nutri- Program Activity Statement. (1) The tion Service (FNS), U.S. Department of Agri- State agency shall submit to FNS for culture (USDA), hereby agree to act in ac- approval a Budget Projection State- cordance with the provisions of the Food ment and Program Activity Statement Stamp Act of 1977, as amended, imple- in accordance with the submittal dates menting regulations and the FNS-approved in § 272.2(e). State Plan of Operation. The State and FNS (i) The Budget Projection Statement (USDA) further agree to fully comply with any changes in Federal law and regulations. solicits projections of the total costs This agreement may be modified with the for major areas of program operations. mutual written consent of both parties. The Budget Projection Statement shall be submitted annually and updated as PROVISIONS necessary through the year. The Budg- The State agrees to: 1. Administer the pro- et Projection Statement shall contain gram in accordance with the provisions con- projections for each quarter of the next tained in the Food Stamp Act of 1977, as Federal fiscal year. The State agency amended, and in the manner prescribed by shall submit with the Budget Projec- regulations issued pursuant to the Act; and tion Statement a narrative justifica- to implement the FNS-approved State Plan of Operation. tion documenting and explaining the 2. Comply with Title VI of the Civil Rights assumptions used to arrive at the pro- Act of 1964 (Pub. L. 88–352), section 11(c) of jections. The narrative shall cover such the Food Stamp Act of 1977, as amended, the subjects as: The number and salary Age Discrimination Act of 1975 (Pub. L. 94– level of employees; other factors affect- 135) and the Rehabilitation Act of 1973 (Pub. ing personnel costs including antici- L. 93–112, sec. 504) and all requirements im- pated increases in pay rates or bene- posed by the regulations issued pursuant to fits, and reallocations of staff among these Acts by the Department of Agriculture to the effect that, no person in the United units or functions, insofar as these States shall, on the grounds of sex, race, might result in cost increases or de- color, age, political belief, religion, handi- creases; costs for purchasing, leasing, cap, or national origin, be excluded from par- and maintaining equipment and space, ticipation in, be denied the benefits of, or be especially as concerns any upcoming, otherwise subject to discrimination under one-time-only purchases of new capital the Food Stamp Program. assets such as ADP equipment, renego- 3. (For States with Indian Reservations tiation of leases, changes in deprecia- only). Implement the Program in a manner that is responsive to the special needs of tion rates or procedures, relocation of American Indians on reservations and con- offices, maintenance and renovation sult in good faith with tribal organizations work, and inflation; issuance system about that portion of the State’s Plan of Op- costs, including renegotiation of

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issuing agent fees and plans to change local jurisdictions will contribute to issuance systems; changes in caseload the State agency portion of adminis- and factors contributing to increases trative costs; or decreases in the number of partici- (iv) The position within the State or- pants; recertifications, including the ganizational structure of the Perform- anticipated impact of economic condi- ance Reporting System (PRS) coordi- tions (and in particular unemploy- nator, including whether the PRS coor- ment) and seasonality; cost implica- dinator is full or part-time, and is re- tions of corrective action plans; antici- sponsible for direct supervision over pated changes in program regulations Quality Control or Management Eval- and operating guidelines and instruc- uation or if these functions are handled tions; training needs; travel costs; and separately, and whether quality con- adjustments in insurance premiums. trol reviewers have single Food Stamp The narrative should cover as many of Program or multi-program review re- the items listed above, and any other sponsibilities; items deemed relevant by the State (v) The position of the training coor- agency, that will have a significant im- dinator and whether this is a full or pact on costs. The State agency is not part-time position; and required to discuss every item in the list in every submission of a Budget (vi) The organizational entity respon- Projection Statement. The narrative sible for corrective action. should concentrate on items that ac- (3) Additional attachments. Attached count for increases or decreases in for informational purposes (not subject costs from the preceding submissions. to approval as part of the plan submis- (ii) The Program Activity Statement, sion procedures) to the Program Activ- to be submitted annually, solicits a ity Statement and submitted as re- summary of program activity for the quired in paragraph (e)(3) of this sec- State agency’s operations during the tion shall be the agreements between preceding fiscal year. the State agency and the United States (2) The organizational outline sub- Postal Service for coupon issuance, and mitted in 1982 as an attachment to the between the State agency and the So- Program Activity Statement shall be cial Security Administration for sup- considered the basic outline. Hence- plemental income/food stamp joint ap- forth, changes to this outline shall be plication processing and for routine provided to FNS as they occur. The user status. outline contains the following informa- (d) Planning documents. (1) The fol- tion: lowing planning documents shall be (i) The position of the head of the submitted: State agency responsible for admin- (i) Quality Control Sampling Plan as istering the Food Stamp Program in required by § 275.11(a)(4); relation to the overall State organiza- (ii) Disaster Plan as required by tional structure, i.e., the Program Di- § 280.6 (currently reserved), or certifi- rector in relation to the Commissioner cation that a previously submitted Dis- of Welfare; aster Plan has been reviewed and re- (ii) A description of the organiza- mains current; tional structure through which the (iii) Nutrition Education Plan if the State agency will administer and oper- State agency elects to request Federal ate the Food Stamp Program, including whether the Program is State, Food Stamp Program administrative county, locally, or regionally-adminis- matching funds to conduct nutrition tered; whether the workers have single education programs as discussed in Food Stamp Program or multi-program paragraph (d)(2) of this section. functions; and the title and position of (iv) A plan for the State Income and the individual or panel designated as Eligibility Verification System re- the hearing authority and whether offi- quired by § 272.8. cials conduct both fair and fraud hear- (v) Employment and Training Plan as ings. required in § 273.7 (c)(6). (iii) A description of the funding ar- (vi) ADP/CIS Plan as required by rangement by which State, county, and § 272.10.

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(vii) A plan for the Systematic Alien (i) The number and positions of staff Verification for Entitlements (SAVE) that will be conducting nutrition edu- Program as required by § 272.11(e). cation; (viii) Mail Issuance Loss Reporting (ii) Description of activities in the Level Plan required by § 276.2(b)(4), for nutrition education program; and the State agency using mail issuance, (iii) Assurance that nutrition edu- shall contain the unit level of report- cation programs for which USDA pro- ing mail issuance losses for the upcom- vides Food Stamp Program administra- ing fiscal year as elected by the State tive matching funds are conducted ex- agency. If a State agency does not re- clusively for the benefit of Food Stamp vise its Plan by August 15 in any given Program applicants and participants year, FNS shall continue to require re- and do not duplicate USDA’s Expanded porting and to assess liabilities for the Food and Nutrition Education Pro- next fiscal year at the level last indi- gram’s efforts in the State. cated by the State agency. If the agen- (e) Submittal requirements. States cy has selected the unit provided for in shall submit to the appropriate FNS § 276.2(b)(4)(ii), a listing of the issuance Regional Office for approval each of sites or counties comprising each ad- the components of the Plan of Oper- ministrative unit within the State ation for approval within the time- agency shall also be included in the frames established by this paragraph. Plan. Approval or denial of the document (ix) A plan for Program informa- may be withheld pending review by tional activities as specified in FNS. However, if FNS fails to either § 272.5(c). approve, deny, or request additional in- (x) A plan for intercepting UC bene- formation within 30 days, the docu- fits for collecting claims for inten- ment is approved. If additional infor- tional program violations as specified mation is requested, the State agency in § 272.12 if the State agency elects to shall provide this as soon as possible, use that procedure. and FNS shall approve or deny the (xi)–(xii) [Reserved] Plan within 30 days after receiving the (xiii) If the State agency chooses to information. implement the optional provisions (1) The Federal/State agreement specified in (273.11(k), (l), (o), (p), and shall be signed by the Governor of the (q) of this chapter, it must include in State or authorized designee and shall the Plan’s attachment the options it be submitted to FNS within 120 days selected, the guidelines it will use, and after publication of these regulations any good cause criteria under para- in final form and shall remain in effect graph (o). For § 273.11(k) of this chap- until terminated. ter, the State agency must identify (2) The Budget Projection Statement which sanctions in the other programs and Program Activity Statement shall this provision applies to. The State be signed by the head of the State agency must also include in the plan a agency or its chief financial officer and description of the safeguards it will use submitted as follows: to restrict the use of information it (i) The Budget Projection Statement collects in implementing the optional shall be submitted annually, no later provision contained in § 273.11(p) of this than August 15 of each year. chapter. (ii) The Program Activity Statement (xiv) The State agency’s disqualifica- shall be submitted annually, not later tion plan, in accordance with than 45 days after the end of the State § 273.7(f)(3) of this chapter. agency’s fiscal year. The first report is (xv) If the State agency chooses to due 45 days after the end of the State’s implement the provisions for a work 1981 fiscal year. The first report is not supplementation or support program, required to contain information that is the work supplementation or support not currently captured by the State program plan, in accordance with agency’s information system. State § 273.7(l)(1) of this chapter. agencies shall amend their data gath- (2) Nutrition Education Plan. If sub- ering systems so that all items can be mitted, the Nutrition Education Plan completed on the second report, due for shall contain: the 1982 fiscal year.

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(3) Changes to the organizational (8) ADP/CIS Plan. The ADP/CIS Plan outline required by § 272.2(c)(2) and the shall be signed by the head of the State agreements with other agencies out- agency and submitted to FNS by Octo- lined in § 272.2(c)(3)(ii) shall be provided ber 1, 1987. State agencies which re- to FNS as changes occur. The attach- quire additional time to complete their ments outlined in § 272.2(c)(3)(i) shall be ADP/CIS plan may submit their plan in submitted annually with the Program two phases as described in § 272.10(a)(2), Activity Statement. with the first part of the plan being (4) The Quality Control Sampling submitted October 1, 1987. State agen- Plan shall be signed by the head of the cies requiring additional time shall State agency and submitted to FNS submit the second part of their plans prior to implementation as follows: by January 1, 1988. If FNS requests ad- (i) According to the timeframes spec- ditional information to be provided in ified in paragraph (e)(4)(ii) of this sec- the State agency ADP/CIS Plan or if tion, prior to each annual review pe- FNS requests that changes be made in riod each State agency shall submit the State agency ADP/CIS Plan, State any changes in their sampling plan for agencies must comply with FNS com- FNS approval or submit a statement ments and submit an approvable ADP/ that there are no such changes. These CIS Plan within 60 days of their receipt submittals shall include the statement of the FNS comments but in no event required by § 275.11(a)(2), if appropriate. later than March 1, 1988. Requirements The Quality Control Sampling Plan in for the ADP/CIS plan are specified in effect for each State agency as of the § 272.10. beginning of Fiscal Year 1984 shall be (9) The Employment and Training considered submitted and approved for Plan shall be submitted as specified purposes of this section, provided that under § 273.7(c)(8). the State agency has obtained prior (f) Revisions. Revisions to any of the FNS approval of its sampling plan. planning documents or the Program (ii) Initial submissions of and major and Budget Summary Statement shall changes to sampling plans and changes be prepared and submitted for approval in sampling plans resulting from gen- to the appropriate FNS Regional Office eral changes in procedure shall be submitted to FNS for approval at least 60 in the same manner as the original days prior to implementation. Minor document. However, revisions to the changes to approved sampling plans budget portion of the Budget Projec- shall be submitted at least 30 days tion Statement and Program Activity prior to implementation. Statement shall be submitted as fol- (5) Disaster Plan. [Reserved] lows: (6) The Nutrition Education Plan (1) Program funds. (i) For program shall be signed by the head of the State funds, State agencies shall request agency and submitted prior to funding prior approvals promptly from FNS for of nutrition education activities when budget revisions whenever: the State agency elects to request Fed- (A) The revision indicates the need eral administrative matching funds to for additional Federal funding; conduct Nutrition Education Pro- (B) The program budget exceeds grams. The plan shall then be sub- $100,000, and the cumulative amount of mitted annually no later than August transfers among program functions ex- 15. The initial submission may be for a ceeds or is expected to exceed five per- period of less than or more than a year cent of the program budget. The same in order to meet the August 15 dead- criteria apply to the cumulative line. amount of transfers among functions (7) Where applicable, State agencies and activities when budgeted sepa- shall consult (on an ongoing basis) rately for program funds provided to a with the tribal organization of an In- subagency, except that FNS shall per- dian reservation about those portions mit no transfer which would cause any of the State Plan of Operation per- Federal appropriation, or part thereof, taining to the special needs of the to be used for purposes other than members of the tribe. those intended;

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(C) The revisions involve the transfer Sections Affected, which appears in the of amounts budgeted for indirect costs Finding Aids section of the printed volume to absorb increases in direct costs; or and on GPO Access. (D) The revisions pertain to the addition of items requiring prior approval § 272.3 Operating guidelines and forms. by FNS in accordance with the provisions of the applicable cost principles (a) Coverage of operating guidelines. specified in part 277 appendix A of the State agencies shall prepare and pro- regulations. vide to staff responsible for admin- (ii) No other changes to the Program istering the Program written operating fund budget require approval from procedures. In those States which have FNS. Examples of changes which do State regulations that outline these not require Federal approval are: The Operating Procedures, these are equiv- use of State agency funds to accom- alent to Operating Guidelines. Other plish program objectives over and examples of Operating Guidelines are above the State agency minimum share manuals, instructions, directives or included in the approved Program transmittal memos. The following cat- budget; and the transfer of amounts egories shall be included in the Oper- budgeted for direct costs to absorb au- ating Guidelines: thorized increases in indirect costs. (1) Certification of households, in- (iii) The requirements of paragraph cluding but not limited to: (f)(1)(i)(B) of this section may be (i) Application processing; waived by FNS provided that: (ii) Nonfinancial eligibility stand- (A) No different limitation or ap- ards; proval requirement may be imposed; (iii) Financial criteria and the eligi- and, bility determination; (B) FNS shall not permit a transfer (iv) Actions resulting from eligibility which would cause any Federal appro- determinations; priation, or part, thereof, to be used for (v) Determining eligibility of special purpose other than those intended. situation households as specified in (2) Authorized funds exceeding State § 273.11; agency needs. When it becomes appar- (vi) Additional certification func- ent that the funds authorized by the tions such as processing changes dur- Letter of Credit will exceed the needs ing certification periods and reporting of the State agency, FNS will make ap- requirements for households; propriate adjustments in the Letter of (vii) Lost benefits/claims against Credit in accordance with part 277. households; (3) Method of requesting approvals. (viii) Fair/fraud hearings; When requesting approval for budget (ix) A list of Federal and State en- revisions, State agencies shall use the ergy assistance programs that qualify same format as the Budget Projection for the resource and income exclusions Statement used in the previous submis- discussed in §§ 273.8(e)(14) and sion. However, State agencies may re- 273.9(c)(11) and how these payments are quest by letter the approvals required identified as being eligible for the ex- by paragraph (f)(1)(i)(D) of this section. emption; (4) Notification of approval or dis- (x) Work registration and employ- approval. Within 30 days from the date of receipt of the request for budget re- ment and training requirements. visions, FNS shall review the request (2) Issuance, accountability, and rec- and notify the State agency whether or onciliation; not the budget revisions have been ap- (3) The Performance Reporting Sys- proved. If the revision is still under tem, including instructions or direc- consideration at the end of 30 days, tives for conducting quality control FNS shall inform the State agency in and management evaluation reviews writing as to when the decision will be and the quality control sample plan; made. (4) A description of the training program, including a listing of the organi- [Amdt. 156, 46 FR 6315, Jan. 21, 1981] zational component which conducts EDITORIAL NOTE: For FEDERAL REGISTER ci- training, to whom and how often train- tations affecting § 272.2, see the List of CFR ing is provided;

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(5) The fair/fraud hearing procedures fective implementation of the specific if not included in the Certification regulatory provision and require an al- Handbook. ternate procedure; for example, the use (6) The consultation process (where of fee agents in Alaska to perform applicable) with the tribal organization many of the duties involved in the cer- of an Indian reservation about the tification of households including con- State Plan of Operation and Operating ducting the interviews. Guidelines in terms of the special (2) FNS shall not approve requests needs of members of the tribe and the for waivers when: method to be used for incorporating (i) The waiver would be inconsistent the comments from the tribal organiza- with the provisions of the Act; or tion into the State Plan of Operations (ii) The waiver would result in mate- and Operating Guidelines. rial impairment of any statutory or (b) Submittal of operating guidelines regulatory rights of participants or po- and forms. (1) State agencies shall de- tential participants. velop the necessary forms, except the (3) FNS shall approve waivers for a Application for Food Stamps, and period not to exceed one year unless other operating guidelines to imple- the waiver is for an on-going situation. ment the provisions of the Food Stamp If the waiver is requested for longer Act and regulations. In accordance than a year, appropriate justification with §§ 273.2(b) and 273.12(b)(1) State shall be required and FNS will deter- agencies shall use the FNS-designed mine if a longer period is warranted Application for Food Stamps or an and if so, the duration of the waiver. FNS-approved deviation. Extensions may be granted provided (2) State agencies shall submit their that States submit appropriate jus- operating guidelines and forms and tification as part of the State Plan of amendments to these materials to FNS Operation. for review and audit purposes simulta- (4) When submitting requests for neous with distribution within the waivers, State agencies shall provide States. compelling justification for the waiver (3) State agencies may request that in terms of how the waiver will im- FNS review and provide comments on prove the efficiency and effectiveness their operating guidelines, forms and of the administration of the Program. any amendments to these materials At a minimum, requests for waivers prior to distribution of the materials shall include but not necessarily be within the State. limited to: (4) If deficiencies are discovered in a (i) Reasons why the waiver is needed; State agency’s materials, FNS shall (ii) The portion of caseload or poten- provide the State agency with written tial caseload which would be affected notification. and the characteristics of the affected (c) Waivers. (1) The Administrator of caseload such as geographic, urban, or the Food and Nutrition Service or Dep- rural concentration; uty Administrator for Family Nutri- (iii) Anticipated impact on service to tion Programs may authorize waivers participants or potential participants to deviate from specific regulatory pro- who would be affected; visions. Requests for waivers may be (iv) Anticipated time period for approved only in the following situa- which the waiver is needed; and tions: (v) Thorough explanation of the pro- (i) The specific regulatory provision posed alternative provision to be used cannot be implemented due to extraor- in lieu of the waived regulatory provi- dinary temporary situations such as a sion. sudden increase in the caseload due to (5) Notwithstanding the preceding the loss of SSI cash-out status; paragraphs, waivers of the certification (ii) FNS determines that the waiver period timeframes as described in would result in a more effective and ef- § 273.10(f) may be granted by the Ad- ficient administration of the program; ministrator of the Food and Nutrition or Service or the Deputy Administrator (iii) Unique geographic or climatic for Family Nutrition Programs as pro- conditions within a State preclude ef- vided in section 3(c) of the Act. Waivers

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authorized by this paragraph are not outreach, prescreening, assisting appli- subject to the public comment provi- cants in the application and certifi- sions of § 272.3(d). cation process, and in securing needed (6) Notwithstanding the preceding verification. Individuals and organiza- paragraphs, waivers may be granted by tions who are parties to a strike or the Administrator of the Food and Nu- lockout, and their facilities, may not trition Service or the Deputy Adminis- be used in the certification process ex- trator for Family Nutrition Programs cept as a source of verification for in- as provided in section 5(f) of the Act. formation supplied by the applicant. Waivers authorized by this paragraph Only authorized employees of the State are not subject to the public comment agency, coupon issuers, coupon bulk provisions of § 272.3(d). storage points, and Federal employees (7) Notwithstanding the preceding involved in administration of the pro- paragraphs, waivers may be granted by gram shall be permitted access to food the Administrator of the Food and Nu- coupons, ATP’s, or other issuance doc- trition Service or the Deputy Adminis- uments. trator for Family Nutrition Programs (b) Bilingual requirements. (1) Based on as provided in section 6(c) of the Act. the estimated total number of low-in- Waivers authorized by this paragraph come households in a project area are not subject to the public comment which speak the same non-English lan- provisions of § 272.3(d). guage (a single-language minority), the (d) Public comment. State agencies State agency shall provide bilingual shall solicit public input and comment program information and certification on overall Program operations as State laws require or as the individual State materials, and staff or interpreters as agency believes would be useful. specified in paragraphs (b) (2) and (3) of this section. Single-language minority [Amdt. 156, 46 FR 6315, Jan. 21, 1981] refers to households which speak the EDITORIAL NOTE: For FEDERAL REGISTER ci- same non-English language and which tations affecting § 272.3, see the List of CFR do not contain adult(s) fluent in Sections Affected, which appears in the English as a second language; Finding Aids section of the printed volume (2) The State agency shall provide and on GPO Access. materials used in Program informa- § 272.4 Program administration and tional activities in the appropriate lan- personnel requirements. guage(s) as follows: (i) In project areas with less than (a) Merit personnel. (1) State agency 2,000 low-income households, if approxi- personnel used in the certification mately 100 or more of those households process shall be employed in accord- are of a single-language minority; ance with the current standards for a merit system of personnel administra- (ii) In project areas with 2,000 or tion or any standards later prescribed more low-income households, if ap- by the U.S. Civil Service Commission proximately 5 percent or more of those under section 208 of the Intergovern- households are of a single-language mi- mental Personnel Act of 1970. nority; and (2) State agency employees meeting (iii) In project areas with a certifi- the standards outlined in paragraph cation office that provides bilingual (a)(1) of this section shall perform the service as required in paragraph (b)(3) interviews required in § 273.2(e). Volun- of this section. teers and other non-State agency em- (3) The State agency shall provide ployees shall not conduct certification both certification materials in the ap- interviews or certify food stamp appli- propriate language(s) and bilingual cants. Exceptions to the use of State staff or interpreters as follows: merit system personnel in the inter- (i) In each individual certification of- view and certification process are spec- fice that provides service to an area ified in § 273.2(k) for SSI households, containing approximately 100 single- § 272.7(d) for households residing in language minority low-income house- rural Alaska, and part 280 for disaster holds; and victims. State agencies are encouraged (ii) In each project area with a total to use volunteers in activities such as of less than 100 low-income households

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if a majority of those households are of cials may be important sources of in- a single-language minority. formation in determining the need for (A) Certification materials shall in- bilingual service. If these information clude the food stamp application form, sources do not provide sufficient infor- change report form and notices to mation for the State agency to deter- households. mine if there is a need for bilingual (B) If notices are required in only one staff or interpreters, each certification language other than English, notices office shall, for a 6-month period, may be printed in English on one side record the total number of single-lan- and in the other language on the re- guage minority households that visit verse side. If the certification office is the office to make inquiries about the required to use several languages, the program, file a new application for ben- notice may be printed in English and may contain statements in other lan- efits, or be recertified. Those certifi- guages summarizing the purpose of the cation offices that are contacted by a notice and the telephone number (toll- total of over 100 single-language minor- free number or a number where collect ity households in the 6-month period calls will be accepted for households shall be required to provide bilingual outside the local calling area) which staff or interpreters. State agencies the household may call to receive addi- shall also combine the figures collected tional information. For example, a no- in each certification office to deter- tice of eligibility could in the appro- mine the need for bilingual outreach priate language(s) state: materials in each project area. Your application for food stamps has been (c) Internal controls—(1) Requirements. approved in the amount stated above. If you In order to safeguard certification and need more information telephone lllll. issuance records from unauthorized (4) In project areas with a seasonal creation or tampering, the State agen- influx of non-English-speaking house- cy shall establish an organizational holds, the State agency shall provide structure which divides the responsi- bilingual materials and staff or inter- bility for eligibility determinations preters, if during the seasonal influx and coupon issuance among certifi- the number of single-language minor- cation, data management, and issuance ity low-income households which move units. The certification unit shall be into the area meets or exceeds the re- responsible for the determination of quirements in paragraphs (b) (2) and (3) household eligibility and the creation of this section. of records and documents to authorize (5) The State agency shall insure the issuance of coupons to eligible that certification offices subject to the households. The data management requirements of paragraph (b) (3) or (4) unit, in response to input from the cer- of this section provide sufficient bilin- tification unit, shall create and main- gual staff or interpreters for the timely tain the household issuance record processing of non-English-speaking ap- (HIR) master file on cards, computer plicants. discs, tapes, or similar memory de- (6) The State agency shall develop es- vices. The issuance unit shall provide timates of the number of low-income certified households with the author- single-language minority households, ized allotments. In cases where per- both participating and not partici- sonnel are periodically, or on a part- pating in the program, for each project time basis, shifted from one unit to an- area and certification office by using census data (including the Census Bu- other, supervisory controls should be reau’s Current Population Report: Pop- sufficient to assure that the unauthor- ulation Estimates and Projections, Se- ized creation or modification of case ries P–25, No. 627) and knowledge of records is not possible. project areas and areas serviced by cer- (2) Exceptions. With prior written tification offices. Local Bureau of Cen- FNS approval, a project area may com- sus offices, Community Services Ad- bine unit responsibilities if the con- ministration offices, community action trols specified in paragraph (c)(1) of agencies, planning agencies, migrant this section have been found to be ad- service organizations, and school offi- ministratively infeasible.

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(i) To receive approval of combined of the Program and which have the po- operations, the State agency shall es- tential of affecting many State agen- tablish special review requirements cies’ Program operations. (State agen- which at a minimum include: cies need not be notified of suits (A) Biweekly reconciliation and brought in Federal Court involving verification of transactions; and FNS’ administration of the Program (B) Semiannual comparison of HIR which may only affect Program oper- cards and case records as required by ations in one or two States.) The noti- § 274.6(d) and, at least once every other fication provided to State agencies month, second-party review of certifi- shall contain a description of the Fed- cation actions. eral policy that is involved in the liti- (ii) The State agency shall annually gation. determine whether each combined op- (e) State monitoring of duplicate par- eration continues to be justified and ticipation. (1) Each State agency shall shall so advise FNS in writing. establish a system to assure that no in- (d) Court suit reporting. (1) State agen- dividual participates more than once in cy responsibility. (i) In the event that a month, in more than one jurisdiction, a State agency is sued by any person(s) or in more than one household within in a State or Federal Court in any mat- the State in the Food Stamp Program. ter which involves the State agency’s To identify such individuals, the sys- administration of the Food Stamp Pro- tem shall use names and social secu- gram, the State agency shall imme- rity numbers at a minimum, and other diately notify FNS that suit has been identifiers such as birth dates or ad- brought and shall furnish FNS with dresses as appropriate. copies of the original pleadings. State (i) If the State agency detects a large agencies involved in suits shall, upon number of duplicates, it shall imple- request of FNS, take such action as is ment other measures, such as more fre- necessary to join the United States quent checks or increased emphasis on and/or appropriate officials of the Fed- prevention. eral Government, such as the Sec- (ii) If the State agency provides cash retary of USDA or the Administrator assistance in lieu of coupons for SSI re- of FNS, as parties to the suit. FNS may cipients or for households participating request to join the following types of in cash-out demonstration projects, the suits: State agency shall check to assure that (A) Class action suits; no individual receives both coupons (B) A suit in which an adverse deci- and other benefits provided in lieu of sion could have a national impact; coupons. Checks to detect individuals (C) A suit challenging Federal policy receiving both food coupons and cash- such as a provision of the Act or regu- out benefits, or any other form of du- lations or an interpretation of the reg- plicate benefits, shall be made at the ulations; or, time of certification, recertification, (D) A suit based on an empirical situ- and whenever a new member is added ation that is likely to recur. to an existing household. However, if (ii) FNS may advise a State agency the State agency can show that these to seek a settlement agreement of a time frames are incompatible with its court suit if the State agency is being system, the State agency shall check sued because it misapplied Federal pol- for duplicate benefits when necessary, icy in administering the Program. but no less often than annually. (iii) State agencies shall notify FNS (2) Processing standards for duplicate when court cases have been dismissed participation checks at certification or otherwise settled. State agencies and recertification shall not delay the shall also provide FNS with informa- issuance of benefits. tion that is requested regarding the (i) If the State agency chooses to State agency’s compliance with the re- check at the time of certification and quirements of court orders or settle- recertification, the check for dupli- ment agreements. cates shall not delay processing of the (2) FNS shall notify all State agen- application and provision of benefits cies of any suits brought in Federal beyond the normal processing stand- court that involve FNS’ administration ards in § 273.2(g).

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(ii) If a duplicate is found in making tion may be performed by persons not such a check, the duplication needs to employed by the State agency. be resolved in accordance with [Amdt. 132, 43 FR 47884, Oct. 17, 1978, as § 273.2(f)(4)(iv) before the application amended by Amdt. 221, 47 FR 35168, Aug. 13, can be processed and benefits provided. 1982; Amdt. 211, 47 FR 53315, Nov. 26, 1982; Delays in processing caused by this res- Amdt. 237, 47 FR 57668, 57669, Dec. 28, 1982; olution shall be handled in accordance Amdt. 262, 49 FR 50597, Dec. 31, 1984; 54 FR with § 273.2(h). 7003, Feb. 15, 1989; 54 FR 24527, June 7, 1989; (3) State agencies shall develop fol- Amdt. 320, 55 FR 6238, Feb. 22, 1990; Amdt. 371, 61 FR 60010, Nov. 26, 1996; Amdt. 388, 65 low-up procedures and corrective ac- FR 70192, Nov. 21, 2000] tion requirements, including time frames within which action must be § 272.5 Program informational activi- taken, to be applied to data obtained ties. from matching for duplicate participa- (a) Definition. ‘‘Program information. Follow-up actions shall include, tional activities’’ are those activities but not be limited to, the adjustment that convey information about the of benefits and eligibility, filing of Program, including household rights claims, disqualification hearings, and and responsibilities, through means referrals for prosecution, as appro- such as publications, telephone hot- priate. lines, and face-to-face contacts. (4) FNS reserves the right to review (b) Minimum requirements. State agen- State agencies’ use of data obtained cies shall comply with the following from matching for duplicate participa- minimum information requirements tion and may require State agencies to for applicants and recipients. take additional specific action to en- (1) Nutrition information. FNS must sure that such data is being used to encourage State agencies to develop protect Program integrity. Nutrition Education Plans as specified (f) Hours of operation. State agencies at § 272.2(d)(2) to inform applicant and are responsible for setting the hours of participant households about the im- operation for their food stamp offices. portance of a nutritious diet and the In doing so, State agencies must take relationship between diet and health. into account the special needs of the (2) State agencies shall encourage populations they serve including program participants to participate in households containing a working per- the Expanded Food and Nutrition Edu- son. cation Program (EFNEP) and, wher- (g) Fraud detection units. State agen- ever practicable, allow EFNEP per- cies shall establish and operate fraud sonnel to come into food stamp offices detection units in all project areas in to distribute informational materials which 5,000 or more households partici- and speak with food stamp recipients. pate in the Program. The fraud detec- (3) Rights and responsibilities. State tion unit shall be responsible for de- agencies shall inform participant and tecting, investigating and assisting in applicant households of their Program the prosecution of Program fraud and rights and responsibilities. This infor- need not be physically located in each mation may be provided through what- 5,000 household ‘‘catchment area’’. The ever means the State agencies deem appropriate. workers fulfilling this function need not work full-time in fraud detection (4) All Program informational mate- nor work exclusively on the Program. rial shall be available in languages other than English as required in A written State agency procedure § 272.4(b) and shall include a statement which systematically identifies and re- that the Program is available to all fers potential fraud cases to Investiga- without regard to race, color, sex, age, tors shall be considered a ‘‘detection’’ handicap, religious creed, national ori- activity meeting the requirements of gin or political belief. this section. The fraud detection func- (c) Program informational activities for low-income households. At their option State agencies may carry out and

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claim associated costs for Program in- (b) Right to file a complaint. Individ- formational activities designed to in- uals who believe that they have been form low-income households about the subject to discrimination as specified availablity, eligibility requirements, in paragraph (a) of this section may application procedures, and benefits of file a written complaint with the Sec- the Food Stamp Program. Program in- retary or the Administrator, FNS, formational materials used in such ac- Washington, DC 20250, and/or with the tivities shall be subject to § 272.4(b), State agency, if the State agency has a which pertains to bilingual require- system for processing discrimination ments. Before FNS considers costs for complaints. The State agency shall ex- such activities eligible for reimburse- plain both the FNS and, if applicable, ment at the fifty percent rate under the State agency complaint system to part 277, State agencies shall obtain each individual who expresses an inter- FNS approval for the attachment to est in filing a discrimination complaint their Plans of Operation as specified in and shall advise the individual of the § 272.2(d)(1)(ix). In such attachments, right to file a complaint in either or State agencies shall describe the sub- both systems. ject activities with respect to the (c) FNS complaint requirements. (1) socio-economic and demographic char- Complaints shall contain the following acteristics of the target population, information to facilitate investiga- types of media used, geographic areas tions: warranting attention, and outside or- (i) The name, address, and telephone ganizations which would be involved. number or other means of contacting State agencies shall update this at- the person alleging discrimination. tachment to their Plans of Operation when significant changes occur and re- (ii) The location and name of the or- port projected costs for this Program ganization or office which is accused of activity in accordance with § 272.2 (c), discriminatory practices. (e), and (f). (iii) The nature of the incident or action or the aspect of program adminis- [Amdt. 207, 47 FR 52334, Nov. 19, 1982. Redes- tration that led the person to allege ignated by Amdt. 211, 47 FR 53316, Nov. 26, discrimination. 1982; Amdt. 262, 49 FR 50597, Dec. 31, 1984; 52 FR 36398, Sept. 29, 1987; 54 FR 24527, June 7, (iv) The reason for the alleged dis- 1989; Amdt. 320, 55 FR 6239, Feb. 22, 1990] crimination (age, race, color, sex, handicap, religious creed, national ori- § 272.6 Nondiscrimination compliance. gin, or political belief). (a) Requirement. State agencies shall (v) The names, titles (if appropriate), not discriminate against any applicant and addresses of persons who may have or participant in any aspect of program knowledge of the alleged discrimina- administration, including, but not lim- tory acts. ited to, the certification of households, (vi) The date or dates on which the the issuance of coupons, the conduct of alleged discriminatory actions oc- fair hearings, or the conduct of any curred. other program service for reasons of (2) If a complainant makes allega- age, race, color, sex, handicap, reli- tions verbally and is unable or is reluc- gious creed, national origin, or polit- tant to put the allegations in writing, ical beliefs. Discrimination in any as- the FNS employee to whom the allega- pect of program administration is pro- tions are made shall document the hibited by these regulations, the Food complaint in writing. Every effort shall Stamp Act, the Age Discrimination be made by the individual accepting Act of 1975 (Pub. L. 94–135), the Reha- the complaint to have the complainant bilitation Act of 1973 (Pub. L. 93–112, provide the information specified in section 504), and title VI of the Civil paragraph (c)(1) of this section. Rights Act of 1964 (42 U.S.C. 2000d). En- (3) Complaints will be accepted by forcement action may be brought the Secretary or the Administrator, under any applicable Federal law. Title FNS, even if the information specified VI complaints shall be processed in ac- in paragraph (c)(1) of this section is not cord with 7 CFR part 15. complete. However, investigations will

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be conducted only if information con- hold contacts on forms or formats pro- cerning paragraphs (c)(1) (ii), (iii) or vided by FNS. (iv) of this section is provided. [Amdt. 132, 43 FR 47884, Oct. 17, 1979. Redesig- (4) A complaint must be filed no later nated by Amdt. 211, 47 FR 53315, Nov. 26, 1982, than 180 days from the date of the alas amended by Amdt. 356, 59 FR 29713, June leged discrimination. However, the 9, 1994; 71 FR 28763, May 18, 2006] time for filing may be extended by the Secretary. § 272.7 Procedures for program administration in Alaska. (d) State agency complaint requirements. (1) The State agency may de- (a) Purpose. To achieve the efficient velop and use a State agency complaint and effective administration of the system. Food Stamp Program in rural areas of (2) The State agency shall submit to Alaska, FNS has determined that it is FNS a report on each discrimination necessary to develop additional regula- complaint processed at the State level. tions which are specifically designed to The report shall contain as much infor- accommodate the unique demographic mation in paragraph (c)(1) of this sec- and climatic characteristics which tion as is available to the State agen- exist in these rural areas. The regula- cy, the findings of the investigation, tions established in this section, except and, if appropriate, the corrective ac- for paragraph (f) of this section, shall tion planned or taken. apply only in those areas of Alaska designated as ‘‘rural’’ in paragraph (b) (e) Reviews. [Reserved] of this section. All regulations not spe- (f) Public notification. The State agen- cifically modified by this section shall cy shall: (1) Publicize the procedures remain in effect. described in paragraphs (b) and (c) of (b) Area Designations. (1) Rural I Alas- this section, and, if applicable, the ka TFP refers to a Thrifty Food Plan State agency’s complaint procedures; (TFP) that is the higher of the TFP (2) insure that all offices involved in that was in effect in each area on Octo- administering the program and that ber 1, 1985, or 28.52 percent higher than also serve the public display the non- the Anchorage TFP, as calculated by discrimination poster provided by FNS; FNS, with rounding and other reduc- and (3) insure that participants and tions that are appropriate. It is to be other low-income households have ac- used in the following areas: In all cess to information regarding non- places in Kodiak Island Borough with discrimination statutes and policies, the exception of Kodiak; in all places complaint procedures, and the rights of in the Kenai Peninsula Borough that participants, within 10 days of the date are west of Cook Inlet (including of a request. Tyonek, Kustatan, Kalgin Island, (g) Data collection. The State agency Iliamna, Chenik, and Augustine Island) must obtain racial and ethnic data on and Chugach Island, English Bay, Port participating households in the manner Graham, Portlock, Pt. Gore, Pye Is- specified by FNS. The application form land, and Seldovia. In the Yukon- must clearly indicate that the informa- Koyukuk Census Area, the city of tion is voluntary, that it will not affect Nenana; and Skwentna in the the eligibility or the level of benefits, Matanuska-Susitna Borough. In the and that the reason for the information Valdez-Cordova Census Area, all places is to assure that program benefits are except Dayville and Valdez; and in the distributed without regard to race, Southeast Fairbanks Census Area all color, or national origin. The State places except Big Delta, Delta Junc- agency must develop alternative means tion, and Fort Greely. In the Skagway- of collecting the ethnic and racial data Yakutat-Angoon Census Area, all on households, such as by observation places except Skagway; in Sitka Bor- during the interview, when the infor- ough all places except Sitka; in the mation is not provided voluntarily by Wrangell-Petersburg Census Area, all the household on the application form. places except Wrangell and Petersburg; (h) Reports. As required by FNS, the in the Ketchikan Gateway Borough, all State agency must report the racial places except Ketchikan, Saxman, and and ethnic data on participating house- Ward Cove; in the Prince of Wales-

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Outer Ketchikan Census Area, all sist in the completion of applications, places except Craig, Hyder, and conduct required interviews, secure re- Metlakatla. quired verification, forward completed (2) Rural II Alaska TFP refers to a applications and supporting docu- TFP that is 56.42 percent higher than mentation to the State agency, and the Anchorage TFP, as calculated by provide other services as required by FNS, with rounding and other reduc- the State agency. Such services shall tions that are appropriate. It is to be not include making final decisions on used in the following areas: North household eligibility or benefit levels. Slope Borough; Kobuk Census Area; (d) Application processing. The State Nome Census Area; Yukon-Koyukuk agency may modify the application Census Area except for the city of processing requirements in § 273.2 of Nenana; Wade Hampton Census Area; this chapter as necessary to insure Bethel Census Area; Denali in the prompt delivery of services to eligible Matanuska-Susitna Borough; households. The following restrictions Dillingham-Bristol Bay Borough; and apply: in all places in the Aleutian Islands ex- (1) Fee agent processing. If the signed cept for Cold Bay and Adak. application is first submitted by a (3) Urban Alaska TFP refers to a TFP household to a fee agent, the fee agent that is the higher of the TFP that was shall mail the application to the State in effect in each area on October 1, agency within 5 days of receipt. The fee 1985, or .79 percent higher than the An- agent shall give the household the chorage TFP, as calculated by FNS, maximum amount of time to provide with rounding and other reductions needed verification as long as the five- that are appropriate. It is to be used in day processing period is met. the following areas: Cold Bay and Adak (2) Application filing date. An applica- in the Aleutian Islands; Kodiak in Ko- tion is considered filed for purposes of diak Island Borough; Valdez and timely processing when it is received Dayville in the Valdez-Cordova Census by an office of the State agency. Area; all places in Kenai Peninsula (3) Application processing timeframes. Borough that are on the Kenai Penin- Eligible households must be provided sula except for those specifically des- an opportunity to participate as soon ignated as Rural I; the entire Anchor- as possible but no later than 30 days age Borough; the entire Matanuska- after the application is received by an Susitna Borough except for Denali and office of the State agency. Skwentna; the entire Fairbanks-North (4) Expedited service. (i) If the signed Star Borough; the entire Juneau Bor- application is first submitted by a ough; the entire Haines Borough; Sitka household to a fee agent, the fee agent in the Sitka Borough; Skagway in the shall mail the application to the State Skagway-Yakutat-Angoon Census agency within 5 days of receipt. If the Area; Wrangell and Petersburg in the household is eligible for expedited serv- Wrangell-Petersburg Census Area; ice, the State agency will mail the cou- Ketchikan, Saxman, and Ward Cove in pons no later than the close of business the Ketchikan-Gateway Borough; of the second working day following Craig, Hyder, and Metlakatla in the the date the application was received Prince of Wales-Outer Ketchikan Cen- by the State agency. sus Area; and Big Delta, Delta Junc- (ii) If the signed application is sub- tion, and Fort Greely in the Southeast- mitted directly to the State agency in Fairbanks Census Area. person by a rural resident or its au- (4) The State agency may, in con- thorized representative or by mail, the sultation with FNS, change the des- State agency shall process the applica- ignation of any Alaska subdivision con- tion and issue coupons to households tained in the Plan of Operation to re- eligible for expedited service in accord- flect changes in demographics or the ance with the time standards contained cost of food within the subdivision. in § 273.2(i)(3) of this chapter. (c) Fee agents. ‘‘Fee agent’’ means a (iii) If an incomplete application is paid agent who, on behalf of the State, submitted directly to the State agency is authorized to make applications by mail, the State agency shall con- available to low-income households, as- duct the interview by the first working

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day following the date the application shall not be counted as a household re- was received if the fee agent can con- source. tact the household or the household (g) Reporting changes. The State agen- can be reached by telephone or radio- cy shall allow the household to choose phone and does not object to this meth- to report changes either directly to the od of interviewing on grounds of pri- State agency or to the fee agent. If the vacy. Based on information obtained household reports the change to the fee during the interview, the State agency agent, the fee agent will mail the shall complete the application and change report to the State agency of- process the case. Because of the mail- fice within two working days of the ing time in rural areas, the State agen- date of receipt. The household’s obliga- cy shall not return the completed ap- tion to report the change will have plication to the household for signa- been met if it submits the change to ture. The processing standard shall be the fee agent within 10 days of the date calculated from the date the applica- the change becomes known to the tion was filed. household. However, for purposes of (5) SSI Joint Processing. SSA workers State agency action for increasing or shall mail all jointly processed applica- decreasing benefits, the change will be tions to the appropriate State agency considered to have been reported when office within 5 days of receipt of the ap- it is received by a State agency office. plication. A jointly processed applica- (h) Fair hearings, fraud hearings, and tion shall be considered filed for pur- agency conferences. The State agency poses of timely processing when it is shall conduct fair hearings, adminis- received by an office of the State agen- trative fraud hearings, and agency con- cy. The household, if determined eligi- ferences with households that wish to ble, shall receive benefits retroactive contest denial of expedited service in to the first day of the month in which the most efficient manner possible, ei- the jointly processed application was ther by face-to-face contact, telephone, received by the SSA worker. radiophone, or other means of cor- (6) Interviews. The State agency shall respondence including written cor- interview applicant households in the respondence, in order to meet the re- most efficient manner possible, either spective time standards contained in by face-to-face contact, telephone, ra- §§ 273.15 and 273.16 of this chapter. diophone, or other means of cor- (i) Issuance services. With the ap- respondence including written cor- proval of FNS, coupons may be mailed respondence. In instances in which an on a quarterly or semiannual basis to interview cannot be conducted, the certain rural areas of Alaska when pro- State agency may postpone the inter- visions are not available on a monthly view until after the household is cer- basis. The decision to allow the dis- tified. tribution of coupons in this manner (e) Determining household eligibility will be made on an annual basis. These and benefit level. If a household submits areas shall be listed in the State’s Plan its application to a fee agent, it shall, of Operation. The State agency shall if eligible, receive benefits retroactive advise households that live in rural to the date the application is received areas where quarterly or semiannual by the fee agent. If a household sub- allotments are authorized. If, as the re- mits its application directly to a State sult of the issuance of quarterly or agency office, it shall, if determined el- semiannual allotments, food coupons igible, receive benefits retroactive to are overissued or underissued, the the date the application is received by State agency shall process claim deter- the State agency. minations and restore lost benefits. (f) Vehicles. In areas of the State [Amdt. 162, 45 FR 73003, Nov. 4, 1980, as where there are no licensing require- amended by Amdt. 202, 46 FR 44722, Sept. 4, ments, snowmobiles and boats used by 1981; Amdt. 215, 47 FR 20741, May 14, 1982. Re- the household for basic transportation designated and amended by Amdt. 211, 47 FR shall be evaluated in accordance with 53315, 53316, Nov. 26, 1982] § 273.8(h) of this chapter even though EDITORIAL NOTE: For other FEDERAL REG- they are unlicensed. Vehicles necessary ISTER citations affecting § 272.7, see the List for subsistence hunting and fishing of CFR Sections Affected, which appears in

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the Finding Aids section of the printed vol- subject to the provisions and limita- ume and on GPO Access. tions of section 303(d) of the Social Se- curity Act. § 272.8 State income and eligibility verification system. (2) State agencies may exchange with State agencies administering certain (a) General. (1) State agencies may other programs in the IEVS informa- maintain and use an income and eligi- tion about food stamp households’ cir- bility verification system (IEVS), as cumstances which may be of use in es- specified in this section. By means of tablishing or verifying eligibility or the IEVS, State agencies may request benefit amounts under the Food Stamp wage and benefit information from the Program and those programs. State agencies identified in this paragraph agencies may exchange such informa- (a)(1) and use that information in tion with these agencies in other verifying eligibility for and the States when they determine that the amount of food stamp benefits due to same objectives are likely to be met. eligible households. Such information These programs are: may be requested and used with respect to all household members, including (i) Temporary Assistance for Needy any considered excluded household Families; members as specified in § 273.11(c) of (ii) Medicaid; this chapter whenever the SSNs of such (iii) Unemployment Compensation excluded household members are avail- (UC); able to the State agency. If not other- (iv) Food Stamps; and wise documented, State agencies must (v) Any State program administered obtain written agreements from these under a plan approved under title I, X, information provider agencies affirm- or XIV (the adult categories), or title ing that they must not record any in- XVI of the Social Security Act. formation about individual food stamp (3) State agencies must provide infor- households and that staff in those mation to those administering the agencies are subject to the disclosure Child Support Program (title IV-D of restrictions of the information pro- the Social Security Act) and titles II vider agencies and § 272.1(c). The infor- (Federal Old Age, Survivors, and Dis- mation provider agencies, at a min- ability Insurance Benefits) and XVI imum, are: (Supplemental Security Income for the (i) The State Wage Information Col- Aged, Blind, and Disabled) of the Social lection Agency (SWICA) which main- Security Act. tains wage information; (4) Prior to requesting or exchanging (ii) The Social Security Administra- information with other agencies, State tion (SSA) which maintains informa- agencies must execute data exchange tion about net earnings from self-em- agreements with those agencies. The ployment, wages, and payments of re- agreements must specify the informa- tirement income, which is available tion to be exchanged and the proce- pursuant to section 6103(1)(7)(A) of the dures which will be used in the ex- Internal Revenue Service (IRS) Code; change of information. These agree- and information which is available from SSA regarding Federal retire- ments are not part of the State agen- ment, and survivors, disability, SSI cy’s Plan of Operation. and related benefits; (b) Alternate data sources. A State (iii) The IRS from which unearned in- agency may continue to use income income information is available pursuant formation from an alternate source or to section 6103(1)(7)(B) of the IRS Code; sources to meet any requirement under and paragraph (a) of this section. (iv) The agency administering Unem- (c) Actions on recipient households. (1) ployment Insurance Benefits (UIB) State agency action on information which maintains claim information items about recipient households shall and any information in addition to in- include: formation about wages and UIB avail- (i) Review of the information and able from the agency which is useful comparison of it to case record infor- for verifying eligibility and benefits, mation;

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(ii) For all new or previously an adverse action is and is not insti- unverified information received, con- tuted. tact with the households and/or collat- [65 FR 70192, Nov. 21, 2000] eral contacts to resolve discrepancies as specified in §§ 273.2(f)(4)(iv) and 273.2 § 272.9 Approval of homeless meal pro- (f)(9)(iii) and (f)(9)(iv); and viders. (iii) If discrepancies warrant reduc- The State food stamp agency, or an- ing benefits or terminating eligibility, other appropriate State or local gov- notices of adverse action. ernmental agency identified by the (2) State agencies must initiate and State food stamp agency, shall approve pursue the actions on recipient house- establishments serving the homeless holds specified in paragraph (c)(1) of upon sufficient evidence, as determined this section so that the actions are by the agency, that the establishment completed within 45 days of receipt of does in fact serve meals to homeless the information items. Actions may be persons. Where the State food stamp completed later than 45 days from the agency identifies another appropriate receipt of information if: State or local agency for the purpose of (i) The only reason that the actions approving establishments serving the cannot be completed is the nonreceipt homeless, the State food stamp agency of verification requested from collat- will remain responsible for insuring eral contacts; and that the provisions of the preceding (ii) The actions are completed as sentence are effectively carried out. specified in § 273.12 of this chapter when The State food stamp agency, or an- verification from a collateral contact other appropriate State or local gov- is received or in conjunction with the ernmental agency identified by the next case action when such verification State food stamp agency or private is not received, whichever is earlier. nonprofit organization under contract (3) When the actions specified in with the State food stamp agency shall paragraph (c)(1) of this section substan- execute contracts with restaurants tiate an overissuance, State agencies wishing to sell meals in exchange for must establish and take actions on food stamp benefits to homeless food claims as specified in § 273.18 of this stamp households. Such contracts shall chapter. specify that such meals are to be sold (4) State agencies must use appro- at ‘‘concessional’’ (low or reduced) priate procedures to monitor the time- prices and shall also specify the ap- liness requirements in paragraph (c)(2) proximate prices which will be of this section. charged, or the amount and type of (5) Except for the claims actions price reduction. specified in paragraph (c)(3) of this section, State agencies may exclude from [56 FR 54777, Oct. 23, 1991, as amended at 61 the actions required in paragraph (c) of FR 53600, Oct. 15, 1996] this section information items pertaining to household members who are § 272.10 ADP/CIS Model Plan. participating in one of the other pro- (a) General purpose and content—(1) grams listed in paragraph (a)(2) of this Purpose. All State agencies are re- section. quired to sufficiently automate their (d) IEVS information and quality con- food stamp program operations and trol. The requirements of this section computerize their systems for obtain- do not relieve the State agency of its ing, maintaining, utilizing and trans- responsibility for determining erro- mitting information concerning the neous payments and/or its liability for food stamp program. Sufficient auto- such payments as specified in part 275 mation levels are those which result in of this chapter (which pertains to qual- effective programs or in cost effective ity control) and in guidelines on qual- reductions in errors and improvements ity control established under that part. in management efficiency, such as de- (e) Documentation. The State agency creases in program administrative must document, as required by costs. Thus, for those State agencies § 273.2(f)(6) of this chapter, information which operate exceptionally efficient obtained through the IEVS both when and effective programs, a lesser degree

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of automation may be considered suffi- paragraph (a)(3) of this section. State cient than in other State agencies. In agencies which are not planning to order to determine a sufficient level of automate each of the areas specified in automation in each State, each State § 272.10(b) or which are not, in their agency shall develop an ADP/CIS plan. opinion, sufficiently automated in FNS may withhold State agency funds these areas shall provide justification. under § 276.4(a) for failure to submit an Any such justification shall include a ADP/CIS plan in accordance with the cost-effectiveness analysis. deadlines for submission, for failure to (3) Transfers. (i) State agencies plan- make appropriate changes in their ning additional automation shall con- ADP/CIS plan within 60 days of their sult with other State agencies and with receipt of FNS comments, or for failure the appropriate Regional Office to de- to implement the approved ADP/CIS termine whether a transfer or modi- plan in accordance with the dates spec- fication of an existing system from an- ified therein, unless extensions of time other jurisdiction would be more effi- or deviations from the plan or sched- cient and cost effective than the devel- ules have been approved by FNS. opment of a new system. In assessing (2) Content. In developing their ADP/ the practicability of a transfer, State CIS plans, State agencies shall use one agencies should consult with other of the following three formats: State agencies that have similar char- (i) State agencies which are suffi- acteristics such as whether they are ciently automated in each area speci- urban or rural, whether they are coun- fied in § 272.10(b) may provide a single ty or State administered, the geo- certification statement that they are graphic size of the States and the size sufficiently automated in each area. of the caseload. (ii) State agencies which are suffi- (ii) State agencies that plan to auto- ciently automated in some, but not all, mate operations using any method areas specified in § 272.10(b) shall sub- other than transfers will need to be mit an ADP/CIS plan which consists of able to justify why they are not using two parts. The first part would be the transfers. The justification will need to State agency’s certification as to the include the results of the consultations areas in which they are sufficiently with other State agencies, the relative automated. The second part would de- costs of transfer and the system the scribe the areas of § 272.10(b) which the State agency plans to develop, and the State agency has not automated or, in reasons for not using a transfer. Com- its opinion, has not automated suffi- mon reasons for not using transfers in- ciently and include the State agency’s clude: The State agency is required to plans for sufficiently automating these use a central data processing facility areas. State agencies shall include a and the (otherwise) transferable sys- description of how they intend to auto- tem is incompatible with it; the State mate each area and a timetable for agency’s data base management soft- each planned activity, including a con- ware is incompatible with the transfer- sideration of transfers as discussed in able system; the State agency’s ADP paragraph (a)(3) of this section. State experts are not familiar with the soft- agencies which are not planning to ware/hardware used by the transferable automate each of the areas specified system and acquiring new expertise § 272.10(b) or which are not already would be expensive; the transferable automated in these areas shall provide system is interactive or uses ‘‘generic’’ justification. Any such justification caseworkers, the receiving State agen- shall include a cost-effectiveness anal- cy does not and it would be expensive ysis. to modify the existing system and/or (iii) State agencies which are not suf- procedures; and transfer would provoke ficiently automated in any of the areas disputes with the State agency’s per- specified in § 272.10(b) shall submit an sonnel union. State agencies that cite ADP/CIS plan which describes their any of these reasons shall not auto- plans for sufficiently automating each matically receive approval to develop area, including a timetable for each non-transferred systems. State agen- planned activity, and including a con- cies shall show what efforts were consideration of transfers as discussed in sidered to overcome the problems and

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that those efforts are cost ineffective. (v) Prior to certification, crosscheck This justification will need to be infor duplicate cases for all household cluded as part of the Advance Planning members by means of a comparison Document that the State agency must with food stamp records within the rel- submit for approval of its proposed sys- evant jurisdiction; tem. (vi) Meet the requirements of the (iii) FNS will assist State agencies IEVS system of § 272.8. Generate infor- that request assistance in determining mation, as appropriate, to other pro- what other States have systems that grams. should be considered as possible trans- (vii) Provide the capability to effect fers. mass changes: Those initiated at the (b) Model Plan. In order to meet the State level, as well as those resulting requirements of the Act and ensure the from changes at the Federal level (eli- efficient and effective administration gibility standards, allotments, deduc- of the program, a food stamp system, tions, utility standards, SSI, TANF, at a minimum, shall be automated in SAA benefits); each of the following program areas in (viii) Identify cases where action is paragraphs (b)(1), Certification, and pending or follow-up must be pursued, (b)(2), Issuance Reconciliation and Re- for example, households and porting of this section. The food stamp verification pending or households con- system must further meet all the retaining disqualified individuals or a quirements in paragraph (b)(3), Gen- striker; eral, of this section. (ix) Calculate or validate benefits (1) Certification. (i) Determine eligi- based on restored benefits or claims bility and calculate benefits or vali- collection, and maintain a record of date the eligibility worker’s calcula- the changes made; tions by processing and storing all (x) Store information concerning casefile information necessary for the characteristics of all household mem- eligibility determination and benefit bers; computation (including but not limited to all household members’ names, ad- (xi) Provide for appropriate Social dresses, dates of birth, social security Security enumeration for all required numbers, individual household mem- household members; and bers’ earned and unearned income by (xii) Provide for monthly reporting source, deductions, resources and and retrospective budgeting as re- household size). Redetermine or revali- quired. date eligibility and benefits based on (2) Issuance, reconciliation and report- notices of change in households’ cir- ing. (i) Generate authorizations for cumstances; benefits in issuance systems employing (ii) Identify other elements that af- ATP’s, direct mail, or online issuance fect the eligibility of household mem- and store all Household Issuance bers such as alien status, presence of Record (HIR) information including: an elderly person in the household, sta- name and address of household, house- tus of periodic work registration, dis- hold size, period of certification, qualification actions, categorical eligi- amount of allotment, case type (PA or bility, and employment and training NA), name and address of authorized status; representative, and racial/ethnic data; (iii) Provide for an automatic cutoff (ii) Prevent a duplicate HIR from of participation for households which being established for presently partici- have not been recertified at the end of pating or disqualified households; their certification period; (iii) Allow for authorized under- or (iv) Notify the certification unit (or over-issuance due to claims collection generate notices to households) of or restored benefits; cases requiring Notices of: (iv) Provide for reconciliation of all (A) Case Disposition, transacted authorization documents to (B) Adverse Action and Mass Change, the HIR masterfile. This process must and incorporate any manually-issued au- (C) Expiration; thorization documents, account for any

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replacement or supplemental author- (i) All activities necessary to meet ization documents issued to a house- the various timeliness and data quality hold, and identify cases of unauthor- requirements established by FNS; ized and duplicate participation; (ii) All activities necessary to coordi- (v) Provide a mechanism allowing for nate with other appropriate Federal a household’s redemption of more than and State programs, such as TANF or one valid authorization document in a SSI; given month; (iii) All activities necessary to main- (vi) Generate data necessary to meet tain the appropriate level of confiden- Federal issuance and reconciliation re- tiality of information obtained from porting requirements, and provide for applicant and recipient households; the eventual capability of directly (iv) All activities necessary to main- transmitting data to FNS including: tain the security of automated systems (A) Issuance: to operate the Food Stamp Program; (1) FNS–259—Summary of mail (v) Implement regulatory and other issuance and replacement; changes including a testing phase to (2) FNS–250—Reconciliation of re- meet implementation deadlines, gen- deemed ATPs with reported authorized erally within 90 days; coupon issuance. (vi) Generate whatever data is nec- (B) Reconciliation: FNS–46—ATP essary to provide management infor- Reconciliation Report. mation for the State agency’s own use, (vii) Generate data necessary to meet such as caseload, participation and ac- other reporting requirements and pro- tions data; vide for the eventual capability of di- (vii) Provide support as necessary for rectly transmitting data to FNS, in- the State agency’s management of Fed- cluding: eral funds relative to Food Stamp Pro- (A) FNS–101—Program participation gram administration, generate infor- by race; mation necessary to meet Federal fi- (B) FNS–209—Status of claims nancial reporting requirements; against households; and (viii) Routine purging of case files (C) FNS–388—Coupon issuance and and file maintenance, and participation estimates. (ix) Provide for the eventual direct (viii) Allow for sample selection for transmission of data necessary to meet quality control reviews of casefiles, Federal financial reporting require- and for management evaluation re- ments. views; [Amdt. 284, 52 FR 35226, Sept. 18, 1987, as (ix) Provide for program-wide reduc- amended by Amdt. 356, 59 FR 29713, June 9, tion or suspension of benefits and res- 1994] toration of benefits if funds later become available and store information § 272.11 Systematic Alien Verification concerning the benefit amounts actu- for Entitlements (SAVE) Program. ally issued; (a) General. A State agency may par- (x) Provide for expedited issuance of ticipate in the SAVE Program estab- benefits within prescribed timeframes; lished by the Immigration and Natu- (xi) Produce and store a participation ralization Service (INS), in order to history covering three (3) year(s) for verify the validity of documents pro- each household receiving benefits. vided by aliens applying for food stamp (xii) Provide for cutoff of benefits for benefits with the central data files households which have not been recer- maintained by INS. tified timely; and (b) Agreements. (1) Prior to imple- (xiii) Provide for the tracking, aging, menting the SAVE Program, the State and collection of recipient claims and agency shall execute an agreement preparation of the FNS–209, Status of with INS. The agreement shall specify Claims Against Households report. the information to be exchanged and (3) General. The following functions the procedures which will be used in shall be part of an overall State agency the exchange of information. system but need not necessarily be (2) The agreement shall cover at least automated: the following areas:

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(i) Identification of positions of all mented alien status has not been agency officials with authority to reverified through automated access to quest immigration status information; the ASVI or significant discrepancies (ii) Identification and location of all exist between the data on the ASVI SAVE access points covered by the and the information provided by the agreement; alien applicant. (iii) For automated SAVE (e) Plan of operation. The require- verification through access to the ments for participation in the SAVE Alien Status Verification Index (ASVI), Program shall be included in an at- a description of the access method and tachment to the State agency’s Plan of procedures; Operation as required in § 272.2(d). This (iv) For secondary verification as de- document shall include a description of scribed in paragraph (d) of this section, procedures used, method of access and the locations of INS District Offices to the agreement specified in paragraph which verification requests will be di- (b) of this section, including steps rected; taken to meet requirements of limiting (v) The safeguards limiting release or disclosure and safeguarding of informa- redisclosure as required by State or tion obtained from food stamp house- Federal law or regulation as discussed holds as specified in § 272.1. in § 272.1(c) and as may be required by [53 FR 39440, Oct. 7, 1988, as amended at 65 FR other guidelines published by the Sec- 33439, May 24, 2000; Amdt. 388, 65 FR 70193, retary; and Nov. 21, 2000] (vi) Reimbursement or billing agreements for ongoing SAVE operational PART 273—CERTIFICATION OF costs, as well as any developmental costs associated with establishing ac- ELIGIBLE HOUSEHOLDS cess to the ASVI database. Sec. (c) Use of data. The State agency 273.1 Household concept. shall use information obtained through 273.2 Office operations and application proc- the SAVE Program only for the pur- essing. poses of: 273.3 Residency. (1) Verifying the validity of docu- 273.4 Citizenship and alien status. mentation of alien status presented by 273.5 Students. an applicant; 273.6 Social security numbers. 273.7 Work provisions. (2) Verifying an individual’s eligi- 273.8 Resource eligibility standards. bility for benefits; 273.9 Income and deductions. (3) Investigating whether partici- 273.10 Determining household eligibility pating households received benefits to and benefit levels. which they were not entitled, if an in- 273.11 Action on households with special dividual was previously certified to re- circumstances. ceive benefits on the basis of eligible 273.12 Requirements for change reporting households. alien status; and 273.13 Notice of adverse action. (4) Assisting in or conducting admin- 273.14 Recertification. istrative disqualification hearings, or 273.15 Fair hearings. criminal or civil prosecutions based on 273.16 Disqualification for intentional Pro- receipt of food stamp benefits to which gram violation. participating households were not enti- 273.17 Restoration of lost benefits. tled. 273.18 Claims against households. 273.19 [Reserved] (d) Method of verification. The State 273.20 SSI cash-out. agency may verify the documentation 273.21 Monthly Reporting and Retrospective presented by an alien applicant by Budgeting (MRRB). completing INS Form G–845 and sub- 273.22 [Reserved] mitting photocopies of such docu- 273.23 Simplified application and standard- mentation to the INS for verification ized benefit projects. as described in § 273.2(f)(10) of this chap- 273.24 Time limit for able-bodied adults. 273.25 Simplified Food Stamp Program. ter. In States that participate in SAVE, the State agency must use this AUTHORITY: 7 U.S.C. 2011–2036. secondary verification procedure when- EDITORIAL NOTE: OMB control numbers re- ever the applicant-individual’s docu- lating to this part 273 are contained in § 271.8.

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§ 273.1 Household concept. her spouse) exceeds 165 percent of the poverty line. (a) General household definition. A (3) Boarders. (i) Residents of a com- household is composed of one of the mercial boarding house, regardless of following individuals or groups of indi- the number of residents, are not eligi- viduals, unless otherwise specified in ble to participate in the Program. A paragraph (b) of this section: commercial boarding house is an estab- (1) An individual living alone; lishment licensed to offer meals and (2) An individual living with others, lodging for compensation. It does not but customarily purchasing food and include any of the entities listed in preparing meals for home consumption paragraph (b)(7)(vii) of this section. In separate and apart from others; or project areas without licensing require- (3) A group of individuals who live to- ments, a commercial boarding house is gether and customarily purchase food a commercial establishment that offers and prepare meals together for home meals and lodging for compensation consumption. with the intent of making a profit. (b) Special household requirements—(1) (ii) All other individuals or groups of Required household combinations. The individuals paying a reasonable following individuals who live with amount for meals or meals and lodging others must be considered as custom- must be considered boarders and are arily purchasing food and preparing not eligible to participate in the Pro- meals with the others, even if they do gram independently of the household not do so, and thus must be included in providing the board. Such individuals the same household, unless otherwise or groups of individuals may partici- specified. pate, along with a spouse or children (i) Spouses; living with them, as members of the (ii) A person under 22 years of age household providing the boarder serv- who is living with his or her natural or ices, only at the request of the house- adoptive parent(s) or step-parent(s); hold providing the boarder services. An and individual paying less than a reason- (iii) A child (other than a foster able amount for board must not be con- child) under 18 years of age who lives sidered a boarder but must be consid- with and is under the parental control ered, along with a spouse or children of a household member other than his living with him or her, as a member of or her parent. A child must be consid- the household providing the board. ered to be under parental control for (A) For individuals whose board ar- purposes of this provision if he or she is rangement is for more than two meals financially or otherwise dependent on a per day, ‘‘reasonable compensation’’ member of the household, unless State must be an amount that equals or ex- law defines such a person as an adult. ceeds the maximum food stamp allot- (2) Elderly and disabled persons. Not- ment for the appropriate size of the withstanding the provisions of para- boarder household. graph (a) of this section, an otherwise (B) For individuals whose board ar- eligible member of a household who is rangement is for two meals or less per 60 years of age or older and is unable to day, ‘‘reasonable compensation’’ must purchase and prepare meals because he be an amount that equals or exceeds or she suffers from a disability consid- two-thirds of the maximum food stamp ered permanent under the Social Secu- allotment for the appropriate size of rity Act or a non disease-related, se- the boarder household. vere, permanent disability may be con- (iii) Boarders must not be considered sidered, together with his or her spouse to be residents of an institution as out- (if living there), a separate household lined in paragraph (b)(7)(vii) of this from the others with whom the indi- section. vidual lives. Separate household status (4) Foster care individuals. Individuals under this provision must not be grant- placed in the home of relatives or other ed when the income of the others with individuals or families by a Federal, whom the elderly disabled individual State, or local governmental foster resides (excluding the income of the el- care program must be considered to be derly and disabled individual and his or boarders. They cannot participate in

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the Program independently of the (A) Individuals who are residents of household providing the foster care federally subsidized housing for the el- services. Such foster care individuals derly; may participate, along with a spouse or (B) Individuals who are narcotic ad- children living with them, as members dicts or alcoholics and reside at a facil- of the household providing the foster ity or treatment center for the purpose care services, only at the request of the of regular participation in a drug or al- household providing the foster care. cohol treatment and rehabilitation (5) Roomers. Individuals to whom a program. This includes the children household furnishes lodging for com- but not the spouses of such persons pensation, but not meals, may partici- who live with them at the treatment pate as separate households. Persons center or facility; described in paragraph (b)(1) of this (C) Individuals who are disabled or section must not be considered room- blind and are residents of group living ers. arrangements; (6) Live-in attendants. A live-in at- (D) Individual women or women with tendant may participate as a separate their children who are temporarily re- household. Persons described in para- siding in a shelter for battered women graph (b)(1) of this section must not be and children; and considered live-in attendants. (E) Individuals who are residents of (7) Ineligible household members. public or private nonprofit shelters for The following persons are not eligible homeless persons. to participate as separate households (vii) Individuals who are ineligible or as a member of any household: under § 273.11(m) because of a drug-re- (i) Ineligible aliens and students as lated felony conviction. specified in §§ 273.4 and 273.5, respec- (viii) At State agency option, indi- tively; viduals who are disqualified in another (ii) SSI recipients in ‘‘cash-out’’ assistance program in accordance with States as specified in § 273.20; § 273.11(k). (iii) Individuals disqualified for non- (ix) Individuals who are fleeing to compliance with the work require- avoid prosecution or custody for a ments of § 273.7; crime, or an attempt to commit a (iv) Individuals disqualified for fail- crime, or who are violating a condition ure to provide an SSN as specified in of probation or parole who are ineli- § 273.6; gible under § 273.11(n). (v) Individuals disqualified for an in- (x) Individuals disqualified for failure tentional Program violation as speci- to cooperate with child support en- fied in § 273.16; and forcement agencies in accordance with (vi) Residents of an institution, with § 273.11(o) or (p), or for being delinquent some exceptions. Individuals must be in any court-ordered child support obli- considered residents of an institution gation in accordance with § 273.11(q). when the institution provides them (xi) Persons ineligible under § 273.24, with the majority of their meals (over the time limit for able-bodied adults. 50 percent of three meals daily) as part of the institution’s normal services. (c) Unregulated situations. For situa- Exceptions to this requirement include tions that are not clearly addressed by only the individuals listed in para- the provisions of paragraphs (a) and (b) graphs (b)(7)(vii)(A) through of this section, the State agency may (b)(7)(vii)(E) of this section. The indi- apply its own policy for determining viduals listed in paragraphs when an individual is a separate house- (b)(7)(vii)(A) through (b)(7)(vii)(E) can hold or a member of another household participate in the Program and must if the policy is applied fairly, equitably be treated as separate households from and consistently throughout the State. the others with whom they reside, sub- (d) Head of household. (1) A State ject to the mandatory household com- agency shall not use the head of house- bination requirements of paragraph hold designation to impose special re- (b)(1) of this section, unless otherwise quirements on the household, such as stated: requiring that the head of household,

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rather than another responsible mem- violation. This provision applies only if ber of the household, appear at the cer- the employment involves 20 hours or tification office to make application more per week or provides weekly for benefits. When designating the head earnings at least equivalent to the Fed- of household, the State agency shall eral minimum wage multiplied by 20 allow the household to select an adult hours. No person of any age living with parent of children (of any age) living in a parent or person fulfilling the role of the household, or an adult who has pa- a parent who is registered for work or rental control over children (under 18 exempt from work registration require- years of age) living in the household, as ments because such parent or person the head of household provided that all fulfilling the role of a parent is subject adult household members agree to the to and participating in any work re- selection. The State agency shall per- quirement under title IV of the Social mit such households to select their Security Act, or in receipt of unem- head at each certification action or ployment compensation (or has reg- whenever there is a change in house- istered for work as part of the applica- hold composition. The State agency tion for or receipt of unemployment shall provide written notice to all compensation), or is employed or self- households at the time of application employed and working a minimum of and as otherwise appropriate that 30 hours weekly or receiving weekly specifies the household’s right to select earnings equal to the Federal min- its head of household in accordance imum wage multiplied by 30 hours with this paragraph. The written no- shall be considered the head of house- tice shall identify which households hold unless the person is an adult par- have the option to select their head of ent of children as specified in household, the circumstances under § 273.1(d)(1) and the household elects to which a household may change its designation of head of household, and how designate the adult parent as its head such changes must be reported to the of household. If there is no principal State agency. If all adult household source of earned income in the house- members do not agree to the selection hold, the household member, docu- or decline to select an adult parent as mented in the casefile as the head of the head of household, the State agen- the household at the time of the viola- cy may designate the head of house- tion, shall be considered the head of hold or permit the household to make household. The designation of head of another selection. In no event shall the household through the circumstances household’s failure to select an adult of this paragraph shall take precedence parent of children or an adult who has over a previous designation of head of parental control over children as the household at least until the period of head of household delay the certifi- ineligibility is ended. cation or result in the denial of bene- (e) Strikers. Households with a strik- fits of an otherwise eligible household. ing member are not eligible to partici- For households that do not consist of pate in the Program, unless the house- adult parents and children or adults hold was eligible for benefits the day who have parental control of children before the strike and is otherwise eligi- living in the household, the State agen- ble at the time of application. A strik- cy shall designate the head of house- er must be anyone involved in a strike hold or permit the household to do so. or concerted stoppage of work by em- (2) For purposes of failure to comply ployees (including a stoppage by reason with the work requirements of § 273.7, of the expiration of a collective-bar- the head of household shall be the prin- gaining agreement) and any concerted cipal wage earner unless the household slowdown or other concerted interrup- has selected an adult parent of children tion of operations by employees. Any as specified in paragraph (d)(1) of this employee affected by a lockout, how- section. The principal wage earner ever, must not be deemed to be a strik- shall be the household member (includ- er. Further, an individual who goes on ing excluded members) who is the strike but is exempt from work reg- greatest source of earned income in the istration under § 273.7(b) the day before two months prior to the month of the the strike, other than those exempt

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solely on the grounds that they are em- about the application process and their ployed, must not be deemed to be a rights and responsibilities. The State striker. Also, persons such as truck agency must base food stamp eligi- drivers who cannot do their jobs be- bility solely on the criteria contained cause the strike has left them with in the Act and this part. nothing to deliver, and employees who (2) Application processing. The applica- are not part of the bargaining unit and tion process includes filing and com- do not want to cross the picket line for pleting an application form, being fear of personal injury or death, must interviewed, and having certain infor- not be deemed to be strikers. mation verified. The State agency (1) Pre-strike eligibility must be de- must act promptly on all applications termined by considering the day prior and provide food stamp benefits retro- to the strike as the day of application active to the month of application to and assuming the strike did not occur. those households that have completed (2) Eligibility at the time of applica- the application process and have been tion must be determined by comparing determined eligible. The State agency the striking member’s income before must make expedited service available the strike to the striker’s current in- to households in immediate need. Spe- come and adding the higher of the two cific responsibilities of households and to the current income of non-striking State agencies in the application proc- members during the month of applica- ess are detailed below. tion. If the household is eligible, the higher income figure must also be used (b) Food Stamp application form—(1) in determining the household’s bene- Content. Each application form shall fits. contain: (i) In prominent and boldface let- [Amdt. 132, 43 FR 47889, Oct. 17, 1978] tering and understandable terms a EDITORIAL NOTE: For FEDERAL REGISTER ci- statement that the information pro- tations affecting § 273.1, see the List of CFR vided by the applicant in connection Sections Affected, which appears in the with the application for food stamp Finding Aids section of the printed volume benefits will be subject to verification and on GPO Access. by Federal, State and local officials to § 273.2 Office operations and applica- determine if such information is fac- tion processing. tual; that if any information is incor- (a) Operation of food stamp offices and rect, food stamps may be denied to the processing of applications—(1) Office op- applicant; and that the applicant may erations. State agencies must establish be subject to criminal prosecution for procedures governing the operation of knowingly providing incorrect infor- food stamp offices that the State agen- mation; cy determines best serve households in (ii) In prominent and boldface let- the State, including households with tering and understandable terms a de- special needs, such as, but not limited scription of the civil and criminal pro- to, households with elderly or disabled visions and penalties for violations of members, households in rural areas the Food Stamp Act; with low-income members, homeless (iii) A statement to be signed by one individuals, households residing on res- adult household member which cer- ervations, households with adult mem- tifies, under penalty of perjury, the bers who are not proficient in English, truth of the information contained in and households with earned income the application, including the informa- (working households). The State agen- tion concerning citizenship and alien cy must provide timely, accurate, and status of the members applying for fair service to applicants for, and par- benefits; ticipants in, the Food Stamp Program. (iv) A place on the front page of the The State agency cannot, as a condi- application where the applicant can tion of eligibility, impose additional write his/her name, address, and signa- application or application processing ture. requirements. The State agency must (v) In plain and prominent language have a procedure for informing persons on or near the front page of the appli- who wish to apply for food stamps cation, notification of the household’s

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right to immediately file the applica- eral contacts. The State agency must tion as long as it contains the appli- also notify all applicants on the applicant’s name and address and the signa- cation form that the alien status of ap- ture of a responsible household member plicant household members may be or the household’s authorized rep- subject to verification by INS through resentative. Regardless of the type of the submission of information from the system the State agency uses (paper or application to INS, and that the sub- electronic), it must provide a means mitted information received from INS for households to immediately begin may affect the household’s eligibility the application process with name, ad- and level of benefits. dress and signature; (3) Jointly processed cases. If a State (vi) In plain and prominent language on or near the front page of the appli- agency has a procedure that allows ap- cation, a description of the expedited plicants to apply for the food stamp service provisions described in para- program and another program at the graph (i) of this section; same time, the State agency shall no- (vii) In plain and prominent language tify applicants that they may file a on or near the front page of the appli- joint application for more than one cation, notification that benefits are program or they may file a separate provided from the date of application; application for food stamps inde- and pendent of their application for bene- (viii) The following nondiscrimina- fits from any other program. All food tion statement on the application itself stamp applications, regardless of even if the State agency uses a joint whether they are joint applications or application form: separate applications, must be proc- ‘‘In accordance with Federal law and U.S. essed for food stamp purposes in ac- Department of Agriculture policy, this insti- cordance with food stamp procedural, tution is prohibited from discriminating on timeliness, notice, and fair hearing re- the basis of race, color, national origin, sex, quirements. No household shall have age, religion, political beliefs, or disability. its food stamp benefits denied solely on ‘‘To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, the basis that its application to par- Room 326-W, Whitten Building, 1400 Inde- ticipate in another program has been pendence Avenue, S.W., Washington, D.C. denied or its benefits under another 20250–9410 or call (202) 720–5964 (voice and program have been terminated without TDD). USDA is an equal opportunity pro- a separate determination by the State vider and employer.’’; and agency that the household failed to (ix) For multi-program applications, satisfy a food stamp eligibility require- contain language which clearly affords ment. Households that file a joint ap- applicants the option of answering only plication for food stamps and another those questions relevant to the pro- program and are denied benefits for the gram or programs for which they are other program shall not be required to applying. resubmit the joint application or to (2) Income and eligibility verification file another application for food system (IEVS). If the State agency stamps but shall have its food stamp chooses to use IEVS in accordance with eligibility determined based on the paragraph (f)(9) of this section, it must joint application in accordance with notify all applicants for food stamp the food stamp processing time frames benefits at the time of application and from the date the joint application was at each recertification through a written statement on or provided with the initially accepted by the State agency. application form that information (4) Privacy Act statement. As a State available through IEVS will be re- agency, you must notify all households quested, used and may be verified applying and being recertified for food through collateral contact when dis- stamp benefits of the following: crepancies are found by the State agen- (i) The collection of this information, cy, and that such information may af- including the social security number fect the household’s eligibility and (SSN) of each household member, is au- level of benefits. The regulations at thorized under the Food Stamp Act of § 273.2(f)(4)(ii) govern the use of collat- 1977, as amended, 7 U.S.C. 2011–2036.

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The information will be used to deter- tion that the State agency must record mine whether your household is eligi- is the date of release of the applicant ble or continues to be eligible to par- from the institution. The length of ticipate in the Food Stamp Program. time a State agency has to deliver ben- We will verify this information efits is calculated from the date the ap- through computer matching programs. plication is filed in the food stamp of- This information will also be used to fice designated by the State agency to monitor compliance with program reg- accept the household’s application, ex- ulations and for program management. cept when a resident of a public insti- (ii) This information may be dis- tution is jointly applying for SSI and closed to other Federal and State agen- food stamps prior to his/her release cies for official examination, and to from an institution in accordance with law enforcement officials for the pur- § 273.1(e)(2). Residents of public institu- pose of apprehending persons fleeing to tions who apply for foods stamps prior avoid the law. to their release from the institution (iii) If a food stamp claim arises shall be certified in accordance with against your household, the informa- § 273.2(g)(1) or § 273.2(i)(3)(i), as appro- tion on this application, including all priate. Each household has the right to SSNs, may be referred to Federal and file an application form on the same State agencies, as well as private day it contacts the food stamp office claims collection agencies, for claims during office hours. The household collection action. shall be advised that it does not have (iv) Providing the requested informa- to be interviewed before filing the ap- tion, including the SSN of each house- plication and may file an incomplete hold member, is voluntary. However, application form as long as the form failure to provide an SSN will result in contains the applicant’s name and ad- the denial of food stamp benefits to dress, and is signed by a responsible each individual failing to provide an member of the household or the house- SSN. Any SSNs provided will be used hold’s authorized representative. State and disclosed in the same manner as agencies shall document the date the SSNs of eligible household members. application was filed by recording on (c) Filing an application—(1) House- the application the date it was received hold’s right to file. Households must file by the food stamp office. When a resi- food stamp applications by submitting dent of an institution is jointly apply- the forms to the food stamp office ei- ing for SSI and food stamps prior to ther in person, through an authorized leaving the institution, the filing date representative, by fax or other elec- of the application to be recorded by the tronic transmission, by mail, or by State agency on the food stamp appli- completing an on-line electronic application is the date of release of the ap- cation. The State agency must provide plicant from the institution. households that complete an on-line (2) Contacting the food stamp office. (i) electronic application in person at the State agencies shall encourage house- food stamp office the opportunity to holds to file an application form the review the information that has been same day the household or its rep- recorded electronically and must pro- resentative contacts the food stamp of- vide them with a copy of that informa- fice in person or by telephone and ex- tion for their records. Applications presses interest in obtaining food signed through the use of electronic stamp assistance or expresses concerns signature techniques or applications which indicate food insecurity. If the containing a handwritten signature State agency attempts to discourage and then transmitted by fax or other households from applying for cash as- electronic transmission are acceptable. sistance, it shall make clear that the State agencies must document the date disadvantages and requirements of ap- the application was filed by recording plying for cash assistance do not apply the date of receipt at the food stamp to food stamps. In addition, it shall en- office. When a resident of an institu- courage applicants to continue with tion is jointly applying for SSI and their application for food stamps. The food stamps prior to leaving the insti- State agency shall inform households tution, the filing date of the applica- that receiving food stamps will have no

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bearing on any other program’s time agency shall also provide an applica- limits that may apply to the house- tion form to anyone who requests the hold. If a household contacting the form. Regardless of the type of system food stamp office by telephone does not the State agency uses (paper or elec- wish to come to the appropriate office tronic), the State agency must provide to file the application that same day a means for applicants to immediately and instead prefers receiving an appli- begin the application process with cation through the mail, the State name, address and signature. agency shall mail an application form (4) Notice of right to file. The State to the household on the same day the agency shall post signs in the certifi- telephone request is received. An application office which explain the applica- cation shall also be mailed on the same tion processing standards and the right day a written request for food assist- to file an application on the day of ini- ance is received. tial contact. The State agency shall in- (ii) Where a project area has des- clude similar information about same ignated certification offices to serve specific geographic areas, households day filing on the application form. may contact an office other than the (5) Notice of Required Verification. The one designated to service the area in State agency shall provide each house- which they reside. When a household hold at the time of application for cer- contacts the wrong certification office tification and recertification with a within a project area in person or by notice that informs the household of telephone, the certification office the verification requirements the shall, in addition to meeting other re- household must meet as part of the ap- quirements in paragraph (c)(2)(i) of this plication process. The notice shall also section, give the household the address inform the household of the State and telephone number of the appro- agency’s responsibility to assist the priate office. The certification office household in obtaining required shall also offer to forward the house- verification provided the household is hold’s application to the appropriate cooperating with the State agency as office that same day if the household specified in (d)(1) of this section. The has completed enough information on notice shall be written in clear and the application to file or forward it the simple language and shall meet the bi- next day by any means that ensures lingual requirements designated in the application arrives at the applica- § 272.4(b) of this chapter. At a min- tion office the day it is forwarded. The imum, the notice shall contain exam- household shall be informed that its ples of the types of documents the application will not be considered filed household should provide and explain and the processing standards shall not the period of time the documents begin until the application is received should cover. by the appropriate office. If the house- (6) Withdrawing application. The hold has mailed its application to the household may voluntarily withdraw wrong office within a project area, the its application at any time prior to the certification office shall mail the application to the appropriate office on the determination of eligibility. The State same day, or forward it the next day by agency shall document in the case file any means that ensures the application the reason for withdrawal, if any was arrives at the application office the stated by the household, and that con- day it is forwarded. tact was made with the household to (iii) In State agencies that elect to confirm the withdrawal. The household have Statewide residency, as provided shall be advised of its right to reapply in § 273.3, the application processing at any time subsequent to a with- timeframes begin when the application drawal. is filed in any food stamp office in the (d) Household cooperation. (1) To de- State. termine eligibility, the application (3) Availability of the application form. form must be completed and signed, The State agency shall make applica- the household or its authorized rep- tion forms readily accessible to poten- resentative must be interviewed, and tially eligible households. The State certain information on the application

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must be verified. If the household re- cordance with § 273.2(f)(1)(ix). If a fuses to cooperate with the State agen- household terminated for refusal to co- cy in completing this process, the ap- operate with a Federal quality control plication shall be denied at the time of reviewer reapplies after seven months refusal. For a determination of refusal from the end of the annual review pe- to be made, the household must be able riod, the household shall not be deter- to cooperate, but clearly demonstrate mined ineligible for its refusal to co- that it will not take actions that it can operate with a Federal quality control take and that are required to complete reviewer during the completed review the application process. For example, period, but must provide verification in to be denied for refusal to cooperate, a accordance with § 273.2(f)(1)(ix). household must refuse to be inter- (e) Interviews. (1) Except for house- viewed not merely failing to appear for holds certified for longer than 12 the interview. If there is any question months, and except as provided in as to whether the household has mere- paragraph (e)(2) of this section, house- ly failed to cooperate, as opposed to re- holds must have a face-to-face inter- fused to cooperate, the household shall view with an eligibility worker at ini- not be denied, and the agency shall tial certification and at least once provide assistance required by para- every 12 months thereafter. State agen- graph (c)(5) of this section. The house- cies may not require households to re- hold shall also be determined ineligible port for an in-office interview during if it refuses to cooperate in any subse- their certification period, though they quent review of its eligibility, includ- may request households to do so. For ing reviews generated by reported changes and applications for recertifi- example, State agencies may not re- cation. Once denied or terminated for quire households to report en masse for refusal to cooperate, the household an in-office interview during their cer- may reapply but shall not be deter- tification periods simply to review mined eligible until it cooperates with their case files, or for any other reason. the State agency. The State agency Interviews may be conducted at the shall not determine the household to food stamp office or other mutually ac- be ineligible when a person outside of ceptable location, including a house- the household fails to cooperate with a hold’s residence. If the interview will request for verification. The State be conducted at the household’s resi- agency shall not consider individuals dence, it must be scheduled in advance identified as nonhousehold members with the household. If a household in under § 273.1(b)(2) as individuals outside which all adult members are elderly or the household. disabled is certified for 24 months in (2) Cooperation with QC Reviewer. In accordance with § 273.10(f)(1), or a addition, the household shall be deter- household residing on a reservation is mined ineligible if it refuses to cooper- required to submit monthly reports ate in any subsequent review of its eli- and is certified for 24 months in accord- gibility as a part of a quality control ance with § 273.10(f)(2), a face-to-face review. If a household is terminated for interview is not required during the refusal to cooperate with a quality con- certification period. The individual trol reviewer, in accordance with interviewed may be the head of house- § 275.3(c)(5) or § 275.12(g)(1)(ii), the hold, spouse, any other responsible household may reapply, but shall not member of the household, or an author- be determined eligible until it cooper- ized representative. The applicant may ates with the quality control reviewer. bring any person he or she chooses to If a household terminated for refusal to the interview. The interviewer must cooperate with a State quality control not simply review the information that reviewer reapplies after 95 days from appears on the application, but must the end of the annual review period, explore and resolve with the household the household shall not be determined unclear and incomplete information. ineligible for its refusal to cooperate The interviewer must advise house- with a State quality control reviewer holds of their rights and responsibil- during the completed review period, ities during the interview, including but must provide verification in ac- the appropriate application processing

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standard and the households’ responsi- where documentary verification would bility to report changes. The inter- normally be provided. viewer must advise households that are (ii) Waiver of the face-to-face inter- also applying for or receiving PA bene- view may not affect the length of the fits that time limits and other require- household’s certification period. ments that apply to the receipt of PA (3) The State agency must schedule benefits do not apply to the receipt of an interview for all applicant house- food stamp benefits, and that households who are not interviewed on the holds which cease receiving PA bene- day they submit their applications. To fits because they have reached a time the extent practicable, the State agen- limit, have begun working, or for other cy must schedule the interview to ac- reasons, may still qualify for food commodate the needs of groups with stamp benefits. The interviewer must special circumstances, including work- conduct the interview as an official and ing households. The State agency must confidential discussion of household schedule all interviews as promptly as circumstances. The State agency must possible to insure eligible households protect the applicant’s right to privacy receive an opportunity to participate during the interview. Facilities must within 30 days after the application is be adequate to preserve the privacy filed. The State agency must notify and confidentiality of the interview. each household that misses its inter- (2) The State agency must notify the view appointment that it missed the applicant that it will waive the face-to- scheduled interview and that the face interview required in paragraph household is responsible for resched- (e)(1) of this section in favor of a tele- uling a missed interview. If the house- phone interview on a case-by-case basis hold contacts the State agency within because of household hardship situa- the 30 day application processing pe- tions as determined by the State agen- riod, the State agency must schedule a cy. These hardship conditions include, second interview. The State agency but are not limited to: Illness, trans- may not deny a household’s application portation difficulties, care of a house- prior to the 30th day after application hold member, hardships due to resi- if the household fails to appear for the dency in a rural area, prolonged severe first scheduled interview. If the house- weather, or work or training hours hold requests a second interview during which prevent the household from par- the 30-day application processing pe- ticipating in an in-office interview. riod and is determined eligible, the The State agency must document the State agency must issue prorated bene- case file to show when a waiver was fits from the date of application. granted because of a hardship. The (f) Verification. Verification is the use State agency may opt to waive the of documentation or a contact with a face-to-face interview in favor of a third party to confirm the accuracy of telephone interview for all households statements or information. The State which have no earned income and all agency must give households at least members of the household are elderly 10 days to provide required or disabled. Regardless of any approved verification. Paragraph (i)(4) of this waivers, the State agency must grant a section contains verification proce- face-to-face interview to any household dures for expedited service cases. which requests one. The State agency (1) Mandatory verification. State agen- has the option of conducting a tele- cies shall verify the following informa- phone interview or a home visit that is tion prior to certification for house- scheduled in advance with the households initially applying: hold if the office interview is waived. (i) Gross nonexempt income. Gross non- (i) Waiver of the face-to-face inter- exempt income shall be verified for all view does not exempt the household households prior to certification. How- from the verification requirements, al- ever, where all attempts to verify the though special procedures may be used income have been unsuccessful because to permit the household to provide the person or organization providing verification and thus obtain its bene- the income has failed to cooperate with fits in a timely manner, such as sub- the household and the State agency, stituting a collateral contact in cases and all other sources of verification are

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unavailable, the eligibility worker ings and in some cases the last year’s shall determine an amount to be used earnings, depending on the time of re- for certification purposes based on the quest. Also, in some cases, an applicant best available information. may have work from uncovered em- (ii) Alien eligibility. (A) The State ployment that is not documented by agency must verify the eligible status SSA, but is countable toward the 40 of applicant aliens. If an alien does not quarters test. In both these cases, the wish the State agency to contact INS individual, rather than SSA, would to verify his or her immigration status, need to provide the evidence needed to the State agency must give the house- verify the quarters. hold the option of withdrawing its ap- (B) An alien is ineligible until ac- plication or participating without that ceptable documentation is provided un- member. The Department of Justice less: (DOJ) Interim Guidance On (1) The State agency has submitted a Verification of Citizenship, Qualified copy of a document provided by the Alien Status and Eligibility Under household to INS for verification. Title IV of the Personal Responsibility Pending such verification, the State and Work Opportunity Reconciliation agency cannot delay, deny, reduce or Act of 1996 (Interim Guidance) (62 FR terminate the individual’s eligibility 61344, November 17, 1997) contains infor benefits on the basis of the individ- formation on acceptable documents ual’s immigration status; or and INS codes. State agencies should (2) The applicant or the State agency use the Interim Guidance until DOJ has submitted a request to SSA for in- publishes a final rule on this issue. formation regarding the number of Thereafter, State agencies should con- quarters of work that can be credited sult both the Interim Guidance and the to the individual, SSA has responded DOJ final rule. Where the Interim that the individual has fewer than 40 Guidance and the DOJ final rule con- quarters, and the individual provides flict, the latter should control the documentation from SSA that SSA is verification of alien eligibility. As pro- conducting an investigation to deter- vided in § 273.4, the following informa- mine if more quarters can be credited. tion may also be relevant to the eligi- If SSA indicates that the number of bility of some aliens: date of admission qualifying quarters that can be cred- or date status was granted; military ited is under investigation, the State connection; battered status; if the agency must certify the individual alien was lawfully residing in the pending the results of the investigation United States on August 22, 1996; mem- for up to 6 months from the date of the bership in certain Indian tribes; if the original determination of insufficient person was age 65 or older on August quarters; or 22, 1996; if a lawful permanent resident (3) The applicant or the State agency can be credited with 40 qualifying quar- has submitted a request to a Federal ters of covered work and if any Federal agency for verification of information means-tested public benefits were re- which bears on the individual’s eligible ceived in any quarter after December alien status. The State agency must 31, 1996; or if the alien was a member of certify the individual pending the re- certain Hmong or Highland Laotian sults of the investigation for up to 6 tribes during a certain period of time months from the date of the original or is the spouse or unmarried depend- request for verification. ent of such a person. The State agency (C) The State agency must provide must also verify these factors, if appli- alien applicants with a reasonable op- cable to the alien’s eligibility. The portunity to submit acceptable docu- SSA Quarters of Coverage History Sys- mentation of their eligible alien status tem (QCHS) is available for purposes of as of the 30th day following the date of verifying whether a lawful permanent application. A reasonable opportunity resident has earned or can receive cred- must be at least 10 days from the date it for a total of 40 qualifying quarters. of the State agency’s request for an ac- However, the QCHS may not show all ceptable document. When the State qualifying quarters. For instance, SSA agency fails to provide an alien appli- records do not show current year earn- cant with a reasonable opportunity as

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of the 30th day following the date of completed SSA Form 2853 shall be con- application, the State agency must sidered proof of application for an SSN provide the household with benefits no for a newborn infant. later than 30 days following the date of (vi) Residency. The residency require- application, provided the household is ments of § 273.3 shall be verified except otherwise eligible. in unusual cases (such as homeless (iii) Utility expenses. The State agen- households, some migrant farmworker cy shall verify a household’s utility ex- households, or households newly ar- penses if the household wishes to claim rived in a project area) where expenses in excess of the State agen- verification of residency cannot rea- cy’s utility standard and the expense sonably be accomplished. Verification would actually result in a deduction. If of residency should be accomplished to the household’s actual utility expenses the extent possible in conjunction with cannot be verified before the 30 days al- the verification of other information lowed to process the application expire, such as, but not limited to, rent and the State agency shall use the standard mortgage payments, utility expenses, utility allowance, provided the house- and identity. If verification cannot be hold is entitled to use the standard as accomplished in conjunction with the specified in § 273.9(d). If the household verification of other information, then wishes to claim expenses for an unoc- the State agency shall use a collateral cupied home, the State agency shall contact or other readily available doc- verify the household’s actual utility umentary evidence. Documents used to expenses for the unoccupied home in verify other factors of eligibility every case and shall not use the stand- should normally suffice to verify resi- ard utility allowance. dency as well. Any documents or col- (iv) Medical expenses. The amount of lateral contact which reasonably estab- any medical expenses (including the lish the applicant’s residency must be amount of reimbursements) deductible accepted and no requirement for a spe- under § 273.9(d)(3) shall be verified prior cific type of verification may be im- to initial certification. Verification of posed. No durational residency require- other factors, such as the allowability ment shall be established. of services provided or the eligibility of (vii) Identity. The identity of the per- the person incurring the cost, shall be son making application shall be required if questionable. verified. Where an authorized rep- (v) Social security numbers. The State resentative applies on behalf of a agency shall verify the social security household, the identity of both the au- number(s) (SSN) reported by the house- thorized representative and the head of hold by submitting them to the Social household shall be verified. Identity Security Administration (SSA) for may be verified through readily avail- verification according to procedures es- able documentary evidence, or if this is tablished by SSA. The State agency unavailable, through a collateral con- shall not delay the certification for or tact. Examples of acceptable documen- issuance of benefits to an otherwise eli- tary evidence which the applicant may gible household solely to verify the provide include, but are not limited to, SSN of a household member. Once an a driver’s license, a work or school ID, SSN has been verified, the State agen- an ID for health benefits or for another cy shall make a permanent annotation assistance or social services program, a to its file to prevent the unnecessary voter registration card, wage stubs, or reverification of the SSN in the future. a birth certificate. Any documents The State agency shall accept as which reasonably establish the appli- verified an SSN which has been verified cant’s identity must be accepted, and by another program participating in no requirement for a specific type of the IEVS described in § 272.8. If an indi- document, such as a birth certificate, vidual is unable to provide an SSN or may be imposed. does not have an SSN, the State agen- (viii) Disability. (A) The State agency cy shall require the individual to sub- shall verify disability as defined in mit Form SS–5, Application for a So- § 271.2 as follows: cial Security Number, to the SSA in (1) For individuals to be considered accordance with procedures in § 273.6. A disabled under paragraphs (2), (3) and

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(4) of the definition, the household ance benefits. The State agency shall shall provide proof that the disabled in- verify that the eligibility to receive dividual is receiving benefits under ti- these benefits is based upon disability tles I, II, X, XIV or XVI of the Social or blindness criteria which are at least Security Act. as stringent as those used under title (2) For individuals to be considered XVI of the Social Security Act. disabled under paragraph (6) of the def- (B) For disability determinations inition, the household must present a which must be made relevant to the statement from the Veterans Adminis- provisions of § 273.1(a)(2)(ii), the State tration (VA) which clearly indicates agency shall use the SSA’s most cur- that the disabled individual is receiv- rent list of disabilities as the initial ing VA disability benefits for a service- step for verifying if an individual has a connected or non-service-connected disability considered permanent under disability and that the disability is the Social Security Act. However, only rated as total or paid at the total rate those individuals who suffer from one by VA. of the disabilities mentioned in the (3) For individuals to be considered SSA list who are unable to purchase disabled under paragraphs (7) and (8) of and prepare meals because of such dis- the definition, proof by the household ability shall be considered disabled for that the disabled individual is receiv- the purpose of this provision. If it is ing VA disability benefits is sufficient obvious to the caseworker that the in- verification of disability. dividual is unable to purchase and pre- (4) For individuals to be considered pare meals because he/she suffers from disabled under paragraphs (5) and (9) of a severe physical or mental disability, the definition, the State agency shall the individual shall be considered dis- use the Social Security Administra- tion’s (SSA) most current list of disabled for the purpose of the provision abilities considered permanent under even if the disability is not specifically the Social Security Act for verifying mentioned on the SSA list. If the dis- disability. If it is obvious to the case- ability is not obvious to the caseworker that the individual has one of worker, he/she shall verify the dis- the listed disabilities, the household ability by requiring a statement from a shall be considered to have verified dis- physician or licensed or certified psy- ability. If disability is not obvious to chologist certifying that the individual the caseworker, the household shall (in the physician’s/psychologist’s opin- provide a statement from a physician ion) is unable to purchase and prepare or licensed or certified psychologist meals because he/she suffers from one certifying that the individual has one of the nonobvious disabilities men- of the nonobvious disabilities listed as tioned in the SSA list or is unable to the means for verifying disability purchase meals because he/she suffers under paragraphs (5) and (9) of the defi- from some other severe, permanent nition. physical or mental disease or nondis- (5) For individuals to be considered ease-related disability. The elderly and disabled under paragraph (10) of the disabled individual (or his/her author- definition, the household shall provide ized representative) shall be respon- proof that the individual receives a sible for obtaining the cooperation of Railroad Retirement disability annuity the individuals with whom he/she re- from the Railroad Retirement Board sides in providing the necessary income and has been determined to qualify for information about the others to the Medicare. State agency for purposes of this provi- (6) For individuals to be considered sion. disabled under paragraph (11) of the (ix) State agencies shall verify all definition, the household shall provide factors of eligibility for households proof that the individual receives in- who have been terminated for refusal terim assistance benefits pending the to cooperate with a State quality con- receipt of Supplemental Security In- trol reviewer, and reapply after 95 days come; or disability-related medical as- from the end of the annual review pe- sistance under title XIX of the SSA; or riod. State agencies shall verify all fac- disability-based State general assist- tors of eligibility for households who

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have been terminated for refusal to co- (xiv) Additional verification for able- operate with a Federal quality control bodied adults subject to the time limit. reviewer and reapply after seven (A) Hours worked. For individuals months from the end of the annual re- subject to the food stamp time limit of view period. § 273.24 who are satisfying the work re- (x) Household composition. State agen- quirement by working, by combining cies shall verify factors affecting the work and participation in a work pro- composition of a household, if ques- gram, or by participating in a work or tionable. Individuals who claim to be a workfare program that is not operated separate household from those with or supervised by the State agency, the whom they reside shall be responsible individuals’ work hours shall be for proving that they are a separate verified. household to the satisfaction of the (B) Countable months in another state. State agency. Individuals who claim to For individuals subject to the food be a separate household from those stamp time limit of § 273.24, the State with whom they reside based on the agency must verify the number of various age and disability factors for countable months (as defined in determining separateness shall be re- § 273.24(b)(1)) an individual has used in sponsible for proving a claim of sepa- another State if there is an indication rateness (at the State agency’s re- that the individual participated in that quest) in accordance with the provi- State. The normal processing stand- sions of § 273.2(f)(1)(viii). ards of 7 CFR 273.2(g) apply. The State (xi) Students. If a person claims to be agency may accept another State agen- physically or mentally unfit for pur- cy’s assertion as to the number of poses of the student exemption con- countable months an individual has tained in § 273.5(b)(2) and the unfitness used in another State. is not evident to the State agency, (2) Verification of questionable informa- verification may be required. Appro- tion. (i) The State agency shall verify, priate verification may consist of re- prior to certification of the household, ceipt of temporary or permanent dis- all other factors of eligibility which ability benefits issued by governmental the State agency determines are ques- or private sources, or of a statement tionable and affect the household’s eli- from a physician or licensed or cer- gibility and benefit level. The State tified psychologist. agency shall establish guidelines to be (xii) Legal obligation and actual child followed in determining what shall be support payments. The State agency considered questionable information. shall obtain verification of the house- These guidelines shall not prescribe hold’s legal obligation to pay child sup- verification based on race, religion, port, the amount of the obligation, and ethnic background, or national origin. the monthly amount of child support These guidelines shall not target the household actually pays. Docu- groups such as migrant farmworkers or ments that are accepted as verification American Indians for more intensive of the household’s legal obligation to verification under this provision. pay child support shall not be accepted (ii) If a member’s citizenship or sta- as verification of the household’s ac- tus as a non-citizen national is ques- tual monthly child support payments. tionable, the State agency must verify State agencies may and are strongly the member’s citizenship or non-citizen encouraged to obtain information re- national status in accordance with at- garding a household member’s child tachment 4 of the DOJ Interim Guid- support obligation and payments from ance. After DOJ issues final rules, Child Support Enforcement (CSE) State agencies should consult both the automated data files. The State agency Interim Guidance and the final rule. shall give the household an oppor- Where the Interim Guidance and the tunity to resolve any discrepancy be- DOJ final rule conflict, the latter tween household verification and CSE should control the eligibility deter- records in accordance with paragraph mination. The State agency must ac- (f)(9) of this section. cept participation in another program (xiii) [Reserved] as acceptable verification if

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verification of citizenship or non-cit- (i) The State agency may establish izen national status was obtained for its own standards for the use of that program. If the household cannot verification, provided that, at a min- obtain the forms of verification sug- imum, all questionable factors are gested in attachment 4 of the DOJ In- verified in accordance with paragraph terim Guidance and the household can (f)(2) of this section and that such provide a reasonable explanation as to standards do not allow for inadvertent why verification is not available, the discrimination. For example, no stand- State agency must accept a signed ard may be applied which prescribes statement, under penalty of perjury, variances in verification based on race, from a third party indicating a reason- religion, ethnic background or national able basis for personal knowledge that origin, nor may a State standard tar- the member in question is a U.S. cit- get groups such as migrant farm- izen or non-citizen national. The signed workers or American Indians for more statement must contain a warning of intensive verification than other the penalties for helping someone com- households. The options specified in mit fraud. Absent verification or third this paragraph, shall not apply in those party attestation of U.S. citizenship or offices of the Social Security Adminis- non-citizen national status, the mem- tration (SSA) which, in accordance ber whose citizenship or non-citizen na- with paragraph (k) of this section, pro- tional status is in question is ineligible vide for the food stamp certification of to participate until the issue is re- households containing recipients of solved. The member whose citizenship Supplemental Security Income (SSI) or non-citizen national status is in and social security benefits. The State question will have his or her income agency, however, may negotiate with and resources considered available to those SSA offices with regard to man- any remaining household members as dating verification of these options. set forth in § 273.11(c). (ii) If a State agency opts to verify a (iii) Homeless households claiming deductible expense and obtaining the shelter expenses may provide verification may delay the household’s verification of their shelter expenses to certification, the State agency shall qualify for the homeless shelter deduc- advise the household that its eligibility tion if the State agency has such a de- and benefit level may be determined duction. If a homeless household has without providing a deduction for the difficulty in obtaining traditional claimed but unverified expense. This types of verification of shelter costs, provision also applies to the allowance the caseworker shall use prudent judg- of medical expenses as specified in ment in determining if the verification paragraph (f)(1)(iv) of this section. obtained is adequate. For example, if a Shelter costs would be computed with- homeless individual claims to have in- out including the unverified compo- curred shelter costs for several nights nents. The standard utility allowance and the costs are comparable to costs shall be used if the household is enti- typically incurred by homeless people, tled to claim it and has not verified for shelter, the caseworker may decide higher actual costs. If the expense can- to accept this information as adequate not be verified within 30 days of the information and not require further date of application, the State agency verification. shall determine the household’s eligi- (3) State agency options. In addition to bility and benefit level without pro- the verification required in paragraphs viding a deduction of the unverified ex- (f)(1) and (f)(2) of this section, the pense. If the household subsequently State agency may elect to mandate provides the missing verification, the verification of any other factor which State agency shall redetermine the affects household eligibility or allot- household’s benefits, and provide in- ment level, including household size creased benefits, if any, in accordance where not questionable. Such with the timeliness standards in § 273.12 verification may be required Statewide on reported changes. If the expense or throughout a project area, but shall could not be verified within the 30-day not be imposed on a selective, case-by- processing standard because the State case basis on particular households. agency failed to allow the household

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sufficient time, as defined in paragraph and neighbors of the household who (h)(1) of this section, to verify the ex- can be expected to provide accurate pense, the household shall be entitled third-party verification. When talking to the restoration of benefits retro- with collateral contacts, State agen- active to the month of application, pro- cies should disclose only the informa- vided that the missing verification is tion that is absolutely necessary to get supplied in accordance with paragraph the information being sought. State (h)(3) of this section. If the household agencies should avoid disclosing that would be ineligible unless the expense the household has applied for food is allowed, the household’s application stamps, nor should they disclose any shall be handled as provided in para- information supplied by the household, graph (h) of this section. especially information that is pro- (4) Sources of verification—(i) Docu- tected by § 273.1(c), or suggest that the mentary evidence. State agencies shall household is suspected of any wrong use documentary evidence as the pri- doing. mary source of verification for all (iii) Home visits. Home visits may be items except residency and household used as verification only when docu- size. These items may be verified ei- mentary evidence is insufficient to ther through readily available docu- make a firm determination of eligi- mentary evidence or through a collat- bility or benefit level, or cannot be ob- eral contact, without a requirement tained, and the home visit is scheduled being imposed that documentary evi- in advance with the household. Home dence must be the primary source of visits are to be used on a case-by-case verification. Documentary evidence basis where the supplied documenta- consists of a written confirmation of a tion is insufficient. Simply because a household’s circumstances. Examples household fits a profile of an error- of documentary evidence include wage prone household does not constitute stubs, rent receipts, and utility bills. lack of verification. State agencies Although documentary evidence shall shall assist households in obtaining be the primary source of verification, sufficient verification in accordance acceptable verification shall not be with paragraph (c)(5) of this section. limited to any single type of document (iv) Discrepancies. Where unverified and may be obtained through the information from a source other than household or other source. Whenever the household contradicts statements documentary evidence cannot be ob- made by the household, the household tained or is insufficient to make a firm shall be afforded a reasonable oppor- determination of eligibility or benefit tunity to resolve the discrepancy prior level, the eligibility worker may re- to a determination of eligibility or quire collateral contacts or home vis- benefits. The State agency may, if it its. For example, documentary evi- chooses, verify the information di- dence may be considered insufficient rectly and contact the household only when the household presents pay stubs if such direct verification efforts are which do not represent an accurate pic- unsuccessful. If the unverified informa- ture of the household’s income (such as tion is received through the IEVS, as out-dated pay stubs) or identification specified in § 272.8, the State agency papers that appear to be falsified. may obtain verification from a third (ii) Collateral contacts. A collateral party as specified in paragraph (f)(9)(v) contact is an oral confirmation of a of this section. household’s circumstances by a person (5) Responsibility of obtaining outside of the household. The collat- verification. (i) The household has pri- eral contact may be made either in per- mary responsibility for providing docu- son or over the telephone. The State mentary evidence to support state- agency may select a collateral contact ments on the application and to resolve if the household fails to designate one any questionable information. The or designates one which is unaccept- State agency must assist the household able to the State agency. Examples of in obtaining this verification provided acceptable collateral contacts may in- the household is cooperating with the clude employers, landlords, social serv- State agency as specified under para- ice agencies, migrant service agencies, graph (d)(1) of this section. Households

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may supply documentary evidence in release statements from households, person, through the mail, by facsimile provided the State agency makes the or other electronic device, or through appropriate data request to SSA and an authorized representative. The executes the necessary data exchange State agency must not require the agreements with SSA. The household household to present verification in shall be given an opportunity to verify person at the food stamp office. The the information from another source if State agency must accept any reason- the SDX or BENDEX information is able documentary evidence provided by contradictory to the information pro- the household and must be primarily vided by the household or is unavail- concerned with how adequately the able. Determination of the household’s verification proves the statements on eligibility and benefit level shall not be the application. delayed past the application processing (ii) Whenever documentary evidence time standards of paragraph (g) of this is insufficient to make a firm deter- section if SDX or BENDEX data is un- mination of eligibility or benefit level, available. or cannot be obtained, the State agen- (8) Verification subsequent to initial cy may require a collateral contact or certification. (i) Recertification—(A) At a home visit in accordance with para- recertification the State agency shall graph (f)(4) of this section. The State verify a change in income if the source agency, generally, shall rely on the has changed or the amount has household to provide the name of any changed by more than $50. Previously collateral contact. The household may unreported medical expenses, actual request assistance in designating a col- utility expenses and total recurring lateral contact. The State agency is medical expenses which have changed not required to use a collateral contact by more than $25 shall also be verified designated by the household if the col- at recertification. The State agency lateral contact cannot be expected to shall not verify income if the source provide an accurate third-party has not changed and if the amount is verification. When the collateral con- unchanged or has changed by $50 or tact designated by the household is unless, unless the information is incom- acceptable, the State agency shall ei- plete, inaccurate, inconsistent or out- ther designate another collateral con- dated. The State agency shall also not tact, ask the household to designate verify total medical expenses, or actual another collateral contact or to pro- utility expenses claimed by households vide an alternative form of which are unchanged or have changed verification, or substitute a home visit. by $25 or less, unless the information is The State agency is responsible for ob- incomplete, inaccurate, inconsistent or taining verification from acceptable outdated. The State agency shall re- collateral contacts. quire a household eligible for the child (6) Documentation. Case files must be support deduction to verify any documented to support eligibility, in- changes in the legal obligation to pay eligibility, and benefit level determina- child support, the obligated amount, tions. Documentation shall be in suffi- and the amount of legally obligated cient detail to permit a reviewer to de- child support a household member pays termine the reasonableness and accu- to a nonhousehold member. The State racy of the determination. agency shall verify reportedly un- (7) State Data Exchange and Bene- changed child support information only ficiary Data Exchange. The State agen- if the information is incomplete, inac- cy may verify SSI benefits through the curate, inconsistent or outdated. State Data Exchange (SDX), and Social (B) Newly obtained social security Security benefit information through numbers shall be verified at recertifi- the Beneficiary Data Exchange cation in accordance with verification (BENDEX), or through verification pro- procedures outlined in § 273.2(f)(1)(v). vided by the household. The State (C) For individuals subject to the agency may use SDX and BENDEX food stamp time limit of § 273.24 who data to verify other food stamp eligi- are satisfying the work requirement by bility criteria. The State agency may working, by combining work and par- access SDX and BENDEX data without ticipation in a work program, or by

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participating in a work program that is (iv) Except as noted in this para- not operated or supervised by the State graph, prior to taking action to termi- agency, the individuals’ work hours nate, deny, or reduce benefits based on shall be verified. information obtained through the (D) Other information which has IEVS which is considered unverified changed may be verified at recertifi- upon receipt, State agencies shall inde- cation. Unchanged information shall pendently verify the information. Such not be verified unless the information unverified information is unearned in- is incomplete, inaccurate, inconsistent come information from IRS, wage in- or outdated. Verification under this formation from SSA and SWICAs, and paragraph shall be subject to the same questionable IEVS information dis- verification procedures as apply during cussed in paragraph (f)(9)(iii) of this initial verification. section. Independent verification shall (ii) Changes. Changes reported during include verification of the amount of the certification period shall be subject the asset or income involved, whether to the same verification procedures as the household actually has or had ac- apply at initial certification, except cess to such asset or income such that that the State agency shall not verify it would be countable income or re- changes in income if the source has not sources for food stamp purposes, and changed and if the amount has changed the period during which such access oc- by $50 or less, unless the information is curred. Except with respect to un- incomplete, inaccurate, inconsistent or earned income information from IRS, outdated. The State agency shall also if a State agency has information not verify total medical expenses or ac- which indicates that independent tual utility expenses which are un- verification is not needed, such changed or have changed by $25 or less, verification is not required. unless the information is incomplete, (v) The State agency shall obtain independent verification of unverified inaccurate, inconsistent or outdated. information obtained from IEVS by (9) Optional use of IEVS. (i) The State means of contacting the household and/ agency may obtain information or the appropriate income, resource or through IEVS in accordance with pro- benefit source. If the State agency cedures specified in § 272.8 of this chap- chooses to contact the household, it ter and use it to verify the eligibility must do so in writing, informing the and benefit levels of applicants and household of the information which it participating households. has received, and requesting that the (ii) The State agency may access household respond within 10 days. If data through the IEVS provided the the household fails to respond in a disclosure safeguards and data ex- timely manner, the State agency shall change agreements required by part 272 send it a notice of adverse action as are satisfied. specified in § 273.13. The State agency (iii) The State agency shall take ac- may contact the appropriate source by tion, including proper notices to house- the means best suited to the situation. holds, to terminate, deny, or reduce When the household or appropriate benefits based on information obtain source provides the independent through the IEVS which is considered verification, the State agency shall verified upon receipt. This information properly notify the household of the is social security and SSI benefit infor- action it intends to take and provide mation obtained from SSA, and TANF the household with an opportunity to benefit information and UIB informa- request a fair hearing prior to any ad- tion obtained from the agencies admin- verse action. istering those programs. If the State (10) Optional use of SAVE. Households agency has information that the IEVS- are required to submit documents to obtained information about a par- verify the immigration status of appli- ticular household is questionable, this cant aliens. State agencies that verify information shall be considered the validity of such documents through unverified upon receipt and the State the INS SAVE system in accordance agency shall take action as specified in with § 272.11 of this chapter must use paragraph (f)(9)(iv) of this section. the following procedures:

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(i) The State agency shall provide an waiting for a response from SAVE, applicant alien with a reasonable op- agency records shall contain either a portunity to submit acceptable docu- notation showing the date of the State mentation of their eligible alien status agency’s transmission or a copy of the prior to the 30th day following the date INS Form G–845 sent to INS. Once the of application. A reasonable oppor- SAVE response is received, agency tunity shall be at least 10 days from records shall show documentation of the date of the State agency’s request the ASVI Query Verification Number for an acceptable document. An alien or contain a copy of the INS-annotated who has been given a reasonable oppor- Form G–845. Whenever the response tunity to submit acceptable docu- from automated access to the ASVI di- mentation and has not done so as of rects the eligibility worker to initiate the 30th day following the date of ap- secondary verification, agency records plication shall not be certified for ben- shall show documentation of the ASVI efits until acceptable documentation Query Verification Number and con- has been submitted. However, if the 10- tain a copy of the INS Form G–845. day reasonable opportunity period pro- (g) Normal processing standard—(1) vided by the State agency does not Thirty-day processing. The State agency lapse before the 30th day following the shall provide eligible households that date of application, the State agency complete the initial application proc- shall provide the household with bene- ess an opportunity to participate (as fits no later than 30 days following the defined in § 274.2(b)) as soon as possible, date of application Provided the house- but no later than 30 calendar days fol- hold is otherwise eligible. lowing the date the application was (ii) The written consent of the alien filed, except for residents of public in- applicant shall not be required as a stitutions who apply jointly for SSI condition for the State agency to con- and food stamp benefits prior to release tact INS to verify the validity of docu- from the institution in accordance mentation. with § 273.1(e)(2). An application is filed (iii) State agencies which access the the day the appropriate food stamp of- ASVI database through an automated fice receives an application containing access shall also submit INS Form G– the applicant’s name and address, 845, with an attached photocopy of the which is signed by either a responsible alien’s document, to INS whenever the member of the household or the house- initial automated access does not con- hold’s authorized representative. firm the validity of the alien’s docu- Households entitled to expedited proc- mentation or a significant discrepancy essing are specified in paragraph (i) of exists between the data provided by the this section. For residents of public in- ASVI and the information provided by stitutions who apply for food stamps the applicant. Pending such responses prior to their release from the institu- from either the ASVI or INS Form G– tion in accordance with § 273.1(e)(2), the 845, the State agency shall not delay, State agency shall provide an oppor- deny, reduce, or terminate the alien’s tunity to participate as soon as pos- eligibility for benefits on the basis of sible, but not later than 30 calendar the individual’s alien status. days from the date of release of the ap- (iv) If the State agency determines, plicant from the institution. after complying with the requirements (2) Combined allotments. Households of this section, that the alien is not in which apply for initial month benefits an eligible alien status, the State agen- (as described in § 273.10(a)) after the cy shall take action, including proper 15th of the month, are processed under notices to the household, to terminate, normal processing timeframes, have deny or reduce benefits. The State completed the application process agency shall provide households the op- within 30 days of the date of applica- portunity to request a fair hearing tion, and have been determined eligible under § 273.15 prior to any adverse ac- to receive benefits for the initial tion. month of application and the next sub- (v) The use of SAVE shall be docu- sequent month, may be issued a com- mented in the casefile or other agency bined allotment at State agency option records. When the State agency is which includes prorated benefits for

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the month of application and benefits agency must have informed the house- for the first full month of participa- hold of the need to register for work, tion. The benefits shall be issued in ac- determined if the household members cordance with § 274.2(c) of this chapter. are exempt from work registration, and (3) Denying the application. House- given the household at least 10 days holds that are found to be ineligible from the date of notification to reg- shall be sent a notice of denial as soon ister these members. as possible but not later than 30 days (C) In cases where verification is in- following the date the application was complete, the State agency must have filed. If the household has failed to ap- provided the household with a state- pear for a scheduled interviewand has ment of required verification and of- made no subsequent contact with the fered to assist the household in obtain- State agency to express interest in pur- ing required verification and allowed suing the application, the State agency the household sufficient time to pro- shall send the household a notice of de- vide the missing verification. Suffi- nial on the 30th day following the date cient time shall be at least 10 days of application. The household must file from the date of the State agency’s ini- a new application if it wishes to partial request for the particular ticipate in the program. In cases where verification that was missing. the State agency was able to conduct (D) For households that have failed an interview and request all of the nec- to appear for an interview, the State essary verification on the same day the agency must notify the household that application was filed, and no subse- it missed the scheduled interview and quent requests for verification have that the household is responsible for been made, the State agency may also rescheduling a missed interview. If the deny the application on the 30th day if household contacts the State agency the State agency provided assistance within the 30 day processing period, the to the household in obtaining State agency must schedule a second verification as specified in paragraph interview. If the household fails to (f)(5) of this section, but the household schedule a second interview, or the failed to provide the requested subsequent interview is postponed at verification. the household’s request or cannot oth- (h) Delays in processing. If the State erwise be rescheduled until after the agency does not determine a house- 20th day but before the 30th day fol- hold’s eligibility and provide an oppor- lowing the date the application was tunity to participate within 30 days filed, the household must appear for following the date the application was the interview, bring verification, and filed, the State agency shall take the register members for work by the 30th following action: day; otherwise, the delay shall be the (1) Determining cause. The State agen- fault of the household. If the household cy shall first determine the cause of has failed to appear for the first inter- the delay using the following criteria: view, fails to schedule a second inter- (i) A delay shall be considered the view, and/or the subsequent interview fault of the household if the household is postponed at the household’s request has failed to complete the application until after the 30th day following the process even though the State agency date the application was filed, the has taken all the action it is required delay shall be the fault of the house- to take to assist the household. The hold. If the household has missed both State agency must have taken the fol- scheduled interviews and requests an- lowing actions before a delay can be other interview, any delay shall be the considered the fault of the household: fault of the household. (A) For households that have failed (ii) Delays that are the fault of the to complete the application form, the State agency include, but are not lim- State agency must have offered, or at- ited to, those cases where the State tempted to offer, assistance in its com- agency failed to take the actions de- pletion. scribed in paragraphs (h)(1)(i) (A) (B) If one or more members of the through (D) of this section. household have failed to register for (2) Delays caused by the household. (i) work, as required in § 273.7, the State If by the 30th day the State agency

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cannot take any further action on the agency, the State agency shall take application due to the fault of the immediate corrective action. Except as household, the household shall lose its specified in §§ 273.2(f)(1)(ii)(F) and entitlement to benefits for the month 273.2(f)(10)(i), the State agency shall of application. However, the State not deny the application if it caused agency shall give the household an ad- the delay, but shall instead notify the ditional 30 days to take the required household by the 30th day following action, except that, if verification is the date the application was filed that lacking, the State agency has the op- its application is being held pending. tion of holding the application pending The State agency shall also notify the for only 30 days following the date of household of any action it must take the initial request for the particular to complete the application process. If verification that was missing. verification is lacking the State agen- (A) The State agency has the option cy has the option of holding the appli- of sending the household either a no- cation pending for only 30 days fol- tice of denial or a notice of pending lowing the date of the initial request status on the 30th day. The option cho- for the particular verification that was sen may vary from one project area to missing. another, provided the same procedures (ii) If the household is found to be eli- apply to all households within a gible during the second 30-day period, project area. However, if a notice of de- the household shall be entitled to bene- nial is sent and the household takes fits retroactive to the month of appli- the required action within 60 days fol- cation. If, however, the household is lowing the date the application was found to be ineligible, the State agency filed, the State agency shall reopen the shall deny the application. case without requiring a new applica- (4) Delays beyond 60 days. (i) If the tion. No further action by the State State agency is at fault for not com- agency is required after the notice of pleting the application process by the denial or pending status is sent if the end of the second 30-day period, and the household failed to take the required case file is otherwise complete, the action within 60 days following the State agency shall continue to process date the application was filed, or if the the original application until an eligi- State agency chooses the option of bility determination is reached. If the holding the application pending for household is determined eligible, and only 30 days following the date of the the State agency was at fault for the initial request for the particular delay in the initial 30 days, the house- verification that was missing, and the hold shall receive benefits retroactive household fails to provide the nec- to the month of application. However, essary verification by this 30th day. if the initial delay was the household’s (B) State agencies may include in the fault, the household shall receive bene- notice a request that the household re- fits retroactive only to the month fol- port all changes in circumstances since lowing the month of application. The it filed its application. The informa- State agency may use the original ap- tion that must be contained on the no- plication to determine the household’s tice of denial or pending status is ex- eligibility in the months following the plained in § 273.10(g)(1) (ii) and (iii). 60-day period, or it may require the (ii) If the household was at fault for household to file a new application. the delay in the first 30-day period, but (ii) If the State agency is at fault for is found to be eligible during the sec- not completing the application process ond 30-day period, the State agency by the end of the second 30-day period, shall provide benefits only from the but the case file is not complete month following the month of applica- enough to reach an eligibility deter- tion. The household is not entitled to mination, the State agency may con- benefits for the month of application tinue to process the original applica- when the delay was the fault of the tion, or deny the case and notify the household. household to file a new application. If (3) Delays caused by the State agency. the case is denied, the household shall (i) Whenever a delay in the initial 30- also be advised of its possible entitle- day period is the fault of the State ment to benefits lost as a result of

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State agency caused delays in accord- (2) Identifying households needing ex- ance with § 273.17. If the State agency pedited service. The State agency’s ap- was also at fault for the delay in the plication procedures shall be designed initial 30 days, the amount of benefits to identify households eligible for expe- lost would be calculated from the dited service at the time the household month of application. If, however, the requests assistance. For example, a re- household was at fault for the initial ceptionist, volunteer, or other em- delay, the amount of benefits lost ployee shall be responsible for screen- would be calculated from the month ing applications as they are filed or as following the month of application. individuals come in to apply. (iii) If the household is at fault for (3) Processing standards. All house- not completing the application process holds receiving expedited service, ex- by the end of the second 30-day period, cept those receiving it during months the State agency shall deny the appli- in which allotments are suspended or cation and require the household to file cancelled, shall have their cases proc- a new application if it wishes to par- essed in accordance with the following ticipate. If however, the State agency provisions. Those households receiving has chosen the option of holding the expedited service during suspensions or application pending only until 30 days cancellations shall have their cases following the date of the initial request processed in accordance with the provi- for the particular verification that was sions of § 271.7(e)(2). missing, and verification is not re- (i) General. For households entitled ceived by that 30th day, the State to expedited service, the State agency agency may immediately close the ap- shall make available to the recipient plication. A notice of denial need not coupons or an ATP card not later than be sent if the notice of pending status the seventh calendar day following the informed the household that it would date an application was filed. For a have to file a new application if resident of a public institution who ap- verification was not received within 30 plies for benefits prior to his/her re- days of the initial request. The house- lease from the institution in accord- hold shall not be entitled to any lost ance with § 273.1(e)(2) and who is enti- benefits, even if the delay in the initial tled to expedited service, the date of 30 days was the fault of the State agen- filing of his/her food stamp application cy. is the date of release of the applicant from the institution. Whatever system (i) Expedited service—(1) Entitlement to a State agency uses to ensure meeting expedited service. The following house- this delivery standard shall be designed holds are entitled to expedited service: to allow a reasonable opportunity for (i) Households with less than $150 in redemption of ATPs no later than the monthly gross income, as computed in seventh calendar day following the day § 273.10 provided their liquid resources the application was filed. (i.e., cash on hand, checking or savings (ii) Drug addicts and alcoholics, group accounts, savings certificates, and living arrangement facilities. For resi- lump sum payments as specified in dents of drug addiction or alcoholic § 273.9(c)(8)) do not exceed $100; treatment and rehabilitation centers (ii) Migrant or seasonal farmworker and residents of group living arrange- households who are destitute as defined ments who are entitled to expedited in § 273.10(e)(3) provided their liquid re- service, the State agency shall make sources (i.e., cash on hand, checking or available to the recipient coupons or savings accounts, savings certificates, an ATP card not later than the 7 cal- and lump sum payments as specified in endar days following the date an appli- § 273.9(c)(8)) do not exceed $100; cation was filed. (iii) Households whose combined (iii) Out-of-office interviews. If a monthly gross income and liquid re- household is entitled to expedited serv- sources are less than the household’s ice and is also entitled to a waiver of monthly rent or mortgage, and utili- the office interview, the State agency ties (including entitlement to a SUA, shall conduct the interview (unless the as appropriate, in accordance with household cannot be reached) and com- § 273.9(d)). plete the application process within

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the expedited service standards. The available documentary evidence. How- first day of this count is the calendar ever, benefits shall not be delayed be- day following application filing. If the yond the delivery standards prescribed State agency conducts a telephone in paragraph (i)(3) of this section, sole- interview and must mail the applica- ly because these eligibility factors tion to the household for signature, the have not been verified. mailing time involved will not be cal- State agencies also may verify factors culated in the expedited service stand- other than identity, residency, and in- ards. Mailing time shall only include come provided that verification can be the days the application is in the mail accomplished within expedited proc- to and from the household and the days essing standards. State agencies should the application is in the household’s attempt to obtain as much additional possession pending signature and mail- verification as possible during the ing. interview, but should not delay the cer- (iv) Late determinations. If the tification of households entitled to ex- prescreening required in paragraph pedited service for the full timeframes (i)(2) of this section fails to identify a specified in paragraph (i)(3) of this sec- household as being entitled to expedited service and the State agency sub- tion when the State agency has deter- sequently discovers that the household mined it is unlikely that other is entitled to expedited service, the verification can be obtained within State agency shall provide expedited these timeframes. Households entitled service to households within the proc- to expedited service will be asked to essing standards described in para- furnish a social security number for graphs (i)(3) (i) and (ii) of this section, each person applying for benefts or except that the processing standard apply for one for each person applying shall be calculated from the date the for benefits before the second full State agency discovers the household month of participation. Those house- is entitled to expedited service. hold members unable to provide the re- (v) Residents of shelters for battered quired SSN’s or who do not have one women and children. Residents of shel- prior to the second full month of par- ters for battered women and children ticipation shall be allowed to continue who are otherwise entitled to expedited to participate only if they satisfy the service shall be handled in accordance good cause requirements with respect with the time limits in paragraph to SSN’s specified in § 273.6(d), except (i)(3)(i) of this section. that households with a newborn may (4) Special procedures for expediting have up to 6 months following the service. The State agency shall use the month the baby was born to supply an following procedures when expediting SSN or proof of an application for an certification and issuance: SSN for the newborn in accordance (i) In order to expedite the certifi- with § 273.6(b)(4). The State agency may cation process, the State agency shall attempt to register other household use the following procedures: members but shall postpone the reg- (A) In all cases, the applicant’s iden- istration of other household members tity (i.e., the identity of the person if it cannot be accomplished within the making the application) shall be expedited service timeframes. With reverified through a collateral contact or gard to the work registration require- readily available documentary evi- ments specified in § 273.7, the State dence as specified in paragraph (f)(1) of agency shall, at a minimum, require this section. the applicant to register (unless ex- (B) All reasonable efforts shall be empt or unless the household has des- made to verify within the expedited ignated an authorized representative to processing standards, the household’s apply on its behalf in accordance with residency in accordance with § 273.1(f)). The State agency may at- § 273.2(f)(1)(vi), income statement (in- tempt registration of other household cluding a statement that the household members by requesting that the appli- has no income), liquid resources and all cant complete the work registration other factors required by § 273.2(f), forms for other household members to through collateral contacts or readily the best of his or her ability. The State

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agency may also attempt to accom- isfy all verification requirements that plish work registration for other were postponed. For subsequent household members in a timely manner months, the household must reapply through other means, such as calling and satisfy all verification require- the household. The State agency may ments which were postponed or be cer- attempt to verify questionable work tified under normal processing stand- registration exemptions, but such ards. If the household does not satisfy verification shall be postponed if the the postponed verification require- expedited service timeframes cannot be ments and does not appear for the met. interview, the State agency does not (ii) Once an acceptable collateral need to contact the household again. contact has been designated, the State (B) For households applying after the agency shall promptly contact the col- 15th of the month, the State agency lateral contact, in accordance with the may assign a 2-month certification pe- provisions of paragraph (f)(4)(ii) of this riod or a normal certification period of section. Although the household has no more than 12 months. Verification the primary responsibility for pro- may be postponed until the third viding other types of verification, the month of participation, if necessary, to State agency shall assist the household meet the expedited timeframe. If a in promptly obtaining the necessary two-month certification period is as- verification. signed, the notice of eligibility may be (iii) Households that are certified on combined with the notice of expiration an expedited basis and have provided or a separate notice may be sent. The all necessary verification required in notice of eligibility must explain that paragraph (f) of this section prior to the household is obligated to satisfy certification shall be assigned normal the verification requirements that certification periods. If verification were postponed. For subsequent was postponed, the State agency may months, the household must reapply certify these households for the month and satisfy the verification require- of application (the month of applica- ments which were postponed or be cer- tion and the subsequent month for tified under normal processing stand- those households applying after the ards. If the household does not satisfy 15th of the month) or, at the State the postponed verification require- agency’s option, may assign normal ments and does not attend the inter- certification periods to those house- view, the State agency does not need to holds whose circumstances would oth- contact the household again. When a erwise warrant longer certification pe- certification period of longer than 2 riods. State agencies, at their option, months is assigned and verification is may request any household eligible for postponed, households must be sent a expedited service which applies after notice of eligibility advising that no the 15th of the month and is certified benefits for the third month will be for the month of application and the issued until the postponed verification subsequent month only to submit a requirements are satisfied. The notice second application (at the time of the must also advise the household that if initial certification) if the household’s the verification process results in verification is postponed. changes in the household’s eligibility (A) For households applying on or be- or level of benefits, the State agency fore the 15th of the month, the State will act on those changes without ad- agency may assign a one-month certifi- vance notice of adverse action. cation period or assign a normal cer- (C) Households which apply for ini- tification period. Satisfaction of the tial benefits (as described in § 273.10(a)) verification requirements may be post- after the 15th of the month, are enti- poned until the second month of par- tled to expedited service, have com- ticipation. If a one-month certification pleted the application process, and period is assigned, the notice of eligi- have been determined eligible to re- bility may be combined with the notice ceive benefits for the initial month and of expiration or a separate notice may the next subsequent month, shall re- be sent. The notice of eligibility must ceive a combined allotment consisting explain that the household has to sat- of prorated benefits for the initial

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month of application and benefits for sistance (PA) of their right to apply for the first full month of participation food stamp benefits at the same time within the expedited service time- and must allow them to apply for food frame. If necessary, verification shall stamp benefits at the same time they be postponed to meet the expedited apply for PA benefits. The State agen- timeframe. The benefits shall be issued cy must also notify such households in accordance with § 274.2(c) of this that time limits or other requirements chapter. that apply to the receipt of PA benefits (D) The provisions of paragraph do not apply to the receipt of food (i)(4)(iii)(C) of this section do not apply stamp benefits, and that households to households which have been deter- which cease receiving PA benefits be- mined ineligible to receive benefits for cause they have reached a time limit, the month of application or the fol- have begun working, or for other rea- lowing month, or to households which sons, may still qualify for food stamp have not satisfied the postponed benefits. If the State agency attempts verification requirements. However, to discourage households from applying households eligible for expedited serv- for cash assistance, it shall make clear ice may receive benefits for the initial that the disadvantages and require- month and next subsequent month ments of applying for cash assistance under the verification standards of do not apply to food stamps. In addi- paragraph (i)(4) of this section. tion, it shall encourage applicants to (E) If the State agency chooses to ex- continue with their application for ercise the option to require a second food stamps. The State agency shall in- application in accordance with para- form households that receiving food graph (i)(4)(iii) of this section and re- stamps will have no bearing on any ceives the application before the third other program’s time limits that may month, it shall not deny the applica- apply to the household. The State tion but hold it pending until the third agency may process the applications of month. The State agency will issue the such households in accordance with the third month’s benefits within 5 work- requirements of paragraph (j)(1) of this ing days from receipt of the necessary section, and the State agency must verification information but not before base their eligibility solely on food the first day of the month. If the post- stamp eligibility criteria unless the poned verification requirements are household is categorically eligible, as not completed before the end of the provided in paragraph (j)(2) of this sec- third month, the State agency shall tion. If a State has a single Statewide terminate the household’s participa- GA application form, households in tion and shall issue no further benefits. which all members are included in a (iv) There is no limit to the number State or local GA grant may have their of times a household can be certified application for food stamps included in under expedited procedures, as long as the GA application form. State agen- prior to each expedited certification, cies may use the joint application the household either completes the processing procedures described in verification requirements that were paragraph (j)(1) of this section for GA postponed at the last expedited certifi- recipients in accordance with para- cation or was certified under normal graph (j)(3) of this section. The State processing standards since the last ex- agency must base eligibility of jointly pedited certification. The provisions of processed GA households solely on food this section shall not apply at recertifi- stamp eligibility criteria unless the cation if a household reapplies before household is categorically eligible as the end of its current certification pe- provided in paragraph (j)(4) of this sec- riod. tion. The State agency must base the (v) Households requesting, but not benefit levels of all households solely entitled to, expedited service shall on food stamp criteria. The State agen- have their applications processed ac- cy must certify jointly processed and cording to normal standards. categorically eligible households in ac- (j) PA, GA and categorically eligible cordance with food stamp procedural, households. The State agency must no- timeliness, and notice requirements, tify households applying for public as- including the 7-day expedited service

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provisions of paragraph (i) of this sec- household has provided the State agen- tion and normal 30-day application cy sufficient verification to meet the processing standards of paragraph (g) verification requirements of para- of this section. Individuals authorized graphs (f)(1) through (f)(8) of this sec- to receive PA, SSI, or GA benefits but tion, but has failed to provide suffi- who have not yet received payment are cient verification to meet the PA considered recipients of benefits from verification rules, the State agency those programs. In addition, individ- may not use such failure as a basis for uals are considered recipients of PA, denying the household’s food stamp ap- SSI, or GA if their PA, SSI, or GA ben- plication or failing to comply with efits are suspended or recouped. Indi- processing requirements of paragraph viduals entitled to PA, SSI, or GA ben- (g) of this section. Under these cir- efits but who are not paid such benefits cumstances, the State agency must because the grant is less than a min- process the household’s food stamp ap- imum benefit are also considered re- plication and determine eligibility cipients. The State agency may not based on its compliance with the reconsider as recipients those individuals quirements of paragraphs (f)(1) through not receiving GA, PA, or SSI benefits (f)(8) of this section. who are entitled to Medicaid only. (iv) In order to determine if a house- (1) Applicant PA households. (i) If a hold will be eligible due to its status as joint PA/food stamp application is a recipient PA/SSI household, the used, the application may contain all State agency may temporarily post- the information necessary to deter- pone, within the 30-day processing mine a household’s food stamp eligibility and level of benefits. Informa- standard, the food stamp eligibility de- tion relevant only to food stamp eligi- termination if the household is not en- bility must be contained in the PA titled to expedited service and appears form or must be an attachment to it. to be categorically eligible. However, The joint PA/food stamp application the State agency shall postpone deny- must clearly indicate that the house- ing a potentially categorically eligible hold is providing information for both household until the 30th day in case programs, is subject to the criminal the household is determined eligible to penalties of both programs for making receive PA benefits. Once the PA appli- false statements, and waives the notice cation is approved, the household is to of adverse action as specified in para- be considered categorically eligible if graph (j)(1)(iv) of this section. it meets all the criteria concerning (ii) The State agency may conduct a categorical eligibility in § 273.2(j)(2). If single interview at initial application the State agency can anticipate the for both public assistance and food amount and the date of receipt of the stamp purposes. A household’s eligi- initial PA payment, but the payment bility for food stamp out-of-office will not be received until a subsequent interview provisions in paragraph (e)(2) month, the State agency shall vary the of this section does not relieve the household’s food stamp benefit level household of any responsibility for a according to the anticipated receipt of face-to-face interview to be certified the payment and notify the household. for PA. Portions of initial PA payments in- (iii) For households applying for both tended to retroactively cover a pre- PA and food stamps, the State agency vious month shall be disregarded as must follow the verification procedures lump sum payments under § 273.9(c)(8). described in paragraphs (f)(1) through If the amount or date of receipt of the (f)(8) of this section for those factors of initial PA payment cannot be reason- eligibility which are needed solely for ably anticipated at the time of the food purposes of determining the house- stamp eligibility determination, the hold’s eligibility for food stamps. For PA payments shall be handled as a those factors of eligibility which are change in circumstances. However, the needed to determine both PA eligi- State agency is not required to send a bility and food stamp eligibility, the notice of adverse action if the receipt State agency may use the PA of the PA grant reduces, suspends or verification rules. However, if the terminates the household’s food stamp

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benefits, provided the household is no- or after December 23, 1985. Any house- tified in advance that its benefits may hold that is determined to be eligible be reduced, suspended, or terminated to receive PA benefits for a period of when the grant is received. The case time within the 30-day food stamp may be terminated if the household is processing time, shall be provided food not categorically eligible in accordance stamp benefits back to the date of the with § 273.12(c). The State agency shall food stamp application. However, in no ensure that the denied application of a event shall food stamp benefits be paid potentially categorically eligible for a month for which such household household is easily retrievable. For a is ineligible for receipt of any PA bene- household filing a joint application for fits for the month, unless the house- food stamps and PA benefits or a hold is eligible for food stamp benefits household that has a PA application and an NPA case. Benefits shall be pro- pending and is denied food stamps but rated in accordance with is later determined eligible to receive § 273.10(a)(1)(ii) and (e)(2)(ii)(B). House- PA benefits and is otherwise categori- hold that file joint applications that cally eligible, the State agency shall are found categorically eligible after provide benefits using the original ap- being denied NPA food stamps shall plication and any other pertinent in- have their benefits for the initial formation occurring subsequent to that month prorated from the date from application. Except for residents of which the PA benefits are payable, or public institutions who apply jointly the date of the original food stamp ap- for SSI and food stamp benefits prior plication, whichever is later. The State to their release from a public institu- agency shall act on reevaluating the tion in accordance with § 273.1(e)(2), original application either at the benefits shall be paid from the begin- household’s request or when it becomes ning of the period for which PA or SSI otherwise aware of the household’s PA benefits are paid, the original food and/or SSI eligibility. The household stamp application date, or December shall be informed on the notice of de- 23, 1985 whichever is later. Residents of nial required by § 273.10(g)(1)(ii) to no- public institutions who apply jointly tify the State agency if its PA or SSI for SSI and food stamp benefits prior benefits are approved. to their release from the institution (v) The State agency may not require shall be paid benefits from the date of households which file a joint PA/food their release from the institution. In stamp application and whose PA appli- situations where the State agency cations are denied to file new food must update and reevaluate the origi- stamp applications. Rather, the State nal application of a denied case, the agency must determine or continue State agency shall not reinterview the their food stamp eligibility on the household, but shall use any available basis of the original applications filed information to update the application. jointly for PA and food stamp pur- The State agency shall then contact poses. In addition, the State agency the household by phone or mail to ex- must use any other documented infor- plain and confirm changes made by the mation obtained subsequent to the ap- State agency and to determine if other plication which may have been used in changes in household circumstances the PA determination and which is rel- have occurred. If any information ob- evant to food stamp eligibility or level tained from the household differs from of benefits. that which the State agency obtained (2) Categorically eligible PA and SSI from available information or the households. (i) The following house- household provided additional changes holds are categorically eligible for food in information, the State agency shall stamps unless the entire household is arrange for the household or it author- institutionalized as defined in § 273.1(e) ized representative to initial all or disqualified for any reason from re- changes, re-sign and date the updated ceiving food stamps. application and provide necessary (A) Any household (except those list- verification. In no event can benefits ed in paragraph (j)(2)(vii) of this sec- be provided prior to the date of the tion) in which all members receive or original food stamp application filed on are authorized to receive cash through

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a PA program funded in full or in part are authorized to receive non-cash or with Federal money under Title IV-A in-kind services from a program that is or with State money counted for main- less than 50 percent funded with State tenance of effort (MOE) purposes under money counted for MOE purposes Title IV-A; under Title IV-A or Federal money (B) Any household (except those list- under Title IV-A and that is designed ed in paragraph (j)(2)(vii) of this sec- to further purposes one and two of the tion) in which all members receive or TANF block grant, as set forth in Sec- are authorized to receive non-cash or tion 401 of P.L. 104–193. States must in- in-kind benefits or services from a pro- form FNS of the TANF services under gram that is more than 50 percent this paragraph that they are deter- funded with State money counted for mining to confer categorical eligi- MOE purposes under Title IV-A or Fed- bility. eral money under Title IV-A and that (B) Subject to FNS approval, any is designed to forward purposes one and household (except those listed in para- two of the TANF block grant, as set graph (j)(2)(vii) of this section) in forth in Section 401 of P.L. 104–193. which all members receive or are au- (C) Any household (except those list- thorized to receive non-cash or in-kind ed in paragraph (j)(2)(vii) of this sec- services from a program that is less tion) in which all members receive or than 50 percent funded with State are authorized to receive non-cash or money counted for MOE purposes in-kind benefits or services from a pro- under Title IV-A or Federal money gram that is more than 50 percent under Title IV-A and that is designed funded with State money counted for to further purposes three and four of MOE purposes under Title IV-A or Fed- the TANF block grant, as set forth in eral money under Title IV-A and that Section 401 of P.L 104–193, and requires is designed to further purposes three participants to have a gross monthly and four of the TANF block grant, as income at or below 200 percent of the set forth in Section 401 of P.L. 104–193, Federal poverty level. and requires participants to have a (iii) Any household in which one gross monthly income at or below 200 member receives or is authorized to re- percent of the Federal poverty level. ceive benefits according to paragraphs (D) Any household in which all mem- (j)(2)(i)(B), (j)(2)(i)(C), (j)(2)(ii)(A) and bers receive or are authorized to re- (j)(2)(ii)(B), of this section and the ceive SSI benefits, except that resi- State agency determines that the dents of public institutions who apply whole household benefits. jointly for SSI and food stamp benefits (iv) For purposes of paragraphs prior to their release from the institu- (j)(2)(i), (j)(2)(ii),and (j)(2)(iii) of this tion in accordance with § 273.1(e)(2), are section, ‘‘authorized to receive’’ means not categorically eligible upon a find- that an individual has been determined ing by SSA of potential SSI eligibility eligible for benefits and has been noti- prior to such release. The State agency fied of this determination, even if the must consider the individuals categori- benefits have been authorized but not cally eligible at such time as SSA received, authorized but not accessed, makes a final SSI eligibility and the suspended or recouped, or not paid be- institution has released the individual. cause they are less than a minimum (E) Any household in which all mem- amount. bers receive or are authorized to re- (v) The eligibility factors which are ceive PA and/or SSI benefits in accord- deemed for food stamp eligibility with- ance with paragraphs (j)(2)(i)(A) out the verification required in para- through (j)(2)(i)(D) of this section. graph (f) of this section because of PA/ (ii) The State agency, at its option, SSI status are the resource, gross and may extend categorical eligibility to net income limits; social security num- the following households only if doing ber information, sponsored alien infor- so will further the purposes of the Food mation, and residency. However, the Stamp Act: State agency must collect and verify (A) Any household (except those list- factors relating to benefit determina- ed in paragraph (j)(2)(vii) of this section that are not collected and verified tion) in which all members receive or by the other program if these factors

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are required to be verified under para- § 273.11(c)) and cannot be reinstated in graph (f) of this section. If any of the the Program on the basis of categorical following factors are questionable, the eligibility provisions. State agency must verify, in accord- (ix) No person shall be included as a ance with paragraph (f) of this section, member in any household which is oth- that the household which is considered erwise categorically eligible if that categorically eligible: person is: (A) Contains only members that are (A) An ineligible alien as defined in PA or SSI recipients as defined in the § 273.4; introductory paragraph (j) of this sec- (B) Ineligible under the student pro- tion; (B) Meets the household definition in visions in § 273.5; § 273.1(a); (C) An SSI recipient in a cash-out (C) Includes all persons who purchase State as defined in § 273.20; or and prepare food together in one food (D) Institutionalized in a nonexempt stamp household regardless of whether facility as defined in § 273.1(e). or not they are separate units for PA (E) Ineligible because of failure to or SSI purposes; and comply with a work requirement of (D) Includes no persons who have § 273.7. been disqualified as provided for in (x) For the purposes of work registra- paragraph (j)(2)(vi) of this section. tion, the exemptions in § 273.7(b) shall (vi) Households subject to retrospec- be applied to individuals in categori- tive budgeting that have been sus- cally eligible households. Any such in- pended for PA purposes as provided for dividual who is not exempt from work in Temporary Assistance for Needy registration is subject to the other Families (TANF) regulations, or that work requirements in § 273.7. receive zero benefits shall continue to (xi) When determining eligibility for be considered as authorized to receive a categorically eligible household all benefits from the appropriate agency. provisions of this subchapter except for Categorical eligibility shall be assumed at recertification in the absence of a those listed below shall apply: timely PA redetermination. If a recer- (A) Section 273.8 except for the last tified household is subsequently termi- sentence of paragraph (a). nated from PA benefits, the procedures (B) Section 273.9(a) except for the in § 273.12(f)(3), (4), and (5) shall be fol- fourth sentence in the introductory lowed, as appropriate. paragraph. (vii) Under no circumstances shall (C) Section 273.10(a)(1)(i). any household be considered categori- (D) Section 273.10(b). cally eligible if: (E) Section 273.10(c) for the purposes (A) Any member of that household is of eligibility. disqualified for an intentional Program (3) Applicant GA households. (i) State violation in accordance with § 273.16 or agencies may use the joint application for failure to comply with monthly reprocessing procedures in paragraph porting requirements in accordance (j)(1) of this section for GA households, with § 273.21; except for the effective date of categor- (B) The entire household is disquali- ical eligibility, when the criteria in fied because one or more of its members failed to comply with workfare in paragraphs (j)(3)(i) (A) and (B) of this accordance with § 273.22; or section are met. Benefits for GA house- (C) The head of the household is dis- holds that are categorically eligible, as qualified for failure to comply with the provided in paragraph (j)(4) of this sec- work requirements in accordance with tion, shall be provided from the date of § 273.7. the original food stamp application, (D) Any member of that household is the beginning of the period for which ineligible under § 273.11(m) by virtue of GA benefits are authorized, or the ef- a conviction for a drug-related felony. fective date of State GA categorical (viii) These households are subject to eligibility (February 1, 1991) or local all food stamp eligibility and benefits GA categorical eligibility (August 1, provisions (including the provisions of 1992), whichever is later:

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(A) The State agency administers a the period for which the assistance is GA program which uses formalized ap- provided. plication procedures and eligibility cri- (A) The program must have income teria that test levels of income and re- standards which do not exceed the sources; and, gross income eligibility standard in (B) Administration of the GA pro- § 273.9(a)(1). The rules of the GA program is integrated with the adminis- gram apply in determining countable tration of the PA or food stamp pro- income. grams, in that the same eligibility (B) The program must provide GA workers process applications for GA benefits as defined in § 271.2 of this benefits and PA or food stamp benefits. part. (ii) State agencies in which different (C) The program must provide bene- eligibility workers process applications fits which are not limited to one-time for GA benefits and PA or food stamp emergency assistance. benefits, but procedures otherwise (ii) Verification requirements. In deter- meet the criteria in paragraph (j)(3)(i) mining whether a household is cat- of this section may, with FNS ap- egorically eligible, the State agency proval, jointly process GA and food shall verify that each member receives stamp applications. If approved, State PA benefits, SSI, or GA from a pro- agencies shall adhere to the joint ap- gram that meets the criteria in para- plication processing procedures in graph (j)(4)(i) section or that has been paragraph (j)(1) of this section, except certified by FNS as an appropriate pro- for the effective date of categorical eligibility for GA households. Benefits gram and that it includes no individ- shall be provided GA households that uals who have been disqualified as pro- are categorically eligible, as provided vided in paragraph (j)(4)(iv) or (j)(2)(v) in paragraph (j)(4) of this section, from of this section. The State agency shall the date of the original food stamp ap- also verify household composition if it plication, the beginning of the period is questionable, in accordance with for which GA benefits are authorized, § 273.2(f), in order to determine that the or the effective date of State GA cat- household meets the definition of a egorical eligibility (February 1, 1992) or household in § 273.1(a). local GA categorical eligibility (Au- (iii) Deemed eligibility factors. When gust 1, 1992), whichever is later. determining eligibility for a categori- (4) Categorically eligible GA households. cally eligible household, all Food Households in which each member re- Stamp Program requirements apply ex- ceives benefits from a State or local cept the following: GA program which meets the criteria (A) Resources. None of the provisions for conferring categorical eligibility in of § 273.8 apply to categorically eligible paragraph (j)(4)(i) of this section shall households except the second sentence be categorically eligible for food of § 273.8(a) pertaining to categorical stamps unless the individual or house- eligibility and § 273.8(i) concerning hold is ineligible as specified in para- transfer of resources. The provision in graph (j)(4)(iv) and (j)(4)(v) of this sec- § 273.10(b) regarding resources available tion. the time of the interview does not (i) Certification of qualifying programs. apply to categorically eligible house- Recipients of benefits from programs holds. that meet the criteria in paragraphs (B) Gross and net income limits. None (j)(4)(i)(A) through (j)(4(i)(C) of this of the provisions in § 273.9(a) relating to section shall be considered categori- income eligibility standards apply to cally eligible to receive benefits from categorically eligible households, ex- the Food Stamp Program. If a program cept the fourth sentence pertaining to does not meet all of these criteria, the categorical eligibility. The provisions State agency may submit a program in §§ 273.10(a)(1)(i) and 273.10(c) relating description to the appropriate FNS re- to the income eligibility determination gional office for a determination. The also do not apply to categorically eligi- description should contain, at a min- ble households. imum, the type of assistance provided, (C) Zero benefit households. All eligi- the income eligibility standard, and ble households of one or two persons

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must be provided the minimum benefit, (5) Households with some PA or GA re- as required by § 273.10(e)(2)(ii)(C). cipients. State agencies that use the (D) Residency. joint application processing procedures (E) Sponsored alien information. in paragraphs (j)(1) and (j)(3) of this (iv) Ineligible household members. No section may apply these procedures to person shall be included as a member of a food stamp applicant household in an otherwise categorically eligible which some, but not all, members are household if that person is: in the PA/GA filing unit, except for (A) An ineligible alien, as defined in procedures concerning categorical eli- § 273.4; gibility. If the State agency decides (B) An ineligible student, as defined not to use the joint application proce- in § 273.5; dures for these households, the house- (C) Disqualified for failure to provide holds shall file separate applications or apply for an SSN, as required by for PA/GA and food stamp benefits. § 273.6; This decision shall not be made on a (D) A household member, not the case-by-case basis, but shall be applied head of household, disqualified for fail- uniformly to all households of this ure to comply with a work requirement type in a project area. of § 273.7; (k) SSI households. For purposes of (E) Disqualified for intentional pro- this paragraph, SSI is defined as Fed- gram violation, as required by § 273.16; eral SSI payments made under title (F) An SSI recipient in a cash-out XVI of the Social Security Act, feder- State, as defined in § 273.20; or ally administered optional supple- (G) An individual who is institu- mentary payments under section 1616 tionalized in a nonexempt facility, as of that Act, or federally administered defined in § 273.1(e). mandatory supplementary payments (v) Ineligible households. A household made under section 212(a) of Pub. L. 93– shall not be considered categorically 66. Except in cashout States (§ 273.20), eligible if: households which have not applied for (A) It refuses to cooperate in pro- food stamps in the thirty preceding viding information to the State agency days, and which do not have applica- that is necessary for making a deter- tions pending, may apply and be cer- mination of its eligibility or for com- tified for food stamp benefits in accord- pleting any subsequent review of its ance with the procedures described in eligibility, as described in §§ 273.2(d) § 273.2(k)(1)(i) or § 273.2(k)(1)(ii) and and 273.21(m)(1)(ii); with the notice, procedural and timeli- (B) The household is disqualified be- ness requirements of the Food Stamp cause the head of household fails to Act of 1977 and its implementing regu- comply with a work requirement of § 273.7; lations. Households applying simultaneously for SSI and food stamps shall (C) The household is ineligible under the striker provisions of § 273.1(g); or be subject to food stamp eligibility cri- (D) The household is ineligible be- teria, and benefit levels shall be based cause it knowingly transferred re- solely on food stamp eligibility criteria sources for the purpose of qualifying or until the household is considered cat- attempting to qualify for the Program, egorically eligible. However, house- as provided in § 273.8(i). holds in which all members are either (vi) Combination households. House- PA or SSI recipients or authorized to holds consisting entirely of recipients receive PA or SSI benefits (as dis- of PA, SSI and/or GA from a program cussed in § 273.2(j)) shall be food stamp that meets the requirements of eligible based on their PA/SSI status as § 273.2(j)(4)(i) shall be categorically eli- provided for in § 273.2(j)(1)(iv) and (j)(2). gible in accordance with the provisions Households denied NPA food stamps for paragraphs (j)(2)(iii) and (j)(2)(v) of that have an SSI application pending this section for members receiving PA shall be informed on the notice of de- and SSI or provisions of paragraphs nial of the possibility of categorical (j)(4) (iv) and (v) of this section for eligibility if they become SSI recipi- members receiving GA. ents. The State agency shall make an

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eligibility determination based on in- information to the State agency for formation provided by SSA or by the eligibility determination. Applications household. and accompanying information must (1) Initial application and eligibility de- be forwarded to the agreed upon ad- termination. At each SSA office, the dress in accordance with the time State agency shall either arrange for standards contained in SSA to complete and forward food § 273.2(k)(1)(i)(B). stamp applications, or the State agen- (F) Except for applications taken in cy shall outstation State food stamp accordance with paragraph (k)(1)(i)(D) eligibility workers at the SSA Offices of this section, the State agency shall with SSA’s concurrence, based upon an make an eligibility determination and agreement negotiated between the issue food stamp benefits to eligible State agency and the SSA. SSI households within 30 days fol- (i) If the State agency arranges with lowing the date the application was re- the SSA to complete and forward food ceived by the SSA. Applications shall stamp applications the following ac- be considered filed for normal proc- tions shall be taken: essing purposes when the signed appli- (A) Whenever a member of a house- cation is received by SSA. The expe- hold consisting only of SSI applicants dited processing time standards shall or recipients transacts business at an begin on the date the State agency re- SSA office, the SSA shall inform the ceives a food stamp application. The household of: State agency shall make an eligibility (1) Its right to apply for food stamps determination and issue food stamp at the SSA office without going to the benefits to a resident of a public insti- food stamp office; and tution who applies jointly for SSI and (2) Its right to apply at a food stamp food stamps within 30 days following office if it chooses to do so. the date of the applicant’s release from (B) The SSA will accept and com- the institution. Expedited processing plete food stamp applications received time standards for an applicant who at the SSA Office from SSI households has applied for food stamps and SSI and forward them, within one working prior to release shall also begin on the day after receipt of a signed applica- date of the applicant’s release from the tion, to a designated office of the State institution in accordance with § 273.2 agency. SSA shall also forward to the (i)(3)(i). SSA shall notify the State State agency a transmittal form which agency of the date of release of the ap- will be approved by SSA and FNS. The plicant from the institution. If, for any SSA will use the national food stamp reason, the State agency is not notified application form for joint processing. on a timely basis of the applicant’s re- State agencies may substitute a State lease date, the State agency shall re- food stamp application, provided that store benefits in accordance with prior approval is received from both § 273.17 to such applicant back to the FNS and SSA. SSA shall approve, date of release. Food stamp applica- deny, or comment upon FNS-approved tions and supporting documentation State food stamp applications within sent to an incorrect food stamp office thirty days of their submission to SSA. shall be sent to the correct office, by (C) SSA will accept and complete the State agency, within one working food stamp applications from SSI day of their receipt in accordance with households received by SSA staff in § 273.2(c)(2)(ii). contact stations. SSA will forward all (G) Households in which all members food stamp applications from SSI are applying for or participating in SSI households to the designated food will not be required to see a State eli- stamp office. gibility worker, or otherwise be sub- (D) The SSA staff shall complete jected to an additional State interview. joint SSI and food stamp applications The food stamp application will be for residents of public institutions in processed by the State agency. The accordance with § 273.1(e)(2). State agency shall not contact the (E) The State agency shall designate household further in order to obtain in- an address for the SSA to forward food formation for certification for food stamp applications and accompanying stamp benefits unless: the application

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is improperly completed; mandatory Stamp Program directly through the verification required by § 273.2(f)(1) is State agency. missing; or, the State agency deter- (L) If SSA takes an SSI application mines that certain information on the or redetermination on the telephone application is questionable. In no event from a member of a pure SSI house- would the applicant be required to ap- hold, a food stamp application shall pear at the food stamp office to finalize also be completed during the telephone the eligibility determination. Further interview. In these cases, the food contact made in accordance with this stamp application shall be mailed to paragraph shall not constitute a second the claimant for signature for return food stamp certification interview. to the SSA office or to the State agen- (H) SSA shall refer non-SSI house- cy. SSA shall then forward any food holds to the correct food stamp office. stamp applications it receives to the The State agencies shall process those State agency. The State agency may applications in accordance with the not require the household to be inter- procedures noted in § 273.2. Applica- tions from such households shall be viewed again in the food stamp office. considered filed on the date the signed The State agency shall not contact the application is taken at the correct household further in order to obtain in- State agency office, and the normal formation for certification for food and expedited processing time stand- stamp benefits except in accordance ards shall begin on that date. with § 273.2(k)(1)(i)(F). (I) The SSA shall prescreen all appli- (M) To SSI recipients redetermined cations for entitlement to expedited for SSI by mail, the SSA shall send a services on the day the application is stuffer informing them of their right to received at the SSA office and shall file a food stamp application at the mark ‘‘Expedited Processing’’ on the SSA office (if they are members of a first page of all households’ applica- pure SSI household) or at their local tions that appear to be entitled to such food stamp office, and their right to an processing. The SSA will inform house- out-of-office food stamp interview to be holds which appear to meet the criteria performed by the State agency if the for expedited service that benefits may household is unable to appoint an au- be issued a few days sooner if the thorized representative. household applies directly at the food (N) Section 272.4 bilingual require- stamp office. The household may take ments shall not apply to the Social Se- the application from SSA to the food curity Administration. stamp office for screening, an inter- (O) State agencies shall provide and view, and processing of the application. SSA shall distribute an information This provision does not apply to appli- sheet or brochure to all households cations described in paragraph processed under this paragraph. This (k)(1)(i)(D) of this section. material shall inform the household of (J) The State agency shall prescreen all applications received from the SSA the following: The address and tele- for entitlement to expedited service on phone number of the household’s cor- the day the application is received at rect food stamp office, the remaining the correct food stamp office. All SSI actions to be taken in the application households entitled to expedited serv- process, and a statement that a house- ice shall be certified in accordance hold should be notified of the food with § 273.2(i) except that the expedited stamp determinations within thirty processing time standard shall begin on days and can contact the food stamp the date the application is received at office if it receives no notification the correct State agency office, unless within thirty days, or has other ques- the applicant is a resident of a public tions or problems. It shall also include institution as described in § 273.1(e)(2). the client’s rights and responsibilities (K) The State agency shall develop (including fair hearings, authorized and implement a method to determine representatives, out-of-office inter- if members of SSI households whose views, reporting changes and timely re- applications are forwarded by the SSA application), information on how and are already participating in the Food where to obtain coupons, and how to

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use coupons (including the commod- (E) The State agency shall not refuse ities clients may purchase with cou- to provide service to persons served by pons). the SSA office because they do not re- (P) As part of the SSA-State agency side in the county or project area in joint food stamp processing agreement, which the SSA office is located, pro- States may negotiate, on behalf of vided, however, that they reside within project areas, to have SSA provide ini- the jurisdictions served by the SSA of- tial eligibility and payment data where fice and the State agency. The State the local area is unable to access accu- agency is not required to process the rate and timely data through the applications of persons who are not re- State’s SDX. However, in negotiating siding within the SSA office jurisdic- such agreements, SSA may challenge a tion but who do reside within the State State’s determination that it does not agency’s jurisdiction, other than to have the computer capability to use forward the forms to the correct food SDX data. If SSA, FNS, and the State stamp offices. are unable to resolve this matter, and (F) The State agency may permit the SSA determines that a State does have eligibility worker outstationed at the the capability to provide accurate and SSA to determine the eligibility of timely SDX data to the food stamp households, or may require that com- project area, SSA is not required to pleted applications be forwarded else- provide alternate means of transmit- where for the eligibility determination. ting initial SSI eligibility and payment (G) Applications from households en- data. titled to joint processing through an (ii) If the State agency chooses to outstationed eligibility worker shall be outstation eligibility workers at SSA considered filed on the date they are offices, with SSA’s concurrence, the submitted to that worker. Both the following actions shall be completed. normal and expedited service time (A) SSA will provide adequate space standards shall begin on that date. for State food stamp eligibility work- (H) Households not entitled to joint ers in SSA offices. (B) The State agency shall have at processing shall be entitled to obtain least one outstationed worker on duty and submit applications at the SSA of- at all time periods during which house- fice. The outstationed eligibility work- holds will be referred for food stamp er need not process these applications application processing. In most cases except to forward them to the correct this would require the availability of food stamp office where they shall be an outstationed worker throughout considered filed upon receipt (any ac- normal SSA business hours. tivities beyond acceptance and referral (C) The following households shall be of the application would require SSA entitled to file food stamp applications concurrence). Both the normal and ex- with, and be interviewed by an pedited service time standards shall outstationed eligibility worker: begin on that date. (1) Households containing an appli- (iii) Regardless of whether the State cant for or recipient of SSI; agency or SSA conducts the food stamp (2) Households which do not have an interview, the following actions shall applicant for or recipient of SSI, but be taken: which contain an applicant for or re- (A) Verification. (1) The State agency cipient of benefits under title II of the shall ensure that information required Social Security Act, if the State agen- by § 273.2(f) is verified prior to certifi- cy and SSA have an agreement to cation for households initially apply- allow the processing of such households ing. Households entitled to expedited at SSA offices. certification services shall be processed (D) Households shall be interviewed in accordance with § 273.2(i). for food stamps on the day of applica- (2) The State agency has the option tion unless there is insufficient time to of verifying SSI benefit payments conduct an interview. The State agen- through the State Data Exchange cy shall arrange for the outstationed (SDX), the Beneficiary Data Exchange worker to interview applicants as soon (BENDEX) and/or through verification as possible. provided by the household.

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(3) State agencies may verify other (3) The State agency shall process ad- information through SDX and justments to SSI cases resulting from BENDEX but only to the extent per- mass changes, in accordance with pro- mitted by data exchange agreements visions of § 273.12(e). with SSA. Information verified (D) SSI households applying at the food through SDX or BENDEX shall not be stamp office. The State agency shall reverified unless it is questionable. allow SSI households to submit food Households shall be given the oppor- stamp applications to local food stamp tunity to provide verification from an- offices rather than through the SSA if other source if all necessary informa- the household chooses. In such cases tion is not available on the SDX or the all verification, including that per- BENDEX, or if the SDX/BENDEX infor- taining to SSI program benefits, shall mation is contradictory to other be provided by the household, by SDX household information. or BENDEX, or obtained by the State (B) Certification period. (1) State agen- agency rather than being provided by cies shall certify households under the SSA. these procedures for up to twelve (E) Restoration of lost benefits. The months, according to the standards in State agency shall restore to the § 273.10(f), except for State agencies household benefits which were lost which must assign the initial certifi- whenever the loss was caused by an cation period to coincide with adjust- error by the State agency or by the So- ments to the SSI benefit amount as cial Security Administration through designated in § 273.10(f)(3)(iii). joint processing. Such an error shall (2) In cases jointly processed in which include, but not be limited to, the loss the SSI determination results in de- of an applicant’s food stamp applica- nial, and the State agency believes tion after it has been filed with SSA or that food stamp eligibility or benefit with a State agency’s outstationed levels may be affected, the State agen- worker. Lost benefits shall be restored cy shall send the household a notice of in accordance with § 273.17. expiration advising that the certifi- (2) Recertification. (i) The State agen- cation period will expire the end of the cy shall complete the application proc- month following the month in which ess and approve or deny timely applica- the notice is sent and that it must re- tions for recertification in accordance apply if it wishes to continue to par- with § 273.14 of the food stamp regula- ticipate. The notice shall also explain tions. A face-to-face interview shall be that its certification period is expiring waived if requested by a household con- because of changes in circumstances sisting entirely of SSI participants un- which may affect food stamp eligibility able to appoint an authorized rep- or benefit levels and that the house- resentative. The State agency shall hold may be entitled to an out-of-office provide SSI households with a notice of interview, in accordance with expiration in accordance with § 273.2(e)(2). § 273.14(b), except that such notification (C) Changes in circumstances. (1) shall inform households consisting en- Households shall report changes in ac- tirely of SSI recipients that they are cordance with the requirements in entitled to a waiver of a face-to-face § 273.12. The State agency shall process interview if the household is unable to changes in accordance with § 273.12. appoint an authorized representative. (2) Within ten days of learning of the (ii) Households shall be entitled to determination of the application for make a timely application (in accord- SSI through SDX, the household, ad- ance with § 273.14(b)(3)) for food stamp visement from SSA where SSA agrees recertification at an SSA office under to do so for households processed under the following conditions. § 273.2(k)(1)(i), or from any other (A) In SSA offices where source, the State agency shall take re- § 273.2(k)(1)(i) is in effect, SSA shall acquired action in accordance with cept the application of a pure SSI § 273.12. State agencies are encouraged household and forward the completed to monitor the results of the SSI deter- application, transmittal form and any mination through SDX and BENDEX to available verification to the designated the extent practical. food stamp office. Where SSA accepts

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and refers the application in such situ- ficulty completing the application ations, the household shall not be re- process, that a nonhousehold member quired to appear at a second office may be designated as the authorized interview, although the State agency representative for application proc- may conduct an out-of-office interview, essing purposes. The household mem- if necessary. ber or the authorized representative (B) In SSA offices where may complete work registration forms § 273.2(k)(1)(ii) is in effect, the for those household members required outstationed worker shall accept the to register for work. The authorized application and interview the recipient representative designated for applica- and the State agency shall process the tion processing purposes may also application according to § 273.14. carry out household responsibilities (l) Households applying for or receiving during the certification period, such as social security benefits. An applicant for reporting changes in the household’s or recipient of social security benefits income or other household cir- under title II of the Social Security cumstances in accordance with Act shall be informed at the SSA office §§ 273.12(a) and 273.21. Except for those of the availability of benefits under the situations in which a drug and alcohol Food Stamp Program and the avail- treatment center or other group living ability of a Food Stamp Program appli- arrangement acts as the authorized cation at the SSA office. The SSA of- representative, the State agency must fice is not required to accept applica- inform the household that the house- tions and conduct interviews for title hold will be held liable for any II applicants/recipients in the manner overissuance that results from erro- prescribed in § 273.2(k) for SSI appli- neous information given by the author- cants/recipients unless the State agen- ized representative. cy has chosen to outstation eligibility (i) A nonhousehold member may be workers at the SSA office and has an designated as an authorized representa- agreement with SSA to allow the proc- tive for the application process pro- essing of such households at SSA of- vided that the person is an adult who is fices. In these cases, processing shall be sufficiently aware of relevant house- in accordance with § 273.2(k)(1)(ii). hold circumstances and the authorized (m) Households where not all members representative designation has been are applying for or receiving SSI. An ap- made in writing by the head of the plicant for or recipient of SSI shall be household, the spouse, or another re- informed at the SSA office of the avail- sponsible member of the household. ability of benefits under the Food Paragraph (n)(4) of this section con- Stamp Program and the availability of tains further restrictions on who can a food stamp application at the SSA of- be designated an authorized represent- fice. The SSA office is not required to ative. accept applications or to conduct (ii) Residents of drug or alcohol interviews for SSI applicants or recipi- treatment centers must apply and be ents who are not members of house- certified through the use of authorized holds in which all are SSI applicants or representatives in accordance with recipients unless the State agency has § 273.11(e). Residents of group living ar- chosen to outstation eligibility work- rangements have the option to apply ers at the SSA office. In this case, and be certified through the use of au- processing shall be in accordance with thorized representatives in accordance § 273.2(k)(1)(ii). with § 273.11(f). (n) Authorized representatives. Rep- (2) Obtaining food stamp benefits. An resentatives may be authorized to act authorized representative may be des- on behalf of a household in the applica- ignated to obtain benefits. Even if the tion process, in obtaining food stamp household is able to obtain benefits, it benefits, and in using food stamp bene- should be encouraged to name an au- fits. thorized representative for obtaining (1) Application processing and report- benefits in case of illness or other cir- ing. The State agency shall inform ap- cumstances which might result in an plicants and prospective applicants inability to obtain benefits. The name that indicate that they may have dif- of the authorized representative must

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be recorded in the household’s case to obtain benefits on behalf of the record and on the food stamp identi- household. fication (ID) card, as provided in (C) If a State agency has determined § 274.10(a)(1) of this chapter. The au- that an authorized representative has thorized representative for obtaining knowingly provided false information benefits may or may not be the same about household circumstances or has individual designated as an authorized made improper use of coupons, it may representative for the application proc- disqualify that person from being an ess or for meeting reporting require- authorized representative for up to one ments during the certification period. year. The State agency must send writ- The State agency must develop a sys- ten notification to the affected house- tem by which a household may des- hold(s) and the authorized representa- ignate an emergency authorized rep- tive 30 days prior to the date of dis- resentative in accordance with qualification. The notification must § 274.10(c) of this chapter to obtain the specify the reason for the proposed ac- household’s benefits for a particular tion and the household’s right to re- month. quest a fair hearing. This provision is (3) Using benefits. A household may not applicable in the case of drug and allow any household member or non- alcoholic treatment centers and those member to use its ID card and benefits group homes which act as authorized to purchase food or meals, if author- representatives for their residents. ized, for the household. Drug or alcohol However, drug and alcohol treatment treatment centers and group living ar- centers and the heads of group living rangements which act as authorized arrangements that act as authorized representatives for residents of the fa- representatives for their residents, and cilities must use food stamp benefits which intentionally misrepresent for food prepared and served to those households circumstances, may be residents participating in the Food prosecuted under applicable Federal Stamp Program (except when residents and State statutes for their acts. leave the facility as provided in (D) Homeless meal providers, as de- § 273.11(e) and (f)). fined in § 271.2 of this chapter, may not (4) Restrictions on designations of au- act as authorized representatives for thorized representatives. (i) The State homeless food stamp recipients. agency must restrict the use of author- (ii) In order to prevent abuse of the ized representatives for purposes of ap- program, the State agency may set a plication processing and obtaining food limit on the number of households an stamp benefits as follows: authorized representative may represent. (A) State agency employees who are involved in the certification or (iii) In the event employers, such as issuance processes and retailers who those that employ migrant or seasonal are authorized to accept food stamp farmworkers, are designated as author- benefits may not act as authorized rep- ized representatives or that a single resentatives without the specific writ- authorized representative has access to a large number of authorization docu- ten approval of a designated State ments or coupons, the State agency agency official and only if that official should exercise caution to assure that determines that no one else is available each household has freely requested to serve as an authorized representa- the assistance of the authorized rep- tive. resentative, the household’s cir- (B) An individual disqualified for an cumstances are correctly represented, intentional Program violation cannot the household is receiving the correct act as an authorized representative amount of benefits and that the au- during the disqualification period, un- thorized representative is properly less the State agency has determined using the benefits. that no one else is available to serve as an authorized representative. The [Amdt. 132, 43 FR 47889, Oct. 17, 1978] State agency must separately deter- EDITORIAL NOTE: For FEDERAL REGISTER ci- mine whether the individual is needed tations affecting § 273.2, see the List of CFR to apply on behalf of the household, or Sections Affected, which appears in the

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Finding Aids section of the printed volume son is eligible to participate in the Pro- and on GPO Access. gram unless that person is: (1) A U.S. citizen 1; § 273.3 Residency. (2) A U.S. non-citizen national 1 (a) A household shall live in the (3) An individual who is: State in which it files an application (i) An American Indian born in Can- for participation. The State agency ada who possesses at least 50 per cen- may also require a household to file an tum of blood of the American Indian application for participation in a speci- race to whom the provisions of section fied project area (as defined in § 271.2 of 289 of the Immigration and Nationality this chapter) or office within the State. Act (INA) (8 U.S.C. 1359) apply; or No individual may participate as a (ii) A member of an Indian tribe as member of more than one household or defined in section 4(e) of the Indian in more than one project area, in any Self-Determination and Education As- month, unless an individual is a resi- sistance Act (25 U.S.C. 450b(e)) which is dent of a shelter for battered women recognized as eligible for the special and children as defined in § 271.2 and programs and services provided by the was a member of a household con- U.S. to Indians because of their status taining the person who had abused him as Indians; or her. Residents of shelters for battered women and children shall be han- (4) An individual who is: dled in accordance with § 273.11(g). The (i) Lawfully residing in the U.S. and State agency shall not impose any was a member of a Hmong or Highland durational residency requirements. The Laotian tribe at the time that the tribe State agency shall not require an oth- rendered assistance to U.S. personnel erwise eligible household to reside in a by taking part in a military or rescue permanent dwelling or have a fixed operation during the Vietnam era be- mailing address as a condition of eligi- ginning August 5, 1964, and ending May bility. Nor shall residency require an 7, 1975; intent to reside permanently in the (ii) The spouse, or surviving spouse of State or project area. Persons in a such Hmong or Highland Laotian who project area solely for vacation pur- is deceased, or poses shall not be considered residents. (iii) An unmarried dependent child of (b) When a household moves within such Hmong or Highland Laotian who the State, the State agency may re- is under the age of 18 or if a full-time quire the household to reapply in the student under the age of 22; an unmar- new project area or it may transfer the ried child under the age of 18 or if a full household’s casefile to the new project time student under the age of 22 of area and continue the household’s cer- such a deceased Hmong or Highland tification without reapplication. If the Laotian provided the child was depend- State agency chooses to transfer the ent upon him or her at the time of his case, it shall act on changes in house- or her death; or an unmarried disabled hold circumstances resulting from the child age 18 or older if the child was move in accordance with § 273.12(c) or disabled and dependent on the person § 273.21. It shall also ensure that dupli- prior to the child’s 18th birthday. For cate participation does not occur in ac- purposes of this paragraph (a)(4)(iii), cordance with § 272.4(f) of this chapter, child means the legally adopted or bio- and that the transfer of a household’s logical child of the person described in case shall not adversely affect the paragraph (a)(4)(i) of this section, or household. (5) An individual who is both a qualified alien as defined in paragraph [46 FR 60166, Dec. 8, 1981, as amended by (a)(5)(i) of this section and an eligible Amdt. 211, 47 FR 53317, Nov. 26, 1982; Amdt. 269, 51 FR 10785, Mar. 28, 1986; Amdt. 274, 51 alien as defined in paragraph (a)(5)(ii) FR 18750, May 21, 1986; Amdt. 364, 61 FR 54317, of this section. Oct. 17, 1996] (i) A qualified alien is:

§ 273.4 Citizenship and alien status. 1 For guidance, see the DOJ Interim Guid- (a) Household members meeting citizen- ance published November 17, 1997 (62 FR ship or alien status requirements. No per- 61344).

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(A) An alien who is lawfully admitted divorces prior to a determination of for permanent residence under the INA; food stamp eligibility. However, if the (B) An alien who is granted asylum State agency determines eligibility of under section 208 of the INA; an alien based on the quarters of cov- (C) A refugee who is admitted to the erage of the spouse, and then the cou- United States under section 207 of the ple divorces, the alien’s eligibility con- INA; tinues until the next recertification. (D) An alien who is paroled into the At that time, the State agency must U.S. under section 212(d)(5) of the INA determine the alien’s eligibility with- for a period of at least 1 year; out crediting the alien with the former (E) An alien whose deportation is spouse’s quarters of coverage. being withheld under section 243(h) of (2) After December 31, 1996, a quarter the INA as in effect prior to April 1, in which the alien actually received 1997, or whose removal is withheld any Federal means-tested public ben- under section 241(b)(3) of the INA; efit, as defined by the agency providing (F) an alien who is granted condi- the benefit, or actually received food tional entry pursuant to section stamps is not creditable toward the 40- 203(a)(7) of the INA as in effect prior to quarter total. Likewise, a parent’s or April 1, 1980; spouse’s quarter is not creditable if the (G) an alien who has been battered or parent or spouse actually received any subjected to extreme cruelty in the Federal means-tested public benefit or U.S. by a spouse or a parent or by a actually received food stamps in that member of the spouse or parent’s fam- quarter. The State agency must evalu- ily residing in the same household as ate quarters of coverage and receipt of the alien at the time of the abuse, an Federal means-tested public benefits alien whose child has been battered or on a calendar year basis. The State subjected to battery or cruelty, or an agency must first determine the num- alien child whose parent has been bat- ber of quarters creditable in a calendar tered 2; or year, then identify those quarters in (H) an alien who is a Cuban or Hai- which the alien (or the parent(s) or tian entrant, as defined in section spouse of the alien) received Federal 501(e) of the Refugee Education Assist- means-tested public benefits and then ance Act of 1980. remove those quarters from the num- (ii) A qualified alien, as defined in ber of quarters of coverage earned or paragraph (a)(5)(i) of this section, must credited to the alien in that calendar also be at least one of the following to year. However, if the alien earns the be eligible to receive food stamps: 40th quarter of coverage prior to apply- (A) An alien lawfully admitted for ing for food stamps or any other Fed- permanent residence under the INA eral means-tested public benefit in who has 40 qualifying quarters as de- that same quarter, the State agency termined under title II of the Social must allow that quarter toward the 40 Security Act, including qualifying qualifying quarters total. quarters of work not covered by Title (B) An alien admitted as a refugee II of the Social Security Act, based on under section 207 of the INA. Eligi- the sum of: quarters the alien worked; bility is limited to 7 years from the quarters credited from the work of a date of the alien’s entry into the U.S. parent of the alien before the alien be- (C) An alien granted asylum under came 18 (including quarters worked be- section 208 of the INA. Eligibility is fore the alien was born or adopted); and limited to 7 years from the date asy- quarters credited from the work of a lum was granted. spouse of the alien during their mar- (D) An alien whose deportation is riage if they are still married or the withheld under section 243(h) of the spouse is deceased. INA as in effect prior to April 1, 1997, or (1) A spouse may not get credit for whose removal is withheld under sec- quarters of a spouse when the couple tion 241(b)(3) or the INA. Eligibility is limited to 7 years from the date depor- 2 For guidance, see Exhibit B to Attach- tation or removal was withheld. ment 5 of the DOJ Interim Guidance pub- (E) An alien granted status as a lished on November 17, 1997 (62 FR 61344). Cuban or Haitian entrant (as defined in

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section 501(e) of the Refugee Education (I) An individual who on August 22, Assistance Act of 1980). Eligibility is 1996, was lawfully residing in the U.S., limited to 7 years from the date the and was born on or before August 22, status as a Cuban or Haitian entrant 1931; or was granted. (J) An individual who on August 22, (F) An Amerasian admitted pursuant 1996, was lawfully residing in the U.S. to section 584 of Public Law 100–202, as and is now under 18 years of age. amended by Public Law 100–461. Eligi- (iii) Each category of eligible alien bility is limited to 7 years from the status stands alone for purposes of de- date admitted as an Amerasian. termining eligibility. Subsequent ad- (G) An alien with one of the following justment to a more limited status does military connections: not override eligibility based on an ear- (1) A veteran who was honorably dis- lier less rigorous status. Likewise, if charged for reasons other than alien eligibility expires under one eligible status, who fulfills the minimum ac- status, the State agency must deter- tive-duty service requirements of 38 mine if eligibility exists under another U.S.C. 5303A(d), including an individual status. who died in active military, naval or (6) For purposes of determining eligi- air service. The definition of veteran ble alien status in accordance with includes an individual who served be- paragraphs (a)(4) and (a)(5)(ii)(H) fore July 1, 1946, in the organized mili- through (a)(5)(ii)(J) of this section tary forces of the Government of the ‘‘lawfully residing in the U.S.’’ means Commonwealth of the Philippines that the alien is lawfully present as de- while such forces were in the service of fined at 8 CFR 103.12(a). the Armed Forces of the U.S. or in the (b) Reporting illegal aliens. (1) The Philippine Scouts, as described in 38 State agency must inform the local U.S.C. 107; INS office immediately whenever per- (2) An individual on active duty in sonnel responsible for the certification the Armed Forces of the U.S. (other or recertification of households deter- than for training); or mine that any member of a household (3) The spouse and unmarried depend- is ineligible to receive food stamps be- ent children of a person described in cause the member is present in the paragraphs (a)(5)(ii)(G)(1) or (G)(2) of U.S. in violation of the INA. The State this section, including the spouse of a agency may meet this requirement by deceased veteran, provided the mar- conforming with the Interagency No- riage fulfilled the requirements of 38 tice providing guidance for compliance U.S.C. 1304, and the spouse has not re- with PRWORA section 404 published on married. An unmarried dependent child September 28, 2000 (65 FR 58301). for purposes of this paragraph (2) When a household indicates in- (a)(5)(ii)(G)(3) is: a child who is under ability or unwillingness to provide doc- the age of 18 or, if a full-time student, umentation of alien status for any under the age of 22; such unmarried de- household member, the State agency pendent child of a deceased veteran must classify that member as an ineli- provided such child was dependent gible alien. When a person indicates in- upon the veteran at the time of the ability or unwillingness to provide doc- veteran’s death; or an unmarried dis- umentation of alien status, the State abled child age 18 or older if the child agency must classify that person as an was disabled and dependent on the vet- ineligible alien. In such cases the State eran prior to the child’s 18th birthday. agency must not continue efforts to ob- For purposes of this paragraph tain that documentation. (a)(5)(ii)(G)(3), child means the legally (c) Households containing sponsored adopted or biological child of the per- alien members—(1) Definition. A spon- son described in paragraph sored alien is an alien for whom a per- (a)(5)(ii)(G)(1) or (G)(2) of this section. son (the sponsor) has executed an affi- (H) An individual who on August 22, davit of support (INS Form I–864 or I– 1996, was lawfully residing in the U.S., 864A) on behalf of the alien pursuant to and is now receiving benefits or assist- section 213A of the INA. ance for blindness or disability (as (2) Deeming of sponsor’s income and re- specified in § 271.2 of this chapter). sources. For purposes of this paragraph

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(c)(2), only in the event a sponsored the alien to amounts specified in para- alien is an eligible alien in accordance graphs (c)(2)(i)(A) and (c)(2)(i)(B) of this with paragraph (a) of this section will section. the State agency consider available to (iii) The State agency must consider the household the income and re- as income to the alien any money the sources of the sponsor and spouse. For sponsor or the sponsor’s spouse pays to purposes of determining the eligibility the eligible sponsored alien, but only and benefit level of a household of to the extent that the money exceeds which an eligible sponsored alien is a the amount deemed to the eligible member, the State agency must deem sponsored alien in accordance with the income and resources of sponsor paragraph (c)(2)(i) of this section. and the sponsor’s spouse, if he or she (iv) The State agency must deem as has executed INS Form I–864 or I–864A, available to the eligible sponsored as the unearned income and resources alien the total amount of the resources of the sponsored alien. The State agen- of the sponsor and sponsor’s spouse as cy must deem the sponsor’s income and determined in accordance with § 273.8, resources until the alien gains U. S. reduced by $1,500. citizenship, has worked or can receive (v) If a sponsored alien can dem- credit for 40 qualifying quarters of onstrate to the State agency’s satisfac- work as described in paragraph tion that his or her sponsor is the spon- (a)(5)(ii)(A) of this section, or the sponsor of other aliens, the State agency sor dies. must divide the income and resources (i) The monthly income of the spon- deemed under the provisions of para- sor and sponsor’s spouse (if he or she graphs (c)(2)(i) and (c)(2)(iii) of this sec- has executed INS Form I–864 or I–864A) tion by the number of such sponsored deemed as that of the eligible spon- aliens. sored alien must be the total monthly earned and unearned income, as defined (3) Exempt aliens. The provisions of in § 273.9(b) with the exclusions pro- paragraph (c)(2) of this section do not vided in § 273.9(c) of the sponsor and apply to: sponsor’s spouse at the time the house- (i) An alien who is a member of his or hold containing the sponsored alien her sponsor’s food stamp household; member applies or is recertified for (ii) An alien who is sponsored by an participation, reduced by: organization or group as opposed to an (A) A 20 percent earned income individual; amount for that portion of the income (iii) An alien who is not required to determined as earned income of the have a sponsor under the Immigration sponsor and the sponsor’s spouse; and and Nationality Act, such as a refugee, (B) An amount equal to the Pro- a parolee, an asylee, or a Cuban or Hai- gram’s monthly gross income eligi- tian entrant; bility limit for a household equal in (iv) An indigent alien that the State size to the sponsor, the sponsor’s agency has determined is unable to ob- spouse, and any other person who is tain food and shelter taking into ac- claimed or could be claimed by the count the alien’s own income plus any sponsor or the sponsor’s spouse as a de- cash, food, housing, or other assistance pendent for Federal income tax pur- provided by other individuals, includ- poses. ing the sponsor(s). For purposes of this (ii) If the alien has already reported paragraph (c)(3)(iv), the phrase ‘‘is un- gross income information on his or her able to obtain food and shelter’’ means sponsor in compliance with the spon- that the sum of the eligible sponsored sored alien rules of another State agen- alien’s household’s own income, the cy administered assistance program, cash contributions of the sponsor and the State agency may use that income others, and the value of any in-kind as- amount for Food Stamp Program sistance the sponsor and others pro- deeming purposes. However, the State vide, does not exceed 130 percent of the agency must limit allowable reduc- poverty income guideline for the tions to the total gross income of the household’s size. The State agency sponsor and the sponsor’s spouse prior must determine the amount of income to attributing an income amount to and other assistance provided in the

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month of application. If the alien is in- should the sponsor or the sponsor’s digent, the only amount that the State spouse change or lose employment or agency must deem to such an alien will die during the certification period. The be the amount actually provided for a State agency must handle such period beginning on the date of such changes in accordance with the timeli- determination and ending 12 months ness standards described in § 273.12 or after such date. Each indigence deter- § 273.21, as appropriate. mination is renewable for additional (5) Awaiting verification. Until the 12-month periods. The State agency alien provides information or must notify the Attorney General of verification necessary to carry out the each such determination, including the provisions of paragraph (c)(2) of this names of the sponsor and the sponsored section, the sponsored alien is ineli- alien involved; gible. The State agency must deter- (v) A battered alien spouse, alien par- mine the eligibility of any remaining ent of a battered child, or child of a household members. The State agency battered alien, for 12 months after the must consider available to the remain- State agency determines that the bat- ing household members the income and tering is substantially connected to the resources of the ineligible alien (ex- need for benefits, and the battered indi- cluding the deemed income and re- vidual does not live with the batterer. 3 sources of the alien’s sponsor and spon- After 12 months, the State agency sor’s spouse) in determining the eligi- must not deem the batterer’s income bility and benefit level of the remain- and resources if the battery is recog- ing household members in accordance nized by a court or the INS and has a with § 273.11(c). If the sponsored alien substantial connection to the need for refuses to cooperate in providing infor- benefits, and the alien does not live mation or verification, other adult with the batterer. members of the alien’s household are (4) Eligible sponsored alien’s respon- responsible for providing the informa- sibilities. During the period the alien is tion or verification required in accord- subject to deeming, the eligible spon- ance with the provisions of § 273.2(d). If sored alien is responsible for obtaining the State agency subsequently receives the cooperation of the sponsor and for information or verification, it must act providing the State agency at the time on the information as a reported of application and at the time of recer- change in household membership in ac- tification with the information and cordance with the timeliness standards documentation necessary to calculate in § 273.12 or § 273.21, as appropriate. If deemed income and resources in ac- the same sponsor is responsible for the cordance with paragraphs (c)(2)(i) entire household, the entire household through (c)(2)(v) of this section. The el- is ineligible until such time as the household provides the needed sponsor igible sponsored alien is responsible for information or verification. The State providing the names and other identi- agency must assist aliens in obtaining fying factors of other aliens for whom verification in accordance with the the alien’s sponsor has signed an affi- provisions of § 273.2(f)(5). davit of support. The State agency (6) Demands for restitution. The State must attribute the entire amount of in- agency must exclude any sponsor who come and resources to the applicant el- is participating in the Program from igible sponsored alien until he or she any demand made under 8 CFR provides the information specified 213a.4(a) for the value of food stamp under this paragraph (c)(4). The eligi- benefits issued to an eligible sponsored ble sponsored alien is also responsible alien he or she sponsors. for reporting the required information about the sponsor and sponsor’s spouse [Amdt. 388, 65 FR 70200, Nov. 21, 2000] should the alien obtain a different sponsor during the certification period § 273.5 Students. and for reporting a change in income (a) Applicability. An individual who is enrolled at least half-time in an insti- 3 For guidance, see Exhibit B to Attach- tution of higher education shall be in- ment 5 of the DOJ Interim Guidance pub- eligible to participate in the Food lished November 17, 1997 (62 FR 61344). Stamp Program unless the individual

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qualifies for one of the exemptions con- (7) Be participating in an on-the-job tained in paragraph (b) of this section. training program. A person is consid- An individual is considered to be en- ered to be participating in an on-the- rolled in an institution of higher edu- job training program only during the cation if the individual is enrolled in a period of time the person is being business, technical, trade, or voca- trained by the employer; tional school that normally requires a (8) Be responsible for the care of a de- high school diploma or equivalency pendent household member under the certificate for enrollment in the cur- age of 6; riculum or if the individual is enrolled (9) Be responsible for the care of a de- in a regular curriculum at a college or pendent household member who has university that offers degree programs reached the age of 6 but is under age 12 regardless of whether a high school di- when the State agency has determined ploma is required. that adequate child care is not avail- (b) Student Exemptions. To be eligible able to enable the student to attend for the program, a student as defined in class and comply with the work re- paragraph (a) of the section must meet quirements of paragraph (b)(5) or (b)(6) at least one of the following criteria. of this section; (1) Be age 17 or younger or age 50 or (10) Be a single parent enrolled in an older; institution of higher education on a (2) Be physically or mentally unfit; full-time basis (as determined by the (3) Be receiving Temporary Assist- institution) and be responsible for the ance for Needy Families under Title IV care of a dependent child under age 12. of the Social Security Act; (4) Be enrolled as a result of partici- (i) This provision applies in those sit- pation in the Job Opportunities and uations where only one natural, adop- Basic Skills program under Title IV of tive or stepparent (regardless of mar- the Social Security Act or its successor ital status) is in the same food stamp program; household as the child. (5) Be employed for a minimum of 20 (ii) If no natural, adoptive or step- hours per week and be paid for such parent is in the same food stamp employment or, if self-employed, be household as the child, another full- employed for a minimum of 20 hours time student in the same food stamp per week and receiving weekly earn- household as the child may qualify for ings at least equal to the Federal min- eligible student status under this pro- imum wage multiplied by 20 hours; vision if he or she has parental control (6) Be participating in a State or fed- over the child and is not living with his erally financed work study program or her spouse. during the regular school year. (11) Be assigned to or placed in an in- (i) To qualify under this provision, stitution of higher education through the student must be approved for work or in compliance with the requirements study at the time of application for of one of the programs identified in food stamps, the work study must be paragraphs (b)(11)(i) through (b)(11)(iv) approved for the school term, and the of this section. Self-initiated place- student must anticipate actually work- ments during the period of time the ing during that time. The exemption person is enrolled in one of these em- shall begin with the month in which ployment and training programs shall the school term begins or the month be considered to be in compliance with work study is approved, whichever is the requirements of the employment later. Once begun, the exemption shall and training program in which the per- continue until the end of the month in son is enrolled provided that the pro- which the school term ends, or it be- gram has a component for enrollment comes known that the student has rein an institution of higher education fused an assignment. and that program accepts the place- (ii) The exemption shall not continue ment. Persons who voluntarily partici- between terms when there is a break of pate in one of these employment and a full month or longer unless the stu- training programs and are placed in an dent is participating in work study institution of higher education through during the break. or in compliance with the requirements

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of the program shall also qualify for (b) Obtaining SSNs for food stamp the exemption. The programs are: household members. (1) For those indi- (i) A program under the Job Training viduals who provide SSNs prior to cer- Partnership Act of 1974 (29 U.S.C. 1501, tification, recertification or at any of- et seq.); fice contact, the State agency shall (ii) An employment and training pro- record the SSN and verify it in accord- gram under § 273.7; ance with § 273.2(f)(1)(v). (iii) A program under section 236 of (2) For those individuals who do not the Trade Act of 1974 (19 U.S.C. 2296); or have an SSN, the State agency shall: (iv) An employment and training pro- (i) If an enumeration agreement with gram for low-income households that is SSA exists, complete the application operated by a State or local govern- for an SSN, Form SS–5. To complete ment where one or more of the compo- Form SS–5, the State agency must doc- nents of such program is at least equiv- ument the verification of identity, age, alent to an acceptable food stamp em- and citizenship or alien status as re- ployment and training program compo- quired by SSA and forward the SS–5 to nent as specified in § 273.7(e)(1). Using SSA. the criteria in § 273.7(e)(1), State agen- (ii) If no enumeration agreement ex- cies shall make the determinations as ists, an individual must apply at the to whether or not the programs qual- SSA, and the State agency shall ar- ify. range with SSA to be notified directly (c) The enrollment status of a stu- of the SSN when it is issued. The State dent shall begin on the first day of the agency shall inform the household school term of the institution of higher where to apply and what information education. Such enrollment shall be will be needed, including any which deemed to continue through normal pe- may be needed for SSA to notify the riods of class attendance, vacation and State agency of the SSN. The State recess, unless the student graduates, is agency shall advise the household suspended or expelled, drops out, or member that proof of application from does not intend to register for the next SSA will be required prior to certifi- normal school term (excluding summer cation. SSA normally uses the Receipt school). of Application for a Social Security (d) The income and resources of an Number, Form SSA–5028, as evidence ineligible student shall be handled as that an individual has applied for an outlined in § 273.11(d). SSN. State agencies may also use their own documents for this purpose. [46 FR 43025, Aug. 25, 1981, as amended by Amdt. 235, 47 FR 55908, Dec. 14, 1982; Amdt. (3) The State agency shall follow the 269, 51 FR 10785, Mar. 28, 1986; Amdt. 274, 51 procedures described in paragraphs FR 18750, May 21, 1986; Amdt. 277, 51 FR 30048, (b)(2) (i) and (ii) of this section for indi- Aug. 22, 1986; Amdt. 370, 60 FR 48869, Sept. 21, viduals who do not know if they have 1995; 67 FR 41603, June 19, 2002] an SSN, or are unable to find their SSN. § 273.6 Social security numbers. (4) If the household is unable to pro- (a) Requirements for participation. The vide proof of application for an SSN for State agency shall require that a a newborn, the household must provide household participating or applying for the SSN or proof of application at its participation in the Food Stamp Pro- next recertification or within 6 months gram provide the State agency with following the month the baby is born, the social security number (SSN) of whichever is later. If the household is each household member or apply for unable to provide an SSN or proof of one before certification. If individuals application for an SSN at its next re- have more than one number, all num- certification within 6 months following bers shall be required. The State agen- the baby’s birth, the State agency shall cy shall explain to applicants and par- determine if the good cause provisions ticipants that refusal or failure with- of paragraph (d) of this section are ap- out good cause to provide an SSN will plicable. result in disqualification of the indi- (c) Failure to comply. If the State vidual for whom an SSN is not ob- agency determines that a household tained. member has refused or failed without

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good cause to provide or apply for an come eligible upon providing the State SSN, then that individual shall be in- agency with an SSN. eligible to participate in the Food (f) Use of SSNs. The State agency is Stamp Program. The disqualification authorized to use SSNs in the adminis- applies to the individual for whom the tration of the Food Stamp Program. To SSN is not provided and not to the en- the extent determined necessary by the tire household. The earned or unearned Secretary and the Secretary of Health income and resources of an individual and Human Services, State agencies disqualified from the household for shall have access to information re- failure to comply with this require- garding individual Food Stamp Pro- ment shall be counted as household in- gram applicants and participants who come and resources to the extent speci- receive benefits under title XVI of the fied in § 273.11(c) of these regulations. Social Security Act to determine such (d) Determining good cause. In deter- a household’s eligibility to receive as- mining if good cause exists for failure sistance and the amount of assistance, to comply with the requirement to or to verify information related to the apply for or provide the State agency benefit of these households. State with an SSN, the State agency shall agencies shall use the State Data Ex- consider information from the house- change (SDX) to the maximum extent hold member, SSA and the State agen- possible. The State agency should also cy (especially if the State agency was use the SSNs to prevent duplicate par- designated to send the SS–5 to SSA and ticipation, to facilitate mass changes either did not process the SS–5 or did in Federal benefits as described in not process it in a timely manner). § 273.12(e)(3) and to determine the accu- Documentary evidence or collateral in- racy and/or reliability of information formation that the household member given by households. In particular, has applied for an SSN or made every SSNs shall be used by the State agency effort to supply SSA with the nec- to request and exchange information essary information to complete an ap- on individuals through the IEVS as plication for an SSN shall be consid- specified in § 272.8. ered good cause for not complying (g) Entry of SSNs into automated data timely with this requirement. Good bases. State agencies with automated cause does not include delays due to food stamp data bases containing illness, lack of transportation or tem- household information shall enter all porary absences, because SSA makes SSNs obtained in accordance with provisions for mail-in applications in § 273.6(a) into these files. lieu of applying in person. If the household member can show good cause why [Amdt. 264, 51 FR 7206, Feb. 28, 1986; Amdt. an application for a SSN has not been 364, 61 FR 54317, Oct. 17, 1996] completed in a timely manner, that § 273.7 Work provisions. person shall be allowed to participate for one month in addition to the month (a) Work requirements. (1) As a condi- of application. If the household mem- tion of eligibility for food stamps, each ber applying for an SSN has been un- household member not exempt under able to obtain the documents required paragraph (b)(1) of this section must by SSN, the State agency caseworker comply with the following Food Stamp should make every effort to assist the Program work requirements: individual in obtaining these docu- (i) Register for work or be registered ments. Good cause for failure to apply by the State agency at the time of ap- must be shown monthly in order for plication and every 12 months after ini- such a household member to continue tial registration. The member required to participate. Once an application has to register need not complete the reg- been filed, the State agency shall per- istration form. mit the member to continue to partici- (ii) Participate in a Food Stamp Em- pate pending notification of the State ployment and Training (E&T) program agency of the household member’s if assigned by the State agency, to the SSN. extent required by the State agency; (e) Ending disqualification. The house- (iii) Participate in a workfare pro- hold member(s) disqualified may be- gram if assigned by the State agency;

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(iv) Provide the State agency or its for PA households not subject to the designee with sufficient information work requirements under title IV of regarding employment status or avail- the Social Security Act or for GA ability for work; households. However, the failure of a (v) Report to an employer to whom household member to comply with referred by the State agency or its des- State or local work requirements that ignee if the potential employment exceed the requirements listed in this meets the suitability requirements de- section must not be considered grounds scribed in paragraph (h) of this section; for disqualification. Work require- (vi) Accept a bona fide offer of suit- ments imposed on refugees partici- able employment, as defined in para- pating in refugee resettlement pro- graph (h) of this section, at a site or grams may also be substituted, with plant not subject to a strike or lock- FNS approval. out, at a wage equal to the higher of (6) Household members who are ap- the Federal or State minimum wage or plying for SSI and for food stamps 80 percent of the wage that would have under § 273.2(k)(1)(i) will have Food governed had the minimum hourly rate Stamp Program work requirements under section 6(a)(1) of the Fair Labor waived until they are determined eligi- Standards Act been applicable to the ble for SSI and become exempt from offer of employment. Food Stamp Program work require- (vii) Do not voluntarily and without ments, or until they are determined in- good cause quit a job of 30 or more eligible for SSI, at which time their ex- hours a week or reduce work effort to emptions from Food Stamp Program less than 30 hours a week, in accord- work requirements will be reevaluated. ance with paragraph (j) of this section. (b) Exemptions from work requirements. (2) The Food and Nutrition Service (1) The following persons are exempt (FNS) has defined the meaning of from Food Stamp Program work re- ‘‘good cause,’’ and ‘‘voluntary quit,’’ quirements: and ‘‘reduction of work effort’’ as used (i) A person younger than 16 years of in paragraph (a)(1)(vii) of this section. age or a person 60 years of age or older. See paragraph (i) of this section for a A person age 16 or 17 who is not the discussion of good cause; see paragraph head of a household or who is attending (j) of this section for a discussion of school, or is enrolled in an employment voluntary quit and reduction of work training program, on at least a half- effort. time basis, is also exempt. If the person (3) Each State agency will determine turns 16 (or 18 under the preceding sen- the meaning of any other terms used in tence) during a certification period, paragraph (a)(1) of this section; the the State agency must register the per- procedures for establishing compliance son as part of the next scheduled recer- with Food Stamp Program work re- tification process, unless the person quirements; and whether an individual qualifies for another exemption. is complying with Food Stamp Pro- (ii) A person physically or mentally gram work requirements. A State unfit for employment. For the purposes agency must not use a meaning, proce- of this paragraph (b), a State agency dure, or determination that is less re- will define physical and mental fitness; strictive on food stamp recipients than establish procedures for verifying; and is a comparable meaning, procedure, or will verify claimed physical or mental determination under the State agen- unfitness when necessary. However, the cy’s program funded under title IV-A of State agency must not use a definition, the Social Security Act. procedure for verification, or (4) Strikers whose households are eli- verification that is less restrictive on gible under the criteria in § 273.1(e) are food stamp recipients than a com- subject to Food Stamp Program work parable meaning, procedure, or deter- requirements unless they are exempt mination under the State agency’s pro- under paragraph (b)(1) of this section gram funded under title IV-A of the So- at the time of application. cial Security Act. (5) State agencies may request ap- (iii) A person subject to and com- proval from FNS to substitute State or plying with any work requirement local procedures for work registration under title IV of the Social Security

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Act. If the exemption claimed is ques- program, or institution of higher edu- tionable, the State agency is respon- cation. Students enrolled at least half- sible for verifying the exemption. time in an institution of higher edu- (iv) A parent or other household cation must meet the student eligi- member responsible for the care of a bility requirements listed in § 273.5. A dependent child under 6 or an incapaci- student will remain exempt during nor- tated person. If the child has his or her mal periods of class attendance, vaca- 6th birthday during a certification pe- tion, and recess. If the student grad- riod, the State agency must work reg- uates, enrolls less than half-time, is ister the individual responsible for the suspended or expelled, drops out, or care of the child as part of the next does not intend to register for the next scheduled recertification process, un- normal school term (excluding sum- less the individual qualifies for another mer), the State agency must work reg- exemption. ister the individual, unless the indi- (v) A person receiving unemployment vidual qualifies for another exemption. compensation. A person who has ap- (2)(i) Persons losing exemption status plied for, but is not yet receiving, undue to any changes in circumstances employment compensation is also ex- that are subject to the reporting re- empt if that person is complying with quirements of § 273.12 must register for work requirements that are part of the employment when the change is re- Federal-State unemployment com- ported. If the State agency does not pensation application process. If the use a work registration form, it must exemption claimed is questionable, the annotate the change to the member’s State agency is responsible for exemption status. If a work registra- verifying the exemption with the ap- tion form is used, the State agency is propriate office of the State employ- responsible for providing the partici- ment services agency. pant with a work registration form (vi) A regular participant in a drug when the change is reported. Partici- addiction or alcoholic treatment and pants are responsible for returning the rehabilitation program. completed form to the State agency (vii) An employed or self-employed within 10 calendar days from the date person working a minimum of 30 hours the form was handed to the household weekly or earning weekly wages at member reporting the change in per- least equal to the Federal minimum son, or the date the State agency wage multiplied by 30 hours. This in- mailed the form. If the participant cludes migrant and seasonal farm fails to return the completed form, the workers under contract or similar State agency must issue a notice of ad- agreement with an employer or crew verse action stating that the partici- chief to begin employment within 30 pant is being terminated and why, but days (although this will not prevent in- that the termination can be avoided by dividuals from seeking additional serv- returning the form. ices from the State employment serv- (ii) Those persons who lose their ex- ices agency). For work registration emption due to a change in cir- purposes, a person residing in areas of cumstances that is not subject to the Alaska designated in § 274.10(a)(4)(iv) of reporting requirements of § 273.12 must this chapter, who subsistence hunts register for employment at their and/or fishes a minimum of 30 hours household’s next recertification. weekly (averaged over the certification (c) State agency responsibilities. (1) The period) is considered exempt as self- State agency must register for work employed. An employed or self-em- each household member not exempted ployed person who voluntarily and by the provisions of paragraph (b)(1) of without good cause reduces his or her this section. As part of the work reg- work effort and, after the reduction, is istration process, the State agency working less than 30 hours per week, is must explain to the individual the per- ineligible to participate in the Food tinent work requirements, the rights Stamp Program under paragraph (j) of and responsibilities of work-registered this section. household members, and the con- (viii) A student enrolled at least half- sequences of failure to comply. The time in any recognized school, training State agency must provide a written

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statement of the above to each indi- this section. The State agency must vidual in the household who is reg- ensure that it is notified by the agency istered for work. A notice must also be or agencies operating its E&T compo- provided when a previously exempt in- nents within 10 days if an E&T manda- dividual or new household member be- tory participant fails to comply with comes subject to a work requirement, E&T requirements. and at recertification. The State agen- (5) Each component of the State cy must permit the applicant to com- agency’s E&T program must be deliv- plete a record or form for each house- ered through its statewide workforce hold member required to register for development system, unless the compo- employment in accordance with para- nent is not available locally through graph (a)(1)(i) of this section. House- such a system. hold members are considered to have (6) In accordance with § 272.2(d) and registered when an identifiable work § 272.2(e) of this chapter, the State registration form is submitted to the agency must prepare and submit an State agency or when the registration E&T Plan to its appropriate FNS Re- is otherwise annotated or recorded by gional Office. The E&T Plan must be the State agency. available for public inspection at the (2) The State agency is responsible State agency headquarters. In its E&T for screening each work registrant to Plan, the State agency will detail the determine whether or not it is appro- following: priate, based on the State agency’s cri- (i) The nature of the E&T compo- teria, to refer the individual to an E&T nents the State agency plans to offer program, and if appropriate, referring and the reasons for such components, the individual to an E&T program com- including cost information. The meth- ponent. Upon entry into each compo- odology for State agency reimburse- nent, the State agency must inform ment for education components must the participant, either orally or in be specifically addressed; writing, of the requirements of the (ii) An operating budget for the Fed- component, what will constitute non- eral fiscal year with an estimate of the compliance and the sanctions for non- cost of operation for one full year. Any compliance. The State agency may, State agency that requests 50 percent with FNS approval, use intake and Federal reimbursement for State agen- sanction systems that are compatible cy E&T administrative costs, other with its title IV-A work program. Such than for participant reimbursements, systems must be proposed and ex- must include in its plan, or amend- plained in the State agency’s E&T ments to its plan, an itemized list of State Plan. all activities and costs for which those (3) The State agency must issue a no- Federal funds will be claimed, includ- tice of adverse action to an individual, ing the costs for case management and or to a household if appropriate, within casework to facilitate the transition 10 days after learning of the individ- from economic dependency to self-suf- ual’s noncompliance with Food Stamp ficiency through work. Costs in excess Program work requirements. The no- of the Federal grant will be allowed tice of adverse action must meet the only with the prior approval of FNS timeliness and adequacy requirements and must be adequately documented to of § 273.13. If the individual complies be- assure that they are necessary, reason- fore the end of the advance notice pe- able and properly allocated; riod, the State agency will cancel the (iii) The categories and types of indi- adverse action. If the State agency of- viduals the State agency intends to ex- fers a conciliation process as part of its empt from E&T participation, the esti- E&T program, it must issue the notice mated percentage of work registrants of adverse action no later than the end the State agency plans to exempt, and of the conciliation period. the frequency with which the State (4) The State agency must design and agency plans to reevaluate the validity operate an E&T program that may con- of its exemptions; sist of one or more or a combination of (iv) The characteristics of the popu- employment and/or training compo- lation the State agency intends to nents as described in paragraph (e)(1) of place in E&T;

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(v) The estimated number of volun- (xiv) The payment rates for child teers the State agency expects to place care established in accordance with the in E&T; Child Care and Development Block (vi) The geographic areas covered and Grant provisions of 45 CFR 98.43, and not covered by the E&T Plan and why, based on local market rate surveys. and the type and location of services to (xv) The combined (Federal/State) be offered; State agency reimbursement rate for (vii) The method the State agency transportation costs and other ex- uses to count all work registrants as of penses reasonably necessary and di- the first day of the new fiscal year; rectly related to participation incurred (viii) The method the State agency by E&T participants. If the State agen- uses to report work registrant informa- cy proposes to provide different reim- tion on the quarterly Form FNS–583; bursement amounts to account for varying levels of expenses, for instance (ix) The method the State agency for greater or lesser costs of transpor- uses to prevent work registrants from tation in different areas of the State, it being counted twice within a Federal must include them here. fiscal year. If the State agency univer- (xvi) Information about expenses the sally work registers all food stamp ap- State agency proposes to reimburse. plicants, this method must specify how FNS must be afforded the opportunity the State agency excludes those ex- to review and comment on the pro- empt from work registration under posed reimbursements before they are paragraph (b)(1) of this section. If the implemented. State agency work registers non- (7) A State agency interested in re- exempt participants whenever a new ceiving additional funding for serving application is submitted, this method able-bodied adults without dependents must also specify how the State agency (ABAWDs) subject to the 3-month time excludes those participants who may limit, in accordance with paragraph have already been registered within the (d)(3) of this section, must include in past 12 months as specified under para- its annual E&T plan: graph (a)(1)(i) of this section; (i) Its pledge to offer a qualifying ac- (x) The organizational relationship tivity to all at-risk ABAWD applicants between the units responsible for cer- and recipients; tification and the units operating the (ii) Estimated costs of fulfilling its E&T components, including units of pledge; the statewide workforce development (iii) A description of management system, if available. FNS is specifically controls in place to meet pledge re- concerned that the lines of commu- quirements; nication be efficient and that non- (iv) A discussion of its capacity and compliance be reported to the certifi- ability to serve at-risk ABAWDs; cation unit within 10 working days (v) Information about the size and after the noncompliance occurs; special needs of its ABAWD population; (xi) The relationship between the and State agency and other organizations (vi) Information about the education, it plans to coordinate with for the pro- training, and workfare components it vision of services, including organiza- will offer to meet the ABAWD work re- tions in the statewide workforce devel- quirement. opment system, if available. Copies of (8) The State agency will submit its contracts must be available for inspec- E&T Plan annually, at least 45 days be- tion; fore the start of the Federal fiscal (xii) The availability, if appropriate, year. The State agency must submit of E&T programs for Indians living on plan revisions to the appropriate FNS reservations; regional office for approval if it plans (xiii) If a conciliation process is to alter the nature or location of its planned, the procedures that will be components or the number or charac- used when an individual fails to comply teristics of persons served. The pro- with an E&T program requirement. In- posed changes must be submitted for clude the length of the conciliation pe- approval at least 30 days prior to riod; and planned implementation.

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(9) The State agency will submit an will receive a 100 percent Federal grant E&T Program Activity Report to FNS each fiscal year to operate an E&T pro- no later than 45 days after the end of gram in accordance with paragraph (e) each Federal fiscal quarter. The report of this section. The grant requires no will contain monthly figures for: State matching. (i) Participants newly work reg- (A) In determining each State agen- istered; cy’s 100 percent Federal E&T grant, (ii) Number of ABAWD applicants FNS will apply the percentage deter- and recipients participating in quali- mined in accordance with paragraph fying components; (d)(1)(i)(B) of this section to the total (iii) Number of all other applicants amount of 100 percent Federal funds and recipients (including ABAWDs in- authorized under section 16(h)(1)(A) of volved in non-qualifying activities) the Act for each fiscal year. participating in components; and (B) FNS will allocate the funding (iv) ABAWDs subject to the 3-month available each fiscal year for E&T time limit imposed in accordance with grants using a formula designed to en- § 273.24(b) who are exempt under the sure that each State agency receives State agency’s 15 percent exemption al- its appropriate share. lowance under § 273.24(g). (1) Ninety percent of the annual 100 (10) The State agency will submit an- percent Federal E&T grant will be allo- nually, on its first quarterly report, cated based on the number of work reg- the number of work registrants in the istrants in each State as a percentage State on October 1 of the new fiscal of work registrants nationwide. FNS year. will use work registrant data reported (11) The State agency will submit an- by each State agency on the FNS–583, nually, on its final quarterly report: Employment and Training Program (i) A list of E&T components it of- Activity Report, from the most recent fered during the fiscal year and the Federal fiscal year. number of ABAWDs and non-ABAWDs (2) Ten percent of the annual 100 per- who participated in each; and cent Federal E&T grant will be allo- (ii) The number of ABAWDs and non- cated based on the number of ABAWDs ABAWDs who participated in the E&T in each State, as determined by food Program during the fiscal year. Each stamp QC data for the most recently individual must be counted only once. available completed fiscal year, which (12) Additional information may be provide a breakdown of each State’s required of the State agency, on an as population of adults age 18 through 49 needed basis, regarding the type of who are not disabled and who do not components offered and the character- live with children. istics of persons served, depending on (C) No State agency will receive less the contents of its E&T Plan. than $50,000 in Federal E&T funds. To (13) The State agency must ensure, to ensure this, FNS will, if necessary, re- the maximum extent practicable, that duce the grant of each State agency al- E&T programs are provided for Indians located more than $50,000. In order to living on reservations. guarantee an equitable reduction, FNS (14) If a benefit overissuance is dis- will calculate grants as follows. First, covered for a month or months in disregarding those State agencies which a mandatory E&T participant scheduled to receive less than $50,000, has already fulfilled a work component FNS will calculate each remaining requirement, the State agency must State agency’s percentage share of the follow the procedure specified in para- fiscal year’s E&T grant. Next, FNS will graph (m)(6)(v) of this section for a multiply the grant—less $50,000 for workfare overissuance. every State agency under the min- (15) If a State agency fails to effi- imum—by each remaining State agen- ciently and effectively administer its cy’s same percentage share to arrive at E&T program, the provisions of the revised amount. The difference be- § 276.1(a)(4) of this chapter will apply. tween the original and the revised (d) Federal financial participation—(1) amounts will represent each State Employment and training grants—(i) Al- agency’s contribution. FNS will dis- location of grants. Each State agency tribute the funds from the reduction to

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State agencies initially allocated less State agencies with approved plans. than $50,000. Non-receipt of an E&T grant does not (D) If a State agency will not obli- release a State agency from its respon- gate or expend all of the funds allo- sibility under paragraph (c)(4) of this cated to it for a fiscal year under para- section to operate an E&T program. graph (d)(1)(i)(B) of this section, FNS (C) Federal funds made available to a will reallocate the unobligated, unex- State agency to operate an educational pended funds to other State agencies component under paragraph (e)(1)(vi) of during the fiscal year or the subse- this section must not be used to sup- quent fiscal year on a first come-first plant nonfederal funds for existing edu- served basis. Each year FNS will notify cational services and activities that all State agencies of the availability of promote the purposes of this compo- carryover funding. Interested State nent. Education expenses are approv- agencies must submit their requests able to the extent that E&T component for carryover funding to FNS. If the re- costs exceed the normal cost of serv- quests are determined reasonable and ices provided to persons not partici- necessary, FNS will allocate carryover pating in an E&T program. funding to meet some or all of the (D) In accordance with section State agencies’ requests, as it con- 6(d)(4)(K) of the Food Stamp Act, and siders appropriate and equitable. The notwithstanding any other provision of factors that FNS will consider when re- this paragraph (d), the amount of Fed- viewing a State agency’s request will eral E&T funds, including participant include the size of the request relative and dependent care reimbursements, a to the level of the State agency’s E&T State agency uses to serve participants spending in prior years, the specificity who are receiving cash assistance of the State agency’s plan for spending under a State program funded under carryover funds, and the quality of pro- title IV-A of the Social Security Act gram and scope of impact for the must not exceed the amount of Federal State’s E&T program and proposed use E&T funds the State agency used in FY of carryover funds. 1995 to serve participants who were re- (ii) Use of Funds. (A) A State agency ceiving cash assistance under a State must use E&T program grants to fund program funded under title IV-A of the the administrative costs of planning, Social Security Act. implementing and operating its food (1) Based on information provided by stamp E&T program in accordance each State agency, FNS established with its approved State E&T plan. E&T claimed Federal E&T expenditures on grants must not be used for the process this category of recipients in fiscal of determining whether an individual year 1995 for the State agencies of Col- must be work registered, the work reg- orado ($318,613), Utah ($10,200), Vermont istration process, or any further ($1,484,913), and Wisconsin ($10,999,773). screening performed during the certifi- These State agencies may spend up to cation process, nor for sanction activ- a like amount each fiscal year to serve ity that takes place after the operator food stamp recipients who also receive of an E&T component reports non- title IV assistance. compliance without good cause. For (2) All other State agencies are pro- purposes of this paragraph (d), the cer- hibited from expending any Federal tification process is considered ended E&T funds on title IV cash assistance when an individual is referred to an recipients. E&T component for assessment or par- (2) Additional administrative costs. ticipation. E&T grants may also not be Fifty percent of all other administra- used to subsidize the wages of partici- tive costs incurred by State agencies in pants, or to reimburse participants operating E&T programs, above the under paragraph (d)(3) of this section. costs referenced in paragraph (d)(1) of (B) A State agency’s receipt of its 100 this section, will be funded by the Fed- percent Federal E&T grant is contin- eral government. gent on FNS’s approval of the State (3) Additional allocations. In addition agency’s E&T plan. If an adequate plan to the E&T program grants discussed is not submitted, FNS may reallocate a in paragraph (d)(1) of this section, FNS State agency’s grant among other will allocate $20 million in Federal

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funds each fiscal year to State agencies (iv) If the information provided in ac- that ensure availability of education, cordance with paragraph (d)(3)(iii) of training, or workfare opportunities this section clearly indicates that the that permit ABAWDs to remain eligi- State agency will be unable to fulfill ble beyond the 3-month time limit. its commitment, FNS may require the (i) To be eligible, a State agency State agency to address its deficiencies must make and comply with a commit- before it is allowed to participate as a ment, or ‘‘pledge,’’ to use these addi- pledge State. tional funds to defray the cost of offer- (v) If the State agency does not ad- ing a position in an education, train- dress its deficiencies by the beginning ing, or workfare component that ful- of the new fiscal year on October 1, it fills the ABAWD work requirement, as will not be allowed to participate as a defined in § 273.24(a), to each applicant pledge State. and recipient who is: (vi) No pledges will be accepted after (A) In the last month of the 3-month the beginning of the fiscal year. time limit described in § 273.24(b); (vii)(A) Once FNS determines how (B) Not eligible for an exception to many State agencies will participate the 3-month time limit under as pledge States in the upcoming fiscal § 273.24(c); year, it will, as early in the fiscal year (C) Not a resident of an area of the as possible, allocate among them the State granted a waiver of the 3-month $20 million based on the number of time limit under § 273.24(f); and ABAWDs in each participating State, (D) Not included in each State agen- as a percentage of ABAWDs in all the cy’s 15 percent ABAWD exemption al- participating States. FNS will deter- lotment under § 273.24(g). mine the number of ABAWDs in each (ii) While a participating pledge participating State using food stamp State may use a portion of the addi- QC data for the most recently available tional funding to provide E&T services completed fiscal year, which provide a to ABAWDs who do not meet the cri- breakdown of each State’s population teria discussed in paragraph (d)(3)(i) of of adults age 18 through 49 who are not this section, it must guarantee that disabled and who do not live with chil- the ABAWDs who do meet the criteria dren. are provided the opportunity to remain (B) Each participating State agency’s eligible. share of the $20 million will be dis- (iii) State agencies will have one op- bursed in accordance with paragraph portunity each fiscal year to take the (d)(6) of this section. pledge described in paragraph (d)(3)(i) (C) Each participating State agency of this section. An interested State must meet the fiscal recordkeeping and agency, in its E&T Plan for the upcom- reporting requirements of paragraph ing fiscal year, must include the fol- (d)(7) of this section. lowing: (viii) If a participating State agency (A) A request to be considered as a notifies FNS that it will not obligate pledge State, along with its commit- or expend its entire share of the addi- ment to comply with the requirements tional funding allocated to it for a fis- of paragraph (d)(3)(i) of this section; cal year, FNS will reallocate the unob- (B) The estimated costs of complying ligated, unexpended funds to other par- with its pledge; ticipating State agencies during the (C) A description of management fiscal year, as it considers appropriate controls it has established to meet the and equitable, on a first come-first requirements of the pledge; served basis. FNS will notify other (D) A discussion of its capacity and pledge States of the availability of ad- ability to serve vulnerable ABAWDs; ditional funding. To qualify, a pledge (E) Information about the size and State must have already obligated its special needs of the State’s ABAWD entire annual 100 percent Federal E&T population; and grant, excluding an amount that is pro- (F) Information about the education, portionate to the number of months re- training, and workfare components maining in the fiscal year, and it must that it will offer to allow ABAWDs to guarantee in writing that it intends to remain eligible. obligate its entire grant by the end of

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the fiscal year. A State’s annual 100 section will be reimbursed by the State percent Federal E&T grant is its share agency upon presentation of appro- of the regular 100 percent Federal E&T priate documentation. Reimbursable allocation plus its share of the addi- costs may include, but are not limited tional $20 million (if applicable). Inter- to, dependent care costs, transpor- ested pledge States must submit their tation, and other work, training or requests for additional funding to FNS. education related expenses such as uni- FNS will review the requests and, if forms, personal safety items or other they are determined reasonable and necessary equipment, and books or necessary, will reallocate some or all training manuals. These costs must of the unobligated, unspent ABAWD not include the cost of meals away funds. from home. If applicable, any allowable (ix) Unlike the funds allocated in ac- costs incurred by a noncompliant E&T cordance with paragraph (d)(1) of this participant after the expiration of the section, the additional pledge funding noncompliant participant’s minimum will not remain available until obli- mandatory disqualification period, as gated or expended. Unobligated funds established by the State agency, that from this grant must be returned to are reasonably necessary and directly the U.S. Treasury at the end of each related to reestablishing eligibility, as fiscal year. defined by the State agency, are reim- (x) The cost of serving at-risk bursable under paragraphs (d)(4)(i) and ABAWDs is not an acceptable reason to (d)(4)(ii) of this section. The State fail to live up to the pledge. A slot agency may reimburse participants for must be made available and the expenses beyond the amounts specified ABAWD must be served even if the in paragraphs (d)(4)(i) of this section; State agency exhausts all of its 100 per- however, only costs that are up to but cent Federal E&T funds and must use not in excess of those amounts are sub- State funds to guarantee an oppor- ject to Federal cost sharing. Reim- tunity for all at-risk ABAWDs to re- bursement must not be provided from main eligible beyond the 3-month time E&T grants allocated under paragraph limit. State funds expended in accord- (d)(1)(i) of this section. Any expense ance with the approved State E&T covered by a reimbursement under this Plan are eligible for 50 percent Federal section is not deductible under match. If a participating State agency § 273.10(d)(1)(i). fails, without good cause, to meet its (i) The State agency will reimburse commitment, it may be disqualified the cost of dependent care it deter- from participating in the subsequent mines to be necessary for the participa- fiscal year or years. tion of a household member in the E&T (4) Participant reimbursements. The program up to the actual cost of de- State agency must provide payments pendent care, or the applicable pay- to participants in its E&T program, in- ment rate for child care, whichever is cluding applicants and volunteers, for lowest. The payment rates for child expenses that are reasonably necessary care are established in accordance with and directly related to participation in the Child Care and Development Block the E&T program. The Federal govern- Grant provisions of 45 CFR 98.43, and ment will fund 50 percent of State are based on local market rate surveys. agency payments for allowable ex- The State agency will provide a de- penses, except that Federal matching pendent care reimbursement to an E&T for dependent care expenses is limited participant for all dependents requiring to the maximum amount specified in care unless otherwise prohibited by paragraph (d)(4)(i) of this section. this section. The State agency will not These payments may be provided as a provide a reimbursement for a depend- reimbursement for expenses incurred ent age 13 or older unless the depend- or in advance as payment for antici- ent is physically and/or mentally in- pated expenses in the coming month. capable of caring for himself or herself The State agency must inform each or is under court supervision. The E&T participant that allowable ex- State agency must provide a reim- penses up to the amounts specified in bursement for all dependents who are paragraphs (d)(4)(i) and (d)(4)(ii) of this physically and/or mentally incapable of

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caring for themselves or who are under ty). An E&T participant may refuse court supervision, regardless of age, if available appropriate dependent care dependent care is necessary for the par- as provided or arranged by the State ticipation of a household member in agency, if the participant can arrange the E&T program. The State agency other dependent care or can show that will obtain verification of the physical such refusal will not prevent or inter- and/or mental incapacity for depend- fere with participation in the E&T pro- ents age 13 or older if the physical and/ gram as required by the State agency. or mental incapacity is questionable. (ii) The State agency will reimburse Also, the State agency will verify a the actual costs of transportation and court-imposed requirement for the su- other costs (excluding dependent care pervision of a dependent age 13 or older costs) it determines to be necessary if the need for dependent care is ques- and directly related to participation in tionable. If more than one household the E&T program up the maximum member is required to participate in an level of reimbursement established by E&T program, the State agency will re- the State agency. Such costs are the imburse the actual cost of dependent actual costs of participation unless the care or the applicable payment rate for State agency has a method approved in child care, whichever is lowest, for its E&T Plan for providing allowances each dependent in the household, re- to participants to reflect approximate gardless of the number of household costs of participation. If a State agen- members participating in the E&T pro- cy has an approved method to provide gram. An individual who is the care- allowances rather than reimburse- taker relative of a dependent in a fam- ments, it must provide participants an ily receiving cash assistance under opportunity to claim actual expenses title IV-A of the Social Security Act in up to the maximum level of reimburse- a local area where an employment, ments established by the State agency. training, or education program under (iii) No participant cost that has title IV-A is in operation is not eligible been reimbursed under a workfare pro- for such reimbursement. An E&T par- gram under paragraph (m)(7)(i) of this ticipant is not entitled to the depend- section, title IV of the Social Security ent care reimbursement if a member of the E&T participant’s food stamp Act or other work program will be re- household provides the dependent care imbursed under this section. services. The State agency must verify (iv) Any portion of dependent care the participant’s need for dependent costs that are reimbursed under this care and the cost of the dependent care section may not be claimed as an ex- prior to the issuance of the reimburse- pense and used in calculating the de- ment. The verification must include pendent care deduction under the name and address of the dependent § 273.9(d)(4) for determining benefits. care provider, the cost and the hours of (v) The State agency must inform all service (e.g., five hours per day, five mandatory E&T participants that they days per week for two weeks). A partic- may be exempted from E&T participa- ipant may not be reimbursed for de- tion if their monthly expenses that are pendent care services beyond that reasonably necessary and directly re- which is required for participation in lated to participation in the E&T pro- the E&T program. In lieu of providing gram exceed the allowable reimburse- reimbursements for dependent care ex- ment amount. Persons for whom allow- penses, a State agency may arrange for able monthly expenses in an E&T com- dependent care through providers by ponent exceed the amounts specified the use of purchase of service con- under paragraphs (d)(4)(i) and (d)(4)(ii) tracts, by providing vouchers to the of this section are not required to par- household or by other means. A State ticipate in that component. These indi- agency may require that dependent viduals will be placed, if possible, in care provided or arranged by the State another suitable component in which agency meet all applicable standards of the individual’s monthly E&T expenses State and local law, including require- would not exceed the allowable reim- ments designed to ensure basic health bursable amount paid by the State and safety protections (e.g., fire safe- agency. If a suitable component is not

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available, these individuals will be ex- cy. Such individuals are referred to in empt from E&T participation until a this section as E&T mandatory partici- suitable component is available or the pants. Requirements may vary among individual’s circumstances change and participants. Failure to comply with- his/her monthly expenses do not exceed out good cause with the requirements the allowable reimbursable amount imposed by the State agency will repaid by the State agency. Dependent sult in disqualification as specified in care expenses incurred that are other- paragraph (f)(2) of this section. wise allowable but not reimbursed be- (1) Components. To be considered ac- cause they exceed the reimbursable ceptable by FNS, any component of- amount specified under paragraph fered by a State agency must entail a (d)(4)(i) of this section will be consid- certain level of effort by the partici- ered in determining a dependent care pants. The level of effort should be deduction under § 273.9(d)(4). comparable to spending approximately (5) Workfare cost sharing. Enhanced 12 hours a month for two months mak- cost-sharing due to placement of ing job contacts (less in workfare or workfare participants in paid employ- work experience components if the ment is available only for workfare household’s benefit divided by the min- programs funded under paragraph imum wage is less than this amount). (m)(7)(iv) of this section at the 50 per- However, FNS may approve compo- cent reimbursement level and reported nents that do not meet this guideline if as such. it determines that such components (6) Funding mechanism. E&T program will advance program goals. An initial funding will be disbursed through screening by an eligibility worker to States’ Letters of Credit in accordance determine whom to place in an E&T with § 277.5 of this chapter. The State agency must ensure that records are program does not constitute a compo- maintained that support the financial nent. The State agency may require claims being made to FNS. Food Stamp Program applicants to (7) Fiscal recordkeeping and reporting participate in any component it offers requirements. Total E&T expenditures in its E&T program at the time of ap- are reported on the Financial Status plication. The State agency must not Report (SF–269) in the column con- impose requirements that would delay taining ‘‘other’’ expenses. E&T expend- the determination of an individual’s itures are also separately identified in eligibility for benefits or in issuing an attachment to the SF–269 to show, benefits to any household that is other- as provided in instructions, total State wise eligible. In accordance with sec- and Federal E&T expenditures; expend- tion 6(o)(1)(A) of the Food Stamp Act itures funded with the unmatched Fed- and § 273.24, job search and job search eral grants; State and Federal expendi- training, when offered as components tures for participant reimbursements; of an E&T program, are not qualifying State and Federal expenditures for activities relating to the participation E&T costs at the 50 percent reimburse- requirements necessary to maintain ment level; and State and Federal ex- food stamp eligibility for ABAWDs. penditures for optional workfare pro- However, job search or job search gram costs, operated under section 20 training activities, when offered as of the Food Stamp Act and paragraph part of other E&T program compo- (m)(7) of this section. Claims for en- nents, are acceptable as long as those hanced funding for placements of par- activities comprise less than half the ticipants in employment after their total required time spent in the compo- initial participation in the optional nents. An E&T program offered by a workfare program will be submitted in State agency must include one or more accordance with paragraph (m)(7)(iv) of of the following components: this section. (i) A job search program. The State (e) Employment and training programs. agency may require an individual to Work registrants not otherwise ex- participate in job search from the time empted by the State agency are subject an application is filed for an initial pe- to the E&T program participation re- riod established by the State agency. quirements imposed by the State agen- Following this initial period (which

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may extend beyond the date when eli- considered a qualifying activity relat- gibility is determined) the State agen- ing to the participation requirements cy may require an additional job necessary to maintain food stamp eli- search period in any period of 12 con- gibility for ABAWDs. secutive months. The first such period (iii) A workfare program as described of 12 consecutive months will begin at in paragraph (m) of this section. any time following the close of the ini- (A) The participation requirements of tial period. The State agency may es- section 20(b) of the Food Stamp Act tablish a job search period that, in its and paragraphs (m)(5)(i)(A) and estimation, will provide participants a (m)(5)(i)(B) of this section for individ- reasonable opportunity to find suitable uals exempt from Food Stamp Program employment. The State agency should work requirements under paragraphs not, however, establish a continuous, (b)(1)(iii) and (b)(1)(v) of this section, year-round job search requirement. If a are not applicable to E&T workfare reasonable period of job search does not result in employment, placing the components. individual in a training or education (B) In accordance with section 20(e) component to improve job skills will of the Food Stamp Act and paragraph likely be more productive. In accord- (m)(6)(ii) of this section, the State ance with section 6(o)(1)(A) of the Food agency may establish a job search pe- Stamp Act and § 273.24, a job search riod of up to 30 days following certifi- program is not a qualifying activity re- cation prior to making a workfare as- lating to the participation require- signment. This job search activity is ments necessary to maintain food part of the workfare assignment, and stamp eligibility for ABAWDs. How- not a job search ‘‘program.’’ Partici- ever, such a program, when operated pants are considered to be partici- under title I of the WIA, or under sec- pating in and complying with the re- tion 236 of the Trade Act, is considered quirements of workfare, thereby meet- a qualifying activity relating to the ing the participation requirement for participation requirements necessary ABAWDs. to maintain food stamp eligibility for (C) The sharing of workfare savings ABAWDs. authorized under section 20(g) of the (ii) A job search training program Food Stamp Act and paragraph that includes reasonable job search (m)(7)(iv) of this section are not avail- training and support activities. Such a able for E&T workfare components. program may consist of job skills as- (iv) A program designed to improve sessments, job finding clubs, training the employability of household mem- in techniques for employability, job bers through actual work experience or placement services, or other direct training, or both, and to enable indi- training or support activities, includ- viduals employed or trained under such ing educational programs determined programs to move promptly into reg- by the State agency to expand the job ular public or private employment. search abilities or employability of Such an employment or training expe- those subject to the program. Job rience must: search training activities are approvable if they directly enhance the em- (A) Not provide any work that has ployability of the participants. A di- the effect of replacing the employment rect link between the job search train- of an individual not participating in ing activities and job-readiness must the employment or training experience be established for a component to be program; and approved. In accordance with section (B) Provide the same benefits and 6(o)(1) of the Food Stamp Act and working conditions that are provided § 273.24, a job search program is not a at the job site to employees performing qualifying activity relating to the par- comparable work for comparable hours. ticipation requirements necessary to (v) A project, program or experiment maintain food stamp eligibility for such as a supported work program, or a ABAWDs. However, such a program, WIA or State or local program aimed when operated under title I of the WIA at accomplishing the purpose of the or under section 236 of the Trade Act, is E&T program.

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(vi) Educational programs or activi- worked in a workfare program under ties to improve basic skills or other- paragraph (m) of this section and any wise improve employability including hours worked for compensation (in educational programs determined by cash or in kind), must not exceed 120. the State agency to expand the job (4) Voluntary participation. (i) A State search abilities or employability of agency may operate program compo- those subject to the program. Allow- nents in which individuals elect to parable educational activities may in- ticipate. clude, but are not limited to, high (ii) A State agency must not dis- school or equivalent educational pro- qualify voluntary participants in an grams, remedial education programs to E&T component for failure to comply achieve a basic literacy level, and in- with E&T requirements. structional programs in English as a (iii) The hours of participation or second language. Only educational work of a volunteer may not exceed the components that directly enhance the hours required of E&T mandatory par- employability of the participants are ticipants, as specified in paragraph allowable. A direct link between the (e)(3) of this section. education and job-readiness must be es- (f) Failure to comply—(1) Ineligibility tablished for a component to be ap- for failure to comply. A nonexempt indi- proved. vidual who refuses or fails without (vii) A program designed to improve good cause, as defined in paragraphs the self-sufficiency of recipients (i)(2) and (i)(3) of this section, to com- through self-employment. Included are ply with the Food Stamp Program programs that provide instruction for work requirements listed under para- self-employment ventures. graph (a)(1) of this section is ineligible (2) Exemptions. Each State agency to participate in the Food Stamp Pro- may, at its discretion, exempt indi- gram, and will be considered an ineli- vidual work registrants and categories gible household member, pursuant to of work registrants from E&T partici- § 273.1(b)(7). pation. Each State agency must peri- (i) As soon as the State agency learns odically reevaluate its individual and of the individual’s noncompliance it categorical exemptions to determine must determine whether good cause for whether they remain valid. Each State the noncompliance exists, as discussed agency will establish the frequency of in paragraph (i) of this section. Within its periodic evaluation. 10 days of establishing that the non- (3) Time spent in an employment and compliance was without good cause, training program. (i) Each State agency the State agency must provide the in- will determine the length of time a dividual with a notice of adverse ac- participant spends in any E&T compo- tion, as specified in § 273.13. If the State nent it offers. The State agency may agency offers a conciliation process as also determine the number of succes- part of its E&T program, it must issue sive components in which a participant the notice of adverse action no later may be placed. than the end of the conciliation period. (ii) The time spent by the members of (ii) The notice of adverse action must a household collectively each month in contain the particular act of non- an E&T work program (including, but compliance committed and the pro- not limited to, those carried out under posed period of disqualification. The paragraphs (e)(1)(iii) and (e)(1)(iv) of notice must also specify that the indi- this section) combined with any hours vidual may, if appropriate, reapply at worked that month in a workfare pro- the end of the disqualification period. gram under paragraph (m) of this sec- Information must be included on or tion must not exceed the number of with the notice describing the action hours equal to the household’s allot- that can be taken to avoid the disquali- ment for that month divided by the fication before the disqualification pe- higher of the applicable Federal or riod begins. The disqualification period State minimum wage. The total hours must begin with the first month fol- of participation in an E&T component lowing the expiration of the 10-day ad- for any household member individually verse notice period, unless a fair hear- in any month, together with any hours ing is requested.

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(iii) An E&T disqualification may be State agency’s household disqualifica- imposed after the end of a certification tion policy. period. Thus, a notice of adverse action (5) Household ineligibility. (i) If the in- must be sent whenever the State agen- dividual who becomes ineligible to par- cy becomes aware of an individual’s ticipate under paragraph (f)(1) of this noncompliance with Food Stamp Pro- section is the head of a household, the gram work requirements, even if the State agency, at its option, may dis- disqualification begins after the cer- qualify the entire household from Food tification period expires and the house- Stamp Program participation. hold has not been recertified. (ii) The State agency may disqualify (2) Disqualification periods. The fol- the household for a period that does lowing disqualification periods will be not exceed the lesser of: imposed: (A) The duration of the ineligibility (i) For the first occurrence of non- of the noncompliant individual under compliance, the individual will be dis- paragraph (f)(2) of this section; or qualified until the later of: (B) 180 days. (A) The date the individual complies, (iii) A household disqualified under as determined by the State agency; this provision may reestablish eligi- (B) One month; or bility if: (C) Up to three months, at State (A) The head of the household leaves agency option. the household; (ii) For the second occurrence, until (B) A new and eligible person joins the later of: the household as the head of the household, as defined in § 273.1(d)(2); or (A) The date the individual complies, (C) The head of the household be- as determined by the State agency; comes exempt from work requirements (B) Three months; or during the disqualification period. (C) Up to six months, at State agency (iv) If the head of the household joins option. another household as its head, that (iii) For the third or subsequent oc- household will be disqualified from par- currence, until the later of: ticipating in the Food Stamp Program (A) The date the individual complies, for the remaining period of ineligi- as determined by the State agency; bility. (B) Six months; (6) Fair hearings. Each individual or (C) A date determined by the State household has the right to request a agency; or fair hearing, in accordance with (D) At the option of the State agen- § 273.15, to appeal a denial, reduction, cy, permanently. or termination of benefits due to a de- (3) Record retention. In accordance termination of nonexempt status, or a with § 272.1(f) of this chapter, State State agency determination of failure agencies are required to retain records to comply with Food Stamp Program concerning the frequency of non- work requirements. Individuals or compliance with FSP work require- households may appeal State agency ments and the resulting disqualifica- actions such as exemption status, the tion actions imposed. These records type of requirement imposed, or State must be available for inspection and agency refusal to make a finding of audit at any reasonable time to ensure good cause if the individual or house- conformance with the minimum man- hold believes that a finding of failure datory disqualification periods insti- to comply has resulted from improper tuted. decisions on these matters. The State (4) Disqualification plan. In accord- agency or its designee operating the ance with § 272.2(d)(1)(xiii) of this chap- relevant component must receive suffi- ter, each State agency must prepare cient advance notice to either permit and submit a plan detailing its dis- the attendance of a representative or qualification policies. The plan must ensure that a representative will be include the length of disqualification available for questioning over the to be enforced for each occurrence of phone during the hearing. A represent- noncompliance, how compliance is de- ative of the appropriate agency must termined by the State agency, and the be available through one of these

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means. A household must be allowed to work requirement leads to a denial or examine its E&T component casefile at termination of the individual’s or a reasonable time before the date of household’s food stamp benefits, the in- the fair hearing, except for confidential dividual or household has a right to ap- information (that may include test re- peal the decision in accordance with sults) that the agency determines the provisions of paragraph (f)(6) of should be protected from release. Con- this section. fidential information not released to a (iv) In cases where the individual is household may not be used by either disqualified from the title IV-A pro- party at the hearing. The results of the gram for refusal or failure to comply fair hearing are binding on the State with a title IV-A work requirement, agency. but the individual meets one of the (7) Failure to comply with a work re- work registration exemptions provided quirement under title IV of the Social Se- in paragraph (b)(1) of this section, curity Act, or an unemployment com- other than the exemption in para- pensation work requirement. An indi- graphs (b)(1)(iii) of this section, the vidual exempt from Food Stamp Pro- State agency may, at its option, apply gram work requirements by paragraphs the identical title IV-A disqualification (b)(1)(iii) or (b)(1)(v) of this section be- on the individual under the Food cause he or she is subject to work re- Stamp Program. The State agency quirements under title IV-A or unem- must impose such optional disquali- ployment compensation who fails to fications in accordance with section comply with a title IV-A or unemploy- 6(i) of the Food Stamp Act and with ment compensation work requirement the provisions of § 273.11(1). will be treated as though he or she (g) Ending disqualification. Except in failed to comply with the Food Stamp cases of permanent disqualification, at Program work requirement. the end of the applicable mandatory (i) When a food stamp household re- disqualification period for noncompli- ports the loss or denial of title IV-A or ance with Food Stamp Program work unemployment compensation benefits, requirements, participation may re- or if the State agency otherwise learns sume if the disqualified individual ap- of a loss or denial, the State agency plies again and is determined by the must determine whether the loss or de- State agency to be in compliance with nial resulted when a household member work requirements. A disqualified indi- refused or failed without good cause to vidual may be permitted to resume comply with a title IV-A or unemploy- participation during the disqualifica- ment compensation work requirement. (ii) If the State agency determines tion period (if otherwise eligible) by be- that the loss or denial of benefits re- coming exempt from work require- sulted from an individual’s refusal or ments. failure without good cause to comply (h) Suitable employment. (1) Employ- with a title IV or unemployment comment will be considered suitable un- pensation requirement, the individual less: (or household if applicable under para- (i) The wage offered is less than the graph (f)(5) of this section) must be dis- highest of the applicable Federal min- qualified in accordance with the appli- imum wage, the applicable State min- cable provisions of this paragraph (f). imum wage, or eighty percent (80%) of However, if the noncomplying indi- the Federal minimum wage if neither vidual meets one of the work registra- the Federal nor State minimum wage tion exemptions provided in paragraph is applicable. (b)(1) of this section (other than the ex- (ii) The employment offered is on a emptions provided in paragraphs piece-rate basis and the average hourly (b)(1)(iii) or (b)(1)(v) of this section) the yield the employee can reasonably be individual (or household if applicable expected to earn is less than the appli- under paragraph (f)(5) of this section) cable hourly wages specified under will not be disqualified. paragraph (h)(1)(i) of this section. (iii) If the State agency determina- (iii) The household member, as a con- tion of noncompliance with a title IV- dition of employment or continuing A or unemployment compensation employment, is required to join, resign

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from, or refrain from joining any le- cumstances, including information gitimate labor organization. submitted by the employer and by the (iv) The work offered is at a site sub- household member involved, in deter- ject to a strike or lockout at the time mining whether or not good cause ex- of the offer unless the strike has been ists. enjoined under section 208 of the (2) Good cause includes cir- Labor-Management Relations Act (29 cumstances beyond the member’s con- U.S.C. 78) (commonly known as the trol, such as, but not limited to, ill- Taft-Hartley Act), or unless an injunc- ness, illness of another household tion has been issued under section 10 of member requiring the presence of the the Railway Labor Act (45 U.S.C. 160). member, a household emergency, the (v) It fails to meet additional suit- unavailability of transportation, or the ability criteria established by State lack of adequate child care for children agencies. who have reached age six but are under (2) In addition, employment will be age 12. considered suitable unless the house- (3) Good cause for leaving employ- hold member involved can demonstrate ment includes the good cause provi- or the State agency otherwise becomes sions found in paragraph (i)(2) of this aware that: section, and resigning from a job that (i) The degree of risk to health and is unsuitable, as specified in para- safety is unreasonable. graphs (h)(1) and (h)(2) of this section. (ii) The member is physically or men- Good cause for leaving employment tally unfit to perform the employment, also includes: as documented by medical evidence or (i) Discrimination by an employer by reliable information from other based on age, race, sex, color, handicap, sources. religious beliefs, national origin or po- (iii) The employment offered within litical beliefs; the first 30 days of registration is not in the member’s major field of experi- (ii) Work demands or conditions that ence. render continued employment unrea- (iv) The distance from the member’s sonable, such as working without being home to the place of employment is unpaid on schedule; reasonable considering the expected (iii) Acceptance of employment by wage and the time and cost of com- the individual, or enrollment by the in- muting. Employment will not be con- dividual in any recognized school, sidered suitable if daily commuting training program or institution of time exceeds 2 hours per day, not in- higher education on at least a half cluding the transporting of a child to time basis, that requires the individual and from a child care facility. Nor will to leave employment; employment be considered suitable if (iv) Acceptance by any other house- the distance to the place of employ- hold member of employment or enrollment prohibits walking and neither ment at least half-time in any recog- public nor private transportation is nized school, training program or insti- available to transport the member to tution of higher education in another the jobsite. county or similar political subdivision (v) The working hours or nature of that requires the household to move the employment interferes with the and thereby requires the individual to member’s religious observances, con- leave employment; victions, or beliefs. (v) Resignations by persons under the (i) Good Cause. (1) The State agency age of 60 which are recognized by the is responsible for determining good employer as retirement; cause when a food stamp recipient fails (vi) Employment that becomes un- or refuses to comply with Food Stamp suitable, as specified in paragraphs Program work requirements. Since it (h)(1) and (h)(2) of this section, after is not possible for the Department to the acceptance of such employment; enumerate each individual situation (vii) Acceptance of a bona fide offer that should or should not be considered of employment of more than 30 hours a good cause, the State agency must week or in which the weekly earnings take into account the facts and cir- are equivalent to the Federal minimum

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wage multiplied by 30 hours that, be- and application processing. (i) When a cause of circumstances beyond the in- household files an application for par- dividual’s control, subsequently either ticipation, or when a participating does not materialize or results in em- household reports the loss of a source ployment of less than 30 hours a week of income or a reduction in household or weekly earnings of less than the earnings, the State agency must deter- Federal minimum wage multiplied by mine whether any household member 30 hours; and voluntarily quit his or her job or re- (viii) Leaving a job in connection duced his or her work effort. Benefits with patterns of employment in which must not be delayed beyond the normal workers frequently move from one em- processing times specified in § 273.2 ployer to another such as migrant farm pending the outcome of this determina- labor or construction work. There may tion. be some circumstances where house- (ii) The voluntary quit provision ap- holds will apply for food stamp benefits plies if the employment involved 30 between jobs particularly in cases hours or more per week or provided where work may not yet be available weekly earnings at least equivalent to at the new job site. Even though em- the Federal minimum wage multiplied ployment at the new site has not actu- by 30 hours; the quit occurred within a ally begun, the quitting of the previous period established by the State agency employment must be considered as between 30 to 60 days prior to the date with good cause if it is part of the pat- of application or anytime thereafter; tern of that type of employment. and the quit was without good cause. (4) Verification. To the extent that Changes in employment status that re- the information given by the household sult from terminating a self-employ- is questionable, as defined in ment enterprise or resigning from a job § 273.2(f)(2), State agencies must re- at the demand of the employer will not quest verification of the household’s be considered a voluntary quit for pur- statements. The primary responsibility poses of this paragraph (j). An em- for providing verification, as provided ployee of the Federal Government, or in § 273.2(f)(5), rests with the household. of a State or local government who (j) Voluntary quit and reduction of participates in a strike against such work effort—(1) Period for establishing government, and is dismissed from his voluntary quit and reduction of work ef- or her job because of participation in fort. For the purpose of establishing the strike, will be considered to have that a voluntary quit without good voluntarily quit his or her job without cause or reduction in work effort with- good cause. If an individual quits a job, out good cause occurred prior to apply- secures new employment at coming for food stamps, a State agency parable wages or hours and is then laid may, at its option, choose a period be- off or, through no fault of his own, tween 30 and 60 days before application loses the new job, the individual must in which to determine voluntary quit not be disqualified for the earlier quit. or reduction in work effort. (iii) The reduction of work effort pro- (2) Individual ineligibility. An indi- vision applies if, before the reduction, vidual is ineligible to participate in the the individual was employed 30 hours Food Stamp Program if, in a period es- or more per week; the reduction oc- tablished by the State agency between curred within a period established by 30 and 60 day before applying for food the State agency between 30 and 60 stamp benefits or at any time there- days prior to the date of application or after, the individual: anytime thereafter; and the reduction (i) Voluntarily and without good was voluntary and without good cause. cause quits a job of 30 hours a week or If the individual reduces his or her more; or work hours to less than 30 a week, but (ii) Reduces his or her work effort continues to earn weekly wages that voluntarily and without good cause exceed the Federal minimum wage and, after the reduction, is working multiplied by 30 hours, the individual less than 30 hours per week. remains exempt from Program work (3) Determining whether a voluntary requirements, in accordance with para- quit or reduction of work effort occurred graph (b)(1)(vii) of this section, and the

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reduction in work effort provision does and of its right to a fair hearing. The not apply. Minor variations in the household’s disqualification is effective number of hours worked or in the upon the issuance of the notice of de- weekly minimum wage equivalent nial. wages are inevitable and must be taken (vii) In the case of an individual who into consideration when assessing a re- is a member of a participating house- cipient’s compliance with Program hold, if the State agency determines work rules. that the individual voluntarily quit his (iv) In the case of an applicant house- or her job or reduced his or her work hold, the State agency must determine effort without good cause while partici- if any household member subject to pating in the program or discovers that Food Stamp Program work require- the individual voluntarily quit his or ments voluntarily quit his or her job or her job or reduced his or her work ef- reduced his or her work effort within a fort without good cause during a period period established by the State agency established by the State agency be- between 30 and 60 days prior to date of tween 30 and 60 days prior to the date application. If the State agency learns of application for benefits or between that a household has lost a source of application and certification, the State income or experienced a reduction in agency must provide the individual income after the date of application with a notice of adverse action as spec- but before the household is certified, ified in § 273.13 within 10 days after the the State agency must determine determination of a quit or reduction in whether a voluntary quit or reduction work effort. The notification must con- in work effort occurred. (v) Upon determining that an indi- tain the particular act of noncompli- vidual voluntarily quit employment or ance committed, the proposed period of reduced work effort, the State agency ineligibility, the actions that may be must determine if the voluntary quit taken to avoid the disqualification, and or reduction of work effort was with it must specify that the individual, if good cause as defined in paragraph (i) otherwise eligible, may resume partici- of this section. pation at the end of the disqualifica- (vi) In the case of an individual who tion period if the State agency deter- is a member of an applicant household, mines the individual to be in compli- if the voluntary quit or reduction in ance with Program work requirements. work effort was without good cause, The individual will be disqualified ac- the individual will be determined ineli- cording to the State agency’s estab- gible to participate and will be dis- lished minimum mandatory sanction qualified according to the State agen- schedule. The ineligible individual cy’s established minimum mandatory must be considered an ineligible house- sanction schedule. The ineligible indi- hold member, pursuant to § 273.1(b)(7). vidual must be considered an ineligible The disqualification period will begin household member, pursuant to the first month following the expira- § 273.1(b)(7). The disqualification is ef- tion of the 10-day adverse notice pe- fective upon the determination of eligi- riod, unless the individual requests a bility for the remaining household fair hearing. If a voluntary quit or re- members. If the individual who be- duction in work effort occurs in the comes ineligible is the head of the last month of a certification period, or household, as defined in § 273.1(d)(2), the is determined in the last 30 days of the State agency may choose to disqualify certification period, the individual the entire household, in accordance must be denied recertification for a pe- with paragraph (f)(5) of this section. If riod equal to the appropriate manda- the State agency chooses to disqualify tory disqualification period, beginning the household, the State agency must with the day after the last certification provide the applicant household with a period ends and continuing for the notice of denial in accordance with length of the disqualification, regard- § 273.2(g)(3). The notice must inform the less of whether the individual reapplies household of the proposed period of dis- for food stamps. Each individual has a qualification; its right to reapply at right to a fair hearing to appeal a de- the end of the disqualification period; nial or termination of benefits due to a

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determination that the individual vol- summer of 1993, at least half of its food untarily quit his or her job or reduced stamp households also received cash his or her work effort without good benefits from a State program funded cause. If the participating individual’s under title IV-A of the Social Security benefits are continued pending a fair Act. hearing and the State agency deter- (3) Qualified State agencies. The State mination is upheld, the disqualifica- agencies of Alaska, California, Con- tion period must begin the first of the necticut, the District of Columbia, month after the hearing decision is Massachusetts, Michigan, Minnesota, rendered. New Jersey, West Virginia, and Wis- (viii) If the individual who volun- consin meet the qualification. These 10 tarily quit his or her job, or who re- State agencies may operate an employ- duced his or her work effort without ment initiatives program. good cause is the head of a household, (4) Eligible households. A food stamp as defined in § 273.1(d), the State agen- household in one of the 10 qualified cy, at its option, may disqualify the State agencies may receive cash bene- entire household from Food Stamp fits in lieu of a food stamp coupon al- Program participation in accordance lotment if it meets the following re- with paragraph (f)(5) of this section. quirements: (4) Ending a voluntary quit or a reduc- (i) The food stamp household elects tion in work disqualification. Except in to participate in an employment initia- cases of permanent disqualification, tives program; following the end of the mandatory dis- (ii) An adult member of the house- qualification period for voluntarily hold: quitting a job or reducing work effort (A) Has worked in unsubsidized em- without good cause, an individual may ployment for the last 90 days, earning begin participation in the program if a minimum of $350 per month; he or she reapplies and is determined (B) Is receiving cash benefits under a eligible by the State agency. Eligi- State program funded under title IV-A bility may be reestablished during a of the Social Security Act; or disqualification and the individual, if (C) Was receiving cash benefits under otherwise eligible, may be permitted to the State program but, while partici- resume participation if the individual pating in the employment initiatives becomes exempt from Program work program, became ineligible because of requirements under paragraph (b)(1) of earnings and continues to earn at least this section. $350 a month from unsubsidized em- (5) Application in the final month of ployment. disqualification. Except in cases of per- (5) Program Provisions. (i) Cash bene- manent disqualification, if an applica- fits provided in an employment initiation for participation in the Program is tives program will be considered an al- filed in the final month of the manda- lotment, as defined at § 271.2 of this tory disqualification period, the State chapter. agency must, in accordance with (ii) An eligible household receiving § 273.10(a)(3), use the same application cash benefits in an employment initia- for the denial of benefits in the remain- tives program will not receive any ing month of disqualification and cer- other food stamp benefit during the pe- tification for any subsequent month(s) riod for which cash assistance is pro- if all other eligibility criteria are met. vided. (k) Employment initiatives program—(1) (iii) A qualified State agency oper- General. In accordance with section ating an employment initiatives pro- 17(d)(1)(B) of the Food Stamp Act, gram must increase the cash benefit to qualified State agencies may elect to participating households to com- operate an employment initiatives pro- pensate for any State or local sales tax gram, in which an eligible household on food purchases, unless FNS deter- can receive the cash equivalent of its mines that an increase is unnecessary food stamp coupon allotment. because of the limited nature of items (2) State agency qualification. A State subject to the State or local sales tax. agency qualifies to operate an employ- (iv) Any increase in cash assistance ment initiatives program if, during the to account for a State or local sales tax

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on food purchases must be paid by the cused from meeting any other work re- State agency. quirements; (6) Evaluation. After two years of op- (E) The work supplementation pro- erating an employment initiatives program must not displace any persons gram, a State agency must evaluate currently employed who are not sup- the impact of providing cash assistance plemented or supported; in lieu of a food stamp coupon allot- (F) The wage subsidy must not be ment to participating households. The considered income or resources under State agency must provide FNS with a any Federal, State or local laws, in- written report of its evaluation find- cluding but not limited to, laws relat- ings. The State agency, with the con- ing to taxation, welfare, or public as- currence of FNS, will determine the sistance programs, and the household’s content of the evaluation. food stamp allotment must not be de- (l) Work supplementation program. In creased due to taxation or any other accordance with section 16(b) of the reason because of its use as a wage sub- Food Stamp Act, States may operate sidy; work supplementation (or support) pro- (G) The earned income deduction grams that allow the cash value of food does not apply to the subsidized por- stamp benefits and public assistance, tion of wages received in a work sup- such as cash assistance authorized plementation program; and under title IV-A of the Social Security (H) All work supplemented or sup- Act or cash assistance under a program ported employees must receive the established by a State, to be provided same benefits (sick and personal leave, to employers as a wage subsidy to be health coverage, workmen’s compensa- used for hiring and employing public tion, etc.) as similarly situated co- assistance recipients. The goal of these workers who are not participating in programs is to promote self-sufficiency work supplementation and wages paid under a wage supplementation or sup- by providing public assistance recipi- port program must meet the require- ents with work experience to help them ments of the Fair Labor Standards Act move into unsubsidized jobs. In accord- and other applicable employment laws. ance with § 272.2(d)(1)(xiv) of this chap- (ii) Description. The plan must also ter, State agencies that wish to exer- describe: cise their option to implement work (A) The procedures the State agency supplementation programs must sub- will use to ensure that the cash value mit to FNS for approval a plan that of food stamp benefits for participating complies with the provisions of this households are not subject to State or paragraph (l). Work supplementation local sales taxes on food purchases. The programs may not be implemented costs of increasing household food without prior approval from FNS. stamp allotments to compensate for (1) Plan. (i) Assurances. The plan must such sales taxes must be paid from contain the following assurances: State funds; (A) The individual participating in a (B) State agency, employer and re- work supplementation program must cipient obligations and responsibilities; not be employed by the employer at (C) The procedures the State agency the time the individual enters the pro- will use to provide wage subsidies to gram; employers and to ensure account- (B) The wage subsidy received under ability; the work supplementation program (D) How public assistance recipients must be excluded from household in- in the proposed work supplementation come and resources during the term program will, within a specified period the individual is participating in work of time, be moved from supplemented supplementation; or supported employment to employ- (C) The household must not receive a ment that is not supplemented or sup- separate food stamp allotment while ported; participating in the work supplemen- (E) Whether the food stamp allot- tation program; ment and public assistance grant will (D) An individual participating in a be frozen at the time a recipient begins work supplementation program is ex- a subsidized job; and

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(F) The procedures the State agency workfare, nonexempt food stamp re- will use to ensure that work sup- cipients may be required to perform plementation program participants do work in a public service capacity as a not incur any Federal, State, or local condition of eligibility to receive the tax liabilities on the cash value of coupon allotment to which their house- their food stamp benefits. hold is normally entitled. The primary (2) Budget. In addition to the plan de- goal of workfare is to improve employ- scribed in paragraph (l)(1) of this sec- ability and enable individuals to move tion, an operating budget for the pro- into regular employment. posed work supplementation program (2) Program administration. (i) A food must be submitted to FNS. stamp workfare program may be oper- (3) Approval. FNS will review the ini- ated as a component of a State agen- tial plan and any subsequent amend- cy’s E&T program, or it may be oper- ments. Upon approval by FNS, the ated independently. If the workfare State agency must incorporate the ap- program is part of an E&T program it proved work supplementation program must be included as a component in the plan or subsequent amendment into its State agency’s E&T plan in accordance State Plan of Operation and its oper- with the requirements of paragraph ating budget must be included in the (c)(4) of this section. If it is operated State agency budget. No plan or independent of the E&T program, the amendment may be implemented with- State agency must submit a workfare out approval from FNS. plan to FNS for its approval. For the (4) Reporting. State agencies oper- purpose of this paragraph (m), a polit- ating work supplementation and sup- ical subdivision is any local govern- port programs are required to comply ment, including, but not limited to, with all FNS reporting requirements, any county, city, town or parish. A including reporting the amount of ben- State agency may implement a efits contributed to employers as a workfare program statewide or in only wage subsidy on the FNS–388, State some areas of the State. The areas of Issuance and Participation Estimates; operation must be identified in the FNS–388A, Participation and Issuance State agency’s workfare or E&T plan. by Project Area; FNS–46, Issuance Rec- (ii) Political subdivisions are encour- onciliation Report; and SF–269, Adden- aged, but not required, to submit their dum Financial Status Report. State plans to FNS through their respective agencies are also required to report ad- State agencies. At a minimum, how- ministrative costs associated with ever, plans must be submitted to the work supplementation programs on the State agencies concurrent with their FNS–366A, Budget Projection and SF– submission to FNS. Workfare plans and 269, Financial Status Report. Special subsequent amendments must not be codes for work supplementation pro- implemented prior to their approval by grams will be assigned for reporting FNS. purposes. (iii) When a State agency chooses to (5) Funding. FNS will pay the cash sponsor a workfare program by submit- value of a participating household’s ting a plan to FNS, it must incorporate food stamp benefits to a State agency the approved plan into its State Plan with an approved work supplemen- of Operations. When a political subdivi- tation program to pay to an employer sion chooses to sponsor a workfare pro- as a wage subsidy, and will also reim- gram by submitting a plan to FNS, the burse the State agency for related ad- State agency is responsible as a ministrative costs, in accordance with facilitator in the administration of the Section 16 of the Food Stamp Act. program by disbursing Federal funding (6) Quality control. Cases in which a and meeting the requirements identi- household member is participating in a fied in paragraph (m)(4) of this section. work supplementation program will be When it is notified that FNS has ap- coded as not subject to review. proved a workfare plan submitted by a (m) Optional workfare program—(1) political subdivision in its State, the General. This paragraph (m) contains State agency must append that polit- the rules to be followed in operating a ical subdivision’s workfare plan to its food stamp workfare program. In own State Plan of Operations.

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(iv) The operating agency is the ad- chooses to operate a workfare program ministrative organization identified in and represents a population which is the workfare plan as being responsible already, at least in part, subject to a for establishing job sites, assigning eli- food stamp workfare program adminis- gible recipients to the job sites, and tered by another political subdivision, meeting the requirements of this para- it must establish in its workfare plan graph (m). The operating agency may how food stamp recipients will not be be any public or private, nonprofit or- subject to more than one food stamp ganization. The State agency or polit- workfare program. ical subdivision that submitted the (3) Operating agency responsibilities. (i) workfare plan is responsible for moni- General. The operating agency, as des- toring the operating agency’s compli- ignated by the State agency or other ance with the requirements of this political subdivision that submits a paragraph (m) or of the workfare plan. plan, is responsible for establishing and The Department may suspend or termi- monitoring job sites, interviewing and nate some or all workfare program assessing eligible recipients, assigning funding, or withdraw approval of the eligible recipients to appropriate job workfare program from the State agen- sites, monitoring participant compli- cy or political subdivision that sub- ance, making initial determinations of mitted the workfare plan upon finding good cause for household noncompli- that that State agency or political sub- ance, and otherwise meeting the re- division, or their respective operating quirements of this paragraph (m). agencies, have failed to comply with (ii) Establishment of job sites. Workfare the requirements of this paragraph (m) job slots may only be located in public or of the workfare plan. or private nonprofit agencies. Contrac- (v) State agencies or other political tual agreements must be established subdivisions must describe in detail in between the operating agency and or- the plan how the political subdivision, ganizations providing jobs that in- working with the State agency and any clude, but are not limited to, designa- other cooperating agencies that may be tion of the slots available and designa- involved in the program, will fulfill the tion of responsibility for provision of provisions of this paragraph (m). The benefits, if any are required, to the plan will be a one-time submittal, with workfare participant. amendments submitted as needed to (iii) Notifying State agency of non- cover any changes in the workfare pro- compliance. The operating agency must gram as they occur. notify the State agency of noncompli- (vi) State agencies or political sub- ance by an individual with a workfare divisions submitting a workfare plan obligation when it determines that the must submit with the plan an oper- individual did not have good cause for ating budget covering the period from the noncompliance. This notification the initiation of the workfare pro- must occur within five days of such a gram’s implementation schedule to the determination so that the State agency close of the Federal fiscal year. In ad- can make a final determination as pro- dition, an estimate of the cost for one vided in paragraph (m)(4)(iv) of this full year of operation must be subsection. mitted together with the workfare (iv) Notifications. (A) State agencies plan. For subsequent fiscal years, the must establish and use notices to no- workfare program budget must be in- tify the operating agency of workfare- cluded in the State agency’s budget. eligible households. The notice must (vii) If workfare plans are submitted include the case name, case number, by more than one political subdivision, names of workfare-eligible household each representing the same population members, address of the household, (such as a city within a county), the certification period, and indication of Department will determine which po- any part-time work. If the State agen- litical subdivision will have its plan cy is calculating the hours of obliga- approved. Under no circumstances will tion, it must also include this in the a food stamp recipient be subject to notice. If the operating agency is com- more than one food stamp workfare puting the hours to be worked, include program. If a political subdivision the monthly allotment amount.

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(B) Operating agencies must estab- (ii) The State agency must determine lish and use notices to notify the at certification or recertification workfare participant of where and which household members are eligible when the participant is to report, to for the workfare program and inform whom the participant is to report, a the household representative of the na- brief description of duties for the par- ture of the program and of the pen- ticular placement, and the number of alties for noncompliance. If the State hours to be worked. agency is not the operating agency, (C) Operating agencies must establish each member of a household who is and use notices to notify the State subject to workfare under paragraph agency of failure by a household to (m)(5)(i) of this section must be re- meet its workfare obligation. ferred to the organization which is the (v) Recordkeeping requirements. (A) operating agency. The information Files that record activity by workfare identified in paragraph (m)(3)(iv)(A) of participants must be maintained. At a this section must be forwarded to the minimum, these records must contain operating agency within 5 days after job sites, hours assigned, and hours the date of household certification. completed. Computation of hours to be worked (B) Program records must be main- may be delegated to the operating tained, for audit and review purposes, agency. for a period of 3 years from the month (iii) The State agency must inform of origin of each record. Fiscal records the household and the operating agen- and accountable documents must be re- cy of the effect of any changes in a tained for 3 years from the date of fis- household’s circumstances on the cal or administrative closure of the household’s workfare obligation. This workfare program. Fiscal closure, as includes changes in benefit levels or used in this paragraph (m), means that workfare eligibility. workfare program obligations for or (iv) Upon notification by the oper- against the Federal government have ating agency that a participant has been liquidated. Administrative clo- failed to comply with the workfare re- sure, as used in this paragraph (m), quirement without good cause, the means that the operating agency or State agency must make a final deter- Federal government has determined mination as to whether or not the fail- and documented that no further action ure occurred and whether there was to liquidate the workfare program obli- good cause for the failure. If the State gation is appropriate. Fiscal records agency determines that the participant and accountable records must be kept in a manner that will permit did not have good cause for noncompli- verification of direct monthly reim- ance, a sanction must be processed as bursements to recipients, in accord- provided in paragraphs (f)(1)(i) and ance with paragraph (m)(7)(iii) of this (f)(1)(ii) of this section. The State section. agency must immediately inform the (vi) Reporting requirements. The oper- operating agency of the months during ating agency is responsible for pro- which the sanction will apply. viding information needed by the State (v) The State agency must submit agency to fulfill the reporting require- quarterly reports to FNS within 45 ments contained in paragraph (m)(4)(v) days of the end of each quarter identi- of this section. fying for that quarter for that State: (vii) Disclosure. The provisions of (A) The number of households with § 272.1(c) of this chapter restricting the workfare-eligible recipients referred to use and disclosure of information ob- the operating agency. A household will tained from food stamp households is be counted each time it is referred to applicable to the administration of the the operating agency; workfare program. (B) The number of households as- (4) State agency responsibilities. (i) If a signed to jobs each month by the oper- political subdivision chooses to operate ating agency; a workfare program, the State agency (C) The number of individuals as- must cooperate with the political sub- signed to jobs each month by the oper- division in developing a plan. ating agency;

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(D) The total number of hours imum must take into account hours worked by participants; and worked in any other compensated ca- (E) The number of individuals pacity (including hours of participa- against which sanctions were applied. tion in a title IV work program) by the An individual being sanctioned over participant on a regular or predictable two quarters should only be reported as part-time basis. With the participant’s sanctioned for the earlier quarter. consent, the hours to be worked may (vi) The State agency may, at its op- be scheduled in such a manner that tion, assume responsibility for moni- more than 30 hours are worked in one toring all workfare programs in its week, as long as the total for that State to assure that there is compli- month does not exceed the weekly av- ance with this section and with the erage of 30 hours. plan submitted and approved by FNS. (B) No participant will be required to Should the State agency assume this work more than eight hours on any responsibility, it would act as agent for given day without his or her consent. FNS, which is ultimately responsible for ensuring such compliance. Should (C) No participant will be required to the State agency determine that non- accept an offer of workfare employ- compliance exists, it may withhold ment if it fails to meet the criteria es- funding until compliance is achieved or tablished in paragraphs (h)(1)(iii), FNS directs otherwise. (h)(1)(iv), (h)(2)(i), (h)(2)(ii), (h)(2)(iv), (5) Household responsibilities. (i) Par- and (h)(2)(v) of this section. ticipation requirement. Participation in (D) If the workfare participant is un- workfare, if assigned by the State able to report for job scheduling, to ap- agency, is a Food Stamp Program work pear for scheduled workfare employ- requirement for all nonexempt house- ment, or to complete the entire hold members, as provided in para- workfare obligation due to compliance graph (a) of this section. In addition: with Unemployment Insurance require- (A) Those recipients exempt from ments; other Food Stamp Program Food Stamp Program work require- work requirements established in para- ments because they are subject to and graph (a)(1) of this section; or the job complying with any work requirement search requirements established in under title IV of the Social Security paragraph (e)(1)(i) of this section, that Act are subject to workfare if they are inability must not be considered a re- currently involved less than 20 hours a fusal to accept workfare employment. week in title IV work activities. Those If the workfare participant informs the recipients involved 20 hours a week or operating agency of the time conflict, more may be subject to workfare at the the operating agency must, if possible, option of the political subdivision; and reschedule the missed activity. If the (B) Those recipients exempt from rescheduling cannot be completed be- Food Stamp Program work require- fore the end of the month, that must ments because they have applied for or not be considered as cause for disquali- are receiving unemployment com- fication. pensation are subject to workfare. (ii) Household obligation. The max- (E) The operating agency must as- imum total number of hours of work sure that all persons employed in required of a household each month is workfare jobs receive job-related bene- determined by dividing the household’s fits at the same levels and to the same coupon allotment by the Federal or extent as similar non-workfare em- State minimum wage, whichever is ployees. These are benefits related to higher. Fractions of hours of obligation the actual work being performed, such may be rounded down. The household’s as workers’ compensation, and not to hours of obligation for any given the employment by a particular agen- month may not be carried over into an- cy, such as health benefits. Of those other month. benefits required to be offered, any (6) Other program requirements. (i) elective benefit that requires a cash Conditions of employment. (A) A partici- contribution by the participant will be pant may be required to work a max- optional at the discretion of the partic- imum of 30 hours per week. This max- ipant.

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(F) The operating agency must as- quired under this section during this sure that all workfare participants ex- time. perience the same working conditions (iii) Participant reimbursement. The that are provided to non-workfare em- operating agency must reimburse par- ployees similarly employed. ticipants for transportation and other (G) The provisions of section 2(a)(3) costs that are reasonably necessary of the Service Contract Act of 1965 and directly related to participation in (Public Law 89–286), relating to health the program. These other costs may in- and safety conditions, apply to the clude the cost of child care, or the cost workfare program. of personal safety items or equipment (H) Operating agencies must not required for performance of work if place a workfare participant in a work these items are also purchased by reg- position that has the effect of replacing ular employees. These other costs may or preventing the employment of an in- not include the cost of meals away dividual not participating in the from home. No participant cost reim- workfare program. Vacancies due to bursed under a workfare program oper- hiring freezes, terminations, or lay-offs ated under Title IV of the Social Secu- must not be filled by workfare partici- rity Act or any other workfare pro- pants unless it can be demonstrated gram may be reimbursed under the that the vacancies are a result of insuf- food stamp workfare program. Only re- ficient funds to sustain former staff imbursement of participant costs up to levels. but not in excess of $25 per month for any participant will be subject to Fed- (I) Workfare jobs must not, in any eral cost sharing as provided in para- way, infringe upon the promotional op- graph (m)(7) of this section. Reim- portunities that would otherwise be bursed child care costs may not be available to regular employees. claimed as expenses and used in calcu- (J) Workfare jobs must not be related lating the child care deduction for de- in any way to political or partisan ac- termining household benefits. In activities. cordance with paragraph (m)(4)(i) of (K) The cost of workers’ compensa- this section, a State agency may decide tion or comparable protection provided what its reimbursement policy shall to workfare participants by the State be. agency, political subdivision, or oper- (iv) Failure to comply. When a ating agency is a matchable cost under workfare participant is determined by paragraph (m)(7) of this section. How- the State agency to have failed or re- ever, whether or not this coverage is fused without good cause to comply provided, in no case is the Federal gov- with the requirements of this para- ernment the employer in these graph (m), the provisions of paragraph workfare programs (unless a Federal (f) of this section will apply. agency is the job site). The Department (v) Benefit overissuances. If a benefit does not assume liability for any in- overissuance is discovered for a month jury to or death of a workfare partici- or months in which a participant has pant while on the job. already performed a workfare or work (L) The nondiscrimination require- component requirement, the State ment provided in § 272.6(a) of this chap- agency must apply the claim recovery ter applies to all agencies involved in procedures as follows: the workfare program. (A) If the person who performed the (ii) Job search period. The operating work is still subject to a work obliga- agency may establish a job search pe- tion, the State must determine how riod of up to 30 days following certifi- may extra hours were worked because cation prior to making a workfare as- of the improper benefit. The partici- signment during which the potential pant should be credited those extra participant is expected to look for a hours toward future work obligations; job. This period may only be estab- and lished at household certification, not (B) If a workfare or work component at recertification. The potential partic- requirement does not continue, the ipant would not be subject to any job State agency must determine whether search requirements beyond those re- the overissuance was the result of an

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intentional program violation, an inad- subdivisions which have submitted vertent household error, or a State plans must be established by the State agency error. For an intentional pro- agencies. gram violation a claim should be estab- (iii) Fiscal recordkeeping and reporting lished for the entire amount of the requirements. Workfare-related costs overissuance. If the overissuance was must be identified by the State agency caused by an inadvertent household on the Financial Status Report (Form error or State agency error, the State SF–269) as a separate column. All fi- agency must determine whether the nancial records, supporting documents, number of hours worked in workfare statistical records, negotiated con- are more than the number which could tracts, and all other records pertinent have been assigned had the proper ben- to workfare program funds must be efit level been used in calculating the maintained in accordance with § 277.12 number of hours to work. A claim must of this chapter. be established for the amount of the (iv) Sharing workfare savings—(A) En- overissuance not ‘‘worked off,’’ if any. titlement. A political subdivision is en- If the hours worked equal the amount titled to share in the benefit reductions of hours calculated by dividing the that occur when a workfare participant overissuance by the minimum wage, no begins employment while participating claim will be established. No credit for in workfare for the first time, or with- future work requirements will be in thirty days of ending the first par- given. ticipation in workfare. (7) Federal financial participation—(i) (1) To begin employment means to Administrative costs. Fifty percent of all appear at the place of employment and administrative costs incurred by State to begin working. agencies or political subdivisions in operating a workfare program will be (2) First participation in workfare funded by the Federal government. means performing work for the first Such costs include those related to re- time in a particular workfare program. cipient participation in workfare, up to The only break in participation that $25 per month for any participant, as does not end the first participation will indicated in paragraph (m)(6)(iii) of be due to the participant’s taking a job this section. Such costs do not include which does not affect the household’s the costs of equipment, capital expend- allotment by an entire month’s wages itures, tools or materials used in con- and which is followed by a return to nection with the work performed by workfare. workfare participants, the costs of su- (B) Calculating the benefit reductions. pervising workfare participants, the The political subdivision will calculate costs of reimbursing participants for benefit reductions from each workfare meals away from home, or reimbursed participant’s employment as follows. expenses in excess of $25 per month for (1) Unless the political subdivision any participant. State agencies must knows otherwise, it will presume that not use any portion of their annual 100 the benefit reduction equals the dif- percent Federal E&T allocations to ference between the last allotment fund the administration of optional issued before the participant began the workfare programs under section 20 of new employment and the first allot- the Food Stamp Act and this para- ment that reflects a full month’s graph (m). wages, earned income deduction, and (ii) Funding mechanism. The State dependent care deduction attributable agencies have responsibility for dis- to the new job. bursing Federal funds used for the (2) If the political subdivision knows workfare program through the State of other changes besides the new job agencies’ Letters of Credit. The State that affect the household’s allotment agency must also assure that records after the new job began, the political are being maintained which support subdivision will obtain the first allot- the financial claims being made to ment affected by an entire month’s FNS. This will be for all programs, re- wages from the new job. The political gardless of who submits the plan. subdivision will then recalculate the Mechanisms for funding local political allotment to account for the wages,

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earned income deduction, and depend- tion, all protections provided under ent care deduction attributable to the paragraph (m)(6)(i) of this section shall new job. In recalculating the allotment continue to apply. Those State agen- the political subdivision will also re- cies and political subdivisions choosing place any benefits from a State pro- to operate such a program shall indi- gram funded under title IV-A of the So- cate in their workfare plan how their cial Security Act received after the staffing will adapt to anticipated and new job with benefits received in the unanticipated levels of participation. last month before the new job began. The Department will not approve plans The difference between the first allot- which do not show that the benefits of ment that accounts for the new job and the workfare program, in terms of the recalculated allotment will be the hours worked by participants and re- benefit reduction. duced food stamp allotments due to (3) The political subdivision’s share successful job attainment, are expected of the benefit reduction is three times to exceed the costs of such a program. this difference, divided by two. In addition, if the Department finds (4) If, during these procedures, an that an approved voluntary program error is discovered in the last allot- does not meet this criterion, the De- ment issued before the new employ- partment reserves the right to with- ment began, that allotment must be draw approval. corrected before the savings are cal- (9) Comparable workfare programs. In culated. accordance with section 6(o)(2)(C) of (C) Accounting. The reimbursement the Food Stamp Act, State agencies from workfare will be reported and and political subdivisions may estab- paid as follows: lish programs comparable to workfare (1) The political subdivision will re- under this paragraph (m) for the pur- port its enhanced reimbursement to pose of providing ABAWDs subject to the State agency in accordance with the time limits specified at § 273.24 a paragraph (m)(7)(iii) of this section. means of fulfilling the work require- (2) The Food and Nutrition Service ments in order to remain eligible for will reimburse the political subdivision food stamps. While comparable to in accordance with paragraph (m)(7)(ii) of this section. workfare in that they require the par- (3) The political subdivision will, ticipant to work for his or her house- upon request, make available for re- hold’s food stamp allotment, these pro- view sufficient documentation to jus- grams may or may not conform to tify the amount of the enhanced reim- other workfare requirements. State bursement. agencies or political subdivisions desir- (4) The Food and Nutrition Service ing to operate a comparable workfare will reimburse only the political sub- program must meet the following con- division’s reimbursed administrative ditions: costs in the fiscal year in which the (i) The maximum number of hours workfare participant began new em- worked weekly in a comparable ployment and which are acceptable ac- workfare activity, combined with any cording to paragraph (m)(7)(i) of this other hours worked during the week by section. a participant for compensation (in cash (8) Voluntary workfare program. State or in kind) in any other capacity, must agencies and political subdivisions may not exceed 30; operate workfare programs whereby (ii) Participants must not receive a participation by food stamp recipients fourth month of food stamp benefits is voluntary. In such a program, the (the first month for which they would penalties for failure to comply, as pro- not be eligible under the time limit) vided in paragraph (f) of this section, without having secured a workfare po- will not apply for noncompliance. The sition or without having met their amount of hours to be worked will be workfare obligation. Participation negotiated between the household and must be verified timely to prevent the operating agency, though not to issuance of a month’s benefits for exceed the limits provided under para- which the required work obligation is graph (m)(5)(ii) of this section. In addi- not met;

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(iii) The State agency or political early withdrawal of the entire amount subdivision must maintain records to in the account or plan; and support the issuance of benefits to (2) Nonliquid resources, personal comparable workfare participants be- property, licensed and unlicensed vehi- yond the third month of eligibility; and cles, buildings, land, recreational prop- (iv) The State agency or political erties, and any other property, pro- subdivision must provide a description vided that these resources are not spe- of its program, including a method- cifically excluded under paragraph (e) ology for ensuring compliance with of this section. The value of nonexempt (m)(9)(ii) of this section. The descrip- resources, except for licensed vehicles tion should be submitted to the appro- as specified in paragraph (f) of this sec- priate Regional office, with copies for- tion, shall be its equity value. The eq- warded to the Food Stamp Program uity value is the fair market value less National office. encumbrances. [67 FR 41603, June 19, 2002, as amended at 71 (3) For a household containing a FR 33382, June 9, 2006] sponsored alien, the State agency must deem the resources of the sponsor and § 273.8 Resource eligibility standards. the sponsor’s spouse in accordance (a) Uniform standards. The State with § 273.4(c)(2). agency shall apply the uniform na- (d) Jointly owned resources. Resources tional resource standards of eligibility owned jointly by separate households to all applicant households, including shall be considered available in their those households in which members are entirety to each household, unless it recipients of federally aided public as- can be demonstrated by the applicant sistance, general assistance, or supple- household that such resources are inac- mental security income. Households cessible to that household. If the which are categorically eligible as de- household can demonstrate that it has fined in § 273.2(j)(2) or 273.2(j)(4) do not access to only a portion of the re- have to meet the resource limits or source, the value of that portion of the definitions in this section. resource shall be counted toward the (b) Maximum allowable resources. The household’s resource level. The re- maximum allowable resources, includ- source shall be considered totally inac- ing both liquid and nonliquid assets, of cessible to the household if the re- all members of the household shall not source cannot practically be subdivided exceed $2,000 for the household, except and the household’s access to the value that, for households including a mem- of the resource is dependent on the ber or members age 60 or over, such re- agreement of a joint owner who refuses sources shall not exceed $3,000. to comply. For the purpose of this pro- (c) Definition of resources. In deter- vision, ineligible aliens or disqualified mining the resources of a household, individuals residing with the household the following shall be included and doc- shall be considered household mem- umented by the State agency in suffi- bers. Resources shall be considered in- cient detail to permit verification: accessible to persons residing in shel- (1) Liquid resources, such as cash on ters for battered women and children, hand, money in checking or savings ac- as defined in § 271.2, if counts, savings certificates, stocks or (1) The resources are jointly owned bonds, lump sum payments as specified by such persons and by members of in § 273.9(c)(8), funds held in individual their former household; and retirement accounts (IRA’s), and funds (2) The shelter resident’s access to held in Keogh plans which do not in- the value of the resources is dependent volve the household member in a con- on the agreement of a joint owner who tractual relationship with individuals still resides in the former household. who are not household members. In (e) Exclusions from resources. In deter- counting resources of households with mining the resources of a household, IRA’s or includable Keogh plans, the only the following shall be excluded: State agency shall include the total (1) The home and surrounding prop- cash value of the account or plan erty which is not separated from the minus the amount of the penalty (if home by intervening property owned any) that would be exacted for the by others. Public rights of way, such as

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roads which run through the sur- household)—for example, the vehicle of rounding property and separate it from a traveling sales person or a migrant the home, will not affect the exemp- farm worker following the work tion of the property. The home and sur- stream; rounding property shall remain exempt (D) Used as the household’s home when temporarily unoccupied for rea- and, therefore, excluded under para- sons of employment, training for fu- graph (e)(1) of this section; ture employment, illness, or (E) Necessary to transport a phys- uninhabitability caused by casualty or ically disabled household member (or natural disaster, if the household in- physically disabled ineligible alien or tends to return. Households that cur- physically disabled disqualified person rently do not own a home, but own or whose resources are being considered are purchasing a lot on which they in- available to the household) regardless tend to build or are building a perma- of the purpose of such transportation nent home, shall receive an exclusion (limited to one vehicle per physically for the value of the lot and, if it is par- disabled household member). The vehi- tially completed, for the home. cle need not have special equipment or (2) Household goods, personal effects, be used primarily by or for the trans- the cash value of life insurance poli- portation of the physically disabled cies, one burial plot per household household member; or member, and the value of one bona fide (F) Necessary to carry fuel for heat- funeral agreement per household mem- ing or water for home use when the ber, provided that the agreement does transported fuel or water is anticipated not exceed $1,500 in equity value, in to be the primary source of fuel or which event the value above $1,500 is water for the household during the cer- counted. The cash value of pension tification period. Households must re- plans or funds shall be excluded, except ceive this resource exclusion without that Keogh plans which involve no con- having to meet any additional tests tractual relationship with individuals concerning the nature, capabilities, or who are not household members and individual retirement accounts (IRA’s) other uses of the vehicle. Households shall not be excluded under this para- must not be required to furnish docu- graph. mentation, as mandated by § 273.2(f)(4), (3)(i) Licensed vehicles that meet the unless the exclusion of the vehicle is following conditions: questionable. If the basis for exclusion (A) Used for income-producing pur- of the vehicle is questionable, the poses such as, but not limited to, a State agency may require documenta- taxi, truck, or fishing boat, or a vehicle tion from the household, in accordance used for deliveries, to call on clients or with § 273.2(f)(4). customers, or required by the terms of (G) The value of the vehicle is inac- employment. Licensed vehicles that cessible, in accordance with paragraph have previously been used by a self-em- (e)(18) of this section, because its sale ployed household member engaged in would produce an estimated return of farming but are no longer used in farm- not more than $1,500. ing because the household member has (ii) On those Indian reservations that terminated his/her self-employment do not require vehicles driven by tribal from farming must continue to be ex- members to be licensed, such vehicles cluded as a resource for one year from must be treated as licensed vehicles for the date the household member termi- the purpose of this exclusion. nated his/her self-employment farming; (iii) The exclusions in paragraphs (B) Annually producing income con- (e)(3)(i)(A) through (e)(3)(i)(C) of this sistent with its fair market value, even section will apply when the vehicle is if used only on a seasonal basis; not in use because of temporary unem- (C) Necessary for long-distance trav- ployment, such as when a taxi driver is el, other than daily commuting, that is ill and cannot work, or when a fishing essential to the employment of a boat is frozen in and cannot be used. household member (or ineligible alien (4) Property which annually produces or disqualified person whose resources income consistent with its fair market are being considered available to the value, even if only used on a seasonal

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basis. Such property shall include rent- riod and no household member has the al homes and vacation homes. power to revoke the trust arrangement (5) Property, such as farm land or or change the name of the beneficiary work related equipment, such as the during the certification period; tools of a tradesman or the machinery (ii) The trustee administering the of a farmer, which is essential to the funds is either: employment or self-employment of a (A) A court, or an institution, cor- household member. Property essential poration, or organization which is not to the self-employment of a household under the direction or ownership of any member engaged in farming shall con- household member, or (B) an individual tinue to be excluded for one year from appointed by the court who has court the date the household member termi- imposed limitations placed on his/her nates his/her self-employment from use of the funds which meet the re- farming. quirements of this paragraph; (6) Installment contracts for the sale (iii) Trust investments made on be- of land or buildings if the contract or half of the trust do not directly involve agreement is producing income con- or assist any business or corporation sistent with its fair market value. The under the control, direction, or influ- exclusion shall also apply to the value ence of a household member; and of the property sold under the install- (iv) The funds held in irrevocable ment contract, or held as security in trust are either: exchange for a purchase price con- (A) Established from the household’s sistent with the fair market value of own funds, if the trustee uses the funds that property. solely to make investments on behalf (7) Any governmental payments of the trust or to pay the educational which are designated for the restora- or medical expenses of any person tion of a home damaged in a disaster, if named by the household creating the the household is subject to a legal trust, or (B) established from non- sanction if the funds are not used as in- household funds by a nonhousehold tended; for example, payments made by member. the Department of Housing and Urban Development through the individual (9) Resources, such as those of stu- and family grant program or disaster dents or self-employed persons, which loans or grants made by the Small have been prorated as income. The Business Administration. treatment of student income is ex- (8) Resources having a cash value plained in § 273.10(c) and the treatment which is not accessible to the house- of self-employment income is explained hold, such as but not limited to, irrev- in § 273.11(a). ocable trust funds, security deposits on (10) Indian lands held jointly with the rental property or utilities, property in Tribe, or land that can be sold only probate, and real property which the with the approval of the Department of household is making a good faith effort the Interior’s Bureau of Indian Affairs; to sell at a reasonable price and which and has not been sold. The State agency (11) Resources which are excluded for may verify that the property is for sale food stamp purposes by express provi- and that the household has not de- sion of Federal statute. clined a reasonable offer. Verification (12) Earned income tax credits shall may be obtained through a collateral be excluded as follows: contact or documentation, such as an (i) A Federal earned income tax cred- advertisement for public sale in a it received either as a lump sum or as newspaper of general circulation or a payments under section 3507 of the In- listing with a real estate broker. Any ternal Revenue Code for the month of funds in a trust or transferred to a receipt and the following month for the trust, and the income produced by that individual and that individual’s spouse. trust to the extent it is not available (ii) Any Federal, State or local to the household, shall be considered earned income tax credit received by inaccessible to the household if: any household member shall be ex- (i) The trust arrangement is not like- cluded for 12 months, provided the ly to cease during the certification pe- household was participating in the

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Food Stamp Program at the time of received, if the benefits are suspended or ceipt of the earned income tax credit recouped, or if the benefits are not paid and provided the household partici- because they are less than a minimum pates continuously during that 12- amount. For purposes of this paragraph month period. Breaks in participation (e)(17), if an individual receives non- of one month or less due to administra- cash or in-kind services from a pro- tive reasons, such as delayed recertifi- gram specified in §§ 273.2(j)(2)(i)(B), cation or missing or late monthly re- 273.2(j)(2)(i)(C), 273.2(j)(2)(ii)(A), or ports, shall not be considered as non- 273.2(j)(2)(ii)(B), the State agency must participation in determining the 12- determine whether the individual or month exclusion. the household benefits from the assist- (13) Where an exclusion applies be- ance provided, in accordance with cause of use of a resource by or for a § 273.2(j)(2)(iii). Individuals entitled to household member, the exclusion shall Medicaid benefits only are not consid- also apply when the resource is being ered recipients of SSI or PA. used by or for an ineligible alien or dis- (18) The State agency must develop qualified person whose resources are clear and uniform standards for identi- being counted as part of the house- fying kinds of resources that, as a prac- hold’s resources. For example, work re- tical matter, the household is unable lated equipment essential to the em- to sell for any significant return be- ployment of an ineligible alien or dis- cause the household’s interest is rel- qualified person shall be excluded (in atively slight or the costs of selling the accordance with paragraph (e)(5) of this household’s interest would be rel- section), as shall one burial plot per in- atively great. The State agency must eligible alien or disqualified household so identify a resource if its sale or member (in accordance with paragraph other disposition is unlikely to produce (e)(2) of this section). any significant amount of funds for the (14) Energy assistance payments or support of the household or the cost of allowances excluded as income under selling the resource would be relatively § 273.9(c)(11). great. This provision does not apply to (15) Non-liquid asset(s) against which financial instruments such as stocks, a lien has been placed as a result of bonds, and negotiable financial instru- taking out a business loan and the ments. The determination of whether household is prohibited by the security any part of the value of a vehicle is in- or lien agreement with the lien holder cluded as a resource must be made in (creditor) from selling the asset(s). accordance with the provisions of para- (16) Property, real or personal, to the graphs (e)(3) and (f) of this section. The extent that it is directly related to the State agency may require verification maintenance or use of a vehicle ex- of the value of a resource to be excluded under paragraphs (e)(3)(i)(A), cluded if the information provided by (e)(3)(i)(B) or (e)(3)(i)(C) of this section. the household is questionable. The Only that portion of real property de- State agencies must use the following termined necessary for maintenance or definitions in developing these stand- use is excludable under this provision. For example, a household which owns a ards: produce truck to earn its livelihood (i) ‘‘Significant return’’ means any may be prohibited from parking the return, after estimating costs of sale or truck in a residential area. The house- disposition, and taking into account hold may own a 100-acre field and use a the ownership interest of the house- quarter-acre of the field to park and/or hold, that the State agency determines service the truck. Only the value of the are more than $1,500; and quarter-acre would be excludable under (ii) ‘‘Any significant amount of this provision, not the entire 100-acre funds’’ means funds amounting to more field. than $1,500. (17) The resources of a household (f) Determining the value of non-ex- member who receives SSI or PA bene- cluded vehicles. (1) The State agency fits. A household member is considered must: a recipient of these benefits if the ben- (i) Individually evaluate the fair efits have been authorized but not re- market value of each licensed vehicle

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that is not excluded under paragraph true value of the vehicle from a reli- (e)(3) of this section; able source. (ii) Count in full toward the house- (4) A State agency may substitute for hold’s resource level, regardless of any the vehicle evaluation provisions in encumbrances on the vehicle, that por- paragraphs (f)(1) through (f)(3) of this tion of the fair market value that ex- section the vehicle evaluation provi- ceeds $4,650 beginning October 1, 1996; sions of a program in that State that (iii) Evaluate such licensed vehicles uses TANF or State or local funds to as well as all unlicensed vehicles for meet TANF maintenance of effort re- their equity value (fair market value quirements and provides benefits that less encumbrances), unless specifically meet the definition of ‘‘assistance’’ ac- exempt from the equity value test; and cording to TANF regulations at 45 CFR (iv) Count as a resource only the 260.31, where doing so results in a lower greater of the two amounts if the vehi- attribution of resources to the house- cle has a countable fair market value hold. States electing this option must: of more than $4,650 after October 1, (i) Apply the substituted TANF vehi- 1996, and also has a countable equity cle rules to all food stamp households value. in the State, whether or not they receive or are eligible to receive TANF (2) Only the following vehicles are ex- assistance of any kind; empt from the equity value test out- (ii) Exclude from household resources lined in paragraph (f)(1)(iii) of this sec- any vehicles excluded by either the tion: substituted TANF vehicle rules or the (i) Vehicles excluded under paragraph food stamp vehicle rules at paragraphs (e)(3)(i) of this section; (e)(3), (e)(5), (e)(11) and (f) of this sec- (ii) One licensed vehicle per adult tion; household member (or an ineligible (iii) Apply either the substituted alien or disqualified household member TANF rules or the food stamp vehicle whose resources are being considered rules to each of a household’s vehicles available to household), regardless of in turn, using whichever set of rules the use of the vehicle; and produces the lower attribution of re- (iii) Any other vehicle a household sources to the household; member under age 18 (or an ineligible (iv) Apply any vehicle exclusions al- alien or disqualified household member lowed by their TANF vehicle rules to under age 18 whose resources are being the vehicles with the highest values; considered available to household) and drives to commute to and from employ- (v) Exclude any vehicle owned by any ment, or to and from training or edu- household in the State if it selects cation which is preparatory to employ- TANF vehicle rules that exclude all ve- ment, or to seek employment. This eq- hicles completely or contain no re- uity exclusion applies during tem- source provisions at all. porary periods of unemployment to a (g) Handling of excluded funds. Ex- vehicle which a household member cluded funds that are kept in a sepa- under age 18 customarily drives to rate account, and that are not commin- commute to and from employment. gled in an account with nonexcluded (3) State agencies will be responsible funds, shall retain their resource exclu- for establishing methodologies for de- sion for an unlimited period of time. termining the fair market value of ve- The resources of students and self-em- hicles. In establishing such methodolo- ployment households which are ex- gies, the State agency must not included as provided in paragraph (e)(9) crease the basic value of a vehicle by of this section and are commingled in adding the value of low mileage or an account with nonexcluded funds other factors such as optional equip- shall retain their exclusion for the pe- ment or special apparatus for the riod of time over which they have been handicapped. Any household that prorated as income. All other excluded claims that the State agency’s deter- moneys which are commingled in an mination of the value of its vehicle(s) account with nonexcluded funds shall is not accurate must be given the op- retain their exemption for six months portunity to acquire verification of the from the date they are commingled.

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After six months from the date of com- knowingly transferred resources for mingling, all funds in the commingled the purpose of qualifying or attempting account shall be counted as a resource. to qualify for food stamp benefits, the (h) Transfer of resources. (1) At the household shall be sent a notice of de- time of application, households shall nial explaining the reason for and be asked to provide information re- length of the disqualification. The pe- garding any resources which any riod of disqualification shall begin in household member (or ineligible alien the month of application. If the house- or disqualified person whose resources hold is participating at the time of the are being considered available to the discovery of the transfer, a notice of household) had transferred within the adverse action explaining the reason 3-month period immediately preceding for and length of the disqualification the date of application. Households shall be sent. The period of disquali- which have transferred resources fication shall be made effective with knowingly for the purpose of qualifying the first allotment to be issued after or attempting to qualify for food stamp the notice of adverse action period has benefits shall be disqualified from par- expired, unless the household has re- ticipation in the program for up to 1 quested a fair hearing and continued year from the date of the discovery of benefits. the transfer. This disqualification pe- (4) The length of the disqualification riod shall be applied if the resources period shall be based on the amount by are transferred knowingly in the 3- which nonexempt transferred re- month period prior to application or if sources, when added to other countable they are transferred knowingly after resources, exceeds the allowable re- the household is determined eligible source limits. The following chart will for benefits. An example of the latter be used to determine the period of dis- would be assets which the household qualification. acquires after being certified and which are then transferred to prevent Period of the household from exceeding the max- disqualifica- Amount in excess of the resource limit tion imum resource limit. (months) (2) Eligibility for the program will not be affected by the following trans- $0 to 249.99 ...... 1 250 to 999.99 ...... 3 fers: 1,000 to 2999.99 ...... 6 (i) Resources which would not other- 3,000 to 4,999.99 ...... 9 wise affect eligibility, for example, re- 5,000 or more ...... 12 sources consisting of excluded personal property such as furniture or of money (i) Resources of non-household mem- that, when added to other nonexempt bers. (1) The resources of non-household household resources, totaled less at the members, as defined in § 273.1(b)(7)(i) time of the transfer than the allowable and (ii), must be handled as outlined in resource limits; § 273.11(d). (ii) Resources which are sold or trad- (2) The resources of non-household ed at, or near, fair market value; members, as defined in § 273.1(b)(7)(iii) (iii) Resources which are transferred through (vi), must be handled as out- between members of the same house- lined in § 273.11(c) and (d), as appro- hold (including ineligible aliens or dis- priate. qualified persons whose resources are being considered available to the [Amdt. 132, 43 FR 47889, Oct. 17, 1978] household); and EDITORIAL NOTE: For FEDERAL REGISTER ci- (iv) Resources which are transferred tations affecting § 273.8, see the List of CFR for reasons other than qualifying or at- Sections Affected, which appears in the tempting to qualify for food stamp ben- Finding Aids section of the printed volume efits, for example, a parent placing and on GPO Access. funds into an educational trust fund described in paragraph (e)(9) of this § 273.9 Income and deductions. section. (a) Income eligibility standards. Par- (3) In the event the State agency es- ticipation in the Program shall be lim- tablishes that an applicant household ited to those households whose incomes

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are determined to be a substantial lim- erty guidelines for the 48 States and iting factor in permitting them to ob- the District of Columbia, for Alaska, tain a more nutritious diet. Households and for Hawaii. which contain an elderly or disabled (i) 130 percent of the annual income member shall meet the net income poverty guidelines shall be divided by eligiblity standards for the Food 12 to determine the monthly gross in- Stamp Program. Households which do come standards, rounding the results not contain an elderly or disabled upwards as necessary. For households member shall meet both the net in- greater than eight persons, the incre- come eligibility standards and the ment in the Federal income poverty gross income eligibility standards for guidelines is multiplied by 130 percent, the Food Stamp Program. Households divided by 12, and the results rounded which are categorically eligible as de- upward if necessary. fined in § 273.2(j)(2) or 273.2(j)(4) do not (ii) The annual income poverty have to meet either the gross or net in- guidelines shall be divided by 12 to de- come eligibility standards. The net and termine the monthly net income eligi- gross income eligibility standards shall bility standards, rounding the results be based on the Federal income poverty upward as necessary. For households levels established as provided in sec- greater than eight persons, the incre- tion 673(2) of the Community Services ment in the Federal income poverty Block Grant Act (42 U.S.C. 9902(2)). guidelines is divided by 12, and the re- (1) The gross income eligibility sults rounded upward if necessary. standards for the Food Stamp Program (4) The monthly gross and net income shall be as follows: eligibility standards for all areas will (i) The income eligibility standards be prescribed in tables posted on the for the 48 contiguous States and the FNS web site, at www.fns.usda.gov/fsp. District of Columbia, Guam and the Virgin Islands shall be 130 percent of (b) Definition of income. Household in- the Federal income poverty levels for come shall mean all income from what- the 48 contiguous States and the Dis- ever source excluding only items speci- trict of Columbia. fied in paragraph (c) of this section. (ii) The income eligibility standards (1) Earned income shall include: (i) for Alaska shall be 130 percent of the All wages and salaries of an employee. Federal income poverty levels for Alas- (ii) The gross income from a self-em- ka. ployment enterprise, including the (iii) The income eligibility standards total gain from the sale of any capital for Hawaii shall be 130 percent of the goods or equipment related to the busi- Federal income poverty levels for Ha- ness, excluding the costs of doing busi- waii. ness as provided in paragraph (c) of (2) The net income eligibility stand- this section. Ownership of rental prop- ards for the Food Stamp Program shall erty shall be considered a self-employ- be as follows: ment enterprise; however, income de- (i) The income eligibility standards rived from the rental property shall be for the 48 contiguous States and the considered earned income only if a District of Columbia, Guam and the member of the household is actively Virgin Islands shall be the Federal in- engaged in the management of the come poverty levels for the 48 contig- property at least an average of 20 hours uous States and the District of Colum- a week. Payments from a roomer or bia. boarder, except foster care boarders, (ii) The income eligibility standards shall also be considered self-employ- for Alaska shall be the Federal income ment income. poverty levels for Alaska. (iii) Training allowances from voca- (iii) The income eligibility standard tional and rehabilitative programs rec- for Hawaii shall be the Federal income ognized by Federal, State, or local gov- poverty levels for Hawaii. ernments, such as the work incentive (3) The income eligibility limits, as program, to the extent they are not a described in this paragraph, are revised reimbursement. Training allowances each October 1 to reflect the annual ad- under Job Training Partnership Act, justment to the Federal income pov- other than earnings as specified in

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paragraph (b)(1)(v) of this section, are repay claims for intentional program excluded from consideration as income. violations as provided in § 272.12; old- (iv) Payments under Title I (VISTA, age, survivors, or social security bene- University Year for Action, etc.) of the fits; strike benefits; foster care pay- Domestic Volunteer Service Act of 1973 ments for children or adults who are (Pub. L. 93–113 Stat., as amended) shall considered members of the household; be considered earned income and sub- gross income minus the cost of doing ject to the earned income deduction business derived from rental property prescribed in § 273.10(e)(1)(i)(B), exclud- in which a household member is not ac- ing payments made to those house- tively engaged in the management of holds specified in paragraph (c)(10)(iii) the property at least 20 hours a week. of this section. (iii) Support or alimony payments (v) Earnings to individuals who are made directly to the household from participating in on-the-job training nonhousehold members. programs under section 204(b)(1)(C) or (iv) Scholarships, educational grants, section 264(c)(1)(A) of the Workforce In- deferred payment loans for education, vestment Act. This provision does not veteran’s educational benefits and the apply to household members under 19 like, other than educational assistance years of age who are under the parental with a work requirement, in excess of control of another adult member, re- amounts excluded under § 273.9(c). gardless of school attendance and/or (v) Payments from Government-spon- enrollment as discussed in paragraph sored programs, dividends, interest, (c)(7) of this section. For the purpose of royalties, and all other direct money this provision, earnings include monies payments from any source which can paid under the Workforce Investment be construed to be a gain or benefit. Act and monies paid by the employer. (vi) Monies which are withdrawn or (vi) Educational assistance which has dividends which are or could be re- a work requirement (such as work ceived by a household from trust funds study, an assistantship or fellowship considered to be excludable resources with a work requirement) in excess of under § 273.8(e)(8). Such trust with- the amount excluded under § 273.9(c)(3). drawals shall be considered income in (2) Unearned income shall include, the month received, unless otherwise but not be limited to: exempt under the provisions of para- (i) Assistance payments from Federal graph (c) of this section. Dividends or federally aided public assistance which the household has the option of programs, such as supplemental secu- either receiving as income or rein- rity income (SSI) or Temporary Assist- vesting in the trust are to be consid- ance for Needy Families (TANF); gen- ered as income in the month they be- eral assistance (GA) programs (as de- come available to the household unless fined in § 271.2); or other assistance pro- otherwise exempt under the provisions grams based on need. Such assistance of paragraph (c) of this section. is considered to be unearned income (3) The earned or unearned income of even if provided in the form of a vendor an individual disqualified from the payment (provided to a third party on household for intentional Program vio- behalf of the household), unless the lation, in accordance with § 273.16, or as vendor payment is specifically exempt a result of a sanction imposed while he/ from consideration as countable in- she was participating in a household come under the provisions of paragraph disqualified for failure to comply with (c)(1) of this section. Assistance pay- workfare requirements, in accordance ments from programs which require, as with § 273.22, shall continue to be at- a condition of eligibility, the actual tributed in their entirety to the re- performance of work without com- maining household members. However, pensation other than the assistance the earned or unearned income of indi- payments themselves, shall be consid- viduals disqualified from households ered unearned income. for failing to comply with the require- (ii) Annuities; pensions; retirement, ment to provide an SSN, in accordance veteran’s, or disability benefits; work- with § 273.6, or for being an ineligible er’s or unemployment compensation alien, in accordance with § 273.4, shall including any amounts deducted to continue to be counted as income, less

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a pro rata share for the individual. Pro- (D) Emergency assistance (including, cedures for calculating this pro rata but not limited to housing and trans- share are described in § 273.11(c). portation payments) for migrant or (4) For a household containing a seasonal farmworker households while sponsored alien, the income of the they are in the job stream; sponsor and the sponsor’s spouse must (E) Housing assistance payments be deemed in accordance with made through a State or local housing § 273.4(c)(2). authority; (5) Income shall not include the fol- (F) Emergency and special assistance. lowing: PA provided to a third party on behalf (i) Moneys withheld from an assist- of a household which is not specifically ance payment, earned income, or other excluded from consideration as income income source, or moneys received under the provisions of paragraphs from any income source which are vol- (c)(1)(i)(A) through (c)(1)(i)(E) of this untarily or involuntarily returned, to section shall be considered for exclu- repay a prior overpayment received sion under this provision. To be consid- from that income source, provided that ered emergency or special assistance the overpayment was not excludable and excluded under this provision, the under paragraph (c) of this section. assistance must be provided over and However, moneys withheld from assist- above the normal PA grant or pay- ance from another program, as speci- ment, or cannot normally be provided fied in § 273.11(k), shall be included as as part of such grant or payment. If the income. PA program is composed of various standards or components, the assist- (ii) Child support payments received ance would be considered over and by TANF recipients which must be above the normal grant or not part of transferred to the agency admin- the grant if the assistance is not in- istering title IV-D of the Social Secu- cluded as a regular component of the rity Act, as amended, to maintain PA grant or benefit or the amount of TANF eligibility. assistance exceeds the maximum rate (c) Only the fol- Income exclusions. of payment for the relevant compo- lowing items shall be excluded from nent. If the PA program is not com- household income and no other income posed of various standards or compo- shall be excluded: nents but is designed to provide a basic (1) Any gain or benefit which is not monthly grant or payment for all eligi- in the form of money payable directly ble households and provides a larger to the household, including in-kind basic grant amount for all households benefits and certain vendor payments. in a particular category, e.g., all house- In-kind benefits are those for which no holds with infants, the larger amount monetary payment is made on behalf of is still part of the normal grant or ben- the household and include meals, cloth- efit for such households and not an ing, housing, or produce from a garden. ‘‘extra’’ payment excluded under this A vendor payment is a money payment provision. On the other hand, if a fire made on behalf of a household by a per- destroyed a household item and a PA son or organization outside of the program provides an emergency household directly to either the house- amount paid directly to a store to pur- hold’s creditors or to a person or orga- chase a replacement, such a payment is nization providing a service to the excluded under this provision. If the household. Payments made to a third PA program is not composed of various party on behalf of the household are in- standards, allowances, or components cluded or excluded as income as fol- but is simply designed to provide as- lows: sistance on an as-needed basis rather (i) Public assistance (PA) vendor pay- than to provide routine, regular ments. PA vendor payments are count- monthly benefits to a client, no exclu- ed as income unless they are made for: sion would be granted under this provi- (A) Medical assistance; sion because the assistance is not pro- (B) Child care assistance; vided over and above the normal grant, (C) Energy assistance as defined in it is the normal grant. If it is not clear paragraph (c)(11) of this section; whether a certain type of PA vendor

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payment is covered under this provi- which would normally be excluded as sion, the State agency shall apply to income but are converted in whole or the appropriate FNS Regional Office in part to a direct cash payment under for a determination of whether the PA a federally authorized demonstration vendor payments should be excluded. project or waiver of provisions of Fed- The application for this exclusion de- eral law shall be excluded from income. termination must explain the emer- (vii) Other third-party payments. Other gency or special nature of the vendor third-party payments shall be handled payment, the exact type of assistance as follows: moneys legally obligated it is intended to provide, who is eligible and otherwise payable to the household for the assistance, how the assistance which are diverted by the provider of is paid, and how the vendor payment the payment to a third party for a fits into the overall PA benefit stand- household expense shall be counted as ard. A copy of the rules, ordinances, or income and not excluded. If a person or statutes which create and authorize organization makes a payment to a the program shall accompany the ap- third party on behalf of a household plication request. using funds that are not owed to the (ii) General assistance (GA) vendor pay- household, the payment shall be ex- ments. Vendor payments made under a cluded from income. This distinction is State or local GA program or a com- illustrated by the following examples: parable basic assistance program are (A) A friend or relative uses his or excluded from income except for some her own money to pay the household’s vendor payments for housing. A hous- rent directly to the landlord. This ven- ing vendor payment is counted as in- dor payment shall be excluded. come unless the payment is for: (B) A household member earns wages. (A) Energy assistance (as defined in However, the wages are garnished or paragraph (c)(11) of this section); diverted by the employer and paid to a (B) Housing assistance from a State third party for a household expense, or local housing authority; such as rent. This vendor payment is (C) Emergency assistance for migrant counted as income. However, if the em- or seasonal farmworker households ployer pays a household’s rent directly while they are in the job stream; to the landlord in addition to paying (D) Emergency or special payments the household its regular wages, the (as defined in paragraph (c)(1)(i)(F) of rent payment shall be excluded from this section; or income. Similarly, if the employer pro- (E) Assistance provided under a provides housing to an employee in addi- gram in a State in which no GA pay- tion to wages, the value of the housing ments may be made directly to the shall not be counted as income. household in the form of cash. (C) A household receives court-or- (iii) Department of Housing and Urban dered monthly support payments in the Development (HUD) vendor payments. amount of $400. Later, $200 is diverted Rent or mortgage payments made to by the provider and paid directly to a landlords or mortgagees by HUD are creditor for a household expense. The excluded. payment is counted as income. Money (iv) Educational assistance vendor pay- deducted or diverted from a court-or- ments. Educational assistance provided dered support or alimony payment (or to a third party on behalf of the house- other binding written support or ali- hold for living expenses shall be treat- mony agreement) to a third party for a ed the same as educational assistance household’s expense shall be included payable directly to the household. as income because the payment is (v) Vendor payments that are reim- taken from money that is owed to the bursements. Reimbursements made in household. However, payments speci- the form of vendor payments are ex- fied by a court order or other legally cluded on the same basis as reimburse- binding agreement to go directly to a ments paid directly to the household in third party rather than the household accordance with paragraph (c)(5) of this are excluded from income because they section. are not otherwise payable to the house- (vi) Demonstration project vendor pay- hold. For example, a court awards sup- ments. In-kind or vendor payments port payments in the amount of $400 a

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month and in addition orders $200 to be the pursuit of the course of study in- paid directly to a bank for repayment volved, of a loan. The $400 payment is counted (3) Books, as income and the $200 payment is ex- (4) Supplies, cluded from income. Support payments (5) Transportation, not required by a court order or other (6) Miscellaneous personal expenses, legally binding agreement (including other than normal living expenses, of payments in excess of the amount spec- the student incidental to attending a ified in a court order or written agree- school, institution or program, ment) which are paid to a third party on the household’s behalf shall be ex- (7) Dependent care, cluded from income. (8) Origination fees and insurance (2) Any income in the certification premiums on educational loans, period which is received too infre- (9) Normal living expenses which are quently or irregularly to be reasonably room and board are not excludable. anticipated, but not in excess of $30 in (10) Amounts excluded for dependent a quarter. care costs shall not also be excluded (3)(i) Educational assistance, includ- under the general exclusion provisions ing grants, scholarships, fellowships, of paragraph § 273.9(c)(5)(i)(C). Depend- work study, educational loans on ent care costs which exceed the which payment is deferred, veterans’ amount excludable from income shall educational benefits and the like. be deducted from income in accordance (ii) To be excluded, educational as- with paragraph § 273.9(d)(4) and be sub- sistance referred to in paragraph ject to a cap. (c)(3)(i) must be: (iii) Exclusions based on use pursuant (A) Awarded to a household member to paragraph (c)(3)(ii)(B) must be in- enrolled at a: curred or anticipated for the period the (1) Recognized institution of post-sec- educational income is intended to ondary education (meaning any public cover regardless of when the edu- or private educational institution cational income is actually received. If which normally requires a high school a student uses other income sources to diploma or equivalency certificate for pay for allowable educational expenses enrollment or admits persons who are in months before the educational in- beyond the age of compulsory school come is received, the exclusions to attendance in the State in which the cover the expenses shall be allowed institution is located, provided that when the educational income is re- the institution is legally authorized or ceived. When the amounts used for al- recognized by the State to provide an lowable expense are more than educational program beyond secondary amounts earmarked by the institution, education in the State or provides a school, program or other grantor, an program of training to prepare stu- exclusion shall be allowed for amounts dents for gainful employment, includ- used over the earmarked amounts. Ex- ing correspondence schools at that clusions based on use shall be sub- level), tracted from unearned educational in- (2) School for the handicapped, come to the extent possible. If the un- (3) Vocational education program, earned educational income is not (4) Vocational or technical school, enough to cover the expense, the re- (5) Program that provides for obtain- mainder of the allowable expense shall ing a secondary school diploma or the be excluded from earned educational equivalent; income. (B) Used for or identified (earmarked) (iv) An individual’s total educational by the institution, school, program, or income exclusions granted under the other grantor for the following allow- provisions of paragraph (c)(3)(i) able expenses: through (c)(3)(iii) of this section can- (1) Tuition, not exceed that individual’s total edu- (2) Mandatory school fees, including cational income which was subject to the rental or purchase of any equip- the provisions of paragraph (c)(3)(i) ment, material, and supplies related to through (c)(3)(iii) of this section.

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(4) All loans, including loans from (D) Reimbursements received by private individuals as well as commer- households to pay for services provided cial institutions, other than edu- by Title XX of the Social Security Act. cational loans on which repayment is (E) Any allowance a State agency deferred. Educational loans on which provides no more frequently than an- repayment is deferred shall be excluded nually for children’s clothes when the pursuant to the provisions of children enter or return to school or § 273.9(c)(3)(i). A loan on which repay- daycare, provided the State agency ment must begin within 60 days after does not reduce the monthly TANF receipt of the loan shall not be consid- payment for the month in which the ered a deferred repayment loan. school clothes allowance is provided. (5) Reimbursements for past or future State agencies are not required to expenses, to the extent they do not ex- verify attendance at school or daycare. ceed actual expenses, and do not rep- (F) Reimbursements made to the resent a gain or benefit to the house- household under § 273.7(d)(3) for ex- hold. Reimbursements for normal penses necessary for participation in household living expenses such as rent an education component under the or mortgage, personal clothing, or food E&T program. eaten at home are a gain or benefit (ii) The following shall not be consid- and, therefore, are not excluded. To be ered a reimbursement excludable under excluded, these payments must be pro- this provision: vided specifically for an identified ex- (A) No portion of benefits provided pense, other than normal living ex- under title IV-A of the Social Security penses, and used for the purpose in- Act, to the extent such benefits are attended. When a reimbursement, includ- tributed to an adjustment for work-re- ing a flat allowance, covers multiple lated or child care expenses (except for expenses, each expense does not have payments or reimbursements for such to be separately identified as long as expenses made under an employment, none of the reimbursement covers nor- education or training program initi- mal living expenses. The amount by ated under such title after September which a reimbursement exceeds the ac- 19, 1988), shall be considered excludable tual incurred expense shall be counted under this provision. as income. However, reimbursements (B) No portion of any educational as- shall not be considered to exceed ac- sistance that is provided for normal tual expenses, unless the provider or living expenses (room and board) shall the household indicates the amount is be considered a reimbursement exclud- excessive. able under this provision. (i) Examples of excludable reimburse- (6) Moneys received and used for the ments which are not considered to be a care and maintenance of a third-party gain or benefit to the household are: beneficiary who is not a household (A) Reimbursements or flat allow- member. If the intended beneficiaries ances, including reimbursements made of a single payment are both household to the household under § 273.7(d)(3), for and nonhousehold members, any iden- job- or training-related expenses such tifiable portion of the payment in- as travel, per diem, uniforms, and tended and used for the care and main- transportation to and from the job or tenance of the nonhousehold member training site. Reimbursements which shall be excluded. If the nonhousehold are provided over and above the basic member’s portion cannot be readily wages for these expenses are excluded; identified, the payment shall be evenly however, these expenses, if not reim- prorated among intended beneficiaries bursed, are not otherwise deductible. and the exclusion applied to the non- Reimbursements for the travel ex- household member’s pro rata share or penses incurred by migrant workers the amount actually used for the non- are also excluded. household member’s care and mainte- (B) Reimbursements for out-of-pock- nance, whichever is less. et expenses of volunteers incurred in (7) The earned income (as defined in the course of their work. paragraph (b)(1) of this section) of any (C) Medical or dependent care reim- household member who is under age 18, bursements. who is an elementary or secondary

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school student, and who lives with a the food stamp program. The following natural, adoptive, or stepparent or laws provide such an exclusion: under the parental control of a house- (i) Reimbursements from the Uni- hold member other than a parent. For form Relocation Assistance and Real purposes of this provision, an elemen- Property Acquisition Policy Act of 1970 tary or secondary school student is (Pub. L. 91–646, section 216). someone who attends elementary or (ii) Payments received under the secondary school, or who attends class- Alaska Native Claims Settlement Act es to obtain a General Equivalency Di- (Pub. L. 92–203, section 21(a)); ploma that are recognized, operated, or (iii) Any payment to volunteers supervised by the student’s state or under Title II (RSVP, Foster Grand- local school district, or who attends el- parents and others) of the Domestic ementary or secondary classes through Volunteer Services Act of 1973 (Pub. L. a home-school program recognized or 93–113) as amended. Payments under supervised by the student’s state or title I of that Act (including payments local school district. The exclusion from such title I programs as VISTA, shall continue to apply during tem- University Year for Action, and Urban porary interruptions in school attend- Crime Prevention Program) to volun- ance due to semester or vacation teers shall be excluded for those indi- breaks, provided the child’s enrollment viduals receiving food stamps or public will resume following the break. If the assistance at the time they joined the child’s earnings or amount of work per- title I program, except that households formed cannot be differentiated from which were receiving an income exclu- that of other household members, the sion for a Vista or other title I Subsist- total earnings shall be prorated equally ence allowance at the time of conver- among the working members and the sion to the Food Stamp Act of 1977 child’s pro rata share excluded. shall continue to receive an income exclusion for VISTA for the length of (8) Money received in the form of a their volunteer contract in effect at nonrecurring lump-sum payment, in- the time of conversion. Temporary cluding, but not limited to, income tax interruptions in food stamp participa- refunds, rebates, or credits; retroactive tion shall not alter the exclusion once lump-sum social security, SSI, public an initial determination has been assistance, railroad retirement bene- made. New applicants who were not re- fits, or other payments; lump-sum in- ceiving public assistance or food surance settlements; or refunds of se- stamps at the time they joined VISTA curity deposits on rental property or shall have these volunteer payments utilities. TANF payments made to di- included as earned income. The FNS vert a family from becoming dependent National Office shall keep FNS Re- on welfare may be excluded as a non- gional Offices informed of any new pro- recurring lump-sum payment if the grams created under title I and II or payment is not defined as assistance changes in programs mentioned above because of the exception for non-recur- so that they may alert State agencies. rent, short-term benefits in 45 CFR (iv) Income derived from certain sub- 261.31(b)(1). These payments shall be marginal land of the United States counted as resources in the month re- which is held in trust for certain In- ceived, in accordance with § 273.8(c) un- dian tribes (Pub. L. 94–114, section 6). less specifically excluded from consid- (v) Allowances, earnings, or pay- eration as a resource by other Federal ments (including reimbursements) to laws. individuals participating in programs (9) The cost of producing self-employ- under the Job Training Partnership ment income. The procedures for com- Act (Pub. L. 90–300), except as provided puting the cost of producing self-em- for under paragraph (b)(1)(v) of this ployment income are described in section. § 273.11. (vi) Income derived from the disposi- (10) Any income that is specifically tion of funds to the Grand River Band excluded by any other Federal statute of Ottawa Indians (Pub. L. 94–540). from consideration as income for the (vii) Earned income tax credits re- purpose of determining eligibility for ceived as a result of Pub. L. 95–600, the

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Revenue Act of 1978 which are received or other necessary equipment, and before January 1, 1980. books or training manuals. These costs (viii) Payments by the Indian Claims shall not include the cost of meals Commission to the Confederated Tribes away from home. Also, the value of any and Bands of the Yakima Indian Na- dependent care services provided for or tion or the Apache Tribe of the Mesca- arranged under § 273.7(d)(3)(i) would be lero Reservation (Pub. L. 95–433). excluded. (ix) Payments to the Passamaquoddy (15) Governmental foster care pay- Tribe and the Penobscot Nation or any ments received by households with fos- of their members received pursuant to ter care individuals who are considered the Maine Indian Claims Settlement to be boarders in accordance with Act of 1980 (Pub. L. 96–420, section 5). § 273.1(c). (x) Payments of relocation assistance (16) Income of an SSI recipient nec- to members of the Navajo and Hopi essary for the fulfillment of a plan for Tribes under Pub. L. 93–531. achieving self-support (PASS) which (11) Energy assistance as follows: has been approved under section (i) Any payments or allowances made 1612(b)(4)(A)(iii) or 1612(b)(4)(B)(iv) of for the purpose of providing energy as- the Social Security Act. This income sistance under any Federal law other may be spent in accordance with an ap- than part A of Title IV of the Social proved PASS or deposited into a PASS Security Act (42 U.S.C. 601 et seq.), in- savings account for future use. cluding utility reimbursements made (d) Income deductions. Deductions by the Department of Housing and shall be allowed only for the following Urban Development and the Rural household expenses: Housing Service, or (ii) A one-time payment or allowance (1) Standard deduction. Effective Oc- applied for on an as-needed basis and tober 1, 1996, for each household in the made under a Federal or State law for 48 contiguous States and the District the costs of weatherization or emer- of Columbia, Alaska, Hawaii, Guam gency repair or replacement of an un- and the Virgin Islands of the United safe or inoperative furnace or other States, the standard deduction must be heating or cooling device. A down-pay- $134, $229, $189, $269, and $118, respec- ment followed by a final payment upon tively. completion of the work will be consid- (2) Earned income deduction. Twenty ered a one-time payment for purposes percent of gross earned income as de- of this provision. fined in paragraph (b)(1) of this section. (12) Cash donations based on need re- Earnings excluded in paragraph (c) of ceived on or after February 1, 1988 from this section shall not be included in one or more private nonprofit chari- gross earned income for purposes of table organizations, but not to exceed computing the earned income deduc- $300 in a Federal fiscal year quarter. tion. (13) Earned income tax credit pay- (3) Excess medical deduction. That por- ments received either as a lump sum or tion of medical expenses in excess of payments under section 3507 of the In- $35 per month, excluding special diets, ternal Revenue Code of 1986 (relating to incurred by any household member advance payment of earned income tax who is elderly or disabled as defined in credits received as part of the pay- § 271.2. Spouses or other persons receiv- check or as a reduction in taxes that ing benefits as a dependent of the SSI otherwise would have been paid at the or disability and blindness recipient end of the year). are not eligible to receive this deduc- (14) Any payment made to an E&T tion but persons receiving emergency participant under § 273.7(d)(3) for costs SSI benefits based on presumptive eli- that are reasonably necessary and di- gibility are eligible for this deduction. rectly related to participation in the Allowable medical costs are: E&T program. These costs include, but (i) Medical and dental care including are not limited to, dependent care psychotherapy and rehabilitation serv- costs, transportation, other expenses ices provided by a licensed practitioner related to work, training or education, authorized by State law or other quali- such as uniforms, personal safety items fied health professional.

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(ii) Hospitalization or outpatient could qualify under both the medical treatment, nursing care, and nursing deduction and dependent care deduc- home care including payments by the tion, the State agency shall treat the household for an individual who was a cost as a medical expense. household member immediately prior (4) Dependent care. Payments for the to entering a hospital or nursing home actual costs for the care of children or provided by a facility recognized by the other dependents when necessary for a State. household member to accept or con- (iii) Prescription drugs when pre- tinue employment, comply with the scribed by a licensed practitioner au- employment and training requirements thorized under State law and other as specified under § 273.7(e), or attend over-the-counter medication (including training or pursue education which is insulin) when approved by a licensed preparatory to employment, except as practitioner or other qualified health provided in § 273.10(d)(1)(i). The max- professional; in addition, costs of med- imum monthly dependent care deduc- ical supplies, sick-room equipment (in- tion amount households shall be grant- cluding rental) or other prescribed ed under this provision is $200 a month equipment are deductible; for each dependent child under two (2) (iv) Health and hospitalization insur- years of age and $175 a month for each ance policy premiums. The costs of other dependent. health and accident policies such as (5) Child support deduction. Legally those payable in lump sum settlements obligated child support payments paid for death or dismemberment or income by a household member to or for a non- maintenance policies such as those household member, including pay- that continue mortgage or loan payments made to a third party on behalf ments while the beneficiary is disabled of the nonhousehold member (vendor are not deductible; payments). The State agency shall (v) Medicare premiums related to allow a deduction for amounts paid to- coverage under Title XVIII of the So- ward arrearages. Alimony payments cial Security Act; any cost-sharing or made to or for a nonhousehold member spend down expenses incurred by Med- shall not be included in the child sup- icaid recipients; port deduction. (vi) Dentures, hearing aids, and pros- (6) Standard utility allowance—(i) thetics; Homeless shelter deduction. A State (vii) Securing and maintaining a see- agency may develop a standard home- ing eye or hearing dog including the less shelter deduction up to a max- cost of dog food and veterinarian bills; imum of $143 a month for shelter ex- (viii) Eye glasses prescribed by a phy- penses specified in paragraphs sician skilled in eye disease or by an (d)(6)(ii)(A), (d)(6)(ii)(B) and (d)(6)(ii)(C) optometrist; of this section that may reasonably be (ix) Reasonable cost of transpor- expected to be incurred by households tation and lodging to obtain medical in which all members are homeless in- treatment or services; dividuals but are not receiving free (x) Maintaining an attendant, home- shelter throughout the month. The de- maker, home health aide, or child care duction must be subtracted from net services, housekeeper, necessary due to income in determining eligibility and age, infirmity, or illness. In addition, allotments for the households. The an amount equal to the one person cou- State agency may make a household pon allotment shall be deducted if the with extremely low shelter costs ineli- household furnishes the majority of the gible for the deduction. A household re- attendant’s meals. The allotment for ceiving the homeless shelter deduction this meal related deduction shall be cannot have its shelter expenses con- that in effect at the time of initial cer- sidered under paragraphs (d)(6)(ii) or tification. The State agency is only re- (d)(6)(iii) of this section. However, a quired to update the allotment amount homeless household may choose to at the next scheduled recertification; claim actual costs under paragraph however, at their option, the State (d)(6)(ii) of this section instead of the agency may do so earlier. If a house- homeless shelter deduction if actual hold incurs attendant care costs that costs are higher and verified.

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(ii) Excess shelter deduction. Monthly initial installation of the utility. One- shelter expenses in excess of 50 percent time deposits cannot be included. of the household’s income after all (D) The shelter costs for the home if other deductions in paragraphs (d)(1) temporarily not occupied by the house- through (d)(5) of this section have been hold because of employment or train- allowed. If the household does not con- ing away from home, illness, or aban- tain an elderly or disabled member, as donment caused by a natural disaster defined in § 271.2 of this chapter, the or casualty loss. For costs of a home shelter deduction cannot exceed the vacated by the household to be in- maximum shelter deduction limit es- cluded in the household’s shelter costs, tablished for the area. For fiscal year the household must intend to return to 2001, effective March 1, 2001, the max- the home; the current occupants of the imum monthly excess shelter expense home, if any, must not be claiming the deduction limits are $340 for the 48 con- shelter costs for food stamp purposes; tiguous States and the District of Co- and the home must not be leased or lumbia, $543 for Alaska, $458 for Ha- rented during the absence of the house- waii, $399 for Guam, and $268 for the hold. Virgin Islands. FNS will set the max- (E) Charges for the repair of the imum monthly excess shelter expense home which was substantially damaged deduction limits for fiscal year 2002 and or destroyed due to a natural disaster future years by adjusting the previous such as a fire or flood. Shelter costs year’s limits to reflect changes in the shall not include charges for repair of shelter component and the fuels and the home that have been or will be re- utilities component of the Consumer imbursed by private or public relief Price Index for All Urban Consumers agencies, insurance companies, or from for the 12 month period ending the pre- any other source. vious November 30. FNS will notify (iii) Standard utility allowances. (A) State agencies of the amount of the With FNS approval, a State agency limit. Only the following expenses are may develop the following standard utility allowances (standards) to be allowable shelter expenses: used in place of actual costs in deter- (A) Continuing charges for the shel- mining a household’s excess shelter deter occupied by the household, includ- duction: an individual standard for ing rent, mortgage, condo and associa- each type of utility expense; a standard tion fees, or other continuing charges utility allowance for all utilities that leading to the ownership of the shelter includes heating or cooling costs such as loan repayments for the pur- (HCSUA); and, a limited utility allow- chase of a mobile home, including in- ance (LUA) that includes electricity terest on such payments. and fuel for purposes other than heat- (B) Property taxes, State and local ing or cooling, water, sewerage, well assessments, and insurance on the and septic tank installation and main- structure itself, but not separate costs tenance, telephone, and garbage or for insuring furniture or personal be- trash collection. The LUA must in- longings. clude expenses for at least two utili- (C) The cost of fuel for heating; cool- ties. However, at its option, the State ing (i.e., the operation of air condi- agency may include the excess heating tioning systems or room air condi- and cooling costs of public housing tioners); electricity or fuel used for residents in the LUA if it wishes to purposes other than heating or cooling; offer the lower standard to such house- water; sewerage; well installation and holds. The State agency may use dif- maintenance; septic tank system in- ferent types of standards but cannot stallation and maintenance; garbage allow households the use of two stand- and trash collection; all service fees re- ards that include the same expense. In quired to provide service for one tele- States in which the cooling expense is phone, including, but not limited to, minimal, the State agency may include basic service fees, wire maintenance the cooling expense in the electricity fees, subscriber line charges, relay cen- component. The State agency may ter surcharges, 911 fees, and taxes; and vary the allowance by factors such as fees charged by the utility provider for household size, geographical area, or

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season. Only utility costs identified in approval, to mandate use of a standard. paragraph (d)(6)(ii)(C) of this section The State agency may require use of must be used in developing standards. the telephone standard for the cost of (B) The State agency must review basic telephone service even if actual the standards annually and make ad- costs are higher. Households certified justments to reflect changes in costs, for 24 months may also choose to rounded to the nearest whole dollar. switch between a standard and actual State agencies must provide the costs at the time of the mandatory in- amounts of standards to FNS when terim contact required by they are changed and submit meth- § 273.10(f)(1)(i), if the State agency has odologies used in developing and updat- not mandated use of the standard. ing standards to FNS for approval (E) A State agency may mandate use when the methodologies are developed of standard utility allowances for all or changed. households with qualifying expenses if (C) A standard with a heating or the State has developed one or more cooling component must be made standards that include the costs of available to households that incur heating and cooling and one or more heating or cooling expenses separately standards that do not include the costs from their rent or mortgage and to of heating and cooling, the standards households that receive direct or indi- will not result in increased program rect assistance under the Low Income costs, and FNS approves the standard. Home Energy Assistance Act of 1981 The prohibition on increasing Program (LIHEAA). A heating or cooling stand- costs does not apply to necessary in- ard is available to households in pri- creases to standards resulting from vate rental housing who are billed by utility cost increases. Under this op- their landlords on the basis of individual usage or who are charged a flat tion households entitled to the stand- rate separately from their rent. How- ard may not claim actual expenses, ever, households in public housing even if the expenses are higher than units which have central utility meters the standard. Households not entitled and which charge households only for to the standard may claim actual al- excess heating or cooling costs are not lowable expenses. Households in public entitled to a standard that includes housing units that have central utility heating or cooling costs based only on meters and charge households only for the charge for excess usage. Households excess heating or cooling costs are not that receive direct or indirect energy entitled to the HCSUA but, at State assistance that is excluded from in- agency option, may claim the LUA. Re- come consideration (other than that quests for approval to use a standard provided under the LIHEAA) are enti- for a single utility must include the tled to a standard that includes heat- cost figures upon which the standard is ing or cooling only if the amount of the based. Requests to use an LUA should expense exceeds the amount of the as- include the approximate number of sistance. Households that receive di- food stamp households that would be rect or indirect energy assistance that entitled to the nonheating and non- is counted as income and incur a heat- cooling standard, the average utility ing or cooling expense are entitled to costs prior to use of the mandatory use a standard that includes heating or standard, the proposed standards, and cooling costs. A household that has an explanation of how the standards both an occupied home and an unoccu- were computed. pied home is only entitled to one (F) If a household lives with and standard. shares heating or cooling expenses with (D) At initial certification, recertifi- another individual, another household, cation, and when a household moves, or both, the State agency must prorate the household may choose between a a standard that includes heating or standard or verified actual utility costs cooling expenses among the household for any allowable expense identified in and the other individual, household, or paragraph (d)(6)(ii)(C) of this section both. However, the State agency may (except the telephone standard), unless not prorate the SUA if all the individ- the State agency has opted, with FNS uals who share utility expenses but are

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not in the food stamp household are ex- efit level for the initial month of cer- cluded from the household only be- tification shall be based on the date of cause they are ineligible. the month the household is released [Amdt. 132, 43 FR 47889, Oct. 17, 1978] from the institution and the household shall receive benefits from the date of EDITORIAL NOTE: For FEDERAL REGISTER ci- the household’s release from the insti- tations affecting § 273.9, see the List of CFR tution to the end of the month. As used Sections Affected, which appears in the Finding Aids section of the printed volume in this section, the term ‘‘initial and on GPO Access. month’’ means the first month for which the household is certified for § 273.10 Determining household eligi- participation in the Food Stamp Pro- bility and benefit levels. gram following any period during (a) Month of application—(1) Deter- which the household was not certified mination of eligibility and benefit levels. for participation, except for migrant (i) A household’s eligibility shall be de- and seasonal farmworker households. termined for the month of application In the case of migrant and seasonal by considering the household’s cir- farmworker households, the term ‘‘ini- cumstances for the entire month of ap- tial month’’ means the first month for plication. Most households will have which the household is certified for the eligibility determination based on participation in the Food Stamp Pro- circumstances for the entire calendar gram following any period of more month in which the household filed its than 1 month during which the house- application. However, State agencies hold was not certified for participation. may, with the prior approval of FNS, Recertification shall be processed in use a fiscal month if the State agency accordance with § 273.10(a)(2). The State determines that it is more efficient and agency shall prorate a household’s ben- satisfies FNS that the accounting pro- efits according to one of the two fol- cedures fully comply with certification lowing options: and issuance requirements contained in these regulations. A State agency may (A) The State agency shall use a elect to use either a standard fiscal standard 30-day calendar or fiscal month for all households, such as from month. A household applying on the the 15th of one calendar month to the 31st of a month will be treated as 15th of the next calendar month, or a though it applied on the 30th of the fiscal month that will vary for each month. household depending on the date an in- (B) The State agency shall prorate dividual files an application for the benefits over the exact length of a par- Program. Applicant households con- ticular calendar or fiscal month. sisting of residents of a public institu- (iii) To determine the amount of the tion who apply jointly for SSI and food prorated allotment, the State agency stamps prior to release from the public shall use either the appropriate Food institution in accordance with Stamp Allotment Proration Table pro- § 273.1(e)(2) will have their eligibility vided by FNS or whichever of the fol- determined for the month in which the lowing formulae is appropriate: applicant household was released from (A) For State agencies which use a the institution. standard 30-day calendar or fiscal (ii) A household’s benefit level for month the formula is as follows, keep- the initial months of certification shall ing in mind that the date of applica- be based on the day of the month it applies for benefits and the household tion for someone applying on the 31st shall receive benefits from the date of of a month is the 30th: application to the end of the month un- ab× less the applicant household consists of X = residents of a public institution. For c households which apply for SSI prior to their release from a public institution in accordance with § 273.1(e)(2), the ben-

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(31− date of application) full month’s benefits × = allotment 30

(B) For State agencies which use the ab× exact number of days in a month, the X = formula is: c

(number of days in month + 1− date of application) full month’s benefits × = allotment number of days in month

(C) If after using the appropriate for- an application for recertification prior mula the result ends in 1 through 99 to the end of its certification period cents, the State agency shall round the and is found eligible for the first month product down to the nearest lower following the end of the certification whole dollar. If the computation re- period, then that month shall not be an sults in an allotment of less than $10, initial month. then no issuance shall be made for the (3) Anticipated changes. Because of an- initial month. ticipated changes, a household may be (2) Application for recertification. Eli- eligible for the month of application, gibility for recertification shall be determined based on circumstances an- but ineligible in the subsequent month. ticipated for the certification period The household shall be entitled to ben- starting the month following the expi- efits for the month of application even ration of the current certification pe- if the processing of its application re- riod. The level of benefits for recertifi- sults in the benefits being issued in the cations shall be based on the same an- subsequent month. Similarly, a house- ticipated circumstances, except for ret- hold may be ineligible for the month of rospectively budgeted households application, but eligible in the subse- which shall be recertified in accord- quent month due to anticipated ance with § 273.21(f)(2). If a household, changes in circumstances. Even though other than a migrant or seasonal farm- denied for the month of application, worker household, submits an applica- the household does not have to reapply tion after the household’s certification in the subsequent month. The same ap- period has expired, that application plication shall be used for the denial shall be considered an initial applica- for the month of application and the tion and benefits for that month shall determination of eligibility for subse- be prorated in accordance with para- quent months, within the timeliness graph (a)(1)(ii) of this section. If a standards in § 273.2. household’s failure to timely apply for (4) Changes in allotment levels. As a re- recertification was due to an error of sult of anticipating changes, the house- the State agency and therefore there was a break in participation, the State hold’s allotment for the month of ap- agency shall follow the procedures in plication may differ from its allotment § 273.14(e). In addition, if the household in subsequent months. The State agen- submits an application for recertifi- cy shall establish a certification period cation prior to the end of its certifi- for the longest possible period over cation period but is found ineligible for which changes in the household’s cir- the first month following the end of cumstances can be reasonably antici- the certification period, then the first pated. The household’s allotment shall month of any subsequent participation vary month to month within the cer- shall be considered an initial month. tification period to reflect changes an- Conversely, if the household submits ticipated at the time of certification,

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unless the household elects the aver- indication of anticipated fluctuations aging techniques in paragraphs (c)(3) in future income. Similarly, if the and (d)(3) of this section. household’s income fluctuates season- (b) Determining resources. Available ally, it may be appropriate to use the resources at the time the household is most recent season comparable to the interviewed shall be used to determine certification period, rather than the the household’s eligibility. last 30 days, as one indicator of antici- (c) Determining income—(1) Antici- pated income. The State agency shall pating income. (i) For the purpose of de- exercise particular caution in using in- termining the household’s eligibility come from a past season as an indi- and level of benefits, the State agency cator of income for the certification shall take into account the income al- period. In many cases of seasonally ready received by the household during fluctuating income, the income also the certification period and any antici- fluctuates from one season in one year pated income the household and the to the same season in the next year. State agency are reasonably certain However, in no event shall the State will be received during the remainder agency automatically attribute to the of the certification period. If the household the amounts of any past in- amount of income that will be re- come. The State agency shall not use ceived, or when it will be received, is past income as an indicator of antici- uncertain, that portion of the house- pated income when changes in income hold’s income that is uncertain shall have occurred or can be anticipated not be counted by the State agency. during the certification period. For example, a household anticipating (2) Income only in month received. (i) income from a new source, such as a Income anticipated during the certifi- new job or recently applied for public assistance benefits, may be uncertain cation period shall be counted as in- as to the timing and amount of the ini- come only in the month it is expected tial payment. These moneys shall not to be received, unless the income is be anticipated by the State agency un- averaged. Whenever a full month’s in- less there is reasonable certainty con- come is anticipated but is received on a cerning the month in which the pay- weekly or biweekly basis, the State ment will be received and in what agency shall convert the income to a amount. If the exact amount of the in- monthly amount by multiplying week- come is not known, that portion of it ly amounts by 4.3 and biweekly which can be anticipated with reason- amounts by 2.15, use the State Agen- able certainty shall be considered as cy’s PA conversion standard, or use the income. In cases where the receipt of exact monthly figure if it can be an- income is reasonably certain but the ticipated for each month of the certifi- monthly amount may fluctuate, the cation period. Nonrecurring lump-sum household may elect to income aver- payments shall be counted as a re- age. Households shall be advised to resource starting in the month received port all changes in gross monthly in- and shall not be counted as income. come as required by § 273.12. (ii) Wages held at the request of the (ii) Income received during the past employee shall be considered income to 30 days shall be used as an indicator of the household in the month the wages the income that is and will be available would otherwise have been paid by the to the household during the certifi- employer. However, wages held by the cation period. However, the State agen- employer as a general practice, even if cy shall not use past income as an indi- in violation of law, shall not be count- cator of income anticipated for the cer- ed as income to the household, unless tification period if changes in income the household anticipates that it will have occurred or can be anticipated. If ask for and receive an advance, or that income fluctuates to the extent that a it will receive income from wages that 30-day period alone cannot provide an were previously held by the employer accurate indication of anticipated in- as a general practice and that were, come, the State agency and the house- therefore, not previously counted as in- hold may use a longer period of past come by the State agency. Advances on time if it will provide a more accurate wages shall count as income in the

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month received only if reasonably an- (d) Determining deductions. Deductible ticipated as defined in paragraph (c)(1) deductions include only certain de- of this section. pendent care, shelter, child support and (iii) Households receiving income on medical costs as described in § 273.9. a recurring monthly or semimonthly (1) Disallowed expenses. (i) Any ex- basis shall not have their monthly in- pense, in whole or part, covered by edu- come varied merely because of changes cational income which has been ex- in mailing cycles or pay dates or be- cluded pursuant to the provisions of cause weekends or holidays cause addi- § 273.9(c)(3) shall not be deductible. For tional payments to be received in a example, the portion of rent covered by month. excluded vendor payments shall not be (3) Income averaging. (i) Income may calculated as part of the household’s be averaged in accordance with meth- shelter cost. In addition, an expense ods established by the State agency to which is covered by an excluded vendor be applied Statewide for categories of payment that has been converted to a households. When averaging income, direct cash payment under the ap- the State agency shall use the house- proval of a federally authorized dem- hold’s anticipation of monthly income onstration project as specified under fluctuations over the certification pe- § 273.9(c)(1) shall not be deductible. riod. An average must be recalculated However, that portion of an allowable at recertification and in response to medical expense which is not reimburs- changes in income, in accordance with able shall be included as part of the § 273.12(c), and the State agency shall household’s medical expenses. If the inform the household of the amount of household reports an allowable medical income used to calculate the allot- expense at the time of certification but ment. Conversion of income received cannot provide verification at that weekly or biweekly in accordance with time, and if the amount of the expense paragraph (c)(2) of this section does not cannot be reasonably anticipated based constitute averaging. upon available information about the (ii) Households which, by contract or recipient’s medical condition and pub- self-employment, derive their annual lic or private medical insurance cov- income in a period of time shorter than erage, the household shall have the 1 year shall have that income averaged nonreimbursable portion of the med- over a 12-month period, provided the ical expense considered at the time the income from the contract is not re- amount of the expense or reimburse- ceived on an hourly or piecework basis. These households may include school ment is reported and verified. A de- employees, sharecroppers, farmers, and pendent care expense which is reim- other self-employed households. How- bursed or paid for by the Job Opportu- ever, these provisions do not apply to nities and Basic Skills Training (JOBS) migrant or seasonal farmworkers. The program under title IV-F of the Social procedures for averaging self-employed Security Act (42 U.S.C. 681) or the income are described in § 273.11. Con- Transitional Child Care (TCC) program tract income which is not the house- shall not be deductible. A utility ex- hold’s annual income and is not paid on pense which is reimbursed or paid by an hourly or piecework basis shall be an excluded payment, including HUD prorated over the period the income is or FmHA utility reimbursements, shall intended to cover. not be deductible. (iii) Earned and unearned educational (ii) Expenses shall only be deductible income, after allowable exclusions, if the service is provided by someone shall be averaged over the period which outside of the household and the house- it is intended to cover. Income shall be hold makes a money payment for the counted either in the month it is re- service. For example, a dependent care ceived, or in the month the household deduction shall not be allowed if an- anticipates receiving it or receiving other household member provides the the first installment payment, al- care, or compensation for the care is though it is still prorated over the pe- provided in the form of an inkind ben- riod it is intended to cover. efit, such as food.

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(2) Billed expenses. Except as provided (4) Anticipating expenses. The State in paragraph (d)(3) of this section a de- agency shall calculate a household’s duction shall be allowed only in the expenses based on the expenses the month the expense is billed or other- household expects to be billed for dur- wise becomes due, regardless of when ing the certification period. Anticipa- the household intends to pay the ex- tion of the expense shall be based on pense. For example, rent which is due the most recent month’s bills, unless each month shall be included in the the household is reasonably certain a household’s shelter costs, even if the change will occur. When the household household has not yet paid the expense. is not claiming the utility standard, Amounts carried forward from past the State agency may anticipate billing periods are not deductible, even changes during the certification period if included with the most recent billing based on last year’s bills from the same and actually paid by the household. In period updated by overall price in- any event, a particular expense may creases; or, if only the most recent bill only be deducted once. is available, utility cost increases or (3) Averaging expenses. Households decreases over the months of the cer- may elect to have fluctuating expenses tification period may be based on util- averaged. Households may also elect to ity company estimates for the type of have expenses which are billed less dwelling and utilities used by the often than monthly averaged forward household. The State agency shall not over the interval between scheduled average past expenses, such as utility billings, or, if there is no scheduled in- bills for the last several months, as a terval, averaged forward over the pe- method of anticipating utility costs for riod the expense is intended to cover. the certification period. At certifi- For example, if a household receives a cation and recertification, the house- single bill in February which covers a 3-month supply of fuel oil, the bill may hold shall report and verify all medical be averaged over February, March, and expenses. The household’s monthly April. The household may elect to have medical deduction for the certification one-time only expenses averaged over period shall be based on the informa- the entire certification period in which tion reported and verified by the house- they are billed. Households reporting hold, and any anticipated changes in one-time only medical expenses during the household’s medical expenses that their certification period may elect to can be reasonably expected to occur have a one-time deduction or to have during the certification period based on the expense averaged over the remain- available information about the recipi- ing months of their certification pe- ent’s medical condition, public or pri- riod. Averaging would begin the month vate insurance coverage, and current the change would become effective. For verified medical expenses. The house- households certified for 24 months that hold shall not be required to file re- have one-time medical expenses, the ports about its medical expenses during State agency must use the following the certification period. If the house- procedure. In averaging any one-time hold voluntarily reports a change in its medical expense incurred by a house- medical expenses, the State agency hold during the first 12 months, the shall verify the change in accordance State agency must give the household with § 273.2(f)(8)(ii) if the change would the option of deducting the expense for increase the household’s allotment. one month, averaging the expense over The State agency has the option of ei- the remainder of the first 12 months of ther requiring verification prior to act- the certification period, or averaging ing on the change, or requiring the the expense over the remaining months verification prior to the second normal in the certification period. One-time monthly allotment after the change is expenses reported after the 12th month reported. In the case of a reported of the certification period will be de- change that would decrease the house- ducted in one month or averaged over hold’s allotment, or make the house- the remaining months in the certifi- hold ineligible, the State agency shall cation period, at the household’s op- act on the change without requiring tion. verification, though verification which

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is required by § 273.2(f)(8) shall be ob- ments prospectively, in accordance tained prior to the household’s recer- with paragraphs (d)(2) through (d)(5) of tification. If a child in the household this section, or retrospectively, in ac- reaches his or her second birthday dur- cordance with § 273.21(b) and ing the certification period, the $200 § 273.21(f)(2), regardless of the budgeting maximum dependent care deduction system used for the household’s other defined in § 273.9(d)(4) shall be adjusted circumstances. in accordance with this section not (e) Calculating net income and benefit later than the household’s next regu- levels—(1) Net monthly income. (i) To de- larly scheduled recertification. termine a household’s net monthly in- (5) Conversion of deductions. The income, the State agency shall: come conversion procedures in para- (A) Add the gross monthly income graph (c)(2) of this section shall also earned by all household members and apply to expenses billed on a weekly or the total monthly unearned income of biweekly basis. all household members, minus income (6) Energy Assistance Payments. Ex- exclusions, to determine the house- cept for payments made under the Low hold’s total gross income. Net losses Income Energy Assistance Act of 1981, from the self-employment income of a the State agency shall prorate energy farmer shall be offset in accordance assistance payments as provided for in with § 273.11(a)(2)(iii). § 273.9(d) over the entire heating or (B) Multiply the total gross monthly cooling season the payment is intended earned income by 20 percent and sub- to cover. tract that amount from the total gross (7) Households which contain a mem- income; or multiply the total gross ber who is a disabled SSI recipient in monthly earned income by 80 percent accordance with paragraphs (2), (3), (4) and add that to the total monthly un- or (5) of the definition of a disabled earned income, minus income exclu- member in § 271.2 or households which sions. contain a member who is a recipient of (C) Subtract the standard deduction. SSI benefits and the household is de- (D) If the household is entitled to an termined within the 30-day processing excess medical deduction as provided standard to be categorically eligible in § 273.9(d)(3), determine if total med- (as discussed in § 273.2(j)) or determined ical expenses exceed $35. If so, subtract to be eligible as an NPA household and that portion which exceeds $35. later becomes a categorically eligible (E) Subtract allowable monthly de- household, shall be entitled to the ex- pendent care expenses, if any, up to a cess medical deduction of § 273.9(d)(3) maximum amount as specified under and the uncapped excess shelter ex- § 273.9(d)(4) for each dependent. pense deduction of § 273.9(d)(5) for the (F) Subtract allowable monthly child period for which the SSI recipient is support payments in accordance with authorized to receive SSI benefits or § 273.9(d)(7). the date of the food stamp application, (G) Subtract the homeless shelter de- whichever is later, if the household in- duction, if any, up to the maximum of curs such expenses. Households, which $143. contain an SSI recipient as discussed (H) Total the allowable shelter ex- in this paragraph, which are deter- penses to determine shelter costs, un- mined ineligible as an NPA household less a deduction has been subtracted in and later become categorically eligible accordance with paragraph (e)(1)(i)(G) and entitled to restored benefits in ac- of this section. Subtract from total cordance with § 273.2(j)(1)(iv), shall re- shelter costs 50 percent of the house- ceive restored benefits using the med- hold’s monthly income after all the ical and excess shelter expense deduc- above deductions have been subtracted. tions from the beginning of the period The remaining amount, if any, is the for which SSI benefits are paid, the excess shelter cost. If there is no excess original food stamp application date or shelter cost, the net monthly income December 23, 1985, whichever is later, if has been determined. If there is excess the household incurs such expenses. shelter cost, compute the shelter de- (8) Child support deduction. State duction according to paragraph agencies may budget child support pay- (e)(1)(i)(I) of this section.

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(I) Subtract the excess shelter cost appropriate household size to deter- up to the maximum amount allowed mine eligibility for the month. for the area (unless the household is (C) For households considered des- entitled to the full amount of its excess titute in accordance with paragraph shelter expenses) from the household’s (e)(3) of this section, the State agency monthly income after all other appli- shall determine a household’s eligi- cable deductions. Households not sub- bility by computing its gross and net ject to a capped shelter expense shall income according to paragraph (e)(3) of have the full amount exceeding 50 per- this section, and comparing, as appro- cent of their net income subtracted. priate, the gross and/or net income to The household’s net monthly income the corresponding income eligibility has been determined. standard in accordance with § 273.9(a) (ii) In calculating net monthly in- (1) or (2). come, the State agency shall use one of (D) If a household contains a member the following two procedures: who is fifty-nine years old on the date (A) Round down each income and al- of application, but who will become lotment calculation that ends in 1 sixty before the end of the month of ap- through 49 cents and round up each cal- plication, the State agency shall deter- culation that ends in 50 through 99 mine the household’s eligibility in ac- cents; or cordance with paragraph (e)(2)(i)(A) of (B) Apply the rounding procedure this section. that is currently in effect for the (E) If a household contains a student State’s Temporary Assistance for whose income is excluded in accord- Needy Families (TANF) program. If the ance with § 273.9(c)(7) and the student State TANF program includes the becomes 18 during the month of appli- cents in income calculations, the State cation, the State agency shall exclude agency may use the same procedures the student’s earnings in the month of for food stamp income calculations. application and count the student’s Whichever procedure is used, the State earnings in the following month. If the agency may elect to include the cents student becomes 18 during the certifi- associated with each individual shelter cation period, the student’s income cost in the computation of the shelter shall be excluded until the month fol- deduction and round the final shelter lowing the month in which the student deduction amount. Likewise, the State turns 18. agency may elect to include the cents (ii)(A) Except as provided in para- associated with each individual med- graphs (a)(1), (e)(2)(iii) and (e)(2)(vi) of ical cost in the computation of the this section, the household’s monthly medical deduction and round the final allotment shall be equal to the max- medical deduction amount. imum food stamp allotment for the (2) Eligibility and benefits. (i)(A) household’s size reduced by 30 percent Households which contain an elderly or of the household’s net monthly income disabled member as defined in § 271.2, as calculated in paragraph (e)(1) of this shall have their net income, as cal- section. If 30 percent of the household’s culated in paragraph (e)(1) of this sec- net income ends in cents, the State tion (except for households considered agency shall round in one of the fol- destitute in accordance with paragraph lowing ways: (e)(3) of this section), compared to the (1) The State agency shall round the monthly income eligibility standards 30 percent of net income up to the defined in § 273.9(a)(2) for the appro- nearest higher dollar; or priate household size to determine eli- (2) The State agency shall not round gibility for the month. the 30 percent of net income at all. In- (B) In addition to meeting the net instead, after subtracting the 30 percent come eligibility standards, households of net income from the appropriate which do not contain an elderly or dis- Thrifty Food Plan, the State agency abled member shall have their gross in- shall round the allotment down to the come, as calculated in accordance with nearest lower dollar. paragraph (e)(1)(i)(A) of this section, (B) If the calculation of benefits in compared to the gross monthly income accordance with paragraph (e)(2)(ii)(A) standards defined in § 273.9(a)(1) for the of this section for an initial month

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would yield an allotment of less than change, in accordance with paragraph $10 for the household, no benefits shall (a)(1) of this section. be issued to the household for the ini- (7) The State agency may delay the tial month. work registration of the household’s (C) Except during an initial month, members until the household is deter- all eligible one- and two-person house- mined to be entitled to benefits. holds shall receive minimum monthly (iv) For those eligible households allotments equal to the minimum ben- which are entitled to no benefits in efit and all eligible households with their initial month of application, in three or more members which are enti- accordance with paragraph (a)(1) or tled to $1, $3, and $5 allotments shall (e)(2)(ii)(B) of this section, but are enti- receive allotments, of $2, $4, and $6, re- tled to benefits in subsequent months, spectively, to correspond with current the State agency shall certify the coupon book determinations. households beginning with the month (iii) For an eligible household with of application. three or more members which is enti- (v) When a household’s circumstances tled to no benefits (except because of change and it becomes entitled to a dif- the proration requirements of para- ferent income eligibility standard, the graph (a)(1) and the provision pre- State agency shall apply the different cluding issuances of less than $10 in an standard at the next recertification or initial month of paragraph (e)(2)(ii)(B)) whenever the State agency changes the of this section: household’s eligibility, benefit level or (A) The State agency shall deny the certification period, whichever occurs household’s application on the grounds first. that its net income exceeds the level at (vi) During a month when a reduc- which benefits are issued; or tion, suspension or cancellation of al- (B) The State agency shall certify lotments has been ordered pursuant to the household but suspend its partici- the provisions of § 271.7, eligible pation, subject to the following condi- housholds shall have their benefits cal- tions: culated as follows: (1) The State agency shall inform the (A) If a benefit reduction is ordered, suspended household, in writing, of its State agencies shall reduce the max- suspended status, and of its rights and imum food stamp allotment amounts responsibilities while it is in that sta- for each household size by the percent- tus. age ordered in the Department’s notice (2) The State agency shall set the on benefit reductions. State agencies household’s change reporting require- shall multiply the maximum food ments and the manner in which those stamp allotment amounts by the per- changes will be reported and processed. centage specified in the FNS notice; if (3) The State agency shall specify the result ends in 1 through 99 cents, which changes shall entitle the house- round the result up to the nearest high- hold to have its status converted from er dollar; and subtract the result from suspension to issuance, and which the normal maximum food stamp allot- changes shall require the household to ment amount. In calculating benefit reapply for participation. levels for eligible households, State (4) The household shall retain the agencies would follow the procedures right to submit a new application while detailed in paragraph (e)(2)(ii) of this it is suspended. section and substitute the reduced (5) The State agency shall convert a maximum food stamp allotment household from suspension to issuance amounts for the normal maximum food status, without requiring an additional stamp allotment amounts. certification interview, and issue its (B) Except as provided in paragraphs initial allotment, within ten days of (a)(1), (e)(2)(ii)(B), and (e)(2)(vi)(C) of the date the household reports the this section, one- and two-person change. households shall be provided with at (6) The State agency shall prorate least the minimum benefit. the household’s benefits, in the first (C) In the event that the national re- month after the suspension period, duction in benefits is 90 percent or from the date the household reports a more of the benefits projected to be

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issued for the affected month, the pro- (A) If income is received on a month- vision for a minimum benefit for ly or more frequent basis, it shall be households with one or two members considered as coming from a termi- only may be disregarded and all house- nated source if it will not be received holds may have their benefits lowered again from the same source during the by reducing maximum food stamp al- balance of the month of application or lotment amounts by the percentage during the following month. specified by the Department. The ben- (B) If income is normally received efit reduction notice issued by the De- less often than monthly, the non- partment to effectuate a benefit reduc- receipt of income from the same source tion will specify whether minimum in the balance of the month of applica- benefits for households with one or two tion or in the following month is inap- members only are to be provided to propriate to determine whether or not households. the income is terminated. For example, (D) If the action in effect is a suspen- if income is received on a quarterly sion or cancellation, eligible house- basis (e.g., on January 1, April 1, July holds shall have their allotment levels 1, and October 1), and the household ap- calculated according to the procedures plies in mid-January, the income in paragraph (e)(2)(ii) of this section. should not be considered as coming However, the allotments shall not be from a terminated source merely be- issued for the month the suspension or cause no further payments will be re- cancellation is in effect. The provision ceived in the balance of January or in for the minimum benefit for house- February. The test for whether or not holds with one or two members only this household’s income is terminated shall be disregarded and all households is whether the income is anticipated to shall have their benefits suspended or be received in April. Therefore, for cancelled for the designated month. households that normally receive income less often than monthly, the in- (E) In the event of a suspension or come shall be considered as coming cancellation, or a reduction exceeding from a terminated source if it will not 90 percent of the affected month’s pro- be received in the month in which the jected issuance, all households, includ- next payment would normally be re- ing one and two-person households, ceived. shall have their benefits suspended, (ii) Households whose only income cancelled or reduced by the percentage for the month of application is from a specified by FNS. new source shall be considered des- (3) Destitute households. Migrant or titute and shall be provided expedited seasonal farmworker households may service if income of more than $25 from have little or no income at the time of the new source will not be received by application and may be in need of im- the 10th calendar day after the date of mediate food assistance, even though application. they receive income at some other (A) Income which is normally re- time during the month of application. ceived on a monthly or more frequent The following procedures shall be used basis shall be considered to be from a to determine when migrant or seasonal new source if income of more than $25 farmworker households in these cir- has not been received from that source cumstances may be considered des- within 30 days prior to the date the ap- titute and, therefore, entitled to expe- plication was filed. dited service and special income cal- (B) If income is normally received culation procedures. Households other less often than monthly, it shall be than migrant or seasonal farmworker considered to be from a new source if households shall not be classified as income of more than $25 was not re- destitute. ceived within the last normal interval (i) Households whose only income for between payments. For example, if a the month of application was received household applies in early January and prior to the date of application, and is expecting to be paid every 3 months, was from a terminated source, shall be starting in late January, the income considered destitute households and shall be considered to be from a new shall be provided expedited service. source if no income of more than $25

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was received from the source during grower for whom the migrant is work- October or since that time. ing at a particular point in time, and (iii) Households may receive both in- not the crew chief. A migrant who come from a terminated source prior to travels with the same crew chief but the date of application, and income moves from one grower to another from a new source after the date of ap- shall be considered to have moved from plication, and still be considered des- a terminated income source to a new titute if they receive no other income source. in the month of application and income (vii) The above procedures shall of more than $25 from the new source apply at initial application and at re- will not be received by the 10th day certification, but only for the first after the date of application. month of each certification period. At (iv) Destitute households shall have recertification, income from a new their eligibility and level of benefits source shall be disregarded in the first calculated for the month of application month of the new certification period by considering only income which is re- if income of more than $25 will not be ceived between the first of the month received from this new source by the and the date of application. Any in- 10th calendar day after the date of the come from a new source that is antici- household’s normal issuance cycle. pated after the day of application shall (4) Thrifty Food Plan (TFP) and Max- be disregarded. imum Food Stamp Allotments. (v) Some employers provide travel (i) Maximum food stamp allotment advances to cover the travel costs of level. Maximum food stamp allotments new employees who must journey to shall be based on the TFP as defined in the location of their new employment. § 271.2, and they shall be uniform by To the extent that these payments are household size throughout the 48 con- excluded as reimbursements, receipt of tiguous States and the District of Co- travel advances will not affect the de- lumbia. The TFP for Hawaii shall be termination of when a household is the TFP for the 48 States and DC ad- destitute. However, if the travel adjusted for the price of food in Honolulu. vance is by written contract an ad- The TFPs for urban, rural I, and rural vance of wages that will be subtracted II parts of Alaska shall be the TFP for from wages later earned by the em- the 48 States and DC adjusted by the ployee, rather than a reimbursement, price of food in Anchorage and further the wage advance shall count as in- adjusted for urban, rural I, and rural II come. In addition, the receipt of a wage Alaska as defined in § 272.7(c). The advance for travel costs of a new em- TFPs for Guam and the Virgin Islands ployee shall not affect the determina- shall be adjusted for changes in the tion of whether subsequent payments cost of food in the 48 States and DC, from the employer are from a new provided that the cost of these TFPs source of income, nor whether a house- may not exceed the cost of the highest hold shall be considered destitute. For TFP for the 50 States. The TFP example, if a household applies on May amounts and maximum allotments in 10, has received a $50 advance for travel each area are adjusted annually and from its new employer on May 1 which will be prescribed in a table posted on by written contract is an advance on the FNS web site, at www.fns.usda.gov/ wages, but will not receive any other fsp. wages from the employer until May 30, (ii) Adjustment. Effective October 1, the household shall be considered des- 1996, the maximum food stamp allot- titute. The May 30 payment shall be ments must be based on 100% of the disregarded, but the wage advance re- cost of the TFP as defined in § 271.2 of ceived prior to the date of application this chapter for the preceding June, shall be counted as income. rounded to the nearest lower dollar in- (vi) A household member who crement, except that on October 1, 1996, changes jobs but continues to work for the allotments may not fall below the same employer shall be considered those in effect on September 30, 1996. as still receiving income from the same (f) Certification periods. The State source. A migrant farmworker’s source agency must certify each eligible of income shall be considered to be the household for a definite period of time.

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State agencies must assign the longest (4) Shortening certification periods. The certification period possible based on State agency may not end a house- the predictability of the household’s hold’s certification period earlier than circumstances. The first month of the its assigned termination date, unless certification period will be the first the State agency receives information month for which the household is eligi- that the household has become ineli- ble to participate. The certification pe- gible, or the household has not com- riod cannot exceed 12 months, except plied with the requirements of as specified in paragraphs (f)(1) and § 273.12(c)(3). Loss of public assistance (f)(2) of this section: or a change in employment status is (1) Households in which all adult mem- not sufficient in and of itself to meet bers are elderly or disabled. The State the criteria necessary for shortening agency may certify for up to 24 months the certification period. The State households in which all adult members agency must close the household’s case are elderly or disabled. The State agen- or adjust the household’s benefit cy must have at least one contact with amount in accordance with § 273.12(c)(1) each household every 12 months. The or (c)(2) in response to reported State agency may use any method it changes. The State agency may not use chooses for this contact. the Notice of Expiration to shorten a (2) Households residing on a reserva- certification period. tion. The State agency must certify for (5) Lengthening certification periods. 24 months those households residing on State agencies may lengthen a house- a reservation which it requires to sub- hold’s current certification period once mit monthly reports in accordance it is established, as long as the total with § 273.21, unless the State agency months of the certification period do obtains a waiver from FNS. In the not exceed 24 months for households in waiver request the State agency must which all adult members are elderly or disabled, or 12 months for other house- include justification for a shorter pe- holds. If the State agency extends a riod and input from the affected Indian household’s certification period, it tribal organization(s). When house- must advise the household of the new holds move off the reservation, the certification ending date with a notice State agency must either continue containing the same information as the their certification periods until they notice of eligibility set forth in para- would normally expire or shorten the graph (g)(1)(i)(A) of this section. certification periods in accordance (g) Certification notices to households— with paragraph (f)(4) of this section. (1) Initial applications. State agencies (3) Certification period length. The shall provide applicants with one of the State agency should assign each house- following written notices as soon as a hold the longest certification period determination is made, but no later possible, consistent with its cir- than 30 days after the date of the ini- cumstances. tial application: (i) Households should be assigned cer- (i) Notice of eligibility. (A) If an appli- tification periods of at least 6 months, cation is approved, the State agency unless the household’s circumstances shall provide the household with writ- are unstable or the household contains ten notice of the amount of the allot- an ABAWD. ment and the beginning and ending (ii) Households with unstable cir- dates of the certification period. The cumstances, such as households with household shall also be advised of vari- zero net income, and households with ations in the benefit level based on an ABAWD member should be assigned changes anticipated at the time of cer- certification periods consistent with tification. If the initial allotment con- their circumstances, but generally no tains benefits for both the month of ap- less than 3 months. plication and the current month’s ben- (iii) Households may be assigned 1- or efits, the notice shall explain that the 2-month certification periods when it initial allotment includes more than 1 appears likely that the household will month’s benefits, and shall indicate the become ineligible for food stamps in monthly allotment amount for the re- the near future. mainder of the certification period.

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The notice shall also advise the house- is denied shall be asked to inform the hold of its right to a fair hearing, the State agency if it is approved to re- telephone number of the food stamp of- ceive PA and/or SSI benefits or bene- fice (a toll-free number or a number fits from a State or local GA program. where collect calls will be accepted for In cases where the State agency has households outside the local calling elected to use a notice of denial when a area), and, if possible, the name of the delay was caused by the household’s person to contact for additional infor- failure to take action to complete the mation. If there is an individual or or- application process, as provided in ganization available that provides free § 273.2(h)(2), the notice of denial shall legal representation, the notice shall also explain: The action that the also advise the household of the avail- household must take to reactivate the ability of the services. The State agen- application; that the case will be re- cy may also include in the notice a reopened without a new application if ac- minder of the household’s obligation to tion is taken within 30 days of the date report changes in circumstance and of the notice of denial was mailed; and the need to reapply for continued par- that the household must submit a new ticipation at the end of the certifi- application if, at the end of the 30-day cation period. Other information which period, the household has not taken would be useful to the household may the needed action and wishes to par- also be included. ticipate in the program. If the State (B) In cases where a household’s ap- agency chooses the option specified in plication is approved on an expedited § 273.2(h)(2) of reopening the application basis without verification, as provided in cases where verification is lacking in § 273.2(i), the notice shall explain only if household provides verification that the household must provide the within 30 days of the date of the initial verification which was waived. If the request for verification, the State State agency has elected to assign a agency shall include on the notice of longer certification period to some denial the date by which the household households certified on an expedited must provide the missing verification. basis, the notice shall also explain the (iii) Notice of pending status. If the ap- special conditions of the longer certifi- plication is to be held pending because cation period, as specified in § 273.2(i), some action by the State is necessary and the consequences of failure to pro- to complete the application process, as vide the postponed verification. specified in § 273.2(h)(2), or the State (C) For households provided a notice agency has elected to pend all cases re- of expiration at the time of certifi- gardless of the reason for delay, the cation, as required in § 273.14(b), the no- State agency shall provide the house- tice of eligibility may be combined hold with a written notice which in- with the notice of expiration or sepa- forms the household that its applica- rate notices may be sent. tion has not been completed and is (ii) Notice of denial. If the application being processed. If some action by the is denied, the State agency shall pro- household is also needed to complete vide the household with written notice the application process, the notice explaining the basis for the denial, the shall also explain what action the household’s right to request a fair household must take and that its appli- hearing, the telephone number of the cation will be denied if the household food stamp office (a toll-free number or fails to take the required action within a number where collect calls will be ac- 60 days of the date the application was cepted for households outside the local filed. If the State agency chooses the calling area), and, if possible, the name option specified in § 273.2(h) (2) and (3) of the person to contact for additional of holding the application pending in information. If there is an individual or cases where verification is lacking only organization available that provides until 30 days following the date free legal representation, the notice verification was initially requested, shall also advise the household of the the State agency shall include on the availability of the service. A household notice of pending status the date by which is potentially categorically eli- which the household must provide the gible but whose food stamp application missing verification.

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(2) Applications for recertification. The producing self-employment income State agency shall provide households from farming when the self-employ- that have filed an application by the ment farm income is annualized. 15th of the last month of their certifi- (2) Determining monthly income from cation period with either a notice of self-employment. (i) For the period of eligibility or a notice of denial by the time over which self-employment in- end of the current certification period come is determined, the State agency if the household has complied with all must add all gross self-employment in- recertification requirements. The come (either actual or anticipated, as State agency shall provide households provided in paragraph (a)(1)(i) of this that have received a notice of expira- section) and capital gains (according to tion at the time of certification, and paragraph (a)(3) of this section), ex- have timely reapplied, with either a clude the costs of producing the self- notice of eligibility or a notice of de- employment income (as determined in nial not later than 30 days after the paragraph (a)(4) of this section), and di- date of the household’s initial oppor- vide the remaining amount of self-em- tunity to obtain its last allotment. ployment income by the number of [Amdt. 132, 43 FR 47889, Oct. 17, 1978] months over which the income will be averaged. This amount is the monthly EDITORIAL NOTE: For FEDERAL REGISTER ci- net self-employment income. The tations affecting § 273.10, see the List of CFR Sections Affected, which appears in the monthly net self-employment income Finding Aids section of the printed volume must be added to any other earned in- and on GPO Access. come received by the household to determine total monthly earned income. § 273.11 Action on households with (ii) If the cost of producing self-em- special circumstances. ployment income exceeds the income (a) Self-employment income. The State derived from self-employment as a agency must calculate a household’s farmer (defined for the purposes of this self-employment income as follows: paragraph (a)(2)(ii) as a self-employed (1) Averaging self-employment income. farmer who receives or anticipates re- (i) Self-employment income must be ceiving annual gross proceeds of $1,000 averaged over the period the income is or more from the farming enterprise), intended to cover, even if the house- such losses must be prorated in accord- hold receives income from other ance with paragraph (a)(1) of this sec- sources. If the averaged amount does tion, and then offset against countable not accurately reflect the household’s income to the household as follows: actual circumstances because the (A) Offset farm self-employment household has experienced a substan- losses first against other self-employ- tial increase or decrease in business, ment income. the State agency must calculate the (B) Offset any remaining farm self- self-employment income on the basis of employment losses against the total anticipated, not prior, earnings. amount of earned and unearned income (ii) If a household’s self-employment after the earned income deduction has enterprise has been in existence for less been applied. than a year, the income from that self- (iii) If a State agency determines employment enterprise must be aver- that a household is eligible based on its aged over the period of time the busi- monthly net income, the State may ness has been in operation and the elect to offer the household an option monthly amount projected for the com- to determine the benefit level by using ing year. either the same net income which was (iii) Notwithstanding the provisions used to determine eligibility, or by un- of paragraphs (a)(1)(i) and (a)(1)(ii) of evenly prorating the household’s total this section, households subject to net income over the period for which monthly reporting and retrospective the household’s self-employment in- budgeting who derive their self-em- come was averaged to more closely ap- ployment income from a farming oper- proximate the time when the income is ation and who incur irregular expenses actually received. If income is pro- to produce such income have the op- rated, the net income assigned in any tion to annualize the allowable costs of month cannot exceed the maximum

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monthly income eligibility standards in the Child and Adult Care Food Pro- for the household’s size. gram or a standard amount based on (3) Capital gains. The proceeds from estimated per-meal costs. the sale of capital goods or equipment (ii) For income from boarders, other must be calculated in the same manner than those in commercial boarding as a capital gain for Federal income houses or from foster care boarders, tax purposes. Even if only 50 percent of use: the proceeds from the sale of capital (A) The maximum food stamp allot- goods or equipment is taxed for Federal ment for a household size that is equal income tax purposes, the State agency to the number of boarders; or must count the full amount of the cap- (B) A flat amount or fixed percentage ital gain as income for food stamp pur- of the gross income, provided that the poses. For households whose self-em- method used to determine the flat ployment income is calculated on an amount or fixed percentage is objective anticipated (rather than averaged) and justifiable and is stated in the basis in accordance with paragraph State’s food stamp manual. (a)(1) of this section, the State agency (iii) For income from foster care must count the amount of capital gains boarders, refer to § 273.1(c)(6). the household anticipates receiving during the months over which the in- (iv) Use the standard amount the come is being averaged. State uses for its TANF program. (b) Allowable costs of producing self-em- (v) Use an amount approved by FNS. ployment income. (1) Allowable costs of State agencies may submit a proposal producing self-employment income in- to FNS for approval to use a simplified clude, but are not limited to, the iden- self-employment expense calculation tifiable costs of labor; stock; raw mate- method that does not result in in- rial; seed and fertilizer; payments on creased Program costs. Different meth- the principal of the purchase price of ods may be proposed for different types income-producing real estate and cap- of self-employment. The proposal must ital assets, equipment, machinery, and include a description of the proposed other durable goods; interest paid to method, the number and type of house- purchase income-producing property; holds and percent of the caseload af- insurance premiums; and taxes paid on fected, and documentation indicating income-producing property. that the proposed procedure will not (2) In determining net self-employ- increase Program costs. ment income, the following items are (c) Treatment of income and resources not allowable costs of doing business: of certain nonhousehold members. During (i) Net losses from previous periods; the period of time that a household (ii) Federal, State, and local income member cannot participate for the rea- taxes, money set aside for retirement sons addressed in this section, the eli- purposes, and other work-related per- gibility and benefit level of any re- sonal expenses (such as transportation maining household members shall be to and from work), as these expenses determined in accordance with the pro- are accounted for by the 20 percent cedures outlined in this section. earned income deduction specified in (1) Intentional Program violation, fel- § 273.9(d)(2); ony drug conviction, or fleeing felon dis- (iii) Depreciation; and qualifications, and workfare or work re- (iv) Any amount that exceeds the quirement sanctions. The eligibility and payment a household receives from a benefit level of any remaining house- boarder for lodging and meals. hold members of a household con- (3) When calculating the costs of pro- taining individuals determined ineli- ducing self-employment income, State gible because of a disqualification for agencies may elect to use actual costs an intentional Program violation, a for allowable expenses in accordance felony drug conviction, their fleeing with paragraphs (b)(1) and (b)(2) of this felon status, noncompliance with a section or determine self-employment work requirement of § 273.7, or imposi- expenses as follows: tion of a sanction while they were par- (i) For income from day care, use the ticipating in a household disqualified current reimbursement amounts used because of failure to comply with

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workfare requirements shall be deter- such ineligible members which is at- mined as follows: tributed to their households. That por- (i) Income, resources, and deductible ex- tion of the households’ allowable child penses. The income and resources of the support payment, shelter and depend- ineligible household member(s) shall ent care expenses which are either paid continue to count in their entirety, by or billed to the ineligible members and the entire household’s allowable shall be divided evenly among the earned income, standard, medical, de- households’ members including the in- pendent care, child support, and excess eligible members. All but the ineligible shelter deductions shall continue to members’ share is counted as a deduct- apply to the remaining household ible child support payment, shelter or members. dependent care expense for the remain- (ii) Eligibility and benefit level. The in- ing household members. eligible member shall not be included (iv) Eligibility and benefit level. Such when determining the household’s size ineligible members shall not be infor the purposes of: cluded when determining their house- (A) Assigning a benefit level to the holds’ sizes for the purposes of: household; (A) Assigning a benefit level to the (B) Comparing the household’s household; monthly income with the income eligi- (B) Comparing the household’s bility standards; or monthly income with the income eligi- (C) Comparing the household’s re- bility standards; or sources with the resource eligibility (C) Comparing the household’s re- limits. The State agency shall ensure sources with the resource eligibility that no household’s coupon allotment limits. is increased as a result of the exclusion (3) Ineligible alien. The State agency of one or more household members. must determine the eligibility and ben- (2) SSN disqualifications, comparable efit level of any remaining household disqualifications, child support disquali- members of a household containing an fications, and ineligible ABAWDs. The ineligible alien as follows: eligibility and benefit level of any re- (i) The State agency must count all maining household members of a or, at the discretion of the State agen- household containing individuals de- cy, all but a pro rata share, of the in- termined to be ineligible for refusal to eligible alien’s income and deductible obtain or provide an SSN, for meeting expenses and all of the ineligible the time limit for able-bodied adults alien’s resources in accordance with without dependents or for being dis- paragraphs (c)(1) or (c)(2) of this sec- qualified under paragraphs (k), (o), (p), tion. In exercising its discretion under or (q) of this section shall be deter- this paragraph (c)(3)(i), the State agen- mined as follows: cy may count all of the alien’s income (i) Resources. The resources of such for purposes of applying the gross in- ineligible members shall continue to come test for eligibility purposes while count in their entirety to the remain- only counting all but a pro rata share ing household members. to apply the net income test and deter- (ii) Income. A pro rata share of the in- mine level of benefits. This paragraph come of such ineligible members shall (c)(3)(i) does not apply to an alien: be counted as income to the remaining (A) Who is lawfully admitted for per- members. This pro rata share is cal- manent residence under the INA; culated by first subtracting the allow- (B) Who is granted asylum under sec- able exclusions from the ineligible tion 208 of the INA; member’s income and dividing the in- (C) Who is admitted as a refugee come evenly among the household under section 207 of the INA; members, including the ineligible (D) Who is paroled in accordance members. All but the ineligible mem- with section 212(d)(5) of the INA; bers’ share is counted as income for the (E) Whose deportation or removal has remaining household members. been withheld in accordance with sec- (iii) Deductible expenses. The 20 per- tion 243 of the INA; cent earned income deduction shall (F) Who is aged, blind, or disabled in apply to the prorated income earned by accordance with section 1614(a)(1) of

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the Social Security Act and is admit- (iv) The State agency must compute ted for temporary or permanent resi- the income of the ineligible aliens dence under section 245A(b)(1) of the using the income definition in § 273.9(b) INA; or and the income exclusions in § 273.9(c). (G) Who is a special agricultural (v) For purposes of this paragraph worker admitted for temporary resi- (c)(3), the State agency must not in- dence under section 210(a) of the INA. clude the resources and income of the (ii) For an ineligible alien within a sponsor and the sponsor’s spouse in de- category described in paragraphs termining the resources and income of (c)(3)(i)(A) through (c)(3)(i)(G) of this an ineligible sponsored alien. section, State agencies may either: (4) Reduction or termination of benefits (A) Count all of the ineligible alien’s within the certification period. Whenever resources and all but a pro rata share an individual is determined ineligible of the ineligible alien’s income and de- within the household’s certification pe- ductible expenses; or riod, the State agency shall determine (B) Count all of the ineligible alien’s the eligibility or ineligibility of the re- resources, count none of the ineligible maining household members based, as alien’s income and deductible expenses, much as possible, on information in the count any money payment (including case file. payments in currency, by check, or (i) Excluded for intentional Program electronic transfer) made by the ineli- violation disqualification. If a house- gible alien to at least one eligible hold’s benefits are reduced or termi- household member, not deduct as a nated within the certification period household expense any otherwise de- because one of its members was ex- ductible expenses paid by the ineligible cluded because of disqualification for alien, but cap the resulting benefit intentional Program violation, the amount for the eligible members at the State agency shall notify the remain- allotment amount the household would ing members of their eligibility and receive if the household member within benefit level at the same time the ex- the one of the categories described in paragraphs (c)(3)(i)(A) through cluded member is notified of his or her (c)(3)(i)(G) of this section were still an disqualification. The household is not eligible alien. The State agency must entitled to a notice of adverse action elect one State-wide option for deter- but may request a fair hearing to con- mining the eligibility and benefit level test the reduction or termination of of households with members who are benefits, unless the household has al- aliens within the categories described ready had a fair hearing on the amount paragraphs (c)(3)(i)(A) through of the claim as a result of consolida- (c)(3)(i)(G) of this section. tion of the administrative disqualifica- (iii) For an alien who is ineligible tion hearing with the fair hearing. under § 273.4(a) because the alien’s (ii) Disqualified or determined ineligible household indicates inability or unwill- for reasons other than intentional Pro- ingness to provide documentation of gram violation. If a household’s benefits the alien’s immigration status, the are reduced or terminated within the State agency must count all or, at the certification period for reasons other discretion of the State agency, all but than an Intentional Program Violation a pro rata share of the ineligible alien’s disqualification, the State agency shall income and deductible expenses and all issue a notice of adverse action in ac- of the ineligible alien’s resources in accordance with § 273.13(a)(2) which in- cordance with paragraphs (c)(1) or forms the household of the ineligi- (c)(2) of this section. In exercising its bility, the reason for the ineligibility, discretion under this paragraph the eligibility and benefit level of the (c)(3)(iii), the State agency may count remaining members, and the action the all of the alien’s income for purposes of household must take to end the ineligi- applying the gross income test for eli- bility. gibility purposes while only counting (d) Treatment of income and resources all but a pro rata to apply the net in- of other nonhousehold members. (1) For come test and determine level of bene- all other nonhousehold members de- fits. fined in § 273.1 (b)(1) and (b)(2) who are

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not specifically mentioned in para- made through an authorized represent- graph (c) of this section, the income ative who is employed by the DAA cen- and resources of such individuals shall ter and designated by the center for not be considered available to the that purpose. The State agency may household with whom the individual require the household to designate the resides. Cash payments from the non- DAA center as its authorized rep- household member to the household resentative for the purpose of receiving will be considered income under the and using an allotment on behalf of the normal income standards set in household. Residents must be certified § 273.9(b). Vendor payments, as defined as one-person households unless their in § 273.9(c)(1), shall be excluded as in- children are living with them, in which come. If the household shares deduct- case their children must be included in ible expenses with the nonhousehold the household with the parent. member, only the amount actually (2)(i) Prior to certifying any resi- paid or contributed by the household dents for food stamps, the State agency shall be deducted as a household ex- must verify that the DAA center is au- pense. If the payments or contributions thorized by FNS as a retailer in accord- cannot be differentiated, the expenses ance with § 278.1(e) of this chapter or shall be prorated evenly among persons that it comes under part B of title XIX actually paying or contributing to the of the Public Health Service Act, 42 expense and only the household’s pro U.S.C. 300x et seq., (as defined in ‘‘Drug rata share deducted. addiction or alcoholic treatment and (2) When the earned income of one or rehabilitation program’’ in § 271.2 of more household members and the this chapter). earned income of a nonhousehold mem- (ii) Except as otherwise provided in ber are combined into one wage, the in- this paragraph (e)(2), the State agency come of the household members shall must certify residents of DAA centers be determined as follows: by using the same provisions that (i) If the household’s share can be apply to all other households, includ- identified, the State agency shall count ing, but not limited to, the same rights that portion due to the household as to notices of adverse action and fair earned income. hearings. (ii) If the household’s share cannot be (iii) DAA centers in areas without identified the State agency shall pro- EBT systems may redeem the house- rate the earned income among all those holds’ paper coupons through author- whom it was intended to cover and ized food stores. DAA centers in areas count that prorated portion to the with EBT systems may redeem benefits household. in various ways depending on the (3) Such nonhousehold members shall State’s EBT system design. The de- not be included when determining the signs may include DAA use of indi- size of the household for the purposes vidual household EBT cards at author- of: ized stores, authorization of DAA cen- (i) Assigning a benefit level to the ters as retailers with EBT access via household; POS at the center, DAA use of a center (ii) Comparing the household’s EBT card that is an aggregate of indi- monthly income with the income eligi- vidual household benefits, and other bility standards; or designs. Guidelines for approval of EBT (iii) Comparing the household’s re- systems are contained in § 274.12 of this sources with the resource eligibility chapter. limits. (iv) The treatment center must no- (e) Residents of drug and alcohol treat- tify the State agency of changes in the ment and rehabilitation programs. (1) household’s circumstances as provided Narcotic addicts or alcoholics who reg- in § 273.12(a). ularly participate in publicly operated (3) The DAA center must provide the or private non-profit drug addict or al- State agency a list of currently partici- coholic (DAA) treatment and rehabili- pating residents that includes a state- tation programs on a resident basis ment signed by a responsible center of- may voluntarily apply for the Food ficial attesting to the validity of the Stamp Program. Applications must be list. The State agency must require

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submission of the list on either a fer, or other means if the household monthly or semimonthly basis. In addi- leaves prior to the 16th of the month. tion, the State agency must conduct (B) If the household leaves on or after periodic random on-site visits to the the 16th day of the month, the State center to assure the accuracy of the agency, at its option, may require the list and that the State agency’s records center to give the household a portion are consistent and up to date. of its allotment. Under an EBT system (4) The State agency may issue allot- where the center has an aggregate EBT ments on a semimonthly basis to card, the State agency may, but is not households in DAA centers. required to transfer a portion of the (5) When a household leaves the cen- household’s monthly allotment from a ter, the center must notify the State center’s EBT account back to the agency and the center must provide the household with its ID card. If possible, household’s EBT account. However, the the center must provide the household household, not the center, must be al- with a change report form to report to lowed to receive any remaining bene- the State agency the household’s new fits authorized by the household’s HIR address and other circumstances after or ATP or posted to the EBT account leaving the center and must advise the at the time the household leaves the household to return the form to the ap- center. propriate office of the State agency (iii) The center must return to the within 10 days. After the household State agency any EBT card or coupons leaves the center, the center can no not provided to departing residents by longer act as the household’s author- the end of each month. These coupons ized representative for certification include those not provided to departing purposes or for obtaining or using ben- residents because they left either prior efits. to the 16th and the center was unable (i) The center must provide the to provide the household with the cou- household with its EBT card if it was pons or the household left on or after in the possession of the center, any the 16th of the month and the coupons untransacted ATP, or the household’s were not returned to the household. full allotment if already issued and if (6) The organization or institution no coupons have been spent on behalf shall be responsible for any misrepre- of that individual household. If the sentation or intentional Program vio- household has already left the center, the center must return them to the lation which it knowingly commits in State agency. These procedures are ap- the certification of center residents. As plicable at any time during the month. an authorized representative, the orga- (ii) If the coupons have already been nization or institution must be knowl- issued and any portion spent on behalf edgeable about household cir- of the household, the following proce- cumstances and should carefully re- dures must be followed. view those circumstances with resi- (A) If the household leaves prior to dents prior to applying on their behalf. the 16th of the month and benefits are The organization or institution shall not issued under an EBT system, the be strictly liable for all losses or mis- center must provide the household use of food coupons held on behalf of with one-half of its monthly coupon al- resident households and for all lotment unless the State agency issues overissuances which occur while the semi-monthly allotments and the sec- households are residents of the treat- ond half has not been turned over to ment center. the center. If benefits are issued under (7) The organization or institution an EBT system, the State must ensure authorized by FNS as a retail food that the EBT design or procedures for store may be penalized or disqualified, DAAs prohibit the DAA from obtaining as described in § 278.6, if it is deter- more than one-half of the household’s mined administratively or judicially allotment prior to the 16th of the that coupons were misappropriated or month or permit the return of one-half of the allotment to the household’s used for purchases that did not con- EBT account through a refund, trans- tribute to a certified household’s

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meals. The State agency shall prompt- ative, their eligibility must be deter- ly notify FNS when it has reason to be- mined as a one-person household. lieve that an organization or institu- (2) Each group living arrangement tion is misusing coupons in its posses- shall provide the State agency with a sion. However, the State agency shall list of currently participating resi- take no action prior to FNS action dents. This list shall include a state- against the organization or institution. ment signed by a responsible center of- The State agency shall establish a ficial attesting to the validity of the claim for overissuances of food coupons list. The State shall require the list on held on behalf of resident clients as a periodic basis. In addition, the State stipulated in paragraph (e)(6) of this agency shall conduct periodic random section if any overissuances are discov- onsite visits to assure the accuracy of ered during an investigation or hearing the list and that the State agency’s procedure for redemption violations. If records are consistent and up to date. FNS disqualifies an organization or in- (3) The same provisions applicable in stitution as an authorized retail food § 273.11(e)(3) to residents of treatment store, the State agency shall suspend centers also apply to blind or disabled its authorized representative status for residents of group living arrangements the same period. when the facility acts as the resident’s (f) Residents of a group living arrange- authorized representative. ment. (1) Disabled or blind residents of (4) If the resident has made applica- a group living arrangement (GLA) (as tion on his/her own behalf, the house- defined in § 271.2 of this chapter) may hold is responsible for reporting apply either through use of an author- changes to the State agency as pro- ized representative employed and des- vided in § 273.12(a). If the group living ignated by the group living arrange- arrangement is acting in the capacity ment or on their own behalf or through of an authorized representative, the an authorized representative of their group living arrangement shall notify choice. The GLA must determine if a the State agency, as provided in resident may apply on his or her own § 273.12(a), of changes in the household’s behalf based on the resident’s physical income or other household cir- and mental ability to handle his or her cumstances and when the individual own affairs. Some residents of the GLA leaves the group living arrangement. may apply on their own behalf while The group living arrangement shall re- other residents of the same GLA may turn any household’s ATP card or cou- apply through the GLA’s representa- pons to the State agency if they are re- tive. Prior to certifying any residents, ceived after the household has left the the State agency must verify that the group living arrangement. GLA is authorized by FNS or is cer- (5)(i) When the household leaves the tified by the appropriate agency of the facility, the group living arrangement, State (as defined in § 271.2 of this chap- either acting as an authorized rep- ter) including the agency’s determina- resentative or retaining use of the cou- tion that the center is a nonprofit or- pons on behalf of the residents (regard- ganization. less of the method of application), shall (i) If the residents apply on their own provide residents with their ID cards (if behalf, the household size must be in applicable) and any untransacted ATP accordance with the definition in cards. The household, not the group § 273.1. The State agency must certify living arrangement, shall be allowed to these residents using the same provi- sign for and receive any remaining au- sions that apply to all other house- thorized benefits reflected on HIR holds. If FNS disqualifies the GLA as cards. Also, the departing household an authorized retail food store, the shall receive its full allotment if issued State agency must suspend its author- and if no coupons have been spent on ized representative status for the same behalf of that individual household. time; but residents applying on their These procedures are applicable at any own behalf will still be able to partici- time during the month. However, if the pate if otherwise eligible. coupons have already been issued and (ii) If the residents apply through the any portion spent on behalf of the indi- use of the GLA’s authorized represent- vidual, and the household leaves the

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group living arrangement prior to the purchase and prepare food for their 16th day of the month, the facility own consumption. The GLA may pur- shall provide the household with its ID chase and prepare food to be consumed card (if applicable) and one half of its by eligible residents on a group basis if monthly coupon allotment. If the residents normally obtain their meals household leaves on or after the 16th at a central location as part of the day of the month and the coupons have GLA’s service or if meals are prepared already been issued and used, the at a central location for delivery to the household does not receive any cou- individual residents. If personalized pons. If a group of residents have been meals are prepared and paid for with certified as one household and have re- food stamps, the GLA must ensure that turned the coupons to the facility to the resident’s food stamp benefits are use, the departing residents shall be used for meals intended for that resi- given a pro rata share of one-half of the dent. coupon allotment if leaving prior to (g) Shelters for battered women and the 16th day of the month and shall be children. (1) Prior to certifying its resi- instructed to obtain ID cards or writ- dents under this paragraph, the State ten authorizations to use the coupons agency shall determine that the shelter from the local office. for battered women and children meets (ii) Once the resident leaves, the the definition in § 271.2 and document group living arrangement no longer the basis of this determination. Shel- acts as his/her authorized representa- ters having FNS authorization to re- tive. The group living arrangement, if deem at wholesalers shall be consid- possible, shall provide the household ered as meeting the definition and the with a change report form to report to State agency is not required to make the State agency the individual’s new any further determination. The State address and other circumstances after agency may choose to require local leaving the group living arrangement project area offices to maintain a list and shall advise the household to re- of shelters meeting the definition to fa- turn the form to the appropriate office cilitate prompt certification of eligible of the State agency within 10 days. residents following the special proce- (iii) The group living arrangement dures outlined below. shall return to the State agency any (2) Many shelter residents have re- coupons not provided to departing resi- cently left a household containing the dents at the end of each month. These person who has abused them. Their returned coupons shall include those former household may be certified for not provided to departing residents be- participation in the Program, and its cause they left on or after the 16th of certification may be based on a house- the month or they left prior to the 16th hold size that includes the women and and the facility was unable to provide children who have just left. Shelter them with the coupons. residents who are included in such cer- (6) The same provisions applicable to tified households may nevertheless drug and alcoholic treatment center in apply for and (if otherwise eligible) paragraphs (e) (6) and (7) of this section participate in the Program as separate also apply to group living arrange- households if such certified household ments when acting as an authorized which includes them is the household representative. These provisions, how- containing the person who subjected ever, are not applicable if a resident them to abuse. Shelter residents who has applied on his/her own behalf. The are included in such certified house- resident applying on his/her own behalf holds may receive an additional allot- shall be responsible for overissuances ment as a separate household only once as would any other household as dis- a month. cussed in § 273.18. (3) Shelter residents who apply as (7) If the residents are certified on separate households shall be certified their own behalf, the food stamp bene- solely on the basis of their income and fits may either be returned to the GLA resources and the expenses for which to be used to purchase meals served ei- they are responsible. They shall be cer- ther communally or individually to eli- tified without regard to the income, re- gible residents or retained and used to sources, and expenses of their former

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household. Jointly held resources shall cumstances can the food stamp bene- be considered inaccessible in accord- fits be allowed to rise. Reaching a time ance with § 273.8. Room payments to limit for time-limited benefits, having the shelter shall be considered as shel- a child that is not eligible because of a ter expenses. family cap, failing to reapply or com- (4) Any shelter residents eligible for plete the application process for con- expedited service shall be handled in tinued assistance under the other pro- accordance with § 273.2(i). gram, failing to perform an action that (5) State agencies must take prompt the individual is unable to perform as action to ensure that the former house- opposed to refusing to perform, or fail- hold’s eligibility or allotment reflects ing to comply with a purely procedural the change in the household’s composi- requirement, shall not be considered a tion. Such action must include acting failure to perform an action required on the reported change in accordance by an assistance program for purposes with § 273.12 or § 273.21, as appropriate, of this provision. A procedural require- by issuing a notice of adverse action in ment, which would not trigger a food accordance with § 273.13. stamp sanction, is a step that an indi- (h) Homeless food stamp households. vidual must take to continue receiving Homeless food stamp households shall benefits in the assistance program such be permitted to use their food stamp as submitting a monthly report form benefits to purchase prepared meals or providing verification of cir- from homeless meal providers author- cumstances. A substantive require- ized by FNS under § 278.1(h). ment, which would trigger a food (i) Prerelease applicants. A household stamp sanction, is a behavioral re- which consists of a resident or resi- quirement in the assistance program dents of a public institution(s) which designed to improve the well being of applies for SSI under SSA’s Prerelease the recipient family, such as partici- Program for the Institutionalized shall pating in job search activities. The be allowed to apply for food stamp ben- State agency shall not apply this pro- efits jointly with their application for vision to individuals who fail to per- SSI prior to their release from the inform a required action at the time the stitution. Such households shall be cer- individual initially applies for assist- tified in accordance with the provisions ance. The State agency shall not in- of § 273.1(e), § 273.2(c), (g), (i), (j) and (k), crease food stamp benefits, and may re- and § 273.10(a), as appropriate. duce food stamp benefits only if the (j) Reduction of public assistance bene- person is receiving such assistance at fits. If the benefits of a household that the time the reduction in assistance is is receiving public assistance are re- imposed or the reduction in assistance duced under a Federal, State, or local is imposed at the time of application means-tested public assistance pro- for continued assistance benefits if gram because of the failure of a food there is no break in participation. The stamp household member to perform individual must be certified for food an action required under the assistance stamps at the time of the failure to program or for fraud, the State agency perform a required action for this pro- shall not increase the household’s food vision to apply. Assistance benefits stamp allotment as the result of the shall be considered reduced if they are decrease in income. In addition to pro- decreased, suspended, or terminated. hibiting an increase in food stamp ben- (1) For purposes of this provision a efits, the State agency may impose a Federal, State or local ‘‘means-tested penalty on the household that rep- public assistance program’’ shall mean resents a percentage of the food stamp public or general assistance as defined allotment that does not exceed 25 per- in § 271.2 of this chapter, and is referred cent. The 25 percent reduction in food to as ‘‘assistance’’. This provision must stamp benefits must be based on the be applied to all applicable cases. If a amount of food stamp benefits the State agency is not successful in ob- household should have received under taining the necessary cooperation from the regular food stamp benefit formula, another Federal, State or local means- taking into account its actual (re- tested welfare or public assistance produced) income. However, under no cir- gram to enable it to comply with the

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requirements of this provision, the become ineligible for the assistance State agency shall not be held respon- program during the disqualification pe- sible for noncompliance as long as the riod for some other reason, or the per- State agency has made a good faith ef- son’s assistance case is closed. fort to obtain the information. The (6) If an individual moves within the State agency, rather than the house- State, the prohibition on increasing hold, shall be responsible for obtaining food stamp benefits shall be applied to information about sanctions from the gaining household unless that per- other programs and changes in those son is ineligible for the assistance pro- sanctions. gram for some other reason. If such in- (2) The prohibition on increasing food dividual moves to a new State the pro- stamp benefits applies for the duration hibition on increasing benefits shall of the reduction in the assistance pro- not be applied. gram. If at any time the State agency (7) The State agency must restore can no longer ascertain the amount of lost benefits when necessary in accord- the reduction, then the State agency ance with § 273.17 if it is later deter- may terminate the food stamp sanc- mined that the reduction in the public tion. However, the sanction may not assistance grant was not appropriate. exceed the sanction in the other pro- (8) The State agency must act on gram. If the sanction is still in effect changes which are not related to the at the end of one year, the State agen- assistance violation and that would af- cy shall review the case to determine if fect the household’s benefits. the sanction continues to be appropriate. If, for example, the household is (9) The State agency must include in not receiving assistance, it would not its State Plan of Operations any op- be appropriate to continue the sanctions it has selected in this paragraph tion. Sanctions extended beyond one (j). year must be reviewed at least annu- (k) Comparable disqualifications. If a ally but may be ended by the State disqualification is imposed on a mem- agency at any time. It shall be concur- ber of a household for failure to per- rent with the reduction in the other as- form an action required under a Fed- sistance program to the extent allowed eral, State or local means-tested public by normal food stamp change proc- assistance program, the State agency essing and notice procedures. may impose the same disqualification (3) The State agency shall determine on the member of the household under how to prevent an increase in food the Food Stamp Program. The program stamp benefits. Among other options, must be authorized by a Federal, State, the State agency may increase the as- or local law, but the provision itself sistance grant by a flat percent, not to does not have to be specified in the exceed 25 percent, for all households law. A State agency may choose to that fail to perform a required action apply this provision to one or more of in lieu of computing an individual these programs, and it may select the amount or percentage for each affected types of disqualifications within a pro- household. gram that it wants to impose on food (4) If the allotment of a household is stamp recipients. The State agency reduced under Title IV-A of the Social shall be responsible for obtaining infor- Security Act, the State agency may mation about sanctions from other pro- use the same procedures that apply grams and changes in those sanctions. under Title IV-A to prevent an increase (1) For purposes of this section Fed- in food stamp benefits as the result of eral, State or local ‘‘means-tested pub- the decrease in Title IV-A benefits. For lic assistance program’’ shall mean example, the same budgeting proce- public and general assistance as de- dures and combined notices and hear- fined in § 271.2 of this chapter. ings may be used, but the food stamp (2) The State agency shall not apply allotment may not be reduced by more this provision to individuals who are than 25 percent. disqualified at the time the individual (5) The State agency must lift the initially applies for assistance benefits. ban on increasing food stamp benefits It may apply the provision if the per- if it becomes aware that the person has son was receiving such assistance at

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the time the disqualification in the as- concurrently with the disqualification sistance program was imposed and to in the assistance program to the extent disqualifications imposed at the time allowed by normal food stamp proc- of application for continued assistance essing times and notice requirements. benefits if there is no break in partici- The State agency may determine the pation with the following exceptions: length of the disqualification, pro- Reaching a time limit for time-limited viding that the disqualification does benefits, having a child that is not eli- not exceed the disqualification in the gible because of a family cap, failing to other program. If the sanction is still reapply or complete the application in effect at the end of one year, the process for continued assistance, fail- State agency shall review the case to ing to perform an action that the indi- determine if the sanction continues to vidual is unable to perform as opposed be appropriate. If, for example, the to refusing to perform, and failing to household is not receiving assistance, perform purely procedural require- if would not be appropriate to continue ments, shall not be considered failures the sanction. Sanctions extended be- to perform an action required by an as- yond one year must be reviewed at sistance program. A procedural re- least annually but may be ended by the quirement, which would not trigger a State agency at any time. food stamp sanction, is a step that an (7) If there is a pending disqualifica- individual must take to continue re- tion for a food stamp violation and a ceiving benefits in the assistance pro- pending comparable disqualification, gram such as submitting a monthly re- they shall be imposed concurrently to port form or providing verification of the extent appropriate. For example, if circumstances. A substantive require- the household is disqualified for June ment, which would trigger a food for a food stamp violation and an indi- stamp sanction, is a behavioral re- vidual is disqualified for June and July quirement in the assistance program for an assistance program violation, designed to improve the well being of the whole household shall be disquali- the recipient family, such as partici- fied for June and the individual shall pating in job search activities. The in- be disqualified for July for food stamp dividual must be receiving food stamps purposes. at the time of the disqualification in (8) The State agency must treat the the assistance program to be disquali- income and resources of the disqualified from the Food Stamp Program fied individual in accordance with under this provision. § 273.11(c)(2). (3) The State agency must stop the food stamp disqualification when it be- (9) After a disqualification period has comes aware that the person has be- expired, the person may apply for food come ineligible for assistance for some stamp benefits and shall be treated as other reason, or the assistance case is a new applicant or a new household closed. member, except that a current dis- (4) If a disqualification is imposed for qualification based on a food stamp a failure of an individual to perform an work requirement shall be considered action required under a program under in determining eligibility. Title IV-A of the Social Security Act, (10) A comparable food stamp dis- the State may use the rules and proce- qualification may be imposed in addi- dures that apply under the Title IV-A tion to any coupon allotment reduc- program to impose the same disquali- tions made in accordance with para- fication under the Food Stamp Pro- graph (j) of this section. gram. (11) State agencies shall state in (5) Only the individual who com- their Plan of Operation if they have mitted the violation in the assistance elected to apply comparable disquali- program may be disqualified for food fications, identify which sanctions in stamp purposes even if the entire as- the other programs this provision ap- sistance unit is disqualified for Title plies to, and indicate the options and IV-A purposes. procedures allowed in paragraphs (6) A comparable disqualification for (k)(1), (k)(2), (k)(3), (k)(4), and (k)(10) of food stamp purposes shall be imposed this section which they have selected.

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(12) The State agency must act on the length of the period provided under changes which are not related to the such legislation. Ineligibility under assistance violation and that would af- this provision is only limited to con- fect the household’s benefits. victions based on behavior which oc- (13) The State agency must restore curred after August 22, 1996. The in- lost benefits when necessary in accord- come and resources of individuals sub- ance with 7 CFR 273.17 if it is later de- ject to disqualification under this para- termined that the reduction in the pub- graph (m) shall be treated in accord- lic assistance grant was not appro- ance with the procedures at paragraph priate. (c)(1) of this section. (l) School Attendance. Section 404(i) of (n) Fleeing felons and probation or pa- Part A of the Social Security Act, 42 role violators. Individuals who are flee- U.S.C. 601, et seq., provides that any ing to avoid prosecution or custody for state receiving a TANF block grant a crime, or an attempt to commit a cannot be prohibited from sanctioning crime, that would be classified as a fel- a family that includes an adult who has received assistance financed with ony (or in the State of New Jersey, a federal TANF dollars or provided from high misdemeanor) or who are vio- the food stamp program if such adult lating a condition of probation or pa- fails to ensure that the minor depend- role under a Federal or State law shall ent children of such adult attend not be considered eligible household school as required by the law of the members. The income and resources of State in which the minor children re- the ineligible member shall be handled side. Section 404(j) of Part A of the So- in accordance with (c)(1) of this sec- cial Security Act, 42 U.S.C. 601, et seq., tion. provides that States shall not be pro- (o) Custodial parent’s cooperation with hibited from sanctioning a family that the State Child Support Agency. For pur- includes an adult who is older than 20 poses of this provision, a custodial par- and younger than 51 and who has re- ent is a natural or adoptive parent who ceived assistance that is either fi- lives with his or her child, or other in- nanced with federal TANF funds or dividual who is living with and exer- provided through the food stamp pro- cises parental control over a child gram if such adult does not have, or is under the age of 18. not working toward attaining, a sec- (1) Option to disqualify custodial parent ondary school diploma or recognized for failure to cooperate. At the option of equivalent. These provisions do not a State agency, subject to paragraphs provide independent authority for food (o)(2) and (o)(4) of this section, no nat- stamp sanctions beyond any that may ural or adoptive parent or, at State apply through paragraphs (j) and (k) of agency option, other individual (collec- this section. tively referred to in this paragraph (o) (m) Individuals convicted of drug-re- as ‘‘the individual’’) who is living with lated felonies. An individual convicted and exercising parental control over a (under Federal or State law) of any of- child under the age of 18 who has an ab- fense which is classified as a felony by the law of the jurisdiction involved and sent parent shall be eligible to partici- which has as an element the posses- pate in the Food Stamp Program un- sion, use, or distribution of a con- less the individual cooperates with the trolled substance (as defined in section agency administering a State Child 102(6) of the Controlled Substance Act, Support Enforcement Program estab- 21 U.S.C. 802(6)) shall not be considered lished under Part D of Title IV of the an eligible household member unless Social Security Act (42 U.S.C. 651, et the State legislature of the State seq.), hereafter referred to as the State where the individual is domiciled has Child Support Agency. enacted legislation exempting individ- (i) If the State agency chooses to im- uals domiciled in the State from the plement paragraph (o)(1) of this sec- above exclusion. If the State legislation, it must notify all individuals of ture has enacted legislation limiting this requirement in writing at the time the period of disqualification, the pe- of application and reapplication for riod of ineligibility shall be equal to continued benefits.

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(ii) If the State agency chooses to im- (B) Cooperating with the State Child plement paragraph (o)(1) of this sec- Support Agency would make it more tion, it must refer all appropriate indi- difficult for the individual to escape viduals to the State Child Support domestic violence or unfairly penalize Agency. the individual who is or has been vic- (iii) If the individual is receiving timized by such violence, or the indi- TANF or Medicaid, or assistance from vidual who is at risk of further domes- the State Child Support Agency, and tic violence. For purposes of this provi- has already been determined to be co- sion, the term ‘‘domestic violence’’ operating, or has been determined to means the individual or child would be have good cause for not cooperating, subject to physical acts that result in, then the State agency shall consider or are threatened to result in, physical the individual to be cooperating for injury to the individual; sexual abuse; food stamp purposes. sexual activity involving a dependent (iv) The individual must cooperate child; being forced as the caretaker rel- with the State Child Support Agency ative of a dependent child to engage in in establishing paternity of the child, nonconsensual sexual acts or activi- and in establishing, modifying, or en- ties; threats of, or attempts at physical forcing a support order with respect to or sexual abuse; mental abuse; or ne- the child and the individual in accord- glect or deprivation of medical care. ance with section 454(29) of the Social (C) The individual meets any other Security Act (42 U.S.C. 654(29)). good cause criteria identified by the (v) Pursuant to Section 454(29)(E) of State agency. These criteria will be de- the Social Security Act (42 U.S.C. fined in consultation with the Child 654(29)(E) the State Child Support Support Agency or TANF program, Agency will notify the individual and whichever is appropriate, and identi- the State agency whether or not it has fied in the State plan according to determined that the individual is co- § 272.2(d) (xiii). operating in good faith. (ii) Proof of good cause claim. (A) The (2) Claiming good cause for non-co- State agency will accept as corrobora- operation. Prior to requiring cooperative evidence the same evidence re- tion under paragraph (o)(1) of this sec- quired by Part A of Title IV or Part D tion, the State agency will notify the of Title IV of the Social Security Act household in writing at initial applica- (42 U.S.C. 601, et seq. or 42 U.S.C. 651, et tion and at application for continued seq.) to corroborate a claim of good benefits of the right to good cause as cause. an exception to the cooperation re- (B) The State agency will make a quirement and of all the requirements good cause determination based on the applicable to a good cause determina- corroborative evidence supplied by the tion. Paragraph (o)(1) of this section individual only after it has examined shall not apply to the individual if the evidence and found that it actually good cause is found for refusing to co- verifies the good cause claim. operate, as determined by the State (iii) Review by the State Child Support agency: or TANF Agency. Prior to making a (i) Circumstances under which coopera- final determination of good cause for tion may be ‘‘against the best interests of refusing to cooperate, the State agency the child.’’ The individual’s failure to will afford the State Child Support cooperate is deemed to be for ‘‘good Agency or the agency which admin- cause’’ if: isters the program funded under Part A (A) The individual meets the good of the Social Security Act the oppor- cause criteria established under the tunity to review and comment on the State program funded under Part A of findings and the basis for the proposed Title IV or Part D of Title IV of the So- determination and consider any rec- cial Security Act (42 U.S.C. 601, et seq, ommendation from the State Child or 42 U.S.C. 651, et seq.) (whichever Support or TANF Agency. agency is authorized to define and de- (iv) Delayed finding of good cause. The termine good cause) for failing to co- State agency will not deny, delay, or operate with the State Child Support discontinue assistance pending a deter- Agency; or mination of good cause for refusal to

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cooperate if the applicant or recipient writing of this requirement at the time has complied with the requirements to of application and reapplication for furnish corroborative evidence and in- continued benefits. formation. In such cases, the State (ii) If the individual is receiving agency must abide by the normal proc- TANF, Medicaid, or assistance from essing standards according to § 273.2(g). the State Child Support Agency, and (3) Individual disqualification. If the has already been determined to be co- State agency has elected to implement operating, or has been determined to this provision and determines that the have good cause for not cooperating, individual has not cooperated without then the State agency shall consider good cause, then that individual shall the individual is cooperating for food be ineligible to participate in the Food stamp purposes. Stamp Program. The disqualification (iii) If the State agency chooses to shall not apply to the entire household. implement paragraph (p)(1) of this sec- The income and resources of the dis- tion, it must refer all appropriate indi- qualified individual shall be handled in viduals to the State Child Support accordance with paragraph (c)(2) of this Agency established under Part D of section. Title IV of the Social Security Act (42 (4) Fees. A State electing to imple- U.S.C. 651, et seq.). ment this provision shall not require (iv) The individual must cooperate the payment of a fee or other cost for with the State Child Support Agency services provided under Part D of Title in establishing the paternity of the IV of the Social Security Act (42 U.S.C. child (if the child is born out of wed- 651, et seq.) lock), and in providing support for the (5) Terminating the disqualification. child. The period of disqualification ends once it has been determined that the (v) Pursuant to Section 454(29)(E) of individual is cooperating with the the Social Security Act (42 U.S.C. State Child Support Agency. The State 654(29)(E)), the State Child Support agency must have procedures in place Agency will notify the individual and for re-qualifying such an individual. the State agency whether or not it has (p) Non-custodial parent’s cooperation determined that the individual is co- with child support agencies. For pur- operating in good faith. poses of this provision, a ‘‘non-custo- (2) Determining refusal to cooperate. If dial parent’’ is a putative or identified the State Child Support Agency deter- parent who does not live with his or mines that the individual is not co- her child who is under the age of 18. operating in good faith, then the State (1) Option to disqualify non-custodial agency will determine whether the parent for refusal to cooperate. At the non-cooperation constitutes a refusal option of a State agency, subject to to cooperate. Refusal to cooperate is paragraphs (p)(2) and (p)(4) of this sec- when an individual has demonstrated tion, a putative or identified non-cus- an unwillingness to cooperate as op- todial parent of a child under the age posed to an inability to cooperate. of 18 (referred to in this subsection as (3) Individual disqualification. If the ‘‘the individual’’) shall not be eligible State agency determines that the non- to participate in the Food Stamp Pro- custodial parent has refused to cooper- gram if the individual refuses to co- ate, then that individual shall be ineli- operate with the State agency admin- gible to participate in the Food Stamp istering the program established under Program. The disqualification shall not Part D of Title IV of the Social Secu- apply to the entire household. The in- rity Act (42 U.S.C. 651, et seq.), here- come and resources of the disqualified after referred to as the State Child individual shall be handled according Support Agency, in establishing the pa- to paragraph (c)(2) of this section. ternity of the child (if the child is born (4) Fees. A State electing to imple- out of wedlock); and in providing sup- ment this provision shall not require port for the child. the payment of a fee or other cost for (i) If the State agency chooses to im- services provided under Part D of Title plement paragraph (p)(1) of this sec- IV of the Social Security Act (42 U.S.C. tion, it must notify all individuals in 651, et seq.)

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(5) Privacy. The State agency shall household a written demand letter provide safeguards to restrict the use which informs the household of the of information collected by a State amount owed, the reason for the claim agency administering the program es- and how the household may pay the tablished under Part D of Title IV of claim. The household should also be in- the Social Security Act (42 U.S.C. 651, formed as to the adjusted amount of in- et seq.) to purposes for which the infor- come, resources, and deductible ex- mation is collected. penses of the remaining members of (6) Termination of disqualification. The the household for the month(s) a mem- period of disqualification ends once it ber is disqualified for child support ar- has been determined that the indi- rears. vidual is cooperating with the child [Amdt. 132, 43 FR 47889, Oct. 17, 1978] support agency. The State agency must have procedures in place for re-quali- EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 273.11, see the List of CFR fying such an individual. Sections Affected, which appears in the (q) Disqualification for child support Finding Aids section of the printed volume arrears—(1) Option to disqualify. At the and on GPO Access. option of a State agency, no individual shall be eligible to participate in the § 273.12 Requirements for change re- Food Stamp Program as a member of porting households. any household during any month that (a) Household responsibility to report. the individual is delinquent in any pay- (1) Monthly reporting households are ment due under a court order for the required to report as provided in support of a child of the individual. § 273.21. Quarterly reporting households The State agency may opt to apply are subject to the procedures as pro- this provision to only non-custodial vided in paragraph (a)(4) of this sec- parents. tion. Certified change reporting house- (2) Exceptions. A disqualification holds are required to report the fol- under paragraph (q)(1) of this section lowing changes in circumstances: shall not apply if: (i) (A) A change of more than $50 in (i) A court is allowing the individual the amount of unearned income, except to delay payment; changes relating to public assistance (ii) The individual is complying with (PA) or general assistance (GA) in a payment plan approved by a court or project areas in which GA and food the State agency designated under stamp cases are jointly processed. The Part D of Title IV of the Social Secu- State agency is responsible for identi- rity Act (42 U.S.C., 651 et seq.) to pro- fying changes during the certification vide support of a child of the indi- period in the amount of PA, or GA in vidual; or jointly processed cases. If GA and food (iii) The State agency determines the stamp cases are not jointly processed, individual has good cause for non-sup- the household is responsible for report- port. ing changes in GA of more than $50. (3) Individual disqualification. If the (B) A change in the source of income, State agency has elected to implement including starting or stopping a job or this provision and determines that the changing jobs, if the change in employ- individual should be disqualified for ment is accompanied by a change in in- child support arrears, then that indi- come. vidual shall be ineligible to participate (C) One of the following, as deter- in the Food Stamp Program. The dis- mined by the State agency (different qualification shall not apply to the en- options may be used for different cat- tire household. The income and re- egories of households as long as no sources of the disqualified individual household is required to report under shall be handled according to para- more than one option; the State may graph (c)(2) of this section. also utilize different options in dif- (4) Collecting claims. State agencies ferent project areas within the State): shall initiate collection action as pro- (1) A change in the wage rate or sal- vided for in § 273.18 for any month a ary or a change in full-time or part- household member is disqualified for time employment status (as deter- child support arrears by sending the mined by the employer or as defined in

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the State’s PA program), provided that submit an interim report at 6 months the household is certified for no more in accordance with paragraphs (a)(1)(i) than 6 months; or through (a)(1)(vi) of this section. The (2) A change in the amount earned of State agency must act on any change more than $100 a month from the reported by such households on the in- amount last used to calculate the terim report in accordance with para- household’s allotment, provided that graph (c) of this section. If the house- the household is certified for no more hold files a complete report resulting than 6 months. in reduction or termination of benefits, (ii) All changes in household com- the State agency shall send an ade- position, such as the addition or loss of quate notice, as defined in § 271.2 of this a household member; chapter. The notice must be issued so (iii) Changes in residence and the re- that it will be received by the house- sulting change in shelter costs; hold no later than the time that its (iv) The acquisition of a licensed ve- benefits are normally received. If the hicle not fully excludable under household fails to provide sufficient in- § 273.8(e); and formation or verification regarding a (v) When cash on hand, stocks, bonds, deductible expense, the State agency and money in a bank account or sav- will not terminate the household, but ings institution reach or exceed a total will instead determine the household’s of $2,000. benefits without regard to the deduc- (vi) Changes in the legal obligation tion. to pay child support. (viii) For able-bodied adults subject (vii) State agencies may opt to re- to the time limit of § 273.24, any quire households with earned income changes in work hours that bring an in- that are assigned 6-month or longer dividual below 20 hours per week, aver- certification periods to report only aged monthly, as defined in changes in the amount of gross month- § 273.24(a)(1)(i). An individual shall rely income that result in their gross port this information in accordance monthly income exceeding 130 percent with the reporting system for income of the monthly poverty income guide- to which he is subject. line for their household size. (2) Certified households must report (A) Households with earned income changes within 10 days of the date the certified for 6 months in accordance change becomes known to the house- with paragraph (a)(1)(vii) of this sec- hold. For reportable changes of income, tion must not be required to report the State agency may require that changes in accordance with paragraphs change to be reported as early as with- (a)(1)(ii) through (a)(1)(vi) of this sec- in 10 days of the date that the house- tion. The State agency must act on hold becomes aware of the change or as any change reported by such house- late as within 10 days of the date that holds that would increase their bene- the household receives the first pay- fits in accordance with paragraph (c)(1) ment attributable to the change. For of this section. The State agency must example, in the case of new employ- not act on changes that would result in ment, the State may require the house- a decrease in benefits unless: hold to report the change within 10 (1) The household has voluntarily re- days of the date that the household be- quested that its case be closed in ac- comes aware of the new employment, cordance with § 273.13(b)(12); within 10 days of the date the employ- (2) The State agency has information ment begins or within 10 days of the about the household’s circumstances date that the household receives its considered verified upon receipt; or first paycheck. For households subject (3) There has been a change in the to semi-annual reporting, the house- household’s PA grant, or GA grant in hold must report changes no later than project areas where GA and food stamp 10 days from the end of the calendar cases are jointly processed in accord month in which the change occurred, with § 273.2(j)(2). provided that the household has at (B) Households with earned income least 10 days within which to report the certified for longer than 6 months change. Optional procedures for report- under this option shall be required to ing changes are contained in paragraph

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(f) of this section for households in (iv) Content of the quarterly report States with forms for jointly reporting form. The State agency may include all food stamp and public assistance of the items subject to reporting under changes and food stamp and general as- paragraph (a)(1) of this section in the sistance changes. quarterly report, except changes re- (3) An applying household shall reportable under paragraphs (a)(1)(vii) or port all changes related to its food (a)(1)(viii) of this section, or may limit stamp eligibility and benefits at the the report to specific items while recertification interview. Changes, as quiring that households report other provided in paragraph (a)(1) of this sec- items through the use of the change re- tion, which occur after the interview port form. but before the date of the notice of eli- (v) Reduction or termination of benefits. gibility, shall be reported by the house- If the household files a complete report hold within 10 days of the date of the resulting in reduction or termination notice. of benefits, the State agency shall send (4) The State agency may establish a an adequate notice, as defined in § 271.2 system of quarterly reporting in lieu of of this chapter. The notice must be the change reporting requirements issued so that it will be received by the specified under paragraph (a)(1) of this household no later than the time that section. The following requirements its benefits are normally received. If are applicable to quarterly reporting the household fails to provide suffi- systems: cient information or verification re- (i) Included households. The State garding a deductible expense, the State agency may include all households agency will not terminate the house- within a quarterly reporting system, hold, but will instead determine the except migrant or seasonal farmworker household’s benefits without regard to households, households that have no the deduction. earned income and in which all adult (vi) Changes reported outside of the members are elderly or disabled, house- quarterly report. The State agency must holds in which all members are home- act on any changes reported outside of less individuals, or households subject the quarterly report in accordance to the reporting requirement under with paragraph (c) of this section. paragraph (a)(1)(vii) of this section. (vii) Sole reporting requirement. The The State agency may also limit quar- quarterly report form shall be the sole terly reporting to specific categories of reporting requirement for any informa- households. tion that is required to be reported on (ii) Notification of the quarterly report- the form, except that able-bodied ing requirement. The State agency must adults subject to the time limit of notify households of the quarterly re- § 273.24 shall report whenever their porting requirement, including the work hours fall below 20 hours per consequences of failure to file a report, week, averaged monthly. at initial certification and recertifi- (5) The State agency may require a cation. household that is eligible to receive a (iii) Failure to file a complete form by child support deduction in accordance the specified filing date. If a household with § 273.9(d)(7) to report information fails to file a complete report by the required by the State agency regarding specified filing date, the State agency child support on a change report, a will send a notice to the household ad- monthly report, or quarterly report. vising it of the missing or incomplete The State agency shall process the re- report no later than 10 days from the ports in accordance with procedures for date the report should have been sub- the systems used in budgeting the mitted. If the household does not re- household’s income and deductions. spond to the notice, the household’s The following requirements apply to participation shall be terminated. The quarterly reports: State agency may combine the notice (i) The State agency shall provide the of a missing or incomplete report with household a reasonable period after the the adequate notice of termination de- end of the last month covered by the scribed in paragraph (a)(4)(v) of this report in which to return the report. If section. the household does not file the report

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by the due date or files an incomplete (iii) A reminder to the household of report, the State agency shall provide its right to claim actual utility costs if the household with a reminder notice its costs exceed the standard; advising the household that it has 10 (iv) The number of the food stamp of- days from the date the State agency fice and a toll-free number or a number mails the notice to file a complete re- where collect calls will be accepted for port. If the household does not file a households outside the local calling complete report by the extended filing area; and date as specified in the reminder no- (v) A statement describing the tice, the State agency shall determine changes in household circumstances the household’s eligibility and benefits contained in § 273.12(a)(1) that must be without consideration of the child sup- reported and a statement which clearly port deduction. The State agency shall informs the household that it is re- not terminate the benefits of a house- quired to report these changes. hold for failure to submit a quarterly (2) The quarterly report form, includ- report unless the household is other- ing the form for the quarterly report- wise ineligible. The State agency shall ing of the child support obligation, send the household an adequate notice must be written in clear, simple lan- as defined in § 271.2 of this chapter if guage, and must meet the bilingual re- the household fails to submit a com- quirements described in § 272.4(b) of plete report or if the information con- this chapter. In addition, the form tained on a complete report results in must specify the date by which the a reduction or termination of benefits. agency must receive the form and the The quarterly report shall meet the re- consequences of submitting a late or quirements specified in paragraph (b) incomplete form. The form (or an at- of this section. The State agency may tachment) must specify the combine the content of the reminder verification the household must submit notice and the adequate notice as long with the form, inform the household as the notice meets the requirements where to call for help in completing of the individual notices. the form, and include a statement to be (ii) The quarterly report form, if re- signed by a member of the household quired, shall be the sole reporting re- indicating his or her understanding quirement for reporting child support that the information provided may repayments during the certification pe- sult in reduction or termination of benefits. The form should also include a riod. Households excluded from month- brief description of the Food Stamp ly reporting as specified in § 273.21(b) Program fraud penalties. and households required to submit (3) Changes reported over the tele- monthly reports shall not be required phone or in person by the household to submit quarterly reports. shall be acted on in the same manner (6) State agencies shall not impose as those reported on the change report any food stamp reporting requirements form. on households except as provided in (4) A change report form shall be pro- paragraph (a) of this section. vided to newly certified households at (b) Report forms. (1) The State agency the time of certification, at recertifi- shall provide the household with a cation if the household needs a new form for reporting the changes required form; and a new form shall be sent to in paragraph (a)(1) of this section to be the household whenever a change re- reported within 10 days and shall pay port form is returned by the household. the postage for return of the form. The A change report may be provided to change report form shall, at a min- households more often at the State imum, include the following: agency’s option. (i) A space for the household to re- (c) State agency action on changes. The port whether the change shall continue State agency shall take prompt action beyond the report month; on all changes to determine if the (ii) The civil and criminal penalties change affects the household’s eligi- for violations of the Act in understand- bility or allotment. If a household re- able terms and in prominent and bold- ports a change in income, and the new face lettering; circumstance is expected to continue

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for at least one month beyond the of May would increase the household’s month in which the change is reported, June allotment. If the same decrease the State agency shall act on the were reported on May 28, and the change in accordance with paragraphs household’s normal issuance cycle was (c)(1) and (c)(2) of this section. The on June 1, the household’s allotment time frames in paragraphs (c)(1) and would have to be increased by July. (c)(2) of this section apply to these ac- (ii) For changes which result in an tions. However, during the certifi- increase in a household’s benefits due cation period, the State agency shall to the addition of a new household not act on changes in the medical ex- member who is not a member of an- penses of households eligible for the other certified household, or due to a medical expense deduction which it decrease of $50 or more in the house- learns of from a source other than the hold’s gross monthly income, the State household and which, in order to take agency shall make the change effective action, require the State agency to not later than the first allotment contact the household for verification. issued 10 days after the date the change The State agency shall only act on was reported. However, in no event those changes in medical expenses that shall these changes take effect any it learns about from a source other later than the month following the than the household if those changes are month in which the change is reported. verified upon receipt and do not neces- Therefore, if the change is reported sitate contact with the household. after the 20th of a month and it is too Even if there is no change in the allot- late for the State agency to adjust the ment, the State agency shall document following month’s allotment, the State the reported change in the casefile, agency shall issue a supplementary provide another change report form to ATP or otherwise provide an oppor- the household, and notify the house- tunity for the household to obtain the hold of the receipt of the change re- increase in benefits by the 10th day of port. If the reported change affects the the following month, or the house- household’s eligibility or level of bene- hold’s normal issuance cycle in that fits, the adjustment shall also be re- month, whichever is later. For exam- ported to the household. The State ple, a household reporting a $100 de- agency shall also advise the household crease in income at any time during of additional verification require- May would have its June allotment in- ments, if any, and state that failure to creased. If the household reported the provide verification shall result in in- change after the 20th of May and it was creased benefits reverting to the origi- too late for the State agency to adjust nal allotment. The State agency shall the ATP normally issued on June 1, the document the date a change is re- State agency would issue a supple- ported, which shall be the date the mentary ATP for the amount of the in- State agency receives a report form or crease by June 10. is advised of the change over the tele- (iii) The State agency may elect to phone or by a personal visit. Restora- verify changes which result in an in- tion of lost benefits shall be provided crease in a household’s benefits in ac- to any household if the State agency cordance with the verification require- fails to take action on a change which ments of § 273.2(f)(8)(ii), prior to taking increases benefits within the time lim- action on these changes. If the State its specified in paragraph (c)(1) of this agency elects this option, it must allow section. the household 10 days from the date (1) Increase in benefits. (i) For changes the change is reported to provide which result in an increase in a house- verification required by § 273.2(f)(8)(ii). hold’s benefits, other than changes de- If the household provides verification scribed in paragraph (c)(1)(ii) of this within this period, the State shall take section, the State agency shall make action on the changes within the time- the change effective no later than the frames specified in paragraphs (c)(1) (i) first allotment issued 10 days after the and (ii) of this section. The timeframes date the change was reported to the shall run from the date the change was State agency. For example, a $30 de- reported, not from the date of crease in income reported on the 15th verification. If, however, the household

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fails to provide the required comes temporarily ineligible because verification within 10 days after the of a periodic increase in recurring in- change is reported but does provide the come or other change not expected to verification at a later date, then the continue in the subsequent month. If timeframes specified in paragraphs the suspended household again becomes (c)(1) (i) and (ii) of this section for tak- eligible, the State agency shall issue ing action on changes shall run from benefits to the household on the house- the date verification is provided rather hold’s normal issuance date. If the sus- than from the date the change is re- pended household does not become eli- ported. If the State agency does not gible after one month, the State agen- elect this option, verification required cy shall terminate the household’s cer- by § 273.2(f)(8)(ii) must be obtained tification. Households are responsible prior to the issuance of the second nor- for reporting changes as required by mal monthly allotment after the paragraph (a) of this section during the change is reported. If in these cir- period of suspension. cumstances the household does not (3) Unclear information. During the provide verification, the household’s certification period, the State agency benefits will revert to the original ben- may obtain information about changes efit level. Whenever a State agency in- in a household’s circumstances from creases a household’s benefits to reflect which the State agency cannot readily a reported change and subsequent determine the effect of the change on verification shows that the household the household’s benefit amount. The was actually eligible for fewer benefits, State agency might receive such un- the State agency shall establish a clear information from a third party or claim for the overissuance in accord- from the household itself. The State ance with § 273.18. In cases where the agency must pursue clarification and State agency has determined that a verification of household cir- household has refused to cooperate as cumstances using the following proce- defined in § 273.2(d), the State agency dure: shall terminate the household’s eligi- (i) The State agency must issue a bility following the notice of adverse written request for contact (RFC) action. which clearly advises the household of (2) Decreases in benefits. (i) If the the verification it must provide or the household’s benefit level decreases or actions it must take to clarify its cir- the household becomes ineligible as a cumstances, which affords the house- result of the change, the State agency hold at least 10 days to respond and to shall issue a notice of adverse action clarify its circumstances, either by within 10 days of the date the change telephone or by correspondence, as the was reported unless one of the exemp- State agency directs, and which states tions to the notice of adverse action in the consequences if the household fails § 273.13 (a)(3) or (b) applies. When a no- to respond to the RFC. tice of adverse action is used, the de- (ii) If the household does not respond crease in the benefit level shall be to the RFC, or does respond but refuses made effective no later than the allot- to provide sufficient information to ment for the month following the clarify its circumstances, the State month in which the notice of adverse agency must issue a notice of adverse action period has expired, provided a action as described in § 273.13 which ter- fair hearing and continuation of bene- minates the case, explains the reasons fits have not been requested. When a for the action, and advises the house- notice of adverse action is not used due hold of the need to submit a new appli- to one of the exemptions in § 273.13 cation if it wishes to continue partici- (a)(3) or (b), the decrease shall be made pating in the program. When the effective no later than the month fol- household responds to the RFC and lowing the change. Verification which provides sufficient information, the is required by § 273.2(f) must be ob- State agency must act on the new cir- tained prior to recertification. cumstances in accordance with para- (ii) The State agency may suspend a graphs (c)(1) or (c)(2 ) of this section. household’s certification prospectively (iii) If the household does not respond for one month if the household be- to the RFC, or does respond but refuses

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to provide sufficient information to changes in the eligibility and benefit clarify its circumstances, the State criteria based on legislative or regu- agency may elect to issue a notice of latory changes. adverse action as described in § 273.13 (1) Federal adjustments to eligibility which suspends the household for 1 standards, allotments, and deductions, month before the termination becomes and State adjustments to utility stand- effective, explains the reasons for the ards. (i) State agencies shall implement action, and advises the household of these changes for all households at a the need to submit a new application if specific point in time. Adjustments to it wishes to continue participating in Federal standards shall be imple- the program. If a household responds mented prospectively regardless of the satisfactorily to the RFC during the household’s budgeting system. Annual period of suspension, the State agency and seasonal adjustments in State util- must reinstate the household without ity standards shall also be imple- requiring a new application, issue the mented prospectively for all house- allotment for the month of suspension, holds. and if necessary, adjust the household’s (A) Adjustments in the maximum participation with a new notice of ad- food stamp allotment shall be effective verse action. in accordance with § 273.10(e)(4)(ii). (d) Failure to report. If the State agen- (B) Adjustments in the standard de- cy discovers that the household failed duction shall be effective in accordance to report a change as required by para- with § 273.9(d)(7). graph (a) of this section and, as a re- (C) Adjustments in the shelter deduc- sult, received benefits to which it was tion shall be effective in accordance not entitled, the State agency shall file with § 273.9(d)(8). a claim against the household in ac- (D) Adjustments in the income eligi- cordance with § 273.18. If the discovery bility standards shall be effective in is made within the certification period, accordance with § 273.9(a)(3). the household is entitled to a notice of (ii) A notice of adverse action shall adverse action if the household’s bene- not be used for these changes. At a fits are reduced. A household shall not minimum, the State agencies shall be held liable for a claim because of a publicize these mass changes through change in household circumstances the news media; posters in certification which it is not required to report in ac- offices, issuance locations, or other cordance with § 273.12(a)(1). Individuals sites frequented by certified house- shall not be disqualified for failing to holds; or general notices mailed to report a change, unless the individual households. At its option, the State is disqualified in accordance with the agency may send the notice described disqualification procedures specified in in paragraph (e)(4) of this section or § 273.16. some other type of written explanation (e) Mass changes. Certain changes are of the change. A household whose cer- initiated by the State or Federal gov- tification period overlaps a seasonal ernment which may affect the entire variation in the State utility standard caseload or significant portions of the shall be advised at the time of initial caseload. These changes include, but certification of when the adjustment are not limited to, adjustments to the will occur and what the variation in income eligibility standards, the shel- the benefit level will be, if known. ter and dependent care deductions, the (2) Mass changes in public assistance maximum food stamp allotment and and general assistance. (i) When the the standard deduction; annual and State agency makes an overall adjust- seasonal adjustments to State utility ment to public assistance (PA) pay- standards; periodic cost-of-living ad- ments, corresponding adjustments in justments to Retirement, Survivors, households’ food stamp benefits shall and Disability Insurance (RSDI), Sup- be handled as a mass change in accord- plemental Security Income (SSI) and ance with the procedures in paragraphs other Federal benefits; periodic adjust- (e) (4), (5) and (6) of this section. When ments to Temporary Assistance for the State agency has at least 30 days, Needy Families (TANF) or General As- advance knowledge of the amount of sistance (GA) payments; and other the PA adjustment, the State agency

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shall make the change in benefits ef- affected, or by conducting individual fective in the same month as the PA desk reviews in place of a mass change, change. If the State agency does not it shall notify all households whose have sufficient notice, the food stamp benefits are reduced or terminated in change shall be effective no later than accordance with the requirements of the month following the month in this paragraph, except for mass which the PA change was made. changes made under § 273.12(e)(1); and (ii) State agencies which also admin- (i) At a minimum, the State agency ister a general assistance (GA) program shall inform the household of: shall handle mass adjustments to GA (A) The general nature of the change; payments in accordance with the (B) Examples of the change’s effect schedules outlined in paragraph on households’ allotments; (e)(2)(i) and the procedures in para- (C) The month in which the change graphs (e) (4), (5) and (6) of this section. will take effect; However, where State agencies do not (D) The household’s right to a fair administer both programs, mass hearing; changes in GA payments shall be sub- (E) The household’s right to continue ject to the schedule in paragraph (e)(3) benefits and under what circumstances and the procedures in paragraphs (e) benefits will be continued pending a (4), (5) and (6) of this section. fair hearing; (3) Mass changes in Federal benefits. (F) General information on whom to The State agency shall establish proce- contact for additional information; and dures for making mass changes to re- (G) The liability the household will flect cost-of-living adjustments incur for any overissued benefits if the (COLAs) in benefits and any other mass fair hearing decision is adverse. changes under RSDI, SSI, and other programs such as veteran’s assistance (ii) At a minimum, the State agency under title 38 of the United States Code shall notify the household of the mass and the Black Lung Program, where in- change or the result of the desk review formation on COLA’s is readily avail- on the date the household is scheduled able and is applicable to all or a major- to receive the allotment which has ity of those programs’ beneficiaries. been changed. Households on retrospective budgeting (iii) In addition, the State shall no- but not monthly reporting shall have tify the household of the mass change the change reflected in accordance as much before the household’s sched- with the State’s system. Monthly re- uled issuance date as reasonably pos- porting households shall report the sible, although the notice need not be change on the appropriate monthly re- given any earlier than the time report but are not required to report quired for advance notice of adverse ac- these types of changes outside the tion. monthly report. The State agency shall (5) Fair hearings. The household shall handle such information provided on be entitled to request a fair hearing the monthly report in accordance with when it is aggrieved by the mass its normal procedures. Households not change. subject to monthly reporting shall not (6) Continuation of benefits. A house- be responsible for reporting these hold which requests a fair hearing due changes. The State agency shall be re- to a mass change shall be entitled to sponsible for automatically adjusting a continued benefits at its previous level household’s food stamp benefit level. only if the household meets three cri- The change shall be reflected no later teria; than the second allotment issued to (i) The household does not specifi- nonmonthly reporting households cally waive its right to a continuation issued after the month in which the of benefits; change becomes effective. (ii) The household requests a fair (4) Notice for Mass Changes. When the hearing in accordance with State agency makes a mass change in § 273.13(a)(1); and food stamp eligibility or benefits by si- (iii) The household’s fair hearing is multaneously converting the caseload based upon improper computation of or that portion of the caseload that is food stamp eligibility or benefits, or

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upon misapplication or misinterpreta- notice of adverse action for both the tion of Federal law or regulation. PA and food stamp actions. If the (f) PA and GA households. (1) Except household requests a fair hearing with- as provided in paragraph (f)(2) of this in the period provided by the notice of section, PA households have the same adverse action, the State agency must reporting requirements as any other continue the household’s food stamp food stamp household. PA households benefits on the basis authorized imme- which report a change in cir- diately prior to sending the notice. If cumstances to the PA worker shall be the fair hearing is requested for both considered to have reported the change programs’ benefits, the State agency for food stamp purposes. All of the re- must conduct the hearing according to quirements pertaining to reporting PA procedures and timeliness stand- changes for PA households shall be ap- ards. However, the household must re- plied to GA households in project areas apply for food stamp benefits if the where GA and food stamp cases are food stamp certification period expires processed jointly in accordance with before the fair hearing process is com- provisions of § 273.2(j)(3). pleted. If the household does not ap- (2)(i) State agencies may use a joint peal, the State agency must make the change reporting form for households change effective in accordance with the to report changes for both PA and food procedures specified in paragraph (c) of stamp purposes. Whenever a joint this section. change reporting form is used, the (B) If the household’s food stamp ben- State agency shall insure that adjust- efits will increase as a result of the re- ments are made in a household’s eligi- duction or termination of PA benefits, bility status or allotment for the the State agency must issue the PA no- months determined appropriate given tice of adverse action, but must not the household’s budgeting cycle. take any action to increase the house- (ii) State agencies may combine the hold’s food stamp benefits until the use of a joint PA/food stamp change re- household decides whether it will ap- porting form with a PA reporting sys- peal the PA adverse action. If the tem that demands the regular submis- household decides to appeal and its PA sion of reports, such as a monthly re- benefits are continued, the household’s porting system. The State agency shall food stamp benefits must continue at insure that the procedures in § 273.21(h) the previous level. If the household are followed. does not appeal, the State agency must (3) The State agency may not termi- make the change effective in accord- nate a household’s food stamp benefits ance with the procedures specified in solely because it has terminated the paragraph (c) of this section, except household’s PA benefits without a sep- that the time limits for the State agen- arate determination that the house- cy to act on changes which increase a hold fails to satisfy the eligibility re- household’s benefits must be cal- quirements for participation in the culated from the date the PA notice of Program. Whenever a change results in adverse action period expires. the reduction or termination of a (ii) Whenever a change results in the household’s PA benefits within its food termination of a household’s PA bene- stamp certification period, the State fits within its food stamp certification agency must follow the procedures set period, and the State agency does not forth below: have sufficient information to deter- (i) If a change in household cir- mine how the change affects the house- cumstances requires a reduction or ter- hold’s food stamp eligibility and ben- mination in the PA payment and the efit level (such as when an absent par- State agency has sufficient informa- ent returns to a household, and the tion to determine how the change af- household asks to have its TANF case fects the household’s food stamp eligi- closed without providing any informa- bility and benefit level, the State agen- tion on the income of the new house- cy must take the following actions: hold member), the State agency must (A) If the change requires a reduction take the following action: or termination of food stamp benefits, (A) If the situation requires a reduc- the State agency must issue a single tion or termination of PA benefits, the

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State agency must issue a request for use procedures at paragraph (f)(3) of contact (RFC) in accordance with para- this section to determine the continued graph (c)(3)(i) of this section at the eligibility and benefit level of house- same time it sends a PA notice of ad- holds denied transitional benefits verse action. Before taking further ac- under this paragraph (f)(4). tion, the State agency must wait until (i) When a household leaves TANF, the household’s PA notice of adverse the State agency may freeze for up to action period expires or until the 3 months the household’s benefit household requests a fair hearing, amount at the level the household re- whichever occurs first. If the household ceived when it was receiving TANF. requests a fair hearing and elects to This is the household’s transition pe- have its PA benefits continued pending riod. If the household is losing income the appeal, the State agency must con- as a result of leaving TANF, the State tinue the household’s food stamp bene- agency must adjust the food stamp fits at the same level. If the household benefit amount before initiating the decides not to request a fair hearing transition period. To provide the tran- and continuation of its PA benefits, sition period, the State agency may ex- the State agency must resume action tend the certification period for up to 3 on the changes as required in para- months, not to exceed the maximum graph (c)(3) of this section. periods specified in § 273.10(f)(1) and (B) If the situation does not require a (f)(2). PA notice of adverse action, the State (ii) The State agency must issue a agency must issue a RFC and take ac- transition notice (TN) advising the tion in accordance with paragraph household of the following: that the (c)(3) of this section. State agency must reevaluate its food (iii) Depending on the household’s re- stamp case no more than 3 months sponse to the RFC, the State agency from the effective date of the TANF must take appropriate action, if nec- case closing; that its benefit amount essary, to close the household’s case or will remain the same as when it was re- adjust the household’s benefit amount. ceiving cash assistance (or that the (4) Transitional Benefits Alternative. State agency has adjusted the food The State agency may elect to provide stamp benefit amount if the house- households leaving TANF with transi- hold’s income is decreasing as the re- tional food stamp benefits as provided sult of leaving cash assistance); that it in this paragraph (f)(4). A State agency is not required to report and provide electing the Transitional Benefits Al- verification for any changes in house- ternative (TBA) must provide transi- hold circumstances until the deadline tional benefits, at a minimum, to all established in accordance with para- families with earnings who leave graph (c)(3) of this section (or its recer- TANF. The State agency may not pro- tification interview, if the certification vide transitional benefits to a house- period is expiring); and that it may re- hold which is leaving TANF when: the port changes if income decreases or ex- State agency has determined that the penses or household size increase. household is noncompliant with TANF (iii) If the household does report requirements and the State agency is changes in its circumstances during imposing a comparable food stamp the transition period, the State agency sanction in accordance with § 273.11; must adjust the household’s benefit the State agency has determined that amount in accordance with paragraph the household has violated a food (c) of this section, except that, if the re- stamp work requirement in accordance ported change would cause a reduction with § 273.7; the State agency has deter- in the household’s benefit amount, the mined that a household member has State agency must make the change ef- committed an intentional Program fective the month following the last violation in accordance with § 273.16, or month of the transition period. the State agency is closing the house- (iv) Before the end of the transition hold’s TANF case in response to infor- period, the State agency must issue the mation indicating the household failed RFC specified in paragraph (c)(3) of to comply with food stamp reporting this section and act on any informa- requirements. The State agency must tion it has about the household’s new

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circumstances in accordance with para- vise the household of the availability graph (c)(3) of this section, or recertify of the service. the household in accordance with (3) The State agency may notify a § 273.14. At the end of the transition pe- household that its benefits will be re- riod, the State agency may extend the duced or terminated, no later than the household’s certification period in ac- date the household receives, or would cordance with § 273.10(f)(5). have received, its allotment, if the fol- [Amdt. 132, 43 FR 47889, Oct. 17, 1978] lowing conditions are met: (i) The household reports the infor- EDITORIAL NOTE: For FEDERAL REGISTER ci- mation which results in the reduction tations affecting § 273.12, see the List of CFR or termination. Sections Affected, which appears in the Finding Aids section of the printed volume (ii) The reported information is in and on GPO Access. writing and signed by the household. (iii) The State agency can determine § 273.13 Notice of adverse action. the household’s allotment or ineligi- (a) Use of notice. Prior to any action bility based solely on the information to reduce or terminate a household’s provided by the household as required benefits within the certification pe- in paragraph (a)(3)(ii) of this section. riod, the State agency shall, except as (iv) The household retains its right provided in paragraph (b) of this sec- to a fair hearing as allowed in § 273.15. tion, provide the household timely and (v) The household retains its right to adequate advance notice before the ad- continued benefits if the fair hearing is verse action is taken. requested within the time period set by (1) The notice of adverse action shall the State agency in accordance with be considered timely if the advance no- § 273.13(a)(1). tice period conforms to that period of (vi) The State agency continues the time defined by the State agency as an household’s previous benefit level, if adequate notice period for its public required, within five working days of assistance caseload, provided that the the household’s request for a fair hear- period includes at least 10 days from ing. the date the notice is mailed to the (4) The State agency shall notify a date upon which the action becomes ef- household that its benefits will be re- fective. Also, if the adverse notice pe- duced if an EBT system-error has oc- riod ends on a weekend or holiday, and curred during the redemption process a request for a fair hearing and con- resulting in an out-of-balance settle- tinuation of benefits is received the ment condition. This notification shall day after the weekend or holiday, the be made no later than the date the ac- State agency shall consider the request tion is initiated against the household timely received. account. The State agency shall adjust (2) The notice of adverse action shall the benefit in accordance with § 274.12 be considered adequate if it explains in of this chapter. easily understandable language: The (b) Exemptions from notice. Individual proposed action; the reason for the pro- notices of adverse action shall not be posed action; the household’s right to provided when: request a fair hearing; the telephone (1) The State initiates a mass change number of the food stamp office (toll- as described in § 273.12(e). free number or a number where collect (2) The State agency determines, calls will be accepted for households based on reliable information, that all outside the local calling area) and, if members of a household have died. possible, the name of the person to con- (3) The State agency determines, tact for additional information; the based on reliable information, that the availability of continued benefits; and household has moved from the project the liability of the household for any area. overissuances received while awaiting (4) The household has been receiving a fair hearing if the hearing official’s an increased allotment to restore lost decision is adverse to the household. If benefits, the restoration is complete, there is an individual or organization and the household was previously noti- available that provides free legal rep- fied in writing of when the increased resentation, the notice shall also ad- allotment would terminate.

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(5) The household’s allotment varies own behalf are still eligible to partici- from month to month within the cer- pate. tification period to take into account (12) The household voluntarily re- changes which were anticipated at the quests, in writing or in the presence of time of certification, and the house- a caseworker, that its participation be hold was so notified at the time of cer- terminated. If the household does not tification. provide a written request, the State (6) The household jointly applied for agency shall send the household a let- PA/GA and food stamp benefits and has ter confirming the voluntary with- been receiving food stamp benefits drawal. Written confirmation does not pending the approval of the PA/GA entail the same rights as a notice of grant and was notified at the time of adverse action except that the house- certification that food stamp benefits hold may request a fair hearing. would be reduced upon approval of the (13) The State agency determines, PA/GA grant. based on reliable information, that the household will not be residing in the (7) A household member is disquali- project area and, therefore, will be un- fied for intentional Program violation, able to obtain its next allotment. The in accordance with § 273.16, or the bene- State agency shall inform the house- fits of the remaining household mem- hold of its termination no later than bers are reduced or terminated to re- its next scheduled issuance date. While flect the disqualification of that house- the State agency may inform the hold member. The notice requirements household before its next issuance for individuals or households affected date, the State agency shall not delay by intentional Program violation dis- terminating the household’s participa- qualifications are explained in § 273.16. tion in order to provide advance notice. (8) The State agency has elected to (14) The State agency initiates assign a longer certification period to a recoupment of a claim as specified in household certified on an expedited § 273.18(g)(4) against a household which basis and for whom verification was has previously received a notice of ad- postponed, provided the household has verse action with respect to such received written notice that the receipt claim. of benefits beyond the month of appli- (c) Optional notice. The State agency cation is contingent on its providing may, at its option, send the household the verification which was initially an adequate notice as provided in para- postponed and that the State agency graph (b)(3) of this section when the may act on the verified information household’s address is unknown and without further notice as provided in mail directed to it has been returned § 273.2(i)(4). by the post office indicating no known (9) The State agency must change the forwarding address. household’s benefits back to the origi- [Amdt. 132, 43 FR 47889, Oct. 17, 1978] nal benefit level as required in § 273.12(c)(1)(iii). EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 273.13, see the List of CFR (10) Converting a household from Sections Affected, which appears in the cash and/or food stamp coupon repay- Finding Aids section of the printed volume ment to benefit reduction as a result of and on GPO Access. failure to make agreed upon repayment as discussed in § 273.18. § 273.14 Recertification. (11) The State agency is terminating (a) General. No household may par- the eligibility of a resident of a drug or ticipate beyond the expiration of the alcoholic treatment center or a group certification period assigned in accord- living arrangement if the facility loses ance with § 273.10(f) without a deter- either its certification from the appro- mination of eligibility for a new pe- priate agency or agencies of the State riod. The State agency must establish (as defined in § 271.2) or has its status procedures for notifying households of as an authorized representative sus- expiration dates, providing application pended due to FNS disqualifying it as a forms, scheduling interviews, and re- retailer. However, residents of group certifying eligible households prior to living arrangements applying on their the expiration of certification periods.

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Households must apply for recertifi- interview and for providing required cation and comply with interview and verification information. verification requirements. (iii) To expedite the recertification (b) Recertification process—(1) Notice of process, State agencies are encouraged expiration. (i) The State agency shall to send a recertification form, an inter- provide households certified for one view appointment letter that allows for month or certified in the second month either in-person or telephone inter- of a two-month certification period a views, and a statement of needed notice of expiration (NOE) at the time verification required by § 273.2(c)(5) of certification. The State agency shall with the NOE. provide other households the NOE be- (2) Application. The State agency fore the first day of the last month of must develop an application to be used the certification period, but not before by households when applying for recer- the first day of the next-to-the-last tification. It may be the same as the month. Jointly processed PA and GA initial application, a simplified households need not receive a separate version, a monthly reporting form, or food stamp notice if they are recer- other method such as annotating tified for food stamps at the same time changes on the initial application as their PA or GA redetermination. form. A new household signature and (ii) Each State agency shall develop a date is required at the time of applica- NOE. The NOE must contain the fol- tion for recertification. The recertifi- lowing: cation process can only be used for (A) The date the certification period those households which apply for recer- expires; tification prior to the end of their cur- (B) The date by which a household rent certification period, except for de- must submit an application for recer- layed applications as specified in para- tification in order to receive uninter- graph (e)(3) of this section. The proc- rupted benefits; ess, at a minimum, must elicit from (C) The consequences of failure to the household sufficient information apply for recertification in a timely that, when added to information al- manner; ready contained in the casefile, will en- (D) Notice of the right to receive an application form upon request and to sure an accurate determination of eli- have it accepted as long as it contains gibility and benefits. The State agency a signature and a legible name and ad- must notify the applicant of informa- dress; tion which is specified in § 273.2(b)(2), (E) Information on alternative sub- and provide the household with a no- mission methods available to house- tice of required verification as speci- holds which cannot come into the cer- fied in § 273.2(c)(5). tification office or do not have an au- (3) Interview. As part of the recertifi- thorized representative and how to ex- cation process, the State agency must ercise these options; conduct a face-to-face interview with a (F) The address of the office where member of the household or its author- the application must be filed; ized representative at least once every (G) The household’s right to request 12 months for households certified for a fair hearing if the recertification is 12 months or less. The provisions of denied or if the household objects to § 273.2(e) also apply to interviews for re- the benefit issuance; certification. The State agency may (H) Notice that any household con- choose not to interview the household sisting only of Supplemental Security at interim recertifications within the Income (SSI) applicants or recipients is 12-month period. The requirement for a entitled to apply for food stamp recer- face-to-face interview once every 12 tification at an office of the Social Se- months may be waived in accordance curity Administration; with § 273.2(e)(2). (I) Notice that failure to attend an (ii) If a household receives PA/GA interview may result in delay or denial and will be recertified for food stamps of benefits; and more than once in a 12-month period, (J) Notice that the household is re- the State agency may choose to con- sponsible for rescheduling a missed duct a face-to-face interview with that

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household only once during that pe- State agency’s option. The option cho- riod. At any other recertification dur- sen must be uniformly applied to the ing that year period, the State agency State agency’s entire monthly report- may interview the household by tele- ing caseload. phone, conduct a home visit, or recer- (4) For households consisting only of tify the household by mail. SSI applicants or recipients who apply (iii) State agencies shall schedule for food stamp recertification at SSA interviews so that the household has at offices in accordance with § 273.2(k)(1), least 10 days after the interview in an application shall be considered filed which to provide verification before for normal processing purposes when the certification period expires. If a the signed application is received by household misses its scheduled inter- the SSA. view, the State agency shall send the (d) Timely processing. (1) Households household a Notice of Missed Interview that were certified for one month or that may be combined with the notice certified for two months in the second of denial. If a household misses its month of the certification period and scheduled interview and requests an- have met all required application pro- other interview, the State agency shall cedures shall be notified of their eligi- schedule a second interview. bility or ineligibility. Eligible house- (4) Verification. Information provided holds shall be provided an opportunity by the household shall be verified in to receive benefits no later than 30 cal- accordance with § 273.2(f)(8)(i). The endar days after the date the household State agency shall provide the house- received its last allotment. hold a notice of required verification as (2) Other households that have met provided in § 273.2(c)(5) and notify the all application requirements shall be household of the date by which the notified of their eligibility or ineligi- verification requirements must be sat- bility by the end of their current cer- isfied. The household must be allowed a tification period. In addition, the State minimum of 10 days to provide required agency shall provide households that verification information. Any house- are determined eligible an opportunity hold whose eligibility is not deter- to participate by the household’s nor- mined by the end of its current certifi- mal issuance cycle in the month fol- cation period due to the time period allowing the end of its current certifi- lowed for submitting any missing cation period. verification shall receive an oppor- (e) Delayed processing. (1) If an eligi- tunity to participate, if eligible, within ble household files an application be- 5 working days after the household fore the end of the certification period submits the missing verification and but the recertification process cannot benefits cannot be prorated. be completed within 30 days after the (c) Timely application for recertifi- date of application because of State cation. (1) Households reporting re- agency fault, the State agency must quired changes in circumstances that continue to process the case and pro- are certified for one month or certified vide a full month’s allotment for the in the second month of a two-month first month of the new certification pe- certification period shall have 15 days riod. The State agency shall determine from the date the NOE is received to cause for any delay in processing a re- file a timely application for recertifi- certification application in accordance cation. with the provisions of § 273.3(h)(1). (2) Other households reporting re- (2) If a household files an application quired changes in circumstances that before the end of the certification pe- submit applications by the 15th day of riod, but fails to take a required ac- the last month of the certification pe- tion, the State agency may deny the riod shall be considered to have made a case at that time, at the end of the cer- timely application for recertification. tification period, or at the end of 30 (3) For monthly reporting house- days. Notwithstanding the State’s holds, the filing deadline shall be ei- right to issue a denial prior to the end ther the 15th of the last month of the of the certification period, the house- certification period or the normal date hold has 30 days after the end of the for filing a monthly report, at the certification period to complete the

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process and have its application be at the State level or for a hearing at treated as an application for recertifi- the local level which permits the cation. If the household takes the re- household to further appeal a local de- quired action before the end of the cer- cision to a State level fair hearing. tification period, the State agency State agencies may adopt local level must reopen the case and provide a full hearings in some project areas and month’s benefits for the initial month maintain only State level hearings in of the new certification period. If the other project areas. household takes the required action (c) Timely action on hearings—(1) State after the end of the certification period level hearings. Within 60 days of receipt but within 30 days after the end of the of a request for a fair hearing, the certification period, the State agency State agency shall assure that the shall reopen the case and provide bene- hearing is conducted, a decision is fits retroactive to the date the house- reached, and the household and local hold takes the required action. The agency are notified of the decision. De- State agency shall determine cause for cisions which result in an increase in any delay in processing a recertifi- household benefits shall be reflected in cation application in accordance with the coupon allotment within 10 days of the provisions of § 273.3(h)(1). the receipt of the hearing decision even (3) If a household files an application if the State agency must provide a sup- within 30 days after the end of the cer- plementary ATP or otherwise provide tification period, the application shall the household with an opportunity to be considered an application for recer- obtain the allotment outside of the tification; however, benefits must be normal issuance cycle. However, the prorated in accordance with § 273.10(a). State agency may take longer than 10 If a household’s application for recer- days if it elects to make the decision tification is delayed beyond the first of effective in the household’s normal the month of what would have been its issuance cycle, provided that the new certification period through the issuance will occur within 60 days from fault of the State agency, the house- the household’s request for the hear- hold’s benefits for the new certification ing. Decisions which result in a de- period shall be prorated based on the crease in household benefits shall be date of the new application, and the reflected in the next scheduled State agency shall provide restored issuance following receipt of the hear- benefits to the household back to the ing decision. date the household’s certification pe- (2) Local level hearings. Within 45 days riod should have begun had the State of receipt of a request for a fair hear- agency not erred and the household ing, the State agency shall assure that been able to apply timely. the hearing is conducted, and that a (f) Expedited service. A State agency is decision is reached and reflected in the not required to apply the expedited coupon allotment. service provisions of § 273.2(i) at recer- (3) Appeals of local level decisions. tification if the household applies for Within 45 days of receipt of any request recertification before the end of its for a State level review of a decision or current certification period. for a new State level hearing, the State [Amdt. 364, 61 FR 54318, Oct. 17, 1996, as agency shall assure that the review or amended by Amdt. 388, 65 FR 70210, Nov. 21, the new hearing is conducted, and that 2000] a decision is reached and reflected in the coupon allotment. § 273.15 Fair hearings. (4) Household requests for postpone- (a) Availability of hearings. Except as ment. The household may request and provided in § 271.7(f), each State agency is entitled to receive a postponement shall provide a fair hearing to any of the scheduled hearing. The postpone- household aggrieved by any action of ment shall not exceed 30 days and the the State agency which affects the par- time limit for action on the decision ticipation of the houshold in the Pro- may be extended for as many days as gram. the hearing is postponed. For example, (b) Hearing system. Each State agency if a State level hearing is postponed by shall provide for either a fair hearing the household for 10 days, notification

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of the hearing decision will be required agrees with a State agency action, it within 70 days from the date of the re- shall be reminded of the right to request for a hearing. quest a fair hearing. If there is an indi- (d) Agency conferences. (1) The State vidual or organization available that agency shall offer agency conferences provides free legal representation, the to households which wish to contest a household shall also be informed of the denial of expedited service under the availability of that service. procedures in § 273.2(i). The State agen- (g) Time period for requesting hearing. cy may also offer agency conferences A household shall be allowed to request to households adversely affected by an a hearing on any action by the State agency action. The State agency shall agency or loss of benefits which oc- advise households that use of an agen- curred in the prior 90 days. Action by cy conference is optional and that it the State agency shall include a denial shall in no way delay or replace the of a request for restoration of any ben- fair hearing process. The agency con- efits lost more than 90 days but less ferences may be attended by the eligi- than a year prior to the request. In ad- bility worker responsible for the agen- dition, at any time within a certifi- cy action, and shall be attended by an cation period a household may request eligibility supervisor and/or the agency a fair hearing to dispute its current director, and by the household and/or level of benefits. its representative. An agency con- (h) Request for hearing. A request for ference may lead to an informal resolu- a hearing is defined as a clear expres- tion of the dispute. However, a fair sion, oral or written, by the household hearing must still be held unless the or its representative to the effect that household makes a written withdrawal of its request for a hearing. it wishes to appeal a decision or that (2) An agency conference for house- an opportunity to present its case to a holds contesting a denial of expedited higher authority is desired. If it is un- service shall be scheduled within 2 clear from the household’s request working days, unless the household re- what action it wishes to appeal, the quests that it be scheduled later or State agency may request the house- states that it does not wish to have an hold to clarify its grievance. The free- agency conference. dom to make a request for a hearing (e) Consolidated hearings. State agen- shall not be limited or interfered with cies may respond to a series of indi- in any way. vidual requests for hearings by con- (i) State agency responsibilities on hear- ducting a single group hearing. State ing requests. (1) Upon request, the State agencies may consolidate only cases agency shall make available without where individual issues of fact are not charge the specific materials necessary disputed and where related issues of for a household or its representative to State and/or Federal law, regulation or determine whether a hearing should be policy are the sole issues being raised. requested or to prepare for a hearing. If In all group hearings, the regulations the individual making the request governing individual hearings must be speaks a language other than English followed. Each individual household and the State agency is required by shall be permitted to present its own § 272.4(c)(3) to provide bilingual staff or case or have its case presented by a interpreters who speak the appropriate representative. language, the State agency shall insure (f) Notification of right to request hear- that the hearing procedures are ver- ing. At the time of application, each bally explained in that language. Upon household shall be informed in writing request, the State agency shall also of its right to a hearing, of the method help a household with its hearing re- by which a hearing may be requested, quest. If a household makes an oral re- and that its case may be presented by quest for a hearing, the State agency a household member or a representa- shall complete the procedures nec- tive, such as a legal counsel, a relative, essary to start the hearing process. a friend or other spokesperson. In addi- Households shall be advised of any tion, at any time the household ex- legal services available that can pro- presses to the State agency that it dis- vide representation at the hearing.

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(2) The State agency shall expedite its representative to withdraw the hearing requests from households, such household’s fair hearing request. The as migrant farmworkers, that plan to State agency must provide a written move from the jurisdiction of the hear- notice to the household within 10 days ing official before the hearing decision of the household’s request confirming would normally be reached. Hearing re- the withdrawal request and providing quests from these households shall be the household with an opportunity to processed faster than others if nec- request a hearing. The written notice essary to enable them to receive a deci- must advise the household it has 10 sion and a restoration of benefits if the days from the date it receives the no- decision so indicates before they leave tice to advise the State agency of its the area. desire to request, or reinstate, the (3) The State agency shall publish hearing. If the household timely ad- clearly written uniform rules of proce- vises the State agency that it wishes to dure that conform to these regulations reinstate the fair hearing, the State and shall make the rules available to agency must provide the household any interested party. At a minimum, with a fair hearing, within the time the uniform rules of procedure shall in- frames specified in paragraph (c) of clude the time limits for hearing re- this section and beginning the date the quests as specified in paragraph (g) of household advises the State agency this section, advance notification re- that it wishes to reinstate its request. quirements as specified in paragraph The State agency must reinstate a fair (i)(1) of this section, hearing timeliness hearing as requested from a household standards as specified in paragraph (c) at least once. The State agency must of this section, and the rights and re- not deny a household’s request for a sponsibilities of persons requesting a fair hearing if the household is ag- hearing as specified in paragraph (p) of grieved by a State agency action that this section. differs from the reinstated action. (j) Denial or dismissal of request for (k) Continuation of benefits. (1) If a hearing. (1) The State agency must not household requests a fair hearing with- deny or dismiss a request for a hearing in the period provided by the notice of unless: adverse action, as set forth in § 273.13, (i) The State agency does not receive and its certification period has not ex- the request within the appropriate pired, the household’s participation in time frame specified in paragraph (g) of the program shall be continued on the this section, provided that the State basis authorized immediately prior to agency considers untimely requests for the notice of adverse action, unless the hearings as requests for restoration of household specifically waives continu- lost benefits in accordance with § 273.17; ation of benefits. The form for request- (ii) The household or its representa- ing a fair hearing shall contain space tive fails, without good cause, to ap- for the household to indicate whether pear at the scheduled hearing; or not continued benefits are re- (iii) The household or its representa- quested. If the form does not positively tive withdraws the request in writing; indicate that the household has waived or continuation of benefits, the State (iv) The household or its representa- agency shall assume that continuation tive orally withdraws the request and of benefits is desired and the benefits the State agency has elected to allow shall be issued accordingly. If the State such oral requests. agency action is upheld by the hearing (2) The State agency electing to ac- decision, a claim against the household cept an oral expression from the house- shall be established for all hold or its representative to withdraw overissuances, with one exception. In a fair hearing may discuss the option the case of an EBT adjustment, as de- with the household when it appears fined in § 274.12(f)(4)(ii) of this chapter, that the State agency and household once an adverse action is upheld, the have resolved issues related to the fair State agency shall immediately debit hearing. However, the State agency is the household’s account for the total prohibited from coercion or actions amount stated in its original notice. If which would influence the household or there are no benefits or insufficient

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benefits remaining in the household’s (3) The State agency shall promptly account at the time the State agency inform the household in writing if ben- action is upheld, the State agency may efits are reduced or terminated pending only make the adjustment from the the hearing decision. next month’s benefits, regardless of (l) Notification of time and place of whether this satisfies the full adjust- hearing. The time, date, and place of ment amount. If a hearing request is the hearing shall be arranged so that not made within the period provided by the hearing is accessible to the house- the notice of adverse action, benefits hold. At least 10 days prior to the hear- shall be reduced or terminated as pro- ing, advance written notice shall be vided in the notice. However, if the provided to all parties involved to per- household establishes that its failure mit adequate preparation of the case. to make the request within the ad- However, the household may request vance notice period was for good cause, less advance notice to expedite the the State agency shall reinstate the scheduling of the hearing. The notice benefits to the prior basis. When bene- shall: fits are reduced or terminated due to a mass change, participation on the prior (1) Advise the household or its rep- basis shall be reinstated only if the resentative of the name, address, and issue being contested is that food phone number of the person to notify stamp eligibility or benefits were im- in the event it is not possible for the properly computed or that Federal law household to attend the scheduled or regulation is being misapplied or hearing. misinterpreted by the State agency. (2) Specify that the State agency will (2) Once continued or reinstated, the dismiss the hearing request if the State agency must not reduce or termi- household or its representative fails to nate benefits prior to the receipt of the appear for the hearing without good official hearing decision unless: cause. (i) The certification period expires. (3) Include the State agency hearing The household may reapply and may be procedures and any other information determined eligible for a new certifi- that would provide the household with cation period with a benefit amount as an understanding of the proceedings determined by the State agency; and that would contribute to the effec- (ii) The hearing official makes a pre- tive presentation of the household’s liminary determination, in writing and case. at the hearing, that the sole issue is (4) Explain that the household or rep- one of Federal law or regulation and resentative may examine the case file that the household’s claim that the prior to the hearing. State agency improperly computed the (m) Hearing official. Hearings shall be benefits or misinterpreted or mis- conducted by an impartial official(s) applied such law or regulation is in- who: Does not have any personal stake valid; or involvement in the case; was not di- (iii) A change affecting the house- rectly involved in the initial deter- hold’s eligibility or basis of issuance mination of the action which is being occurs while the hearing decision is contested; and was not the immediate pending and the household fails to re- supervisor of the eligibility worker quest a hearing after the subsequent who took the action. State level hear- notice of adverse action; ings shall be conducted by State level (iv) A mass change affecting the personnel and shall not be conducted household’s eligibility or basis of by local level personnel. issuance occurs while the hearing decision is pending; or (1) Designation of hearing official. The (v) The household, or its representa- hearing official shall be: tive, orally withdrew its request for a (i) An employee of the State agency; fair hearing and did not advise the (ii) An individual under contract State agency of its desire to reinstate with the State agency; the fair hearing within the time frame (iii) An employee of another public specified in paragraph (j)(2) of this sec- agency designated by the State agency tion. to conduct hearings;

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(iv) A member or official of a statu- arrive at the facts of the case in a way tory board or other legal entity des- that makes the household feel most at ignated by the State agency to conduct ease. The household or its representa- hearings; or tive must be given adequate oppor- (v) An executive officer of the State tunity to: agency, a panel of officials of the State (1) Examine all documents and agency or a person or persons expressly records to be used at the hearing at a appointed to conduct State level hear- reasonable time before the date of the ings or to review State and/or local hearing as well as during the hearing. level hearing decisions. The contents of the case file including (2) Power and duties. The hearing offi- the application form and documents of cial shall: verification used by the State agency (i) Administer oaths or affirmations to establish the household’s ineligi- if required by the State; bility or eligibility and allotment shall (ii) Insure that all relevant issues are be made available, provided that con- considered; fidential information, such as the (iii) Request, receive and make part names of individuals who have dis- of the record all evidence determined closed information about the household necessary to decide the issues being without its knowledge or the nature or raised; status of pending criminal prosecu- (iv) Regulate the conduct and course tions, is protected from release. If re- of the hearing consistent with due quested by the household or its rep- process to insure an orderly hearing; resentative, the State agency shall pro- (v) Order, where relevant and useful, vide a free copy of the portions of the an independent medical assessment or case file that are relevant to the hear- professional evaluation from a source ing. Confidential information that is mutually satisfactory to the household protected from release and other docu- and the State agency; ments or records which the household (vi) Provide a hearing record and rec- will not otherwise have an opportunity ommendation for final decision by the to contest or challenge shall not be in- hearing authority; or, if the hearing of- troduced at the hearing or affect the ficial is the hearing authority, render a hearing official’s decision. hearing decision in the name of the (2) Present the case or have it pre- State agency, in accordance with para- sented by a legal counsel or other per- graph (q) of this section, which will re- son. solve the dispute. (3) Bring witnesses. (n) Hearing authority. The hearing au- (4) Advance arguments without thority shall be the person designated undue interference. to render the final administrative deci- (5) Question or refute any testimony sion in a hearing. The same person may or evidence, including an opportunity act as both the hearing official and the to confront and cross-examine adverse hearing authority. The hearing author- witnesses. ity shall be subject to the requirements (6) Submit evidence to establish all specified in paragraph (m) of this sec- pertinent facts and circumstances in tion. the case. (o) Attendance at hearing. The hearing (q) Hearing decisions. (1) Decisions of shall be attended by a representative of the hearing authority shall comply the State agency and by the household with Federal law and regulations and and/or its representative. The hearing shall be based on the hearing record. may also be attended by friends or rel- The verbatim transcript or recording of atives of the household if the house- testimony and exhibits, or an official hold so chooses. The hearing official report containing the substance of shall have the authority to limit the what transpired at the hearing, to- number of persons in attendance at the gether with all papers and requests hearing if space limitations exist. filed in the proceeding, shall constitute (p) Household rights during hearing. the exclusive record for a final decision The household may not be familiar by the hearing authority. This record with the rules of order and it may be shall be retained in accordance with necessary to make particular efforts to § 272.1(f). This record shall also be

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available to the household or its rep- decision notice. Within 45 days of re- resentative at any reasonable time for ceipt of any request for a State level copying and inspection. review of the decision or for a new (2) A decision by the hearing author- State level hearing, the State agency ity shall be binding on the State agen- shall assure that the review or the cy and shall summarize the facts of the hearing is conducted, and that a deci- case, specify the reasons for the decision is reached and reflected in the sion, and identify the supporting evi- coupon allotment. If a new hearing will dence and the pertinent Federal regula- not be held, the State level hearing of- tions. The decision shall become a part ficial will review the local level hear- of the record. ing record to determine if the local de- (3) The household and the local agen- cision was supported by substantial cy shall each be notified in writing of: evidence. State level review procedures The decision; the reasons for the deci- shall provide for notifying the local sion in accordance with paragraph agency and the household that each (q)(2) of this section; the available ap- may file a summary of arguments peal rights; and that the household’s which shall become a part of the record benefits will be issued or terminated as if timely received. Both parties shall decided by the hearing authority. The be advised that failure to file a sum- notice shall also state that an appeal mary will not be considered in deciding may result in a reversal of the deci- the case and that the summary must sion. The following are additional no- be postmarked within 10 days of receipt tice requirements and the available ap- of the notice. peal rights: (5) All State agency hearing records (i) After a State level hearing deci- and decisions shall be available for sion which upholds the State agency public inspection and copying, subject action, the household shall be notified to the disclosure safeguards provided in of the right to pursue judicial review of § 272.1(c), and provided identifying the decision. In addition, in States names and addresses of household which provide for rehearings of State members and other members of the level decisions, the household shall be public are kept confidential. notified of the right to pursue a rehear- (r) Implementation of local level hearing ing. decision. (1) In the event the local hear- (ii) After a local level hearing deci- ing decision upholds the State agency sion which upholds the State agency action, any benefits to the household action, the household shall be notified which were continued pending the of the right to request a completely hearing shall be discontinued begin- new State agency level hearing, and ning with the next scheduled issuance, that a reversal of the decision may re- regardless of whether or not an appeal sult in the restoration of lost benefits is filed. Collection action for any to the household. In addition, the claims against the household for household shall be advised that if a overissuances shall be postponed until new hearing would pose an inconven- the 15-day appeal request period has ience to the household, a State level elapsed, or if an appeal is requested, review of the decision based on the until the State agency upholds the de- hearing record may be requested in- cision of the local hearing authority. stead of a new hearing. A clear descrip- (2) In the event the local hearing au- tion of the two appeal procedures must thority decides in favor of the house- be included to enable the household to hold, benefits to the household shall make an informed choice, if it wishes begin or be reinstated, as required by to appeal. If the household indicates the decision, within the 45-day time that it wishes to appeal, but does not limit allowed for local hearing proce- select the method, the State agency dures. Any lost benefits due to the shall proceed with a new State level household shall be issued as soon as ad- hearing. ministratively feasible. The State (4) If the household wishes to appeal agency shall restore benefits to house- a local level hearing decision, the ap- holds which are leaving the project peal request must be filed within 15 area before the departure whenever days of the mailing date of the hearing possible. If benefits are not restored

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prior to the household’s departure, the (u) Departmental review of decisions State agency shall forward an author- contrary to Federal law and regulations. ization to the benefits to the household [Reserved] or to the new project area if this infor- [Amdt. 132, 43 FR 47889, Oct. 17, 1978, as mation is known. The new project area amended by Amdt. 132, 44 FR 33385, June 8, shall accept an authorization and issue 1979; Amdt. 146, 46 FR 1427, Jan. 6, 1981; the appropriate benefits whether the Amdt. 269, 51 FR 10793, Mar. 28, 1986; Amdt. notice is presented by the household or 356, 59 FR 29713, June 9, 1994; 64 FR 48938, received directly from another project Sept. 9, 1999; Amdt. 378, 65 FR 41325, July 5, 2000; Amdt. 388, 65 FR 70211, Nov. 21, 2000] area. (s) Implementation of final State agency § 273.16 Disqualification for inten- decisions. The State agency is respon- tional Program violation. sible for insuring that all final hearing (a) Administrative responsibility. (1) decisions are reflected in the house- The State agency shall be responsible hold’s coupon allotment within the for investigating any case of alleged in- time limits specified in paragraph (c) tentional Program violation, and en- of this section. suring that appropriate cases are acted (1) When the hearing authority deter- upon either through administrative mines that a household has been im- disqualification hearings or referral to properly denied program benefits or a court of appropriate jurisdiction in has been issued a lesser allotment than accordance with the procedures out- was due, lost benefits shall be provided lined in this section. Administrative to the household in accordance with disqualification procedures or referral § 273.17. The State agency shall restore for prosecution action should be initi- benefits to households which are leav- ated by the State agency in cases in ing the project area before the depar- which the State agency has sufficient ture whenever possible. If benefits are documentary evidence to substantiate not restored prior to the household’s that an individual has intentionally departure, the State agency shall for- made one or more acts of intentional ward an authorization to the benefits Program violation as defined in para- to the household or to the new project graph (c) of this section. If the State agency does not initiate administra- area if this information is known. The tive disqualification procedures or new project area shall accept an au- refer for prosecution a case involving thorization and issue the appropriate an overissuance caused by a suspected benefits whether the notice is pre- act of intentional Program violation, sented by the household or received di- the State agency shall take action to rectly from another project area. collect the overissuance by estab- (2) When the hearing authority up- lishing an inadvertent household error holds the State agency’s action, a claim against the household in accord- claim against the household for any ance with the procedures in § 273.18. overissuances shall be prepared in ac- The State agency should conduct ad- cordance with § 273.18. ministrative disqualification hearings (t) Review of appeals of local level deci- in cases in which the State agency be- sions. State agencies which adopt a lieves the facts of the individual case local level hearing system shall estab- do not warrant civil or criminal pros- lish a procedure for monitoring local ecution through the appropriate court level hearing decisions. The number of system, in cases previously referred for local level decisions overturned upon prosecution that were declined by the appeal to a State level hearing shall be appropriate legal authority, and in pre- examined. If the number of reversed de- viously referred cases where no action cisions is excessive, the State agency was taken within a reasonable period shall take corrective action. of time and the referral was formally withdrawn by the State agency. The State agency shall not initiate an administrative disqualification hearing against an accused individual whose case is currently being referred for

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prosecution or subsequent to any ac- which chooses either of these options tion taken against the accused indi- may base administrative disqualifica- vidual by the prosecutor or court of ap- tions for intentional Program violation propriate jurisdiction, if the factual on the waived right to an administra- issues of the case arise out of the same, tive disqualification hearing or on the or related, circumstances. The State signed disqualification consent agree- agency may initiate administrative ment in cases of deferred adjudication. disqualification procedures or refer a (b) Disqualification penalties. (1) Indi- case for prosecution regardless of the viduals found to have committed an in- current eligibility of the individual. tentional Program violation either (2) Each State agency shall establish through an administrative disqualifica- a system for conducting administrative tion hearing or by a Federal, State or disqualifications for intentional Pro- local court, or who have signed either a gram violation which conforms with waiver of right to an administrative the procedures outlined in paragraph disqualification hearing or a disquali- (e) of this section. FNS shall exempt fication consent agreement in cases re- any State agency from the requirement ferred for prosecution, shall be ineli- to establish an administrative disquali- gible to participate in the Program: fication system if the State agency has (i) For a period of twelve months for already entered into an agreement, the first intentional Program viola- pursuant to paragraph (g)(1) of this section, except as provided under para- tion, with the State’s Attorney Gen- graphs (b)(2), (b)(3), (b)(4), and (b)(5) of eral’s Office or, where necessary, with this section; county prosecutors. FNS shall also ex- (ii) For a period of twenty-four empt any State agency from the re- months upon the second occasion of quirement to establish an administra- any intentional Program violation, ex- tive disqualification system if there is cept as provided in paragraphs (b)(2), a State law that requires the referral (b)(3), (b)(4), and (b)(5) of this section; of such cases for prosecution and if the and State agency demonstrates to FNS that it is actually referring cases for (iii) Permanently for the third occa- prosecution and that prosecutors are sion of any intentional Program viola- following up on the State agency’s re- tion. ferrals. FNS may require a State agen- (2) Individuals found by a Federal, cy to establish an administrative dis- State or local court to have used or re- qualification system if it determines ceived benefits in a transaction involv- that the State agency is not promptly ing the sale of a controlled substance or actively pursuing suspected inten- (as defined in section 102 of the Con- tional Program violation claims trolled Substances Act (21 U.S.C. 802)) through the courts. shall be ineligible to participate in the (3) The State agency shall base ad- Program: ministrative disqualifications for in- (i) For a period of twenty four tentional Program violations on the months upon the first occasion of such determinations of hearing authorities violation; and arrived at through administrative dis- (ii) Permanently upon the second oc- qualification hearings in accordance casion of such violation. with paragraph (e) of this section or on (3) Individuals found by a Federal, determinations reached by courts of State or local court to have used or re- appropriate jurisdiction in accordance ceived benefits in a transaction involv- with paragraph (g) of this section. ing the sale of firearms, ammunition or However, any State agency has the op- explosives shall be permanently ineli- tion of allowing accused individuals ei- gible to participate in the Program ther to waive their rights to adminis- upon the first occasion of such viola- trative disqualification hearings in action. cordance with paragraph (f) of this sec- (4) An individual convicted by a Fed- tion or to sign disqualification consent eral, State or local court of having agreements for cases of deferred adju- trafficked benefits for an aggregate dication in accordance with paragraph amount of $500 or more shall be perma- (h) of this section. Any State agency nently ineligible to participate in the

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Program upon the first occasion of sent agreement in cases referred for such violation. prosecution, and not the entire house- (5) Except as provided under para- hold. graph (b)(1)(iii) of this section, an indi- (12) Even though only the individual vidual found to have made a fraudulent is disqualified, the household, as de- statement or representation with re- fined in § 273.1, is responsible for mak- spect to the identity or place of resi- ing restitution for the amount of any dence of the individual in order to re- overpayment. All intentional Program ceive multiple food stamp benefits si- violation claims must be established multaneously shall be ineligible to par- and collected in accordance with the ticipate in the Program for a period of procedures set forth in § 273.18. 10 years. (13) The individual must be notified (6) The penalties in paragraphs (b)(2) in writing once it is determined that and (b)(3) of this section shall also he/she is to be disqualified. The dis- apply in cases of deferred adjudication qualification period shall begin no as described in paragraph (h) of this later than the second month which fol- section, where the court makes a find- lows the date the individual receives ing that the individual engaged in the written notice of the disqualification. conduct described in paragraph (b)(2) The disqualification period must con- and (b)(3) of this section. tinue uninterrupted until completed (7) If a court fails to impose a dis- regardless of the eligibility of the disqualification or a disqualification pe- qualified individual’s household. riod for any intentional Program viola- (c) Definition of intentional Program tion, the State agency shall impose the violation. Intentional Program viola- appropriate disqualification penalty tions shall consist of having inten- specified in paragraphs (b)(1), (b)(2), tionally: (b)(3), (b)(4), and (b)(5) of this section (1) made a false or misleading state- unless it is contrary to the court order. ment, or misrepresented, concealed or (8) One or more intentional Program withheld facts; or violations which occurred prior to (2) committed any act that con- April 1, 1983 shall be considered as only stitutes a violation of the Food Stamp one previous disqualification when de- Act, the Food Stamp Program Regula- termining the appropriate penalty to tions, or any State statute for the pur- impose in a case under consideration. pose of using, presenting, transferring, (9) Regardless of when an action acquiring, receiving, possessing or traf- taken by an individual which caused an ficking of coupons, authorization cards intentional Program violation oc- or reusable documents used as part of curred, the disqualification periods an automated benefit delivery system specified in paragraphs (b)(2) and (b)(3) (access device). of this section shall apply to any case (d) Notification to applicant house- in which the court makes the requisite holds. The State agency shall inform finding on or after September 1, 1994. the household in writing of the dis- (10) For the disqualification periods qualification penalties for intentional in paragraphs (b)(1), (b)(5) or (b)(6) of Program violation each time it applies this section, if the offense occurred for Program benefits. The penalties prior to the implementation of these shall be in clear, prominent, and bold- penalties, the State agency may estab- face lettering on the application form. lish a policy of disqualifying these in- (e) Disqualification hearings. The dividuals in accordance with the dis- State agency shall conduct administra- qualification periods in effect at the tive disqualification hearings for indi- time of the offense. This policy must be viduals accused of intentional Program consistently applied for all affected in- violation in accordance with the re- dividuals. quirements outlined in this section. (11) State agencies shall disqualify (1) Consolidation of administrative dis- only the individual found to have com- qualification hearing with fair hearing. mitted the intentional Program viola- The State agency may combine a fair tion, or who signed the waiver of the hearing and an administrative disquali- right to an administrative disqualifica- fication hearing into a single hearing if tion hearing or disqualification con- the factual issues arise out of the

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same, or related, circumstances and make these procedures available to any the household receives prior notice interested party. that hearings will be combined. If the (3) Advance notice of hearing. (i) The disqualification hearing and fair hear- State agency shall provide written no- ing are combined, the State agency tice to the individual suspected of com- shall follow the timeframes for con- mitting an intentional Program viola- ducting disqualification hearings. If tion at least 30 days in advance of the the hearings are combined for the pur- date a disqualification hearing initi- pose of settling the amount of the ated by the State agency has been claim at the same time as determining scheduled. If mailed, the notice shall whether or not intentional Program be sent either first class mail or cer- violation has occurred, the household tified mail-return receipt requested. shall lose its right to a subsequent fair The notice may also be provided by any hearing on the amount of the claim. other reliable method. If the notice is However, the State agency shall, upon sent using first class mail and is re- household request, allow the household turned as undeliverable, the hearing to waive the 30-day advance notice pe- may still be held. riod required by paragraph (e)(3)(i) of (ii) If no proof of receipt is obtained, this section when the disqualification a timely (as defined in paragraph (e)(4) hearing and fair hearing are combined. of this section) showing of nonreceipt (2) Disqualification hearing procedures. by the individual due to circumstances (i) State agencies have the option of specified by the State agency shall be using the same hearing officials for dis- considered good cause for not appear- qualification hearings and fair hearings ing at the hearing. Each State agency or designating hearing officials to con- shall establish the circumstances in duct only disqualification hearings. which non-receipt constitutes good (ii) The provisions of § 273.15 (m), (n), cause for failure to appear. Such circumstances shall be consistent (o), (p), and (q)(1) are also applicable throughout the State agency. for disqualification hearings. (iii) The notice shall contain at a (iii) At the disqualification hearing, minimum: the hearing official shall advise the (A) The date, time, and place of the household member or representative hearing; that they may refuse to answer ques- (B) The charge(s) against the indi- tions during the hearing. vidual; (iv) Within 90 days of the date the (C) A summary of the evidence, and household member is notified in writ- how and where the evidence can be ex- ing that a State or local hearing initi- amined; ated by the State agency has been (D) A warning that the decision will scheduled, the State agency shall con- be based solely on information product the hearing, arrive at a decision vided by the State agency if the indi- and notify the household member and vidual fails to appear at the hearing; local agency of the decision. The (E) A statement that the individual household member or representative is or representative will, upon receipt of entitled to a postponement of the the notice, have 10 days from the date scheduled hearing, provided that the of the scheduled hearing to present request for postponement is made at good cause for failure to appear in least 10 days in advance of the date of order to receive a new hearing; the scheduled hearing. However, the (F) A warning that a determination hearing shall not be postponed for of intentional Program violation will more than a total of 30 days and the result in disqualification periods as de- State agency may limit the number of termined by paragraph (b) of this sec- postponements to one. If the hearing is tion, and a statement of which penalty postponed, the above time limits shall the State agency believes is applicable be extended for as many days as the to the case scheduled for a hearing; hearing is postponed. (G) A listing of the individual’s (v) The State agency shall publish rights as contained in § 273.15(p); clearly written rules of procedure for (H) A statement that the hearing disqualification hearings, and shall does not preclude the State or Federal

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Government from prosecuting the indi- present reasons indicating a good cause vidual for the intentional Program vio- for failure to appear. A hearing official lation in a civil or criminal court ac- must enter the good cause decision tion, or from collecting any into the record. overissuance(s); and (5) Participation while awaiting a hear- (I) If there is an individual or organi- ing. A pending disqualification hearing zation available that provides free shall not affect the individual’s or the legal representation, the notice shall household’s right to be certified and advise the affected individual of the participate in the Program. Since the availability of the service. State agency cannot disqualify a (iv) A copy of the State agency’s pub- household member for intentional Pro- lished hearing procedures shall be at- gram violation until the hearing offi- tached to the 30-day advance notice or cial finds that the individual has com- the advance notice shall inform the in- mitted intentional Program violation, dividual of his/her right to obtain a the State agency shall determine the copy of the State agency’s published eligibility and benefit level of the hearing procedures upon request. household in the same manner it would (v) Each State agency shall develop be determined for any other household. an advance notice form which contains For example, if the misstatement or the information required by this sec- action for which the household member tion. is suspected of intentional Program (4) Scheduling of hearing. The time violation does not affect the house- and place of the hearing shall be ar- hold’s current circumstances, the ranged so that the hearing is accessible household would continue to receive its to the household member suspected of allotment based on the latest certifi- intentional Program violation. If the cation action or be recertified based on household member or its representa- a new application and its current cir- tive cannot be located or fails to ap- cumstances. However, the household’s pear at a hearing initiated by the State benefits shall be terminated if the cer- agency without good cause, the hearing tification period has expired and the shall be conducted without the house- household, after receiving its notice of hold member being represented. Even expiration, fails to reapply. The State though the household member is not agency shall also reduce or terminate represented, the hearing official is re- the household’s benefits if the State quired to carefully consider the evi- agency has documentation which sub- dence and determine if intentional Pro- stantiates that the household is ineli- gram violation was committed based gible or eligible for fewer benefits (even on clear and convincing evidence. If if these facts led to the suspicion of in- the household member is found to have tentional Program violation and the committed an intentional Program resulting disqualification hearing) and violation but a hearing official later the household fails to request a fair determines that the household member hearing and continuation of benefits or representative had good cause for pending the hearing. For example, the not appearing, the previous decision State agency may have facts which shall no longer remain valid and the substantiate that a household failed to State agency shall conduct a new hear- report a change in its circumstances ing. The hearing official who originally even though the State agency has not ruled on the case may conduct the new yet demonstrated that the failure to hearing. In instances where good cause report involved an intentional act of for failure to appear is based upon a Program violation. showing of nonreceipt of the hearing (6) Criteria for determining intentional notice as specified in paragraph Program violation. The hearing author- (e)(3)(ii) of this section, the household ity shall base the determination of in- member has 30 days after the date of tentional Program violation on clear the written notice of the hearing deci- and convincing evidence which dem- sion to claim good cause for failure to onstrates that the household mem- appear. In all other instances, the ber(s) committed, and intended to com- household member has 10 days from the mit, intentional Program violation as date of the scheduled hearing to defined in paragraph (c) of this section.

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(7) Decision format. The hearing the household member of the decision authority’s decision shall specify the and the reason for the decision. In ad- reasons for the decision, identify the dition, the notice shall inform the supporting evidence, identify the perti- household member of the date the dis- nent FNS regulation, and respond to qualification will take effect. If the in- reasoned arguments made by the dividual is no longer participating, the household member or representative. notice shall inform the individual that (8) Imposition of disqualification pen- the period of disqualification will be alties. (i) If the hearing authority rules deferred until such time as the indi- that the individual has committed an vidual again applies for and is deter- intentional Program violation, the mined eligible for Program benefits. household member must be disqualified The State agency shall also provide in accordance with the disqualification written notice to the remaining house- periods and procedures in paragraph (b) hold members, if any, of either the al- of this section. The same act of inten- lotment they will receive during the tional Program violation repeated over period of disqualification or that they a period of time must not be separated so that separate penalties can be im- must reapply because the certification posed. period has expired. The procedures for (ii) No further administrative appeal handling the income and resources of procedure exists after an adverse State the disqualified member are described level hearing. The determination of in- in § 273.11(c). A written demand letter tentional Program violation made by a for restitution, as described in disqualification hearing official cannot § 273.18(d)(3), shall also be provided. be reversed by a subsequent fair hear- (iii) Each State agency shall develop ing decision. The household member, a form for notifying individuals that however, is entitled to seek relief in a they have been found by an administra- court having appropriate jurisdiction. tive disqualification hearing to have The period of disqualification may be committed intentional Program viola- subject to stay by a court of appro- tion. The form shall contain the infor- priate jurisdiction or other injunctive mation required by this section. remedy. (10) Local level hearings. (i) The State (iii) Once a disqualification penalty agency may choose to provide adminis- has been imposed against a currently trative disqualification hearings at the participating household member, the local level in some or all of its project period of disqualification shall con- areas with a right to appeal to a State tinue uninterrupted until completed level hearing. If a local level disquali- regardless of the eligibility of the fication hearing determines that a disqualifed member’s household. How- household member committed inten- ever, the disqualified member’s house- tional Program violation, the notifica- hold shall continue to be responsible tion of hearing decision described in for repayment of the overissuance paragraph (e)(9) of this section shall which resulted from the disqualified also inform the household member of member’s intentional Program viola- the right to appeal the decision within tion regardless of its eligibility for Program benefits. 15 days after the receipt of the notice, (9) Notification of hearing decision. (i) the date the disqualification will take If the hearing official finds that the effect unless a State level hearing is household member did not commit in- requested, and that benefits will be tentional Program violation, the State continued pending a State level hear- agency shall provide a written notice ing if the household is otherwise eligi- which informs the household member ble. If the household member appeals of the decision. the local level decision, the advance (ii) If the hearing official finds that notice of hearing, as described in para- the household member committed in- graph (e)(3) of this section, shall be tentional Program violation, the State provided at least 10 days in advance of agency shall provide written notice to the scheduled State level hearing and the household member prior to dis- shall also inform the household mem- qualification. The notice shall inform ber that the local hearing decision will

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be upheld if the household or its rep- to avoid the holding of a hearing and a resentative fails to appear for the hear- signature block for the accused indi- ing without good cause. When a local vidual, along with a statement that the level decision is appealed, the State head of household must also sign the agency shall conduct the State level waiver if the accused individual is not hearing, arrive at a decision, and no- the head of household, with an appro- tify the household member and local priately designated signature block; agency of the decision within 60 days of (B) A statement of the accused indi- the date the household member ap- vidual’s right to remain silent con- pealed its case. The prior decision shall cerning the charge(s), and that any- not be taken into consideration by the thing said or signed by the individual State hearing officer in making the concerning the charge(s) can be used final determination. In all other re- against him/her in a court of law; spects, local level disqualification (C) The fact that a waiver of the dis- hearings shall be handled in accordance qualification hearing will result in dis- with the procedures specified in this qualification and a reduction in bene- section for State level hearings. fits for the period of disqualification, (ii) The State agency shall develop even if the accused individual does not appropriate forms which contain the admit to the facts as presented by the information required by this section State agency; for notification of a local level hearing (D) An opportunity for the accused decision and advance notice of a sched- individual to specify whether or not he/ uled State level hearing for appeal of a she admits to the facts as presented by local level decision. the State agency. This opportunity (f) Waived hearings. Each State agen- shall consist of the following state- cy shall have the option of establishing ments, or statements developed by the procedures to allow accused individuals State agency which have the same ef- to waive their rights to an administra- fect, and a method for the individual to tive disqualification hearing. For State designate his/her choice: agencies which choose the option of al- (1) I admit to the facts as presented, lowing individuals to waive their rights and understand that a disqualification to an administrative disqualification penalty will be imposed if I sign this hearing, the procedures shall conform waiver; and with the requirements outlined in this (2) I do not admit that the facts as section. presented are correct. However, I have (1) Advance notification. (i) The State chosen to sign this waiver and under- agency shall provide written notifica- stand that a disqualification penalty tion to the household member sus- will result; pected of intentional Program viola- (E) The telephone number and, if pos- tion that the member can waive his/her sible, the name of the person to con- right to an administrative disqualifica- tact for additional information; and tion hearing. Prior to providing this (F) The fact that the remaining written notification to the household household members, if any, will be held member, the State agency shall ensure responsible for repayment of the re- that the evidence against the house- sulting claim. hold member is reviewed by someone (iii) The State agency shall develop a other than the eligibility worker as- waiver of right to an administrative signed to the accused individual’s disqualification hearing form which household and a decision is obtained contains the information required by that such evidence warrants scheduling this section as well as the information a disqualification hearing. described in paragraph (e)(3) of this (ii) The written notification provided section for advance notice of a hearing. to the household member which in- However, if the household member is forms him/her of the possibility of notified of the possibility of waiving waiving the administrative disquali- his/her right to an administrative dis- fication hearing shall include, at a qualification hearing before the State minimum: agency has scheduled a hearing, the (A) The date that the signed waiver State agency is not required to notify must be received by the State agency the household member of the date,

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time and place of the hearing at that (3) Notification of disqualification. The point as required by paragraph State agency shall provide written no- (e)(3)(i)(A) of this section. tice to the household member prior to (2) Imposition of disqualification pen- disqualification. The State agency alties. (i) If the household member sus- shall also provide written notice to any pected of intentional Program viola- remaining household members of the tion signs the waiver of right to an ad- allotment they will receive during the ministrative disqualification hearing period of disqualification or that they and the signed waiver is received with- must reapply because the certification in the timeframes specified by the period has expired. The notice(s) shall State agency, the household member conform to the requirements for notifi- shall be disqualified in accordance with cation of a hearing decision specified in the disqualification periods specified in paragraph (e)(9) of this section. A writ- paragraph (b) of this section. The pe- ten demand letter for restitution, as riod of disqualification shall begin with described in § 273.18(d)(3), shall also be the first month which follows the date provided. the household member receives written (4) Waiver of hearing at local level. Any notification of the disqualification. State agency which has adopted the However, if the act of intentional Pro- two-tiered approach for administrative gram violation which led to the dis- disqualification hearings may also pro- qualification occurred prior to the vide for waiver of the right to disquali- written notification of the disqualifica- fication hearing procedures outlined in tion periods specified in paragraph (b) this section. of this section, the household member (g) Court referrals. Any State agency shall be disqualified in accordance with exempted from the requirement to es- the disqualification periods in effect at tablish an administrative disqualifica- the time of the offense. The same act of tion system in accordance with para- intentional Program violation repeated graph (a) of this section shall refer ap- over a period of time shall not be sepa- propriate cases for prosecution by a rated so that separate penalties can be court of appropriate jurisdiction in ac- imposed. cordance with the requirements out- (ii) No further administrative appeal lined in this section. procedure exists after an individual (1) Appropriate cases. (i) The State waives his/her right to an administra- agency shall refer cases of alleged in- tive disqualification hearing and a dis- tentional Program violation for pros- qualification penalty has been im- ecution in accordance with an agree- posed. The disqualification penalty ment with prosecutors or State law. cannot be changed by a subsequent fair The agreement shall provide for pros- hearing decision. The household mem- ecution of intentional Program viola- ber, however is entitled to seek relief tion cases and include the under- in a court having appropriate jurisdic- standing that prosection will be pur- tion. The period of disqualification sued in cases where appropriate. This may be subject to stay by a court of agreement shall also include informa- appropriate jurisdiction or other in- tion on how, and under what cir- junctive remedy. cumstances, cases will be accepted for (iii) Once a disqualification penalty possible prosecution and any other cri- has been imposed against a currently teria set by the prosecutor for accept- participating household member, the ing cases for prosecution, such as a period of disqualification shall con- minimum amount of overissuance tinue uninterrupted until completed which resulted from intentional Pro- regardless of the eligibility of the dis- gram violation. qualified member’s household. How- (ii) State agencies are encouraged to ever, the disqualified member’s house- refer for prosecution under State or hold shall continue to be responsible local statutes those individuals sus- for repayment of the overissuance pected of committing intentional Pro- which resulted from the disqualified gram violation, particularly if large member’s intentional Program viola- amounts of food stamps are suspected tion regardless of its eligibility for of having been obtained by intentional Program benefits. Program violation, or the individual is

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suspected of committing more than one will take effect. The State agency shall act of intentional Program violation. also provide written notice to the re- The State agency shall confer with its maining household members, if any, of legal representative to determine the the allotment they will receive during types of cases which will be accepted the period of disqualification or that for possible prosecution. State agencies they must reapply because the certifi- shall also encourage State and local cation period has expired. The proce- prosecutors to recommend to the dures for handling the income and re- courts that a disqualification penalty sources of the disqualified member are as provided in section 6(b) of the Food described in § 273.11(c). In addition, the Stamp Act be imposed in addition to State agency shall provide the written any other civil or criminal penalties demand letter for restitution described for such violations. in § 273.18(d)(3). (2) Imposition of disqualification pen- (h) Deferred adjudication. Each State alties. (i) State agencies shall dis- agency shall have the option of estab- qualify an individual found guilty of intentional Program violation for the lishing procedures to allow accused in- length of time specified by the court. If dividuals to sign disqualification con- the court fails to impose a disqualifica- sent agreements for cases of deferred tion period, the State agency shall im- adjudication. State agencies are en- pose a disqualification period in ac- couraged to use this option for those cordance with the provisions in para- cases in which a determination of guilt graph (b) of this section, unless con- is not obtained from a court due to the trary to the court order. If disqualifica- accused individual having met the tion is ordered but a date for initiating terms of a court order or which are not the disqualification period is not speci- prosecuted due to the accused indi- fied, the State agency shall initiate the vidual having met the terms of an disqualification period for currently el- agreement with the prosecutor. For igible individuals within 45 days of the State agencies which choose the option date the disqualification was ordered. of allowing individuals to sign disquali- Any other court-imposed disqualifica- fication consent agreements in cases tion shall begin within 45 days of the referred for prosecution, the procedures date the court found a currently eligi- shall conform with the requirements ble individual guilty of civil or crimi- outlined in this section. nal misrepresentation or fraud. (1) Advance notification. (i) The State (ii) Once a disqualification penalty agency shall enter into an agreement has been imposed against a currently with the State’s Attorney General’s Of- participating household member, the fice or, where necessary, with county period of disqualification shall con- prosecutors which provides for advance tinue uninterrupted until completed written notification to the household regardless of the eligibility of the dis- member of the consequences of con- qualified member’s household. How- senting to disqualification in cases of ever, the disqualified member’s house- deferred adjudication. hold shall continue to be responsible for repayment of the overissuance (ii) The written notification provided which resulted from the disqualified to the household member which in- member’s intentional Program viola- forms him/her of the consequences of tion regardless of its eligibility for consenting to disqualification as a part Program benefits. of deferred adjudication shall include, (3) Notification of disqualification. If at a minimum: the court finds that the household (A) A statement for the accused indi- member committed intentional Pro- vidual to sign that the accused indi- gram violation, the State agency shall vidual understands the consequences of provide written notice to the household consenting to disqualification, along member. The notice shall be provided with a statement that the head of prior to disqualification, whenever pos- household must also sign the consent sible. The notice shall inform the agreement if the accused individual is household member of the disqualifica- not the head of household, with an ap- tion and the date the disqualification propriately designated signature block.

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(B) A statement that consenting to ever, the disqualified member’s house- disqualification will result in disquali- hold shall continue to be responsible fication and a reduction in benefits for for repayment of the overissuance the period of disqualification, even which resulted from the disqualified though the accused individual was not member’s intentional Program viola- found guilty of civil of criminal mis- tion regardless of its eligibility for representation or fraud. Program benefits. (C) A warning that the disqualifica- (3) Notification of disqualification. If tion periods for intentional Program the household member suspected of in- violations under the Food Stamp Pro- tentional Program violation signs the gram are as specified in paragraph (b) disqualification consent agreement, of this section, and a statement of the State agency shall provide written which penalty will be imposed as a re- notice to the household member. The sult of the accused individual having notice shall be provided prior to dis- consented to disqualification. qualification, whenever possible. The (D) A statement of the fact that the notice shall inform the household remaining household members, if any, member of the disqualification and the will be held responsible for repayment date the disqualification will take ef- of the resulting claim, unless the ac- fect. The State agency shall also pro- cused individual has already repaid the vide written notice to the remaining claim as a result of meeting the terms household members, if any, of the al- of the agreement with the prosecutor lotment they will receive during the or the court order. period of disqualification or that they (iii) The State agency shall develop a must reapply because the certification disqualification consent agreement, or period has expired. The procedures for language to be included in the agree- handling the income and resources of ments reached between the prosecutors the disqualified member are described and accused individuals or in the court in § 273.11(c). In addition, the State orders, which contains the information agency shall provide the written de- required by this section for notifying a mand letter for restitution described in household member suspected of inten- § 273.18(d)(3). tional Program violation of the con- (i) Reporting requirements. (1) Each sequences of signing a disqualification State agency shall report to FNS infor- consent agreement. mation concerning individuals dis- (2) Imposition of disqualification pen- qualified for intentional Program vio- alties. (i) If the household member sus- lation, including those individuals dis- pected of intentional Program viola- qualified based on the determination of tion signs the disqualification consent an administrative disqualification agreement, the household member hearing official or a court of appro- shall be disqualified in accordance with priate jurisdiction and those individ- the disqualification periods specified in uals disqualified as a result of signing paragraph (b) of this section, unless either a waiver of right to a disquali- contrary to the court order. The period fication hearing or a disqualification of disqualification shall begin within 45 consent agreement in cases referred for days of the date the household member prosecution. This information shall be signed the disqualification consent submitted to FNS so that it is received agreement. However, if the court im- no later than 30 days after the date the poses a disqualification period or speci- disqualification took effect, or would fies the date for initiating the disquali- have taken effect for a currently ineli- fication period, the State agency shall gible individual whose disqualification disqualify the household member in ac- is pending future eligibility. cordance with the court order. (2) Each State agency shall report in- (ii) Once a disqualification penalty formation concerning each individual has been imposed against a currently disqualified for intentional Program participating household member, the violation in a format designed by FNS. period of disqualification shall con- This format shall include the individ- tinue uninterrupted until completed ual’s social security number, date of regardless of the eligibility of the dis- birth, and full name, the number of the qualified member’s household. How- disqualification (1st, 2nd, or 3rd), the

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State and county in which the disquali- report once the individual begins the fication took place, the date on which period of disqualification in accordance the disqualification took effect, and with instructions provided by FNS. the length of the disqualification pe- (7) In cases where the disqualification riod imposed. for intentional Program violation is re- (3) Each State agency shall submit versed by a court of appropriate juris- the required information on each indi- diction, the State agency shall submit vidual disqualified for intentional Pro- a report to purge the file of the infor- gram violation through a reporting mation relating to the disqualification system in accordance with procedures which was reversed in accordance with specified by FNS. instructions provided by FNS. (4) All the data submitted by State (j) Reversed disqualifications. In cases agencies will be available for use by where the determination of intentional any State Welfare Agency. program violation is reversed by a (i) State agencies shall, at a min- court of appropriate jurisdiction, the imum, use the data for the following: State agency shall reinstate the indi- (A) To determine the eligibility of in- vidual in the program if the household dividual Program applicants prior to is eligible. The State agency shall recertification in cases where the State store benefits that were lost as a result agency has reason to believe a house- of the disqualification in accordance hold member is subject to disqualifica- with the procedures specified in tion in another political jurisdiction, § 273.17(e). and [Amdt. 242, 48 FR 6855, Feb. 15, 1983, as (B) To ascertain the appropriate pen- amended by Amdt. 269, 51 FR 10793, Mar. 28, alty to impose, based on past disquali- 1986; Amdt. 357, 60 FR 43515, Aug. 22, 1995; 66 fications, in a case under consider- FR 4468, Jan. 17, 2001] ation. (ii) State agencies may also use the § 273.17 Restoration of lost benefits. data in other ways, such as the fol- (a) Entitlement. (1) The State agency lowing: shall restore to households benefits (A) To screen all program applicants which were lost whenever the loss was prior to certification, and caused by an error by the State agency (B) To periodically match the entire or by an administrative disqualifica- list of disqualified individuals against tion for intentional Program violation their current caseloads. which was subsequently reversed as (5) The disqualification of an indi- specified in paragraph (e) of this sec- vidual for intentional Program violation, or if there is a statement else- tion in one political jurisdiction shall where in the regulations specifically be valid in another. However, one or stating that the household is entitled more intentional Program violations to restoration of lost benefits. Further- which occurred prior to April 1, 1983 more, unless there is a statement else- shall be considered as only one pre- where in the regulations that a house- vious disqualification when deter- hold is entitled to lost benefits for a mining the appropriate penalty to im- longer period, benefits shall be restored pose in a case under consideration, re- for not more than twelve months prior gardless of where the disqualifica- to whichever of the following occurred tion(s) took place. State agencies are first: required to identify any individuals (i) The date the State agency re- disqualified for fraud prior to imple- ceives a request for restoration from a mentation of this rule and to submit household; or the information required by this sec- (ii) The date the State agency is noti- tion on such individuals. fied or otherwise discovers that a loss (6) In cases where the imposition of a to a household has occurred. disqualification penalty is being held (2) The State agency shall restore to pending the future eligibility of a households benefits which were found household member found to have com- by any judicial action to have been mitted intentional Program violation, wrongfully withheld. If the judicial ac- the State agency shall submit a report tion is the first action the recipient revising the original disqualification has taken to obtain restoration of lost

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benefits, then benefits shall be restored ing the results of the fair hearing. If for a period of not more than twelve the fair hearing decision is favorable to months from the date the court action the household, the State agency shall was initiated. When the judicial action restore the lost benefits in accordance is a review of a State agency action, with that decision. the benefits shall be restored for a pe- (2) If a household believes it is enti- riod of not more than twelve months tled to restoration of lost benefits but from the first of the following dates: the State agency, after reviewing the (i) The date the State agency re- case file, does not agree, the household ceives a request for restoration: has 90 days from the date of the State (ii) If no request for restoration is re- agency determination to request a fair ceived, the date the fair hearing action hearing. The State agency shall restore was initiated; but lost benefits to the household only if (iii) Never more than one year from the fair hearing decision is favorable to when the State agency is notified of, or the household. Benefits lost more than discovers, the loss. 12 months prior to the date the State (3) Benefits shall be restored even if agency was initially informed of the the household is currently ineligible. household’s possible entitlement to (b) Errors discovered by the State agen- lost benefits shall not be restored. cy. If the State agency determines that (d) Computing the amount to be re- a loss of benefits has occurred, and the stored. After correcting the loss for fu- household is entitled to restoration of ture months and excluding those those benefits, the State agency shall months for which benefits may have automatically take action to restore been lost prior to the 12-month time any benefits that were lost. No action limits described in paragraphs (b) and by the household is necessary. How- (c) of this section, the State agency ever, benefits shall not be restored if shall calculate the amount to be re- the benefits were lost more than 12 stored as follows: months prior to the month the loss was (1) If the household was eligible but discovered by the State agency in the normal course of business, or were lost received an incorrect allotment, the more than 12 months prior to the loss of benefits shall be calculated only month the State agency was notified in for those months the household partici- writing or orally of a possible loss to a pated. If the loss was caused by an in- specific household. The State agency correct delay, denial, or termination of shall notify the household of its enti- benefits, the months affected by the tlement, the amount of benefits to be loss shall be calculated as follows: restored, any offsetting that was done, (i) If an eligible household’s applica- the method of restoration, and the tion was erroneously denied, the month right to appeal through the fair hear- the loss initially occurred shall be the ing process if the household disagrees month of application, or for an eligible with any aspect of the proposed lost household filing a timely reapplica- benefit restoration. tion, the month following the expira- (c) Disputed benefits. (1) If the State tion of its certification period. agency determines that a household is (ii) If an eligible household’s applica- entitled to restoration of lost benefits, tion was delayed, the months for which but the household does not agree with benefits may be lost shall be calculated the amount to be restored as cal- in accordance with procedures in culated by the State agency or any § 273.2(h). other action taken by the State agency (iii) If a household’s benefits were er- to restore lost benefits, the household roneously terminated, the month the may request a fair hearing within 90 loss initially occurred shall be the first days of the date the household is noti- month benefits were not received as a fied of its entitlement to restoration of result of the erroneous action. lost benefits. If a fair hearing is re- (iv) After computing the date the loss quested prior to or during the time lost initially occurred, the loss shall be cal- benefits are being restored, the house- culated for each month subsequent to hold shall receive the lost benefits as that date until either the first month determined by the State agency pend- the error is corrected or the first

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month the household is found ineli- shall be determined by comparing the gible. allotment the household received with (2) For each month affected by the the allotment the household would loss, the State agency shall determine have received had the disqualified if the household was actually eligible. member been allowed to participate. If In cases where there is no information the household received a smaller allot- in the household’s case file to document than it should have received, the ment that the household was actually difference equals the amount to be re- eligible, the State agency shall advise stored. Participation in an administra- the household of what information tive disqualification hearing in which must be provided to determine eligi- the household contests the State agen- bility for these months. For each cy assertion of intentional Program month the household cannot provide violation shall be considered notifica- the necessary information to dem- tion that the household is requesting onstrate its eligibility, the household restored benefits. shall be considered ineligible. (f) Method of restoration. Regardless of (3) For the months the household was whether a household is currently eligi- eligible, the State agency shall cal- ble or ineligible, the State agency shall culate the allotment the household restore lost benefits to a household by should have received. If the household issuing an allotment equal to the received a smaller allotment than it amount of benefits that were lost. The was eligible to receive, the difference amount restored shall be issued in ad- between the actual and correct allot- dition to the allotment currently eligi- ments equals the amount to be re- ble households are entitled to receive. stored. The State agency shall honor reason- (4) If a claim against a household is able requests by households to restore unpaid or held in suspense as provided lost benefits in monthly installments in § 273.18, the amount to be restored if, for example, the household fears the shall be offset against the amount due excess coupons may be stolen, or that on the claim before the balance, if any, the amount to be restored is more than is restored to the household. At the it can use in a reasonable period of point in time when the household is time. certified and receives an initial allot- (g) Changes in household composition. ment, the initial allotment shall not be Whenever lost benefits are due a house- reduced to offset claims, even if the hold and the household’s membership initial allotment is paid retroactively. has changed, the State agency shall re- (e) Lost benefits to individuals disquali- store the lost benefits to the household fied for intentional Program violation. In- containing a majority of the individ- dividuals disqualified for intentional uals who were household members at Program violation are entitled to res- the time the loss occurred. If the State toration of any benefits lost during the agency cannot locate or determine the months that they were disqualified, household which contains a majority of not to exceed twelve months prior to household members the State agency the date of State agency notification, shall restore the lost benefits to the only if the decision which resulted in household containing the head of the disqualification is subsequently re- household at the time the loss oc- versed. For example, an individual curred. would not be entitled to restoration of (h) Accounting procedures. Each State lost benefits for the period of disquali- agency shall be responsible for main- fication based solely on the fact that a taining an accounting system for docu- criminal conviction could not be ob- menting a household’s entitlement to tained, unless the individual success- restoration of lost benefits and for re- fully challenged the disqualification cording the balance of lost benefits period imposed by an administrative that must be restored to the household. disqualification in a separate court ac- Each State agency shall at a minimum, tion. For each month the individual document how the amount to be re- was disqualified, not to exceed twelve stored was calculated and the reason months prior to State agency notifica- lost benefits must be restored. The action, the amount to be restored, if any, counting system shall be designed to

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readily identify those situations where lecting claims that provides orderly a claim against a household can be claims processing and results in claims used to offset the amount to be re- collections similar to recent national stored. rates of collection. If you do not meet [Amdt. 132, 43 FR 47889, Oct. 17, 1978, as these standards, you must take correc- amended by Amdt. 225, 48 FR 16831, Apr. 19, tive action to correct any deficiencies 1983; Amdt. 314, 54 FR 24518, June 7, 1989; in the plan. Amdt. 356, 59 FR 29713, June 9, 1994] (4) The following are responsible for paying a claim: § 273.18 Claims against households. (i) Each person who was an adult (a) General. (1) A recipient claim is an member of the household when the amount owed because of: overpayment or trafficking occurred; (i) Benefits that are overpaid or (ii) Benefits that are trafficked. Traf- (ii) A sponsor of an alien household ficking is defined in 7 CFR 271.2. member if the sponsor is at fault; or (2) This claim is a Federal debt sub- (iii) A person connected to the house- ject to this and other regulations gov- hold, such as an authorized representa- erning Federal debts. The State agency tive, who actually trafficks or other- must establish and collect any claim wise causes an overpayment or traf- by following these regulations. ficking. (3) As a State agency, you must de- (b) Types of claims. There are three velop a plan for establishing and col- types of claims:

An . . . is . . .

(1) Intentional Program violation any claim for an overpayment or trafficking resulting from an (IPV) claim. individual committing an IPV. An IPV is defined in § 273.16. (2) Inadvertent household error any claim for an overpayment resulting from a misunder- (IHE) claim. standing or unintended error on the part of the household. (3) Agency error (AE) claim ...... any claim for an overpayment caused by an action or failure to take action by the State agency. The only exception is an overpayment caused by a household transacting an untampered expired Authorization to Participate (ATP) card.

(i) As a State agency, you

must calculate a claim . . . and . . . and . . . back to at least twelve months for an IPV claim, the claim for all claims, don’t include prior to when you become must be calculated back to any amounts that occurred aware of the overpayment. the month the act of IPV more than six years before first occurred. you became aware of the overpayment.

(ii) The actual steps for calculating a claim are

you . . . unless . . . then . . . (A) determine the correct amount of benefits for each month that a household received an overpayment.

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you . . .

(B) do not apply the earned in- the claim is an AE claim ...... apply the earned income de- come deduction to that part duction. of any earned income that the household failed to report in a timely manner when this act is the basis for the claim. (C) subtract the correct amount this answer is zero or nega- dispose of the claim referral. of benefits from the benefits tive. actually received. The answer is the amount of the overpayment. (D) reduce the overpayment you are not aware of any ex- the amount of the overpay- amount by any EBT benefits punged benefits. ment calculated in para- expunged from the house- graph (e)(1)(ii)(C) of this hold’s EBT benefit account in section is the amount of the accordance with your own claim. procedures. The difference is the amount of the claim.

(2) Trafficking-related claims. Claims (ii) Adjudication; or arising from trafficking-related of- (iii) The documentation that forms fenses will be the value of the traf- the basis for the trafficking determina- ficked benefits as determined by: tion. (i) The individual’s admission; (d) Claim referral management.

(1) As a State agency, you

must . . . and you . . . unless . . . establish a claim before the will ensure that no less than you develop and use your last day of the quarter fol- 90 percent of all claim re- own standards and proce- lowing the quarter in which ferrals are either estab- dures that have been ap- the overpayment or traf- lished or disposed of ac- proved by us (see para- ficking incident was discov- cording to this time frame. graph (d)(2) of this section). ered.

(2) Instead of using the standard in (D) A description of the process to paragraph (d)(1) of this section, you ensure that these time frames are may opt to develop and follow your being met; own plan for the efficient and effective (E) Any special procedures and time management of claim referrals. frames for IPV referrals; and (i) This plan must be approved by us. (F) A procedure to track and follow- (ii) At a minimum, this plan must in- up on IPV claim referrals when these referrals are referred for prosecutorial clude: or similar action. (A) Justification as to why your (e) Initiating collection action and man- standards and procedures will be more aging claims—(1) Applicability. State efficient and effective than our claim agencies must begin collection action referral standard; on all claims unless the conditions (B) Procedures for the detection and under paragraph (g)(2) of this section referral of potential overpayments or apply. trafficking violations; (2) Pre-establishment cost effectiveness (C) Time frames and procedures for determination. A State agency may opt tracking claim referrals through date not to establish and subsequently col- of discovery to date of establishment; lect an overpayment that is not cost

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effective. The following is our cost-effectiveness policy for State agencies:

(i) You may follow your own cost effectiveness plan and

opt not to establish any claim if unless . . . or ...... you determine that the claim you do not have a cost-effec- you already established the referral is not cost effective tiveness plan approved by claim or discovered the to pursue. us. overpayment in a quality control review.

(ii) Or you may follow the FNS threshold and

opt not to establish any claim if unless . . . or ...... you determine that the claim the household is currently you already established the referral is $125 or less. participating in the Program. claim or discovered the overpayment in a quality control review.

(3) Notification of claim. (i) Each State (D) The time period associated agency must develop and mail or other- with the claim. wise deliver to the household written notification to begin collection action (E) How the claim was cal- on any claim. culated. (ii) The claim will be considered established for tracking purposes as of (F) The phone number to call for the date of the initial demand letter or more information about the written notification. claim. (iii) If the claim or the amount of the claim was not established at a hearing, (G) That, if the claim is not the State agency must provide the paid, it will be sent to other col- household with a one-time notice of adverse action. The notice of adverse ac- lection agencies, who will use tion may either be sent separately or various collection methods to as part of the demand letter. collect the claim. (H) The opportunity to inspect (IV) THE INITIAL DEMAND LETTER and copy records related to the OR NOTICE OF ADVERSE ACTION claim. MUST INCLUDE LANGUAGE STAT- ING: (I) Unless the amount of the claim was established at a hear- (A) The amount of the claim. ing, the opportunity for a fair hearing on the decision related (B) The intent to collect from all to the claim. The household will adults in the household when the have 90 days to request a fair overpayment occurred. hearing.

(C) The type (IPV, IHE, AE or (J) That, if not paid, the claim similar language) and reason for will be referred to the Federal the claim. government for federal collection action.

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(K) That the household can (ii) The date of delinquency for a make a written agreement to claim covered under paragraph repay the amount of the claim (e)(5)(i)(A) of this section is the due prior to it being referred for Fed- date on the initial written notification/ demand letter. The claim will remain eral collection action. delinquent until payment is received in full, a satisfactory payment agreement (L) That, if the claim becomes is negotiated, or allotment reduction is delinquent, the household may invoked. be subject to additional proc- (iii) The date of delinquency for a essing charges. claim covered under paragraph (e)(5)(i)(B) of this section is the due (M) That the State agency may date of the missed installment pay- reduce any part of the claim if ment. The claim will remain delin- the agency believes that the quent until payment is received in full, allotment reduction is invoked, or if household is not able to repay the State agency determines to either the claim. resume or re-negotiate the repayment schedule. (N) A due date or time frame to (iv) A claim will not be considered either repay or make arrange- delinquent if another claim for the ments to repay the claim, unless same household is currently being paid the State agency is to impose al- either through an installment agree- lotment reduction. ment or allotment reduction and you, as a State agency, expect to begin col- (O) If allotment reduction is to lection on the claim once the prior be imposed, the percentage to be claim(s) is settled. (v) A claim is not subject to the re- used and the effective date. quirements for delinquent debts if the State agency is unable to determine (v) The due date or time frame for re- delinquency status because collection payment must be not later than 30 days is coordinated through the court sys- after the date of the initial written no- tem. tification or demand letter. (6) Fair hearings and claims. (i) A (vi) Subsequent demand letters or no- claim awaiting a fair hearing decision tices may be sent at the discretion of must not be considered delinquent. the State agency. The language to be (ii) If the hearing official determines used and content of these letters is left that a claim does, in fact, exist against up to the State agency. the household, the household must be (4) Repayment agreements. (i) Any re- re-notified of the claim. The language payment agreement for any claim must to be used in this notice is left up to contain due dates or time frames for the State agency. The demand for pay- the periodic submission of payments. ment may be combined with the notice (ii) The agreement must specify that of the hearing decision. Delinquency the household will be subject to invol- must be based on the due date of this untary collection action(s) if payment subsequent notice and not on the ini- is not received by the due date and the tial pre-hearing demand letter sent to claim becomes delinquent. the household. (5) Determining Delinquency. (i) Unless (iii) If the hearing official determines specified in paragraph (e)(5)(iv) of this that a claim does not exist, the claim section, a claim must be considered de- is disposed of in accordance with para- linquent if: graph (e)(8) of this section. (A) The claim has not been paid by (7) Compromising claims. (i) As a State the due date and a satisfactory pay- agency, you may compromise a claim ment arrangement has not been made; or any portion of a claim if it can be or reasonably determined that a house- (B) A payment arrangement has been hold’s economic circumstances dictate established and a scheduled payment that the claim will not be paid in three has not been made by the due date. years.

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(ii) You may use the full amount of which all collection action has ceased. the claim (including any amount com- A written-off claim is no longer consid- promised) to offset benefits in accord- ered a receivable subject to continued ance with § 273.17. Federal and State agency collection (iii) You may reinstate any com- and reporting requirements. promised portion of a claim if the (ii) The following is our claim termi- claim becomes delinquent. nation policy: (8) Terminating and writing-off claims– (i) A terminated claim is a claim in

As a State agency, if . . . Then you . . . Unless . . .

(A) you find that the claim is in- must discharge the claim and it is appropriate to pursue the valid. reflect the event as a bal- overpayment as a different ance adjustment rather type of claim (e.g., as an than a termination. IHE rather than an IPV claim). (B) all adult household mem- must terminate and write-off you plan to pursue the claim bers die. the claim. against the estate. (C) the claim balance is $25 or must terminate and write-off other claims exist against this less and the claim has been the claim. household resulting in an delinquent for 90 days or aggregate claim total of more. greater than $25. (D) you determine it is not cost must terminate and write-off we have not approved your effective to pursue the claim the claim. overall cost-effectiveness any further. criteria. (E) the claim is delinquent for must terminate and write-off you plan to continue to pur- three years or more. the claim. sue the claim through Treasury’s Offset Program. (F) you cannot locate the may terminate and write-off household. the claim. (G) a new collection method or may reinstate a terminated you decide not to pursue this a specific event (such as and written-off claim. option. winning the lottery) substantially increases the likelihood of further collections.

(f) Acceptable forms of payment.

You may collect a claim by: However . . .

(1) Reducing benefits prior to issuance. This in- You must follow the instructions and limits cludes allotment reduction and offsets to re- found in paragraphs (g)(1) and (g)(3) of this stored benefits. section. (2) Reducing benefits after issuance. These You must follow the instructions and limits are benefits from electronic benefit transfer found in paragraph (g)(2) of this section. (EBT) accounts. (3) Accepting cash or any of its generally ac- You do not have to accept credit or debit cepted equivalents. These equivalents in- cards if you do not have the capability to ac- clude check, money order, and credit or cept these payments. debit cards. (4) Accepting paper food coupons ...... You must destroy any coupons or coupon books that are not returned to inventory and document as appropriate.

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You may collect a claim by: However . . .

(5) Conducting your own offsets and intercepts. You must follow any limits that may apply in This includes but is not limited to wage gar- paragraph (g) of this section. nishments and intercepts of various State payments. These collections are considered ‘‘cash’’ for FNS claim accounting and reporting purposes. (6) Requiring the household to perform public This form of payment must be ordered by a service. court and specifically be in lieu of paying any claim. (7) Participating in the Treasury collection pro- You must follow the procedures found in para- grams. graph (n) of this section.

(g) Collection methods—(1) Allotment reduction. The following is our allotment reduction policy:

As a State agency, you must . . . Unless . . .

(i) Automatically collect payments for any claim the claim is being collected at regular intervals by reducing the amount of monthly benefits at a higher amount or another household is that a household receives. already having its allotment reduced for the same claim (see paragraph (g)(1)(vi) of this section). (ii) For an IPV claim, limit the amount reduced the household agrees to a higher amount. to the greater of $20 per month or 20 percent of the household’s monthly allotment or entitlement. (iii) For an IHE or AE claim, limit the amount the household agrees to a higher amount. reduced to the greater of $10 per month or 10 percent of the household’s monthly allotment. (iv) Not reduce the initial allotment when the the household agrees to this reduction. household is first certified. (v) Not use additional involuntary collection the additional payment is voluntary; or the methods against individuals in a household source of the payment is irregular and unex- that is already having its benefit reduced. pected such as a State tax refund or lottery winnings offset.

You may . . .

(vi) Collect using allotment reduction from two separate households for the same claim. However, you are not required to perform this simultaneous reduction.

(vii) Continue to use any other collection method against any individual who is not a current member of the household that is undergoing allotment reduction.

(2) Benefits from EBT accounts. (i) As a hold to pay its claim using benefits State agency, you must allow a house- from its EBT benefit account. (ii) You must comply with the following EBT benefit claims collection and adjustment requirements:

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(A) For collecting from active (or reactivated) EBT benefits . . .

You . . . or . . . and . . . need written permission which oral permission for one time the retention rules do apply to may be obtained in advance reductions with you sending this collection. and done in accordance the household a receipt of with paragraph (g)(2)(iv) of the transaction within 10 this section;. days.

(B) For collecting from stale EBT benefits . . .

You . . . and . . . and . . . must mail or otherwise deliver give the household at least 10 the retention rules apply to to the household written no- days to notify you that it this collection. tification that you intend to doesn’t want to use these apply the benefits to the out- benefits to pay the claim. standing claim.

You . . . and . . . and . . . must adjust the amount of any this can be done anytime ...... the retention rules do not claim by subtracting any ex- apply to this adjustment. punged amount from the EBT benefit account for which you become aware.

(iii) A collection from an EBT ac- (5) Installment payments. (i) You may count must be non-settling against the accept installment payments made for benefit drawdown account. a claim as part of a negotiated repay- (iv) At a minimum, any written ment agreement. agreement with the household to col- (ii) As a household, if you fail to sub- lect a claim using active EBT benefits mit a payment in accordance with the must include: terms of your negotiated repayment (A) A statement that this collection schedule, your claim becomes delin- activity is strictly voluntary; quent and it will be subject to addi- (B) The amount of the payment; tional collection actions. (C) The frequency of the payments (6) Intercept of unemployment com- (i.e., whether monthly or one time pensation benefits. (i) As a State agency, only); you may arrange with a liable indi- (D) The length (if any) of the agree- vidual to intercept his or her unem- ment; and ployment compensation benefits for (E) A statement that the household the collection of any claim. This col- may revoke this agreement at any lection option may be included as part time. of a repayment agreement. (3) Offsets to restored benefits. You (ii) You may also intercept an indi- must reduce any restored benefits owed vidual’s unemployment compensation to a household by the amount of any benefits by obtaining a court order. outstanding claim. This may be done at any time during the claim establish- (iii) You must report any intercept of ment and collection process. unemployment compensation benefits (4) Lump sum payments. You must ac- as ‘‘cash’’ payments when they are re- cept any payment for a claim whether ported to us. it represents full or partial payment. (7) Public service. If authorized by a The payment may be in any of the ac- court, the value of a claim may be paid ceptable formats. by the household performing public

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service. As a State agency, you will re- about the overpayment. You will be port these amounts in accordance with paid by whatever method the State our instructions. agency deems appropriate considering (8) Other collection actions. You may the circumstances. employ any other collection actions to (2) You are not entitled to a refund if collect claims. These actions include, the overpaid amount is attributed to but are not limited to, referrals to col- an expunged EBT benefit. lection and/or other similar private and (i) Interstate claims collection. (1) Un- public sector agencies, state tax refund less a transfer occurs as outlined in and lottery offsets, wage garnishments, paragraph (i)(2) of this section, as a property liens and small claims court. State agency, you are responsible for (9) Unspecified joint collections. When initiating and continuing collection ac- an unspecified joint collection is re- tion on any food stamp recipient claim ceived for a combined public assist- regardless of whether the household re- ance/food stamp recipient claim, each mains in your State. program must receive its pro rata (2) You may accept a claim from an- share of the amount collected. An un- other State agency if the household specified joint collection is when funds with the claim moves into your State. are received in response to correspond- Once you accept this responsibility, ence or a referral that contained both the claim is yours for future collection the food stamp and other program and reporting. You will report inter- claim(s) and the debtor does not speci- state transfers to us in accordance fy to which claim to apply the collec- with our instructions. tion. (j) Bankruptcy. A State agency may (h) Refunds for overpaid claims. (1) As act on our behalf in any bankruptcy a household, if you overpay a claim, proceeding against a bankrupt house- the State agency must provide a refund hold with outstanding recipient claims. for the overpaid amount as soon as pos- (k) Retention rates. (1) The retention sible after the State agency finds out rates for State agencies are as follows:

then the retention rate is If you collect an ......

(i) IPV claim ...... 35 percent. (ii) IHE claim ...... 20 percent. (iii) IHE claim by reducing a person’s unemployment compensa- 35 percent. tion benefit. (iv) AE claim ...... nothing.

(2) These rates do not apply to any (2) At a minimum, the accounting reduction in benefits when you dis- system must document the following qualify someone for an IPV. for each claim: (l) Submission of payments to us. A (i) The date of discovery; State agency must send us the value of (ii) The reason for the claim; funds collected for IHE, IPV or AE (iii) The calculation of the claim; claims according to our instructions. (iv) The date you established the We must pay you for claims collection claim; retention by electronic funds transfer. (v) The methods used to collect the (m) Accounting procedures. (1) As a claim; State agency, you must maintain an (vi) The amount and incidence of any accounting system for monitoring re- claim processing charges; cipient claims against households. This (vii) The reason for the final disposi- accounting system shall consist of both tion of the claim; the system of records maintained for (viii) Any collections made on the individual debtors and the accounts re- claim; ceivable summary data maintained for these debts.

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(ix) Any correspondence, including (A) What constitutes an adequate ad- follow-up letters, sent to the house- dress to send the notice; hold. (B) What specific language will be in- (3) At a minimum, your accounting cluded in the TOP referral notice; or certification system must also iden- (C) What will be the appropriate time tify the following for each claim: frames and appeal rights; and (i) Those households whose claims (D) Any other information that we have become delinquent; determine necessary to fulfill all due (ii) Those situations in which an process and other legal requirements as amount not yet restored to a household well as to adequately inform the debtor can be used to offset a claim owed by of the impending action. the household; and (ii) You must also follow our instruc- (iii) Those households with out- tions regarding procedures connected standing claims that are applying for with responding to inquiries, subse- benefits. quent reviews and hearings, and any (4) When requested and at intervals other procedures determined by us as determined by us, your accounting sys- necessary in the debtor notification tem must also produce: process. (3) Effect on debtors. (i) If you, as a (i) Accurate and supported out- debtor, have your claim referred to standing balances and collections for TOP, any eligible Federal payment established claims; and that you are owed may be intercepted (ii) Summary reports of the funds through TOP. collected, the amount submitted to (ii) You may also be responsible for FNS, the claims established and termi- paying any collection or processing nated, any delinquent claims proc- fees charged by the Federal govern- essing charges, the uncollected balance ment to intercept your payment. and the delinquency of the unpaid debt. (4) Procedures when a claim is in TOP. (5) On a quarterly basis, unless other- (i) As a State agency, you must follow wise directed by us, your accounting FNS and Treasury procedures when the system must reconcile summary bal- claim is in TOP. ances reported to individual supporting (ii) You must remove a claim from records. TOP if: (n) Treasury’s Offset Programs (TOP)— (A) FNS or Treasury instruct you to (1) Referring debts to TOP. (i) As a State remove the debt; or agency, you must refer to TOP all re- (B) You discover that: cipient claims that are delinquent for (1) The debtor is a member of a food 180 or more days. stamp household undergoing allotment (ii) You must certify that all of these reduction; claims to be referred to TOP are 180 (2) The claim is paid up; days delinquent and legally enforce- (3) The claim is disposed of through a able. hearing, termination, compromise or (iii) You must refer these claims in any other means; accordance with our and the Depart- (4) The claim was referred to TOP in ment of the Treasury’s (Treasury) in- error; or structions. (5) You make an arrangement with (iv) You must not refer claims to the debtor to resume payments. TOP that: (5) Receiving and reporting. As a State (A) You become aware that the debt- agency, you must follow our proce- or is a member of a participating dures on receiving and reporting TOP household that is having its allotment payments. reduced to collect the claim; or (6) Security or confidentiality agree- (B) Fall into any other category des- ments. As a State agency, you must fol- ignated by us as non-referable to TOP. low our procedures regarding any secu- (2) Notifying debtors of referral to TOP. rity or confidentiality agreements or (i) As a State agency, you must notify processes necessary for TOP participa- the debtor of the impending referral to tion. TOP according to our instructions re- [Amdt. 389, 66 FR 41775, July 6, 2000; 65 FR lating to: 47587, Aug. 2, 2000]

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§ 273.19 [Reserved] tion submitted by the household in monthly reports. The State agency § 273.20 SSI cash-out. shall establish an MRRB system as fol- (a) Ineligibility. No individual who re- lows: ceives supplemental security income (1) In establishing either a one-month (SSI) benefits and/or State supple- or a two-month MRRB system, the mentary payments as a resident of State agency shall use the same sys- California is eligible to receive food tem it uses in its TANF Program un- stamp benefits. The Secretary of the less it has been granted a waiver by Department of Health and Human FNS. Differences between a one-month Services has determined that the SSI and a two-month system are described payments in California have been spe- in paragraph (d) of this section. cifically increased to include the value (2) The State agency shall determine of the food stamp allotment. eligibility, either prospectively or ret- (b) Receipt of SSI benefits. In Cali- rospectively, on the same basis that it fornia, an individual must actually re- uses for its TANF program, unless it ceive, not merely have applied for, SSI has been granted a waiver by FNS. benefits to be determined ineligible for (3) Budgeting waivers. FNS may ap- the food stamp program. If the State prove waivers of the budgeting require- agency provides payments at least ments of this section to conform to equal to the level of SSI benefits to in- budgeting procedures in the TANF pro- dividuals who have applied for but are gram, except for households excluded awaiting an SSI eligibility determina- from retrospective budgeting under tion, receipt of these substitute pay- paragraph (b) of this section. ments will terminate the individual’s (b) Included and excluded households. eligibility for food stamp benefits. The establishment of either a monthly Once SSI benefits are received, the in- reporting or retrospective budgeting dividual will remain ineligible for food system is a State agency option. Cer- stamp benefits, even during months in tain households are specifically ex- which receipt of the SSI benefits is included from both monthly reporting terrupted, or suspended, until the indi- and retrospective budgeting. A house- vidual is terminated from the SSI pro- hold that is included in a monthly re- gram. porting system must be retrospectively (c) Income and resources. In Cali- budgeted. Households not required to fornia, the income and resources of the submit monthly reports may have SSI recipient living in a household their benefits determined on either a shall not be considered in determining prospective or retrospective basis at eligibility or level of benefits of the the State agency’s option, unless spe- household, as specified in § 273.11(d). cifically excluded from retrospective budgeting. [Amdt. 132, 43 FR 47889, Oct. 17, 1978, as (1) The following households are ex- amended by Amdt. 132, 44 FR 33383, June 8, cluded from both monthly reporting 1979. Redesignated at 45 FR 7217, Jan. 31, 1980, as amended by Amdt. 237, 47 FR 57669, and retrospective budgeting: Dec. 28, 1982; Amdt. 269, 51 FR 10793, Mar. 28, (i) Migrant or seasonal farmworker 1986; Amdt. 356, 59 FR 29713, June 9, 1994; households. Amdt. 364, 61 FR 54320, Oct. 17, 1996] (ii) Households in which all members are homeless individuals. § 273.21 Monthly Reporting and Retro- (iii) Households with no earned in- spective Budgeting (MRRB). come in which all adult members are (a) System design. This section pro- elderly or disabled. vides for an MRRB system for deter- (2) Households residing on an Indian mining household eligibility and bene- reservation where there was no month- fits. For included households, this sys- ly reporting system in operation on tem replaces the prospective budgeting March 25, 1994 are excluded from system provided in the preceding sec- monthly reporting. tions of this part. The MRRB system (c) Information on MRRB. At the cer- provides for the use of retrospective in- tification and recertification inter- formation in calculating household view, the State agency shall provide benefits, normally based on informa- the household with the following:

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(1) An oral explanation of the purpose bility consistent with paragraph (a)(2) of MRRB; of this section and in accordance with (2) A copy of the monthly report and either of the following options. an explanation of how to complete and (1) Prospective eligibility. The State file it; agency shall determine eligibility by (3) An explanation that information considering all factors of eligibility required to be reported on the monthly prospectively for each of the issuance report is the only reporting require- months. ment for such information; (2) Retrospective eligibility. The State (4) An explanation of what the house- agency shall determine eligibility by hold shall verify when it submits a considering all factors of eligibility monthly report and how it will verify retrospectively using the appropriate it; budget month except for residency and (5) A telephone number (toll-free compliance with the requirements re- number or a number where collect calls garding social security numbers. Com- will be accepted outside the local call- pliance with work registration provi- ing area) which the household may call sions shall be considered as of the to ask questions or to obtain help in issuance month or month of applica- completing the monthly report; and tion. The 60-day time frame for deter- (6) Written explanations of this infor- mining the applicability of the vol- mation. untary quit provision of § 273.7(n) shall (7) Special assistance. The State agen- be measured by the State agency from cy shall provide special assistance in the date of application. completing and filing monthly reports (f) Calculating allotments for house- to households whose adult members are holds following the beginning months—(1) all either mentally or physically Household composition. (i) If eligibility handicapped or are non-English speak- is determined retrospectively the State ing or otherwise lacking in reading and agency shall determine the household’s writing skills such that they cannot composition as of the last day of the complete and file the required reports. budget month. (d) One and two-month systems. Each (ii) If eligibility is determined pro- State agency shall adopt either a one- spectively (during the beginning month or two-month MRRB system. A months or for households processed one-month system shall have either under paragraph (e)(1) of this section), one or two beginning months in the the State agency shall determine the certification period and a two-month household’s composition as of the system shall have two beginning issuance month. months. Except for beginning months (iii) In a two-month system, the fol- in sequence as described in the pre- lowing provisions shall apply with re- ceding sentence, the State agency shall gard to a household which reports, in not consider as a beginning month any the month between the budget month month which immediately follows a and the corresponding issuance month, month in which a household is cer- that it has gained a new member. tified. (A) The State agency shall use the (1) One-month system. In the one- same household composition for deter- month system, the issuance month im- mining the household’s eligibility that mediately follows its corresponding it uses for calculating the household’s budget month. benefit level. (2) Two-month system. In the two- (B) If the new member is not already month system, the issuance month is certified to receive food stamps in an- the second month following its cor- other household participating within responding budget month. There are the State, the new member’s income, two beginning months of participation deductible expenses, and resources in this system, the first month and the from the issuance month shall be con- following month. sidered in determining the household’s (e) Determining eligibility for house- eligibility and benefit level. If the new holds not certified under the beginning member had been providing income to months’ procedures of § 273.21(g). The the household on an ongoing basis State agency shall determine eligi- prior to becoming a member of the

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household, the State agency shall ex- from the budget month, except as fol- clude the previously provided income lows: in determining the household’s (i) The State agency shall annualize issuance month benefits and eligi- self-employment income which is re- bility. ceived other than monthly, in accord- (C) If the individual has moved out of ance with § 273.11(a). Such income shall one household receiving food stamps be budgeted either prospectively or ret- within the State and into another, with rospectively and shall not affect more no break in participation, the State benefit months than the number of agency shall use the individual’s in- months in the period over which it is come, deductible expenses, and re- annualized or prorated. Except that, sources from the budget month in de- households which receive self-employ- termining benefits to be provided in ment income from a farm operation the issuance month. The State agency monthly but incur irregular expenses shall include such an individual and to produce such self-employment farm the individual’s income, deductible ex- income shall be given the option to an- penses, and resources in determining nualize the self-employment farm in- the issuance month eligibility and ben- come and expenses over a 12-month pe- efit level of either the household from riod. which the individual has moved or the (ii) The State agency shall prorate household into which the individual contract income received over a period has moved, but not both. In deter- of less than one year and either pro- mining the issuance month eligibility spectively or retrospectively budget and benefit level of the household into such income. Such income shall not ef- which the individual has moved, the fect more benefit months than the State agency shall disregard budget number of months in the period over month income received by the new which it is prorated. member from a terminated source. (iii) Earned and unearned educational income shall be prorated over the pe- (D) The State agency may add new riod it is intended to cover in accord- members to the household effective ei- ance with § 273.10(c)(3)(iii), and it shall ther the month the household reports be budgeted either prospectively or ret- the gain of a new household member or rospectively. Such income shall not ef- the first day of the issuance month fol- fect more benefit months than the lowing the month the household re- number of months in the period over ports the gain of a new member. The which it is prorated. benefits shall not be prorated. (iv) The State agency shall budget (iv) The State agency shall add a pre- deductible expenses prorated over two viously excluded member who was dis- or more months, except medical ex- qualified for an intentional program penses, either prospectively or retro- violation or failure to comply with spectively, provided That such deduc- workfare or work requirements, was in- tions are not budgeted over more eligible because of failure to comply months than they are intended to with the social security number recover, and the total amount deducted quirement, or was previously an ineli- does not exceed the total amount of gible alien retrospectively to the the expenses. Medical expenses shall be household the month after the dis- budgeted prospectively. The State qualification period ends. All other agency shall continue to allow deduc- previously excluded members shall be tions for expenses incurred even if added in accordance with the proce- billed on other than a monthly basis dures in paragraph (f)(1)(iii)(B) of this unless the household reports a change section, using the new member’s in the expense. The State agency may issuance month income and expenses. average the child support expense and (2) Income and deductions. For the budget it prospectively or retrospec- household members as determined in tively. accordance with paragraph (f)(1) of this (v) The State agency shall budget in- section, the State agency shall cal- come received on a recurring monthly culate the allotment using the house- or semimonthly basis for the month hold members’ income and deductions that it is intended to cover. The State

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agency shall not vary the budgeting of (3) The first months of retrospective such income merely because it is re- budgeting following the beginning ceived during another month as the re- months. The State agency shall begin sult of changes in mailing cycles or pay to base issuances to the household on dates, or because weekends or holidays retrospective budgeting during the result in an additional or missed pay- first month for which the State’s sys- ment. tem can use the month of application (vi) The State agency may budget in- as a budget month. In a one-month sys- terest income using one of the fol- tem, the first month for which the lowing methods in paragraphs (f)(2)(vi) issuance is based on retrospective (A), (B), or (C) of this section. The budgeting shall be the second month of State agency shall either establish cat- participation. In a two-month system, egories of interest to be handled by the first month for which the issuance each of the methods or shall offer each is based on retrospective budgeting household the option of which method shall be the third month of participa- to budget the interest income. tion. If the State agency had been aver- (A) Actual interest income received aging income or converting weekly or in the budget month. biweekly income to a monthly amount (B) Prorated interest income cal- in the beginning months, it may begin culated by dividing the amount of in- using the household’s actual budget terest anticipated during the certifi- month income when the household be- cation period by the number of months comes subject to retrospective budg- in the certification period. eting. For purposes of this paragraph, (C) An averaged amount adjusted for any income received in either or both anticipated changes. of the beginning months from a source (vii) For a new household member de- which no longer provides income to the scribed under paragraph (f)(1)(iii)(B) of household (terminated income), which this section, the State agency shall was included in the household’s pro- consider the new member’s income and spective budget, shall be disregarded deductible expenses prospectively until when the beginning month becomes the the new member’s first month living budget month. with the household becomes the budget (h) The monthly report form—(1) Gen- month. eral. (i) The State agency shall give the (viii) The options provided under household a reasonable period of time paragraph (j)(1)(vii) of this section may after close of the budget month to sub- affect the calculation of income and mit the monthly reports. deductions. (ii) The State agency shall require (g) Determining eligibility and allot- each household in the MRRB system to ments in the beginning months. The report on household circumstances on State agency shall use the prospective a monthly basis as a condition of con- budgeting procedures of this paragraph tinuing eligibility. for determining the allotments and eli- (iii) The State agency shall provide gibility of households in the MRRB an individual or agency unit which a system during this first month, or first household may contact to receive and second month of participation. The prompt answers about the completion State agency shall not apply the proce- of the form. A telephone number (toll dures of this paragraph to the month(s) free for households outside the local following the month of termination re- calling area) which a household may sulting from a temporary one-month use to obtain further information shall change. also be available. (1) Determining eligibility during the be- (iv) The State agency shall ensure ginning months. The State agency shall that households are informed about the determine eligibility prospectively in availability and amount of the stand- the beginning month(s). ard utility allowances, if the State (2) Calculating allotments during the agency offers them. beginning months. the State agency (2) Monthly report form. The State shall calculate allotments prospec- agency’s monthly report form shall tively in the beginning month(s). meet the following requirements:

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(i) Be written in clear, simple lan- for any item that has changed or ap- guage; pears questionable. If the household (ii) Meet the bilingual requirements voluntarily reports a change in its described in § 272.4(b) of this chapter; medical expenses, the State agency (iii) Specify the date by which the shall verify the change in accordance agency must receive the form and the with § 273.2(f)(8)(ii) before acting on it if consequences of a late or incomplete the change would increase the house- form, including whether the State hold’s allotment. In the case of a re- agency shall delay payment if the form ported change that would decrease the is not received by the specified date; household’s allotment, or make the (iv) Specify the verification which household ineligible, the State agency the household must submit with the shall act on the change without requir- form, in accordance with § 273.21(i); ing verification, though verification (v) Identify the individual or agency which is required by § 273.2(f)(8)(i) shall unit available to assist in completing be obtained prior to the household’s re- the form: certification. (vi) Include a statement to be signed (j) State agency action on reports—(1) by a member of the household, indi- Processing. Upon receiving a monthly cating his or her understanding that report, the State agency shall: the provided information may result in (i) Review the report to ensure accu- changes in the level of benefits, includ- racy and completeness. ing reduction and termination; (ii) Consider the report incomplete (vii) Include, in prominent and bold- only if: face lettering, an understandable de- (A) It is not signed by the head of the scription of the Act’s civil and criminal household, an authorized representa- penalties for fraud. tive or a responsible member of the (viii) If the form requests Social Se- household; curity numbers, include a statement of (B) It is not accompanied by the State agency’s authority to require verification required by the State Social Security numbers (SSN’s) (in- agency on the monthly report; cluding the statutory citation, the (C) It omits information required by title of the statute, and the fact that the State agency on the monthly re- providing SSN’s is mandatory), the port necessary either to determine the purpose of requiring SSN’s, the routine household’s eligibility or to compute uses for SSN’s, and the effect of not the household’s level of food stamp providing SSN’s. This statement may benefits. be on the form itself or included as an (iii) Determine those items which attachment to the form. will require additional verification, in (3) Reported information. The State accordance with paragraph (i) of this agency may determine the information section. relevant to eligibility and benefit de- (iv) Contact the household directly, termination to be included on the and take action as needed, to obtain monthly report form except that the further information on specific items. State agency shall not require house- These items include: holds to monthly report medical ex- (A) The effect of a reported change in penses. Medical expenses may be re- resources on a household’s total reported in accordance with § 273.10(d)(4). sources; and (4) Combined form. If the State agency (B) The effect of a reported change in uses a combined monthly report for household composition or loss of a job food stamps and TANF, the State agen- or source of earned income on the ap- cy shall clearly indicate on the form plicability of the work registration re- that non-TANF food stamp households quirement. need not provide TANF-only informa- (v) Notify the household, in accord- tion. ance with paragraph (j)(3)(ii) of this (i) Verification. Each month the section, of the need to submit a report, household shall verify information for correct an incomplete or inaccurate re- those items designated by the State port, or submit the necessary agency. The State agency may des- verification within the extension pe- ignate that verification be submitted riod.

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(vi) Determine the household’s eligi- A State agency which elects to use the bility by considering all factors, in- PA grant to be paid in the issuance cluding income, in accordance with month shall implement mass changes paragraphs (e) or (g) of this section. in accordance with the procedures at (vii) Determine the household’s level § 273.12(e)(2). of benefits in accordance with § 273.10(e) (C) Deductions as billed or averaged based on the household composition de- from the corresponding budget month, termined in accordance with paragraph including those shelter costs billed less (f)(1) of this section. For those house- often than monthly which the household members the following (except as hold has chosen to average. provided in paragraph (f)(2) of this sec- (viii) Issue benefits in accordance tion) income and deductions shall be with part 274 of this chapter and on the considered: time schedule set forth in paragraph (A) Earned and unearned income re- (k) of this section. ceived in the corresponding budget (ix) Provide specific information on month, including income that has been how the State agency calculated the averaged in accordance with paragraph benefit level if it has changed since the (f) of this section. The earned income preceding month, either with the of an elementary or secondary school issuance or in a separate notification. student excluded in accordance with (2) Notices. (i) All notices regarding § 273.9(c)(7) shall be excluded until the changes in a household’s benefits shall budget month following the budget meet the definition of adequate notice month in which the student turns 18. as defined in § 271.2. The State agency has the option of (ii) The State agency shall notify a converting to a regular monthly household of any change from its prior amount the income that a household benefit level and the basis for its deter- receives weekly or biweekly. If the mination. If the State agency reduces, State agency elects to convert weekly suspends or terminates benefits, it or biweekly income for MRRB house- shall send the notice so the household holds, it shall do so for all households receives it no later than either the date in its MRRB caseload. The State agen- the resulting benefits are to be re- cy may convert or average income in ceived or in place of the benefits. the beginning months and use actual (iii) The State agency shall notify a earned or unearned income received in household, in accordance with para- the budget month following the begin- graph (j)(3)(iii), if its monthly report is ning months of participation. late or incomplete, or further informa- (B) The PA grant paid in the cor- tion is needed. responding budget month or the PA (3) Incomplete filing. (i) If a household grant to be paid in the issuance month. fails to file a monthly report, or files If the State agency elects to use the an incomplete report, by the specified PA grant to be paid in the issuance filing date, the State agency shall give month, the State agency shall ensure the household at least ten more days, that: from the date the State agency mails (1) Any additional or corrective pay- the notice to file a complete monthly ments are counted, either prospec- report. tively or retrospectively; and (ii) The State agency shall notify the (2) the State agency shall disregard household within five days of the filing income received in the budget month date: from a terminated source which results (A) That the monthly report is either in an increase in the PA grant, pro- overdue or incomplete; vided the household has reported the (B) What the household must do to termination of the income either in the complete the form; monthly report for the budget month (C) If any verification is missing and or in some other manner which, as de- the lack of that verification will ad- termined by the State agency, allows versely affect the household’s allot- the State agency sufficient time to ment; process the change and affect the allot- (D) That the Social Security number ment in the issuance month. of a new member must be reported, if

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the household has reported a new mem- (ii) The State agency shall provide ber but not the new member’s Social each household with an issuance cycle Security number; so that the household receives its bene- (E) What the extended filing date is; fits at about the same time each month (F) That the State agency will assist and has an opportunity to participate the household in completing the re- before the end of each issuance month. port. (2) Delayed issuance. (i) If an eligible (iii) When a State agency requires household files a complete monthly reverification for the item listed and the port during its extension period, the household does not provide the State agency shall provide it with an verification, the State agency shall opportunity to participate no later take the following actions: than ten days after its normal issuance (A) If the household does not verify date. earned income, the State agency shall (ii) If an eligible household which has regard the household’s report as incom- been terminated for failure to file a plete, take action in accordance with complete report files a complete report paragraphs (j)(3)(i) and (j)(3)(ii) of this after its extended filing date, but be- section and, if appropriate, terminate fore the end of the issuance month, the the household in accordance with para- State agency may choose to reinstate graph (m) of this section. the household by providing it with an (B) If the household is using its ac- opportunity to participate. If the tual utility costs to establish its shel- household has requested a fair hearing ter cost deduction in accordance with on the basis that a complete monthly § 273.9(d) and it does not verify a change report was filed, the State agency shall in its actual utility expenses, the State reinstate the household if a completed agency shall not allow a deduction for monthly report is filed before the end such costs. of the issuance month. (C) If a household fails to verify a (iii) If an eligible household files a change in reported medical expenses in complete report after the issuance accordance with § 273.2(f)(8), and that month, the State agency shall not pro- change would increase the household’s vide the household with an opportunity allotment, the State agency shall not to participate for that month. make the change. The State agency (l) Other reporting requirements—(1) In- shall act on reported changes without formation reported on the monthly report. requiring verification if the changes The monthly report shall be the sole would decrease the household’s allot- reporting requirement for information ment, or make the household ineli- required to be included in the monthly gible. report. Changes in household cir- (D) If the household does not verify cumstances not subject to monthly re- other items for which verification is reporting shall be reported in accordance quired, the State agency shall: with § 273.12. (1) Act on the reported change if it (2) Households excluded from monthly would decrease benefits. reporting. Households which are ex- (2) Not act on the reported change if cluded from monthly reporting shall it would increase benefits. report changes in accordance with (E) If the household does not report § 273.12. or verify changes in child support, the (m) Termination. (1) The State agency State agency shall not allow a child shall terminate a household’s food support deduction. stamp participation if the household: (k) Issuance of benefits—(1) Timely (i) Is ineligible for food stamps, un- issuance. (i) For an eligible household less suspended in accordance with para- which has filed a complete monthly re- graph (n) of this section: port by the scheduled filing date, the (ii) Fails to file a complete report by State agency shall provide an oppor- the extended filing date; or tunity to participate within the month (iii) Fails to comply with a non- following the budget month in a one- financial eligibility requirement, such month system, or within the second as registering for employment. month following the budget month in a (2) The State agency shall issue a no- two-month system. tice to the household which:

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(i) Complies with the requirements of State agency shall not count any non- § 271.2 for adequate notice; continuing circumstances which caused (ii) Informs the household of the rea- the prospective ineligibility when cal- son for its termination; culating the household’s benefits retro- (iii) If the State agency allows rein- spectively in a subsequent month. statement under paragraph (k)(2)(ii), (p) Fair hearings—(1) Entitlement. All explains how the household may be re- households participating in a MRRB instated; system shall be entitled to fair hear- (iv) Informs the household of its ings in accordance with § 273.15. rights to request a fair hearing and to (2) Continuation of benefits. (i) Any receive continued benefits. If termi- household which requests a fair hear- nation is for failure to submit a month- ing and does not waive continuation of ly report and the household states that benefits, and is otherwise eligible for a monthly report has been filed, the continuation of benefits, shall have its notice must advise the household that benefits continued until the end of the a completed monthly report must be certification period or the resolution of filed prior to the end of the issuance the fair hearing, whichever is first. If month as a condition for continued re- the State agency did not receive a ceipt of benefits. monthly report from the household by (3) The State agency shall issue the the extended filing date and the house- notice to the household so that it re- hold states that a monthly report was ceives the notice no later than the submitted, the household is entitled to household’s normal or extended continued benefits, provided That a issuance date. completed report is submitted no later (n) Suspension. The State agency may than the last day of the issuance suspend a household’s issuance in ac- month. cordance with this paragraph. If the (ii) The State agency shall provide State agency does not choose this op- continued benefits no later than five tion, it shall instead terminate house- working days from the day it receives holds in accordance with paragraph (m) the household’s request. of this section. (iii) A household whose benefits have (1) The State agency may suspend a been continued shall file montly re- household’s issuance for one month if ports until the end of the certification the household becomes temporarily in- period. If the fair hearing is with re- eligible due to a periodic increase in regard to termination for nonreceipt of curring income or other change not ex- the monthly report by the State agen- pected to continue in the subsequent cy, a completed monthly report for the month. The State agency may on a month in question shall be submitted Statewide basis either suspend the by the household no later than the last household’s certification prospectively day of the issuance month. for the issuance month or retrospec- (iv) During the fair hearing period tively for the issuance month cor- the State agency shall adjust allot- responding to the budget month in ments to take into account reported which the noncontinuing circumstance changes, except for the factor(s) on occurs. which the fair hearing is based. (2) The State agency shall continue (q) Recertification—(1) Timeliness. The to supply monthly reports to the State agency shall recertify an eligible household for one month. household which timely reapplies and (3) If the suspended household again provides it with an opportunity to par- becomes eligible, the State agency ticipate in the household’s normal shall issue benefits on the household’s issuance cycle. normal issuance date. (2) Retrospective Recertification. (i) The (4) If the suspended household does State agency shall recertify the house- not become eligible after one month, hold using retrospective information to the State agency shall terminate the determine the household’s benefit level household. for the first month of the new certifi- (o) If a household has been termi- cation period. nated or suspended based on an antici- (ii) If the State agency is operating a pated change in circumstances, the two-month MRRB system, the State

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agency may delay reflecting informa- holds based on the monthly report and tion from the recertification interview the interview. in the household’s eligibility and ben- (ii) At the interview, the State agen- efit level until the second month of the cy shall obtain all of the information new certification period. not provided in the monthly report (iii) The State agency shall recertify which is necessary for recertification. households according to one of the (iii) The State agency shall ensure three options set forth in paragraphs that it has on file a statement signed (q) (3), (4), or (5) of this section. by the appropriate household member (3) Option One: Recertification form. (i) that the household has applied for re- The State agency shall provide each certification. household with a recertification form (6) Interview. (1) The State agency to obtain all necessary information shall conduct a complete interview about the household’s circumstances with a household member or an author- for the budget month. ized representative. (ii) The State agency shall mail the (ii) The State agency shall schedule form to the household, along with a no- the interview at any time during the tice of expiration, in place of the last month of the old certification pe- monthly report form. The State agency riod. shall either: Mail the recertification (iii) If the State agency schedules the form along with the notice of expira- interview for a date on or before the tion; use a recertification form which normal filing due date of the monthly contains a notice of expiration; or mail report, the State agency shall permit the recertification form and the notice the household member and authorized of expiration separately, as long as the representative to bring the recertifi- forms are mailed at the same time. cation form or monthly report to the (iii) The household shall submit the interview. form to the State agency in accordance (r) Procedures for households that with paragraph (h)(1)(i) of this section. change their reporting and budgeting sta- (4) Option Two: Monthly report and ad- tus. The State agency shall use one of dendum. (i) The State agency shall pro- the following procedures for households vide each household with a notice of subject to change in reporting/budg- expiration and monthly report form eting status. and an addendum to obtain all addi- (1) Households which become subject to tional information necessary for recer- MRRB. The State agency may change tification. the reporting/budgeting status of (ii) The State agency shall either: households which become subject to Mail the monthly report form along monthly reporting at any time fol- with the notice of expiration; use a lowing the change in household cir- monthly report form which contains a cumstances which results in the notice of expiration; or mail the change in the household’s reporting/ monthly report form and the notice of budgeting status, subject to the fol- expiration separately, as long as the lowing conditions: forms are mailed at the same time. (i) The State agency shall provide the (iii) The household shall submit the household with information provided monthly report to the State agency in to MRRB households under paragraph accordance with paragraph (h)(1)(i) of (c) of this section. If the State agency this section. elects to implement the change during (iv) The State agency shall deliver the certification period, it may omit the recertification addendum to the the oral explanation of MRRB required household along with the monthly re- under paragraph (c)(1). port form or obtain the necessary in- (ii) The State agency shall not re- formation from the household at the quire the household to submit a interview. monthly report during any month in (v) The household shall submit the which the household was subject to the addendum to the State agency no later change reporting requirements of than the time of the interview. § 273.12. (5) Option Three: Signed Statement. (i) (2) Households which are no longer sub- The State agency shall recertify house- ject to MRRB. The agency shall use one

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of the following procedures to remove household’s reporting requirements households from the MRRB system. under § 273.12. (i) Procedures for households exempt (s) Implementation of Regulatory from MRRB. For any household which Changes. The State agency shall imple- becomes exempt from MRRB under ment changes in regulatory provisions paragraph (b) of this section, the State for households subject to MRRB pro- agency shall notify the household with- spectively based on the effective date in 10 days of the date the State agency and implementation time frame pub- becomes aware of the change that the lished in the FEDERAL REGISTER. Rules household has become exempt from are effective as of the same date for all monthly reporting and is no longer re- households regardless of the budgeting quired to file any future monthly re- system. ports and has also become exempt from (t) Monthly reporting requirements for retrospective budgeting and when the households residing on reservations. The change in budgeting will go into effect. following procedures shall be used for The State agency shall begin deter- households which reside on reserva- mining the household’s benefits pro- tions and are required to submit spectively no later than the first monthly reports: issuance month for which a household (1) Definition of a reservation. For pur- has not submitted a monthly report for poses of this section, the term ‘‘res- the budget month. ervation’’ shall mean the geographi- (ii) Other households moving from cally defined area or areas over which MRRB to change reporting and prospec- a tribal organization exercises govern- tive budgeting. When a household is no mental jurisdiction. The term ‘‘tribal longer subject to MRRB under a State organization’’ shall mean the recog- agency’s system, the State agency may nized governing body of an Indian tribe begin determining the household’s ben- (including the tribally recognized efits prospectively in any month fol- intertribal organization of such tribes), lowing the month the State agency be- as well as any Indian tribe, band, or comes aware of the changed cir- community holding a treaty with a cumstances which necessitate the need State government. to change the household’s reporting/ (2) Benefit determination for missing re- budgeting status. If the State agency ports. The State agency shall not delay, elects to change the household’s re- reduce, or suspend the allotment of a porting/budgeting status prior recer- household that fails to submit a report tification it shall provide the house- by the issuance date. hold with a notice explaining the (3) Reinstatement. If a household is change in the month prior to the terminated for failing to submit a month the change is effective. If the monthly report, the household shall be State agency elects to change the reinstated without being required to household’s status at recertification it submit a new application if a monthly shall advise the household at the recer- report is submitted no later than the tification interview that its reporting/ last day of the month following the budgeting status is being changed. month the household was terminated. (iii) Households moving from MRRB to (4) Notices. (i) All notices regarding retrospective budgeting and change re- changes in a household’s benefits shall porting. If a household’s status neces- meet the definition of adequate notice sitates changing it from a monthly re- as defined in § 271.2 of this chapter. porter to a change reporter while con- (ii) If a household fails to file a tinuing to be budgeted retrospectively, monthly report by the specified filing the State agency may change the date, the State agency shall notify the household’s status at any time. If the household within five days of the filing State agency elects to change the date: household immediately, the State (A) That the monthly report is either agency shall provide the household overdue or incomplete; with a notice that it is no longer sub- (B) What the household must do to ject to monthly reporting. The notice complete the form; shall include information about the (C) If any verification is missing;

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(D) That the Social Security number § 273.22 [Reserved] of a new member must be reported, if the household has reported a new mem- § 273.23 Simplified application and ber but not the new member’s Social standardized benefit projects. Security number; (a) General. This subpart establishes (E) What the extended filing date is; rules under which Simplified Applica- (F) That the State agency will assist tion and Standardized Benefit Projects the household in completing the re- shall operate. State agencies and polit- port; and ical subdivisions chosen as project op- erators may designate households con- (G) That the household’s benefits will taining members receiving TANF, SSI, be issued based on the previous or Medicaid benefits as project eligible. month’s submitted report without re- Project eligible households shall have gard to any changes in the household’s their food stamp eligibility determined circumstances if the missing report is using simplified application proce- not submitted. dures. Food stamp eligibility shall be (iii) Simultaneously with the determined using information con- issuance, the State agency shall notify tained in their TANF, or Medicaid ap- a household, if its report has not been plication, or, in the case of SSI, on the received, that the benefits being pro- State Data Exchange (SDX) tape, and vided are based on the previous any appropriate addendum. Project-eli- month’s submitted report and that this gible households shall be considered benefit does not reflect any changes in categorically food stamp resource eli- the household’s circumstances. This gible based on their eligibility for notice shall also advise the household these other programs and shall be re- that, if a complete report is not filed quired to meet food stamp income eli- timely, the household will be termi- gibility standards. However, income nated. definitions appropriate to the TANF, (iv) If the household is terminated, SSI or Medicaid programs shall be used the State agency shall send the notice instead of food stamp income defini- so the household receives it no later tions in determining eligibility. In addition, such households shall, as a con- than the date benefits would have been dition of program eligibility, meet and/ received. This notice shall advise the or fulfill all food stamp nonfinancial household of its right to reinstatement eligibility requirements. (Project-eligi- if a complete monthly report is sub- ble households defined as categorically mitted by the end of the month fol- eligible in § 273.2 (j) and (k) of these lowing termination. regulations are not required to meet (5) Supplements and claims. If the the income eligibility standards.) To household submits the missing month- further simplify program administra- ly report after the issuance date but in tion, benefits provided to such house- the issuance month, the State agency holds may be standardized by category shall provide the household with a sup- of assistance and household size. plement, if warranted. If the household (b) Program administration. (1) Sim- submits the missing monthly report plified application and standardized after the issuance date or the State benefit procedures are applicable in agency becomes aware of a change that five States and five political subdivi- would have decreased benefits in some sions. For the purpose of this section, a other manner, the State agency shall political subdivision is a project area file a claim for any benefits overissued. as defined in § 271.2 of these regulations. [48 FR 54965, Dec. 8, 1983] (2) State agencies and political sub- EDITORIAL NOTE: For FEDERAL REGISTER ci- divisions seeking to operate a Sim- tations affecting § 273.21, see the List of CFR plified Application and Standardized Sections Affected, which appears in the Benefit Project shall submit Work Finding Aids section of the printed volume Plans to FNS in accordance with the and on GPO Access. requirements of this section. (3) FNS shall evaluate Work Plans according to the criteria set forth in

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the Simplified Application/Standard- (4) Households each of whose mem- ized Benefit Notice of Intent. bers receive one or more of the fol- (4) Political subdivisions shall sub- lowing: TANF, SSI, or Medicaid bene- mit their Work Plans to FNS through fits (multiple-benefit households); and their respective State agencies for re- (5) Households only some of whose view and approval. members receive TANF, SSI, and/or (5) A State agency selected by FNS Medicaid benefits (mixed households). to operate a Simplified Application and (e) Determining Food Stamp Program Standardized Benefit Project shall ineligibility. Under the Simplified Appli- clude the Work Plan in its State Plan cation and Standardized Benefit of Operations. A political subdivision Project, project eligible households chosen to operate a Simplified Applica- shall have their food stamp eligibility tion and Standardized Benefit Project determined using the following cri- shall assure that the responsible State teria. agency include that political subdivi- (1) Certain households, at the oper- sion’s project Work Plan in its own ating agency’s option, which contain State Plan of Operations. The Work members receiving TANF, SSI, or Med- Plan shall be updated, as needed, to re- icaid benefits, shall be designated flect changes in the benefit method- project eligible and need not make sep- ology, subject to prior FNS approval. arate application for food stamp bene- (c) Contents of the work plan. The fits. Once such households indicate in Work Plan submitted by each applicant writing a desire to receive food stamps, shall contain the following informa- their eligibility will be determined tion: based on information contained in (1) Background information on the their application for TANF or Medicaid proposed site’s characteristics, current benefits or, in the case of SSI, on the operating procedures, and a general de- State Data Exchange (SDX) tape. scription of the proposed procedures; TANF or Medicaid applications may (2) A description of the proposed need to be modified, or be subject to an project design, including the benefit methodology, households which will be addendum in order to accommodate project eligible, operational proce- any additional information required by dures, and the need for waivers; the operating agency. (3) An implementation and moni- (2) The income definitions and re- toring plan describing tasks, staffing source requirements prescribed under and a timetable for implementation; § 273.9 (b) and (c) and § 273.8 are inappli- (4) An estimate of project impacts in- cable to project-eligible households. cluding implementation costs and, on Project-eligible households which have an annual basis, operating costs, ad- met the resource requirements of the ministrative costs, error reduction, and TANF, SSI, and/or Medicaid programs benefit changes; and shall be considered to have satisfied (5) A statement signed by the State the food stamp resource requirements. official with authority to commit the Gross income less any allowed exclu- State or political subdivisions to the sions, as defined by the appropriate project’s operation. categorical aid program, shall be used (d) Project-eligible households. Each to determine food stamp income eligi- operating agency shall decide which of bility (unless the project household is the following categories of household categorically income eligible as de- shall be eligible to participate in the fined in § 273.2 (j) and (k)) and benefit project. levels. Deemed income, as defined (1) Households all of whose members under TANF, SSI or Medicaid rules, receive TANF benefits under part A of shall be excluded to the extent that title IV of the Social Security Act; households with such income are part (2) Households all of whose members of the food stamp household providing receive SSI benefits under title XVI of the deemed income. the Social Security Act; (3) Project-eligible households which (3) Households all of whose members are not categorically income eligible receive Medicaid benefits under title shall meet the gross and net income XIX of the Social Security Act; standards prescribed in § 273.9(a). Net

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income shall be determined by sub- (5) The methodology to be used in de- tracting from gross income either ac- veloping benefit levels shall be deter- tual or standardized deduction mined by the operating agency but amounts. If standardized deduction shall be subject to FNS approval. amounts are used, they may be ini- (6) With FNS approval, operating tially determined using recent histor- agencies may develop an alternate ical data on deductions claimed by methodology for standardizing allot- such households. Such deductions must ments/deductions for specific sizes and be updated, as necessary, on at least an categories of households where such annual basis. Such deductions shall in- size and category is so small as to clude: make the use of average deductions (i) The current standard deduction and/or allotments impractical. for all households; (7) FNS may require operating agen- (ii) An excess shelter deduction and a cies to revise their standardized allot- dependent care deduction for house- ments during the course of the project holds not containing an elderly or dis- to reflect changes in items such as abled member; household characteristics, the Thrifty (iii) A dependent care deduction, an Food Plan, deduction amounts, the uncapped excess shelter deduction and benefit reduction rate, or benefit levels a medical deduction for households in TANF or SSI. Such changes will be documented by revising the Work Plan containing a qualified elderly or dis- amendment to the State Plan of Oper- abled member; and ations. (iv) A standardized or actual earned (g) Household notification. All cer- income deduction for households con- tified project-eligible households resid- taining members with earned income. ing in the selected project sites shall be (4) All non-financial food stamp eligi- provided with a notice, prior to project bility requirements shall be applicable commencement, informing them of the to project-eligible households. revised procedures and household re- (f) Benefit levels. (1) In establishing quirements under the project. If house- benefits for project eligible households, hold allotments are to be standardized, either the appropriate State standard the notice shall also provide specific of need (maximum aid payment) or information on the value of the newly gross income as determined for the ap- computed benefit and the formula used propriate categorical aid program plus to calculate the benefit. The notice the value of any monetary categorical shall meet the requirements of a notice benefits received, if any, may be used of adverse action as set forth in as the gross income amount. If mixed § 273.13(a)(2). households are designated project eligi- (h) Application processing procedures. ble, procedures shall be developed to (1) The operating agency shall allow include as household income the in- project-eligible households to indicate come of those household members not in writing their desire to receive food receiving categorical aid. stamps. Such households shall be noti- (2) If allotments are standardized, the fied in writing, at the time such indica- average allotment for each category of tion is made, that information con- household, by household size, shall be tained in their TANF, SSI, or Medicaid no less than average allotments would application will be the basis of their have been were the project not in oper- food stamp eligibility determination. If ation. mixed households are included in the (3) Benefit methodologies shall be project-eligible universe, the project constructed to ensure that benefits re- operator shall develop a procedure to ceived by households having higher collect the necessary information on than average allotments under normal household members not receiving cat- program rules are not significantly re- egorical aid. duced as a result of standardization. (2) The operating agency may use (4) Benefit methodologies shall be simplified application and standardized structured to ensure that decreases in benefit procedures only for those household benefits are not reduced by households containing at least one more than $10 or 20%, whichever is less. member certified to receive either

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TANF, SSI, or Medicaid benefits. If been developed by the State agency simplified procedures are to be used, and approved by FNS. the State agency shall make all eligi- (2) The error rate(s) determined using bility determinations for households the special quality control review pro- jointly applying for food stamps and cedures shall be included when deter- TANF, SSI, or Medicaid benefits within mining the State agency’s overall error the 30-day food stamp processing pe- rate. riod. If a household’s eligibility for (k) Funding. Operating agencies shall TANF, SSI, or Medicaid cannot be es- be reimbursed for project costs at the tablished within the 30-day period, nor- rates prescribed in § 277.4. mal food stamp application, certifi- (l) Evaluation. Each project site shall cation, and benefit determination pro- conduct a self-evaluation of the cedures shall be used and benefits shall project’s impact on benefits, adminis- be issued within 30 days if the house- trative costs and participation. Such hold is eligible. Households which are evaluation shall be conducted within jointly applying for TANF, SSI, or three months of project implementa- Medicaid, and which qualify for expe- tion. The results of the self-evaluation dited service, shall be certified for food shall be sent to FNS within six months stamps using procedures prescribed at of project implementation. The impact § 273.2(i). However, if the State agency of the project on project-eligible house- can process the application of an expe- holds’ error rates shall be reported on dited service household for categorical an annual basis in accordance with assistance within the expedited period § 273.23(m). prescribed at § 273.2(i), it may use simplified application and standardized (m) Reporting requirements. Operating benefit procedures to certify the house- agencies shall be required to prepare hold for food stamp benefits. and submit to FNS an annual report on (i) Regulatory requirements. (1) All the error rate attributable to project- Food Stamp Program regulations shall eligible households. The timing of such remain in effect unless they are ex- reports shall coincide with the due date pressly altered by the provisions of this for the annual quality control report section or the provisions contained prescribed in § 275.21(d). within the approved SA/SB Work Plan. (n) State agency monitoring. Moni- (2) Certification periods for mixed toring shall be undertaken to ensure households. At the option of the oper- compliance with these regulations and ating agency, mixed households may be the Work Plan submitted to and ap- assigned certification periods of up to proved by FNS. Project monitoring one year. Such households, if cir- shall be conducted in accordance with cumstances warrant, may be required the appropriate sections of part 275, to attend a face-to-face interview on a Performance Reporting System, of schedule which would conform to cer- these regulations. At a minimum, on- tification periods normally assigned site reviews of the Simplified Applica- such households as specified in tion and Standardized Benefit Project § 273.10(f). At the time of the interview, shall be conducted once within six the household shall be required to com- months of the project’s implementa- plete a modified application and pro- tion and then in accordance with the vide additional information in accord- Management Evaluation review sched- ance with § 273.2(f). If the household ule for the project area. fails to comply with the interview re- (o) Termination. (1) FNS may termi- view requirement or if information ob- nate project operations for any reason tained indicates a revision in house- and at any time on 60 days written no- hold eligibility or benefits, action will tice to the administering State agency be taken in accordance with§ 273.13, No- or political subdivision. State or local tice of Adverse Action. agencies may also choose to terminate (j) Quality control. (1) Project eligible their participation with 60 days writ- households selected for quality control ten notice to FNS. In either such review shall be reviewed by the State event, operating agencies shall be agency using special procedures, based given sufficient time to return to nor- on project requirements, which have mal operations in an orderly fashion.

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(2) If termination occurs, FNS may (ii) A comparable program estab- select another site for project oper- lished by a State or political subdivi- ations. Such selection shall be based on sion of a State. either previously received project pro- (b) General Rule. Individuals are not posals or proposals received under a eligible to participate in the Food new solicitation. Stamp Program as a member of any household if the individual received [53 FR 26224, July 12, 1988] food stamps for more than three count- § 273.24 Time limit for able-bodied able months during any three-year pe- adults. riod, except that individuals may be eligible for up to three additional count- (a) Definitions. For purposes of the able months in accordance with para- food stamp time limit, the terms below graph (e) of this section. have the following meanings: (1) Countable months. Countable (1) Fulfilling the work requirement months are months during which an in- means: dividual receives food stamps for the (i) Working 20 hours per week, aver- full benefit month while not: aged monthly; for purposes of this pro- (i) Exempt under paragraph (c) of vision, 20 hours a week averaged this section; monthly means 80 hours a month; (ii) Covered by a waiver under para- (ii) Participating in and complying graph (f) of this section; with the requirements of a work pro- (iii) Fulfilling the work requirement gram 20 hours per week, as determined as defined in paragraph (a)(1) of this by the State agency; section; or (iii) Any combination of working and (iv) Receiving benefits that are pro- participating in a work program for a rated in accordance with § 273.10. total of 20 hours per week, as deter- (2) Good cause. As determined by the mined by the State agency; or State agency, if an individual would (iv) Participating in and complying have worked an average of 20 hours per with a workfare program; week but missed some work for good (2) Working means: cause, the individual shall be consid- (i) Work in exchange for money; ered to have met the work requirement (ii) Work in exchange for goods or if the absence from work is temporary services (‘‘in kind’’ work); or and the individual retains his or her (iii) Unpaid work, verified under job. Good cause shall include cir- standards established by the State cumstances beyond the individual’s agency. control, such as, but not limited to, ill- (iv) Any combination of paragraphs ness, illness of another household (a)(2)(i), (a)(2)(ii) and (a)(2)(iii) of this member requiring the presence of the section. member, a household emergency, or (3) Work Program means: the unavailability of transportation. (i) A program under the Workforce (3) Measuring the three-year period. Investment Act (Pub. L. 105–220); The State agency may measure and (ii) A program under section 236 of track the three-year period as it deems the Trade Act of 1974 (19 U.S.C. 2296); or appropriate. The State agency may use (iii) An employment and training either a ‘‘fixed’’ or ‘‘rolling’’ clock. If program, other than a job search or job the State agency chooses to switch search training program, operated or tracking methods it must inform FNS supervised by a State or political sub- in writing. With respect to a State, the division of a State that meets stand- three-year period: ards approved by the Governor of the (i) Shall be measured and tracked State, including a program under consistently so that individuals who § 273.7(f). Such a program may contain are similarly situated are treated the job search or job search training as a same; and subsidiary component as long as such (ii) Shall not include any period be- component is less than half the re- fore the earlier of November 22, 1996, or quirement. the date the State notified food stamp (4) Workfare program means: recipients of the application of Section (i) A program under § 273.7(m); or 824 of the Personal Responsibility and

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Work Opportunity Reconciliation Act (3) Is a parent (natural, adoptive, or of 1996 (Pub. L. 104–193). step) of a household member under age (4) Treatment of income and resources. 18, even if the household member who The income and resources of an indi- is under 18 is not himself eligible for vidual made ineligible under this para- food stamps; graph (b) shall be handled in accord- (4) Is residing in a household where a ance with § 273.11(c)(2). household member is under age 18, even (5) Benefits received erroneously. If an if the household member who is under individual subject to this section re- 18 is not himself eligible for food ceives food stamp benefits erroneously, stamps; the State agency shall consider the (5) Is otherwise exempt from work re- benefits to have been received for pur- quirements under section 6(d)(2) of the poses of this provision unless or until Food Stamp Act, as implemented in the individual pays it back in full. regulations at § 273.7(b); or (6) Verification. Verification shall be (6) Is pregnant. in accordance with § 273.2(f)(1) and (d) Regaining eligibility. (1) An indi- (f)(8). vidual denied eligibility under paragraph (b) of this section, or who did not (7) Reporting. A change in work hours reapply for benefits because he was not below 20 hours per week, averaged meeting the work requirements under monthly, is a reportable change in ac- paragraph (b) of this section, shall re- cordance with § 273.12(a)(1)(viii). Re- gain eligibility to participate in the gardless of the type of reporting sys- Food Stamp Program if, as determined tem the State agency assigns to poten- by the State agency, during any 30 con- tial ABAWDs, the State agency must secutive days, he or she: adhere to the statutory requirements (i) Worked 80 or more hours; of time-limited benefits for individuals (ii) Participated in and complied who are subject to the work require- with the requirements of a work pro- ment. The State agency may opt to gram for 80 or more hours; consider work performed in a job that (iii) Any combination of work and was not reported according to the re- participation in a work program for a quirements of § 273.12 ‘‘work.’’ total of 80 hours; or participated in and (c) The time limit does Exceptions. complied with a workfare program; or not apply to an individual if he or she (iv) At State agency option, verifies is: that the he or she will meet one of the (1) Under 18 or 50 years of age or requirements in paragraphs (d)(1)(i), older; (d)(1)(ii), (d)(1)(iii), or (d)(1)(v) of this (2) Determined by the State agency section, within the 30 days subsequent to be medically certified as physically to application; or or mentally unfit for employment. An (v) Becomes exempt. individual is medically certified as (2) An individual regaining eligibility physically or mentally unfit for em- under paragraph (d)(1) of this section ployment if he or she: shall have benefits calculated as fol- (i) Is receiving temporary or perma- lows: nent disability benefits issued by gov- (i) For individuals regaining eligi- ernmental or private sources; bility by working, participating in a (ii) Is obviously mentally or phys- work program, or combining hours ically unfit for employment as deter- worked and hours participating in a mined by the State agency; or work program, the State agency may (iii) If the unfitness is not obvious, either prorate benefits from the day provides a statement from a physician, the 80 hours are completed or from the physician’s assistant, nurse, nurse date of application, or practitioner, designated representative (ii) For individuals regaining eligi- of the physician’s office, a licensed or bility by participating in a workfare certified psychologist, a social worker, program, and the workfare obligation or any other medical personnel the is based on an estimated monthly al- State agency determines appropriate, lotment prorated back to the date of that he or she is physically or mentally application, then the allotment issued unfit for employment. must be prorated back to this date.

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(3) There is no limit on how many dence that an area: is designated as a times an individual may regain eligi- Labor Surplus Area (LSA) by the De- bility and subsequently maintain eligi- partment of Labor’s Employment and bility by meeting the work require- Training Administration (ETA); is de- ment. termined by the Department of Labor’s (e) Additional three-month eligibility. Unemployment Insurance Service as An individual who regained eligibility qualifying for extended unemployment under paragraph (d) of this section and benefits; has a low and declining em- who is no longer fulfilling the work re- ployment-to-population ratio; has a quirement as defined in paragraph (a) lack of jobs in declining occupations or of this section is eligible for a period of industries; is described in an academic three consecutive countable months (as study or other publications as an area defined in paragraph (b) of this sec- where there are lack of jobs; has a 24- tion), starting on the date the indi- month average unemployment rate 20 vidual first notifies the State agency percent above the national average for that he or she is no longer fulfilling the the same 24-month period. This 24- work requirement, unless the indi- month period may not be any earlier vidual has been satisfying the work re- than the same 24-month period the quirement by participating in a work ETA uses to designate LSAs for the or workfare program, in which case the current fiscal year. period starts on the date the State (3) Waivers that are readily approvable. agency notifies the individual that he FNS will approve State agency waivers or she is no longer meeting the work where FNS confirms: requirement. An individual shall not (i) Data from the BLS or the BLS co- receive benefits under this paragraph operating agency that shows an area (e) more than once in any three-year has a most recent 12 month average un- period. employment rate over 10 percent; (f) Waivers—(1) General. On the re- (ii) Evidence that the area has been quest of a State agency, FNS may designated a Labor Surplus Area by the waive the time limit for a group of in- ETA for the current fiscal year; or dividuals in the State if we determine (iii) Data from the BLS or the BLS that the area in which the individuals cooperating agency that an area has a reside: 24 month average unemployment rate (i) Has an unemployment rate of over that exceeds the national average by 20 10 percent; or percent for any 24-month period no ear- (ii) Does not have a sufficient number lier than the same period the ETA uses of jobs to provide employment for the to designate LSAs for the current fis- individuals. cal year. (2) Required data. The State agency (4) Effective date of certain waivers. In may submit whatever data it deems ap- areas for which the State certifies that propriate to support its request. How- data from the BLS or the BLS cooper- ever, to support waiver requests based ating agency show a most recent 12 on unemployment rates or labor force month average unemployment rate data, States must submit data that re- over 10 percent; or the area has been lies on standard Bureau of Labor Sta- designated as a Labor Surplus Area by tistics (BLS) data or methods. A non- the Department of Labor’s Employ- exhaustive list of the kinds of data a ment and Training Administration for State agency may submit follows: the current fiscal year, the State may (i) To support a claim of unemploy- begin to operate the waiver at the time ment over 10 percent, a State agency the waiver request is submitted. FNS may submit evidence that an area has will contact the State if the waiver a recent 12 month average unemploy- must be modified. ment rate over 10 percent; a recent (5) Duration of waiver. In general, three month average unemployment waivers will be approved for one year. rate over 10 percent; or an historical The duration of a waiver should bear seasonal unemployment rate over 10 some relationship to the documenta- percent; or tion provided in support of the waiver (ii) To support a claim of lack of suf- request. FNS will consider approving ficient jobs, a State may submit evi- waivers for up to one year based on

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documentation covering a shorter pe- cent of the number of covered individ- riod, but the State agency must show uals in the State, as estimated by FNS, that the basis for the waiver is not a based on FY 1996 quality control data seasonal or short term aberration. We and other factors FNS deems appro- reserve the right to approve waivers for priate, and adjusted by FNS to reflect a shorter period at the State agency’s changes in: request or if the data is insufficient. (i) The State agency’s caseload; and We reserve the right to approve a waiv- (ii) FNS’s estimate of changes in the er for a longer period if the reasons are proportion of food stamp recipients compelling. covered by waivers granted under para- (6) Areas covered by waivers. States graph (f) of this section. may define areas to be covered by (4) State agencies must not discrimi- waivers. We encourage State agencies nate against any covered individual for to submit data and analyses that cor- reasons of age, race, color, sex, dis- respond to the defined area. If cor- ability, religious creed, national ori- responding data does not exist, State gin, or political beliefs. Such discrimi- agencies should submit data that cor- nation is prohibited by this part, the responds as closely to the area as pos- Food Stamp Act, the Age Discrimina- sible. tion Act of 1975 (Public Law 94–135), the (g) 15 percent exemptions. (1) For the Rehabilitation Act of 1973 (Public Law purpose of establishing the 15 percent 93–112, section 504), and title VI of the exemption for each State agency, the Civil Rights Act of 1964 (42 U.S.C. following terms are defined: 2000d). Enforcement action may be (i) Caseload means the average brought under any applicable Federal monthly number of individuals receiv- law. Title VI complaints will be proc- ing food stamps during the 12-month essed in accord with 7 CFR part 15. period ending the preceding June 30. (h) Adjustments. FNS will make ad- (ii) Covered individual means a food justments as follows: stamp recipient, or an applicant denied (1) Caseload adjustments. FNS will ad- eligibility for benefits solely because just the number of exemptions esti- he or she received food stamps during mated for a State agency under para- the 3 months of eligibility provided graph (g)(2) of this section during a fis- under paragraph (b) of this section, cal year if the number of food stamp who: recipients in the State varies from the (A) Is not exempt from the time limit State’s caseload by more than 10 per- under paragraph (c) of this section; cent, as estimated by FNS. (B) Does not reside in an area covered (2) Exemption adjustments. During by a waiver granted under paragraph each fiscal year, FNS will adjust the (f) of this section; number of exemptions allocated to a (C) Is not fulfilling the work require- State agency based on the number of ments as defined in paragraph (a)(1) of exemptions in effect in the State for this section; and the preceding fiscal year. (D) Is not receiving food stamp bene- (i) If the State agency does not use fits under paragraph (e) of this section. all of its exemptions by the end of the (2) Subject to paragraphs (h) and (i) fiscal year, FNS will increase the esti- of this section, a State agency may mated number of exemptions allocated provide an exemption from the 3-month to the State agency for the subsequent time limit of paragraph (b) of this sec- fiscal year by the remaining balance. tion for covered individuals. Exemp- (ii) If the State agency exceeds its tions do not count towards a State exemptions by the end of the fiscal agency’s allocation if they are provided year, FNS will reduce the estimated to an individual who is otherwise ex- number of exemptions allocated to the empt from the time limit during that State agency for the subsequent fiscal month. year by the corresponding number. (3) For each fiscal year, a State agen- (i) Reporting requirement. The State cy may provide a number of exemp- agency will track the number of ex- tions such that the average monthly emptions used each month and report number of exemptions in effect during this number to the regional office on a the fiscal year does not exceed 15 per- quarterly basis as an addendum to the

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quarterly Employment and Training gible to receive under the regular FSP. Report (Form FNS–583) required by Reductions of $10 or less will be dis- § 273.7(c)(8). regarded when applying this require- (j) Other Program rules. Nothing in ment. this section will make an individual el- (2) The State must include in its igible for food stamp benefits if the in- State SFSP plan an analysis showing dividual is not otherwise eligible for the impact its program has on benefit benefits under the other provisions of levels for mixed-TANF households by this part and the Food Stamp Act. comparing the allotment amount such [Amdt. 379, 64 FR 48257, Sept. 3, 1999, as households would receive using the amended at 66 FR 4469, Jan. 17, 2001; 67 FR rules and procedures of the State’s 41618, June 19, 2002; 71 FR 33384, June 9, 2006] SFSP with the allotment amount these households would receive if certified § 273.25 Simplified Food Stamp Pro- under regular Food Stamp Program gram. rules and showing the number of house- (a) Definitions. For purposes of this holds whose allotment amount would section: be reduced by 9.99 percent or less, by 10 (1) Simplified Food Stamp Program to 24.99 percent, and by 25 percent or (SFSP) means a program authorized more, excluding those households with under 7 U.S.C. 2035. reductions of $10 or less. In order for (2) Temporary Assistance for Needy FNS to accurately evaluate the pro- Families (TANF) means a State program’s impact, States must describe in gram of family assistance operated by detail the methodology used as the an eligible State under its TANF plan basis for this analysis. as defined at 45 CFR 260.30. (3) To ensure compliance with the (3) Pure-TANF household means a benefit reduction requirement once an household in which all members re- SFSP is operational, States must de- ceive assistance under a State program scribe in their plan and have approved funded under part A of title IV of the by FNS a methodology for measuring Social Security Act (42 U.S.C. 601 et benefit reductions for mixed-TANF seq.). households on an on-going basis (4) Mixed-TANF household means a throughout the duration of the SFSP. household in which 1 or more members, In addition, States must report to FNS but not all members, receive assistance on a periodic basis the amount of ben- under a State program funded under efit loss experienced by mixed-TANF part A of title IV of the Social Security households participating in the State’s Act (42 U.S.C. 601 et seq.). SFSP. The frequency of such reports (5) Assistance under a State program will be determined by FNS taking into funded under part A of title IV of the consideration such factors as the num- Social Security Act (42 U.S.C. 601 et ber of mixed-TANF households partici- seq.) means ‘‘assistance’’ as defined in pating in the SFSP and the amount of regulations at 45 CFR 260.31. benefit loss attributed to these house- (b) Limit on benefit reduction for mixed- holds through initial or on-going anal- TANF households under the SFSP. If a yses. State agency chooses to operate an (c) Application processing standards. SFSP and includes mixed-TANF house- Under statutory requirements, a households in its program, the following re- hold is not eligible to participate in an quirements apply in addition to the SFSP unless it is receiving TANF as- statutory requirements governing the sistance. If a household is not receiving SFSP. TANF assistance (payments have not (1) If a State’s SFSP reduces benefits been authorized) at the time of its ap- for mixed-TANF households, then no plication for the SFSP, the State agen- more than 5 percent of these partici- cy must process the application using pating households can have benefits re- the regular Food Stamp Program reduced by 10 percent of the amount they quirements of § 273.2, including proc- are eligible to receive under the reg- essing within the 30-day regular or 7- ular FSP and no mixed-TANF house- day expedited time frame, and screen- hold can have benefits reduced by 25 ing for and provision of expedited serv- percent or more of the amount it is eli- ice if eligible. The State agency must

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determine under regular food stamp 274.11 Issuance and inventory record reten- rules the eligibility and benefits of any tion, and forms security. household that it has found ineligible 274.12 Electronic Benefit Transfer issuance for TANF assistance because of time system approval standards. limits, more restrictive resource stand- AUTHORITY: 7 U.S.C. 2011–2036. ards, or other rules that do not apply SOURCE: 54 FR 7004, Feb. 15, 1989, unless to food stamps. otherwise noted. (d) Standards for shelter costs. Legisla- tion governing the SFSP requires that EDITORIAL NOTE: OMB control numbers re- State plans must address the needs of lating to this part 274 are contained in § 271.8. households with high shelter costs rel- § 274.1 State agency issuance responsi- ative to their income. If a State choos- bility. es to standardize shelter costs under the SFSP, it must, therefore, use mul- (a) Basic issuance requirements. State tiple standards that take into consider- agencies shall establish issuance and ation households with high shelter accountability systems which ensure costs versus those with low shelter that only certified eligible households costs. A State is prohibited from using receive benefits; that coupons are ac- a single standard based on average cepted, stored, and protected after de- shelter costs for all households partici- livery to receiving points within the pating in an SFSP. State; that Program benefits are time- (e) Opportunity for public comment. ly distributed in the correct amounts; States must provide an opportunity for and that coupon issuance and reconcili- public input on proposed SFSP plans ation activities are properly conducted (with special attention to changes in and accurately reported to FNS. benefit amounts that are necessary in (b) Contracting or delegating issuance order to ensure that the overall pro- responsibilities. State agencies may as- posal not increase Federal costs) sign to others such as banks, savings through a public comment period, pub- and loan associations, the Postal Serv- lic hearings, or meetings with groups ice, community action and migrant representing participants’ interests. service agencies, and other commercial Final approval will be given after the businesses, the responsibility for the State informs the Department about issuance and storage of food coupons. the comments received from the pub- State agencies may permit contractors lic. After the public comment period, to subcontract assigned issuance re- the State agency must inform the De- sponsibilities. partment about the comments received (1) Any assignment of issuance func- from the public and submit its final tions shall clearly delineate the re- SFSP plan for Departmental approval. sponsibilities of both parties. The State agency remains responsible, re- [Amdt. 388, 65 FR 70211, Nov. 21, 2000] gardless of any agreements to the contrary, for ensuring that assigned duties PART 274—ISSUANCE AND USE OF are carried out in accordance with COUPONS these regulations. In addition, the State agency is strictly liable to FNS Sec. for all losses of coupons, even if those 274.1 State agency issuance responsibility. losses are the result of the performance 274.2 Providing benefits to participants. of issuance, security, or accountability 274.3 Issuance systems. duties by another party. 274.4 Reconciliation and reporting. (2) All issuance contracts shall follow 274.5 [Reserved] procurement standards set forth in 274.6 Replacement issuances to households. part 277. 274.7 Coupon management. (3) The State agency shall not assign 274.8 Responsibilities of coupon issuers, and the issuance of coupons to any retail bulk storage and claims collection points. food firm unless the State agency pro- 274.9 Closeout of a coupon issuer. vides evidence that such an arrange- 274.10 Use of identification cards and re- ment is needed to maintain or increase demption of coupons by eligible house- the efficient and effective operation of holds. the Program, as described below.

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(i) Coupons may be issued inside or natives will not compromise the secu- within a retail food store, if the rity of the ID system. issuance is performed by a bank, credit (c) State monitoring of coupon issuers. union or other financial organization The State agency’s accountability sys- independent of the retail food store. tem shall include procedures for moni- (ii) Coupons may be issued on-site by toring coupon issuers to assure that a retail food store under the following the day-to-day operations of all coupon conditions: issuers comply with these regulations, (A) The State agency adequately doc- to identify and correct deficiencies, uments that unless the retail food and to report violations of the Act or store is permitted to issue coupons on- regulations to FNS. site there will be a hardship, not just (1) The State agency shall conduct an an inconvenience, to recipients. The onsite review of each coupon issuer and State agency shall contract directly bulk storage point at least once every with the retail food firm and shall pro- three years. All offices or units of a vide oversight to such entity; or coupon issuer are subject to this review (B) In the absence of the hardship requirement. The State agency shall documentation, a retail food firm itself base each review on the specific activi- may perform issuance as a subcon- ties performed by each coupon issuer or tractor to a bank, credit union or other bulk storage point. A physical inven- independent financial organization, tory of coupons shall be taken at each with strict oversight by the financial location and that count compared with organization. perpetual inventory records and the (4) The State agency may contract monthly reports of the coupon issuer with the U.S. Postal Service for the or bulk storage point. This review may issuance of benefits. The Department be conducted at branch sites as well as and the Postal Service have signed an the main offices of each issuer and bulk agreement which governs benefit storage point that operates in more issuance by the Postal Service. A State than one office. Except in unusual cir- agency’s contract with the Postal cumstances, the Postal Inspection Service does not exempt the State Service will conduct onsite reviews of agency from the requirement that it comply with these regulations. How- Postal Service issuance operations. ever, State agencies may negotiate (2) This review requirement may be contracts with the Postal Service on fulfilled in part or in total by the per- all terms and conditions as long as formance reporting review system, part such provisions do not conflict with 275. The State agency may delegate these regulations. this review responsibility to another (5) In project areas or parts of project unit of the State government or con- areas where FNS has required a Photo- tract with an outside firm with exper- graphic identification (Photo ID) sys- tise in auditing and accounting. State tem to be used, the State agency shall agencies may use the results of reviews include in any contract or agreement of coupon issuers by independent audit with an issuing agent a provision es- or accounting firms as long as the food tablishing the agent’s liability to the coupon issuance operations of the cou- State agency for the face value of coupon issuer are included in the review. pons issued in any authorization docu- (d) Changes. The State agency shall ment transaction where the authoriza- inform FNS whenever a project area, tion document is found to have been issuance point, reconciliation point, re- stolen or otherwise not received by the placement point, bulk storage report- household certified as eligible, if the ing point or coupon shipment receiving cashier has not fulfilled the require- point is created, relocated, or termi- ments contained in § 274.10. This same nated. The State agency shall report provision shall apply to issuance con- the change at least 30 days prior to the tracts in project areas or parts of effective date of the change. Initial no- project areas where FNS has granted a tification may be made by telephone waiver or waivers of any provision(s) of but the State agency shall confirm the the Photo ID requirements based on a information in writing as soon as pos- determination that State agency alter- sible.

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(e) Advance planning documentation. make benefits available to the house- State agencies must comply with the hold not later than the fifth calendar procurement requirements of part 277 day following the date of application. for the acquisition, design, develop- Whatever system a State agency uses ment, or installation of automated to ensure meeting this delivery stand- data processing (ADP) equipment. With ard shall be designed to allow a reason- certain exceptions detailed in part 277, able opportunity for redemption of State agencies must receive prior ap- ATPs no later than the fifth calendar proval for the design and acquisition of day following the date of application. ADP systems through submission of (c) Combined allotments. For those advance planning documents (APD’s). households which are to receive a combined allotment, the State agency shall § 274.2 Providing benefits to partici- provide the benefits for both months as pants. an aggregate (combined) allotment, or (a) General. Each State agency is re- as two separate allotments, with the sponsible for the timely and accurate same validity period, made available at issuance of benefits to certified eligible the same time, in accordance with the households in accordance with these timeframes specified in § 273.2 of this regulations. Those households com- chapter. prised of elderly or disabled members (d) Ongoing households. All house- which have difficulty reaching issuance holds shall be placed on an issuance offices, and households which do not schedule so that they receive their ben- reside in a permanent dwelling or of a efits on or about the same date each fixed mailing address shall be given as- month. The date upon which a house- sistance in obtaining their regular hold receives its initial allotment after monthly benefits. State agencies shall certification need not be the date that assist these households by arranging the household must receive its subse- for the mail issuance of coupons to quent allotments. them, by assisting them in finding au- (1) State agencies that use direct- thorized representatives who can act mail issuance shall stagger issuance on their behalf, or by using other ap- over at least 10 days of the issuance propriate means. month, and may stagger issuance over (b) Availability of benefits. All newly- the entire issuance month. State agen- certified households, except those that cies using a method other than direct- are given expedited service, shall be mail issuance may stagger issuance given an opportunity to participate no throughout the month, or for a shorter later than 30 calendar days following period. When staggering benefit deliv- the date the application was filed. An ery, however, State agencies shall not opportunity to participate consists of allow more than 40 days to elapse be- providing households with coupons or tween the issuance of any two allot- authorization documents and having ments provided to a household partici- issuance facilities open and available pating longer than two consecutive, for the households to obtain their bene- complete months. Regardless of the fits. State agencies must mail author- issuance schedule used, the State agen- ization documents or coupons in time cy shall adhere to the reporting re- to assure that the documents can be quirements specified in § 274.4. transacted, or the coupons spent after (2) Upon the request of the tribal or- they are received but before the 30-day ganization that exercises governmental standard expires. A household has not jurisdiction over a reservation, the been provided an opportunity to par- State agency shall stagger the issuance ticipate within the 30-day standard if of benefits for eligible households lo- the authorization document or benefits cated on reservations for at least 15 are mailed on the 29th or 30th day. Nei- days each month. ther has an opportunity to participate (3) When a participating household is been provided if the authorization doc- transferred from one issuance system ument is mailed on the 28th day but no or procedure to another issuance sys- issuance facility is open on the 30th tem or procedure, the State agency day. For households entitled to expe- shall not permit more than 40 days to dited service, the State agency shall elapse between the last issuance under

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the previous system or procedure, and ticable inconvenience to affected the first issuance under the new sys- households. tem or procedure. The 40-day require- (f) Issuance of coupons to households. ment does not apply to instances in The State agency shall issue coupon which actions by recipients, such as books in accordance with a table for failure to submit a monthly report, dis- coupon-book issuance provided by FNS, rupt benefits. Transfers include, but except as provided in paragraphs (e)(1), are not limited to, households being (e)(2), and (e)(3) of this section. The moved into or out of a staggered State agency shall issue the coupon issuance procedure, households on a books in consecutive serial number fluctuating schedule within a staggered order whenever possible, starting with system, and households being moved the lowest serial number in each cou- from a direct-mail issuance system to pon book denomination. The household an authorization document system. If member whose name appears on the ID the State agency determines that more card shall sign the coupon books; if than 40 days may elapse between more than one name appears, any issuances, the State agency shall di- named member may sign the books. vide the new issuance into two parts, (1) The State agency may deviate with one part being issued within the from the table if the specified coupon 40-day period, and the second part, or books are unavailable. supplemental issuance, being issued on (2) Exceptions from the table are au- the household’s established issuance thorized for blind and visually-handi- date in the new system or procedure. capped participants who request that The supplemental issuance cannot pro- all coupons be of one denomination. vide the household more benefits than Recipients who have no fixed address the household is entitled to receive. (homeless), and residents of shelters for (4) Notwithstanding the above provi- battered women and children, as de- sions, in months in which benefits have fined in § 271.2, and which are not au- been suspended under the provisions of thorized by FNS to redeem through § 271.7, State agencies may stagger wholesalers, may request that all or issuance to certified households fol- part of their coupons be of the $1 de- lowing the end of the suspension. In nomination. State agencies are author- such situations, State agencies may, at ized to grant this request when fea- their option, stagger issuance from the sible. date issuance resumes through the end (3) If a household is eligible for an al- of the month or over a five-day period lotment of $1, $3, or $5, the State agen- following the resumption of issuance, cy shall adjust those allotments to $2, even if this results in benefits being $4, or $6, respectively. issued after the end of the month in (g) Issuance in rural areas. Unless the which the suspension occurred. area is served by an electronic benefit (e) Issuance services. State agencies transfer system, State agencies must are responsible for determining the lo- use direct-mail issuance in any rural cation and hours of operation of areas where the State agency deter- issuance services. In doing so, State mines that recipients face substantial agencies shall ensure that the issuance difficulties in obtaining transportation schedules set forth in paragraphs (b) in order to obtain their food stamp and (c) of this section are met. In addi- benefits by methods other than direct- tion, issuance authorization docu- mail issuance. State agencies must re- ments, such as ATP cards, should be port any exceptions to direct-mail valid only in the geographic area with- issuance as specified under § 272.3(a)(2) in the State that is encompassed by and (b)(2) of this chapter. the reconciliation system through [54 FR 7004, Feb. 15, 1989, as amended at 54 which the issuance will be processed; FR 51351, Dec. 15, 1989; 60 FR 20182, Apr. 25, however, the validity area may be ex- 1995; 65 FR 70212, Nov. 21, 2000] tended within the State at the State agency’s option. State agencies may § 274.3 Issuance systems. also restrict the validity of these docu- (a) System classification. State agen- ments to smaller areas or particular cies may issue benefits to households issuance sites with minimal prac- through any of the following systems:

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(1) An authorization document sys- with the Office of the Inspector Gen- tem that uses a document produced for eral, determines that Program integ- each month’s issuance. The inter- rity would be improved by changing mediary document, such as an ATP, the issuance system of a State, the may be distributed on a monthly basis Secretary shall require the State agen- to each household and surrendered by cy to issue or deliver coupons using an- the household to the coupon issuer, or other method. The alternative method provided monthly to issuers with ei- may be one of the methods described in ther single household authorizations or paragraph (a) of this section, or the multiple household authorizations on Secretary may require a State agency each (such as a computer-generated to issue, in lieu of coupons, reusable listing). For reconciliation and identi- documents to be used as part of an fication purposes, the authorization automated data processing and infor- document shall contain the following: mation retrieval system and to be pre- (i) Serial number; sented by, and returned to, recipients (ii) Case name and address; at retail food firms for the purpose of (iii) Case number; purchasing food. The determination of (iv) Allotment amount; which alternative to use will be made (v) Benefit month or expiration date; by FNS after consultation with the (vi) Name of issuing project area; State agency. The cost of conversion and, will be shared by the Department and (vii) Space for signature of household the State agency in accordance with member. An additional space for an au- the cost accounting provision of part thorized representative may be in- 277. cluded. (2) The cost of documents or systems (2) A direct access system that di- which may be required as a result of a rectly accesses a master issuance file permanent alternative issuance system at the time that benefits are issued to pursuant to this section shall not be households. This system shall use man- imposed upon retail food firms partici- ual card access or an automated access pating in the Program. to the master issuance file. Systems of (d) System requirements. (1) The State this type include the manual House- hold Issuance Record (HIR) card sys- agency shall establish a master tem and on-line issuance terminals. issuance file which is a composite of (3) A mail issuance system that di- the issuance records of all certified rectly delivers coupons through the food stamp households. The State mail to households. agency shall establish the master (4) An on-line Electronic Benefit issuance file in a manner compatible Transfer system in which food stamp with its system used for maintaining benefits are stored in a central com- case record information and shall sepa- puter database and electronically rate the information on the master accessed by households at the point-of- issuance file into active and inactive sale via reusable plastic cards. case file categories. The master (5) An off-line Electronic Benefit issuance file shall contain all the infor- Transfer system in which benefit allot- mation needed to identify certified ments can be stored on a card or in a households, issue household benefits, card access device and used to purchase record the participation activity for authorized items at a point-of-sale ter- each household and supply all informa- minal without real-time authorization tion necessary to fulfill the reporting from a central processor. requirements prescribed in § 274.4. (b) Other systems. A State agency may (i) The master issuance file shall be develop an issuance system which can- kept current and accurate. It shall be not be readily categorized into one of updated and maintained through the the systems described in paragraph (a) use of documents such as notices of of this section. FNS shall prescribe the change and controls for expired certifi- reporting and reconciliation require- cation periods. ments which apply to that system. (ii) Before entering a household’s (c) Alternative benefit issuance system. data on the master issuance file, the (1) If the Secretary, in consultation State agency shall review the master

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issuance file to ensure that the house- tended use, which may or may not be a hold is not currently participating in, calendar month. However, in instances or disqualified from, the Program. If an in which authorization documents are authorization document is issued under distributed, or benefits become avail- the expedited service requirements of able for ongoing households late in the §§ 273.2(i) and 274.2(b), the State agency issuance month, the State agency shall shall complete as much of the master extend the validity or availability pe- issuance file review as possible prior to riod for either twenty (20) additional issuing the authorization document. days, or until the end of the following Any uncompleted reviews shall be com- issuance month, at the State agency’s pleted after issuance and appropriate option. The State agency may also corrective action shall be taken to re- choose one of two dates which will ini- cover overissuance. tiate this extension of the validity or (2) State agencies should divide availability period. The State agency issuance responsibilities between at may choose to extend the period for au- least two persons to prevent any single thorization documents distributed or individual from having complete con- for benefits made available, on or after trol over the authorization of issuances the 20th day of the issuance month or and the issuances themselves. Respon- after the 15th day of the issuance sibilities to be divided include mainte- month. Whichever date the State agen- nance of inventory records, assembly of cy chooses to initiate the required ex- benefits and preparation of envelopes tension, the State agency must use the for mailing. If issuance functions in an date consistently for all extensions in office are handled by one person, a sec- this category. A household which does ond-party review shall be made to not transact its authorization docu- verify coupon inventory, the reconcili- ment, or obtain the benefits directly ation of the mail log, and the number from an issuance point during the of mailings prepared. issuance’s validity period, shall lose its (3) State agencies shall establish con- entitlement to the benefits, and the trols to prevent a household from con- State agency shall not issue benefits to currently receiving benefits through such a household for such a period. more than one issuance system. (2) State agencies experiencing exces- (4) State agencies shall clearly iden- sive issuance losses may develop sys- tify issuances in their accountability tems that have authorization docu- systems as initial, supplemental, re- ments that expire in shorter time placement, or restored benefits. frames than those set forth in para- (5) State agencies shall establish a graph (e) of this section. However, such Statewide record of replacement systems shall include methods that issuances granted to households to pre- allow households the opportunity to vent a household from receiving more obtain their benefits for the full valid- than two countable replacement ity period of a month’s issuance. issuances as defined in § 274.6(b) in a [54 FR 7004, Feb. 15, 1989, as amended at 54 six-month period. FR 51351, Dec. 15, 1989; 57 FR 11249, Apr. 1, (6) State agencies which issue bene- 1992; 60 FR 20183, Apr. 25, 1995; Amdt. 390, 65 fits by mail shall, at a minimum, use FR 59110, Oct. 4, 2000] first class mail and sturdy nonfor- warding envelopes or packages to send § 274.4 Reconciliation and reporting. benefits to households. (a) Reconciliation. State agencies (e) Validity periods. (1) State agencies shall account for all issuance through a shall establish validity periods for reconciliation process. The manner in issuances made in both authorization which this is done varies depending on document and direct access systems. A the type of issuance system being used. validity period is the time frame dur- (1) Described below are the required ing which a household may obtain ben- reconciliation procedures for each type efits by transacting an authorization of system. document, or receiving the benefits di- (i) In all issuance systems coupon rectly at an issuance point. Generally, issuers shall reconcile their issuances the validity period coincides with the daily using daily tally sheets, cashiers’ issuance month or the period of in- daily reports, tapes or printouts.

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(ii) In systems where a record-for- report. At a minimum, such docu- issuance is used, all issuances author- mentation shall include documents ized for the month shall be merged into supporting coupon shipments, trans- one record-for-issuance at the end of fers, issuances, and destruction. each month. All issuances made during (iii) For those State agencies which the month shall then be posted to the use an authorization document record-for-issuance. The record-for- issuance system, coupon issuers shall issuance shall then be compared with submit transacted authorization docu- the master issuance file. Findings from ments batched according to each day’s this comparison shall be reported on activity in accordance with a schedule the Form FNS–46 as prescribed in para- prescribed by the State agency, but not graph (b)(2) of this section. less often than monthly. (iii) In systems where no record-for- (iv) All mail issuance activity, in- issuance is used, issuances made during cluding the value of mail issuance re- each month shall be reconciled to the placements, shall be reported. Original master issuance file. Findings from allotments (first benefits issued for a this reconciliation shall be reported on particular month to an ongoing house- the Form FNS–46 as prescribed in para- hold) subsequently recovered by the graph (b)(2) of this section. issuance office during the current (iv) In addition to the reconciliation month shall be returned to inventory activity prescribed in the paragraphs and noted on the mail issuance log. (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this When the original allotment is re- section, the following steps shall be turned to inventory and the replace- followed in authorization document ment issuance is issued during the cur- systems: rent month (month in which original (A) The State agency shall determine benefits were issued), the ‘‘replace- and verify the transacted value of au- ment’’ shall not be reported. thorized coupon issuances. (v) The Form FNS–250 shall be re- (B) Any batches of transacted au- viewed by the State agency for accu- thorization documents that do not reconcile shall be maintained intact by racy, completeness and reasonableness. the State agency until the discrepancy The State agency shall attest to the is resolved with the coupon issuer and/ accuracy of these reports and shall sub- or a review of the case files. mit the reports so they will be received (C) The State agency shall compare by FNS by the 45th day after the report all transacted authorization documents month. Any revisions to the Form with the record-for-issuance or master FNS–250 for a given month shall be sub- issuance file as appropriate. Any docu- mitted to FNS within 105 days after ments that do not match with the the end of the report month. record-for-issuance or master issuance (vi) FNS shall review each form, sub- file shall be identified and reported as mitted through the State agency, for required in paragraph (b)(2) of this sec- completeness, accuracy and reason- tion. ableness and shall reconcile inventory (b) Required reports. The State agency with shipping records, and shall review shall review and submit the following State agency verification of coupon reports to FNS on a monthly basis: issuer and bulk storage point monthly (1) Form FNS–250, Food Coupon Ac- reports. FNS may supplement the countability Report. above reviews by unannounced spot (i) This report, executed monthly by checks of inventory levels and coupon coupon issuers and bulk storage points, security arrangements at coupon shall be signed by the coupon issuer or issuers and at bulk storage points. appropriate official, certifying that the (2) Form FNS–46, Issuance Reconcili- information is true and correct to the ation Report, shall be submitted by best of that person’s knowledge and be- each State agency operating an lief. issuance system. The report shall be (ii) Coupon issuers and bulk storage prepared at the level of the State agen- points shall submit supporting docu- cy where the actual reconciliation of mentation to the State agency which the record-for-issuance and master will allow verification of the monthly issuance file occurs.

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(i) The State agency shall identify second preceding months of January and report the number and value of all and July. issuances which do not reconcile with (iii) State agencies shall submit any the record-for-issuance and/or master proposed changes in their estimation issuance file. All unreconciled procedures to be used in determining issuances shall be identified as speci- the Form FNS–388 data to the FNS re- fied on this reporting document. gional office for review and comment. (ii) The report shall be received by FNS shall monitor the accuracy of the FNS no later than 90 days following estimated dollar value of coupons the end of the report month. issued as reported on the Form FNS–388 (3) Form FNS–259, Food Stamp Mail against the Statewide total dollar Issuance Report. value of coupons as reported by the (i) Form FNS–259 reports shall be sub- issuance agents on the Form FNS–250, mitted by State agencies for each unit Food Stamp Accountability Report, for using a mail issuance system as speci- the corresponding month. FNS shall fied in the Mail Issuance Loss Report- monitor the accuracy of the Statewide ing Plan required in § 272.2(d)(1)(iv). estimated number of households and The State agency shall submit the persons participating as reported on Form FNS–259 reports so that they are the Form FNS–388 report against the received in FNS by the 45th day fol- Statewide actual total participation as lowing the end of each quarter. reported on succeeding Form FNS–388 (ii) The State agency shall verify the reports and against the semiannual issuance by a comparison with issuance project area participation totals at- on the appropriate coupon issuer’s tached to the March and September Form FNS–250. Form FNS–388 reports. The FNS accu- (4) Form FNS–388, State Coupon racy standards for the issuance and Issuance and Participation Estimates. participation estimates are that esti- (i) State agencies shall telephone or mates for the current month be within ¥ transmit by computer the Form FNS– (+) or ( ) four (4) percent of actual lev- 388 data and mail the reports to the els, and the estimates for the previous ¥ FNS regional office no later than the month be within (+) or ( ) two (2) per- 19th day of each month. When the 19th cent of actual levels. State agencies falls on a weekend or holiday, the shall explain any unusual cir- Form FNS–388 data shall be reported by cumstances that cause coupon issuance telephone or transmitted by computer and/or participation data to not meet and mailed on the first work day after these accuracy standards. If a State the 19th. The Form FNS–388 report agency fails to meet these accuracy shall be signed by the person respon- standards, FNS shall notify the State sible for completing the report or a agency and assist the State agency in revising its estimating procedures to designated State agency official. improve its reporting. (ii) The Form FNS–388 report shall (iv) A participating household is one provide Statewide estimated or actual that is certified and has been, or will totals of issuance and participation for be, issued benefits (whether or not the the current and previous month, and benefits are used), and households that actual or final participation totals for have met the eligibility requirements, the second preceding month. In addi- but will receive zero benefits. tion to the participation totals for the second preceding months of January [54 FR 7004, Feb. 15, 1989, as amended at 54 and July, provided on the March and FR 51351, Dec. 15, 1989] September reports, non-assistance (NA) and public assistance (PA) household § 274.5 [Reserved] and person participation breakdowns shall be provided. As an attachment to § 274.6 Replacement issuances to the March and September Form FNS– households. 388 reports, State agencies shall pro- (a) Providing replacement issuance. (1) vide project area breakdowns of the Subject to the restrictions in para- coupon issuance and NA/PA household graph (b) of this section, State agencies and person participation data for the shall provide replacement issuances to

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a household when the household re- the household, or an authorization doc- ports that: ument, coupons, or food purchased (i) Its authorization document was with food stamps is destroyed in a not received in the mail or was stolen household misfortune. In mail issuance from the mail, was stolen after receipt, (ATPs or coupons), the report must be was destroyed in a household misfor- made within the period of intended use, tune, or was improperly manufactured unless the original issuance was made or mutilated; after the 20th of the month, in which (ii) Its coupons were not received in case the period of intended use is 20 the mail, were stolen from the mail, days from original issuance, or the last were destroyed in a household misfor- day of the next month (State agency tune, or were improperly manufactured option). or mutilated; (2) The number of replacement (iii) Food purchased with food stamps issuances which a household may re- was destroyed in a household misfor- ceive shall be limited as follows: tune; or (i) State agencies shall limit replace- (iv) It received a partial coupon al- ment issuances to a total of two count- lotment. able replacements in six months for au- (2) State agencies shall not provide thorization documents or coupons not replacement issuances to households received in, or stolen from, the mail; when coupons are lost, stolen or mis- authorization documents stolen after placed after receipt, authorization doc- receipt; and partial coupon allotments. uments are lost or misplaced after re- However, no limit shall be put on the ceipt, when authorization documents number of replacements of partial al- or coupons are totally destroyed after lotments if the partial allotments were receipt in other than a disaster or mis- due to State agency error. Separate fortune, or when coupons sent by reg- limits shall not apply for each of these istered or certified mail are signed for types of loss. by anyone residing with or visiting the (ii) State agencies shall limit re- household. In addition, replacement placement issuances per household to issuances shall not be made if the two countable replacements in six household or its authorized representa- months for authorization documents or tive has not signed and returned the coupons reported as destroyed in a household statement required in para- household misfortune. This limit is in graph (c) of this section, where applica- addition to the limit in paragraph ble. (b)(2)(i) of this section. (3) Where FNS has issued a disaster (iii) No limit on the number of re- declaration and the household is eligi- placements shall be placed on the re- ble for disaster food stamp benefits placement of authorization documents under the provisions of part 280, the or coupons which were improperly household shall not receive both the manufactured or mutilated or food pur- disaster allotment and a replacement chased with food stamp benefits which allotment for a misfortune. was destroyed in a household misfor- (4) In order for a replacement to be tune. considered non-countable, the replace- (iv) The replacement issuance shall ment must not result in a loss to the not be considered a countable replace- Program. ment if: (b) Replacement restrictions. (1) Re- (A) The original or replacement placement issuances shall be provided issuance is returned or otherwise re- only if a household timely reports a couped by the State agency; loss orally or in writing, and provides a (B) The original authorization docu- statement of nonreceipt if the original ment is not transacted; authorization document or allotment (C) The replacement authorization has not been returned to the State document is not transacted; or agency at the time of the request for (D) The replacement is being issued replacement. The report will be consid- due to a State agency issuance error. ered timely if it is made to the State (3) Except for households certified agency within 10 days of the date an under 7 CFR part 280, replacement authorization document is stolen from issuances shall be provided in the

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amount of the loss to the household, up (iv) If the statement of nonreceipt is to a maximum of one month’s allot- not signed and returned within ten (10) ment, unless the issuance includes re- days of the date the loss was reported, stored benefits which shall be replaced the State agency shall not replace the up to their full value. coupons or authorization document. (c) Household statement of nonreceipt. (d) Time limits for making replacements. (1) Prior to issuing a replacement, the (1) Replacement issuances shall be pro- State agency shall obtain from a mem- vided to households within 10 days ber of the household a signed state- after report of nondelivery or loss (15 ment attesting to the household’s loss. days if issuance was by certified or reg- This statement shall not be required if istered mail) or within two (2) working the reason for the replacement is that days of receiving the signed household the original authorization document or statement required in paragraph (c) of coupons were improperly manufactured this section, whichever date is later. or mutilated, or if the original issuance (i) Replacement of mutilated coupons has already been returned. The re- shall be delayed until a determination quired statement may be mailed to the of the value of the coupons can be State agency if the household member made in accordance with paragraph is unable to come into the office be- (f)(3) of this section. cause of age, handicap or distance from (ii) If the household has already been the office and is unable to appoint an issued the maximum allowable number authorized representative. of countable replacements, subsequent (2) If the signed statement or affi- replacements shall be delayed until the davit is not received by the State agen- agency has verified that the original cy within 10 days of the date of report, issuance was returned or the original no replacement shall be made. If the authorization document was not trans- 10th day falls on a weekend or holiday, acted. In a system using authorization and the statement is received the day documents, due to the time it takes to after the weekend or holiday, the State post and reconcile all authorization agency shall consider the statement documents, it may not be known at the timely received. time of the replacement request wheth- (3) The statement shall be retained in er prior replacements are countable re- the case record. It shall attest to the placements and, therefore, whether the nonreceipt, theft, loss or destruction of household has reached its limit. In the original issuance and specify the such cases, the allotment shall be re- reason for the replacement. It shall stored when the State agency verifies also state that the original or replace- that the limit on countable replacement issuance will be returned to the ments has not been reached. State agency if the original issuance is (iii) The State agency shall deny or recovered by the household and that delay replacement issuances in cases in the household is aware of the penalties which available documentation indi- for intentional misrepresentation of cates that the household’s request for the facts, including but not limited to, replacement appears to be fraudulent. a charge of perjury for a false claim. In (2) The household shall be informed addition, the statement shall advise of its right to a fair hearing to contest the household that: the denial or delay of a replacement (i) The household may request to be issuance. Replacements shall not be placed on an alternate issuance system made while the denial or delay is being after one report of nonreceipt; appealed. (ii) After two reports in a six-month (e) Replacing issuances lost in the mail period of loss or theft prior to receipt, or stolen prior to receipt by the household. the household shall be placed on an al- State agencies shall comply with the ternate delivery system; following procedures in replacing (iii) After two reports in a six-month issuances reported lost in the mail or period of loss or theft prior to receipt stolen prior to receipt by the house- and/or theft of an authorization docu- hold: ment after receipt the State agency (1) Determine if the authorization may delay or deny further replace- documents or benefits were validly ments for such causes; and issued, if they were actually mailed, if

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sufficient time has elapsed for delivery authorization document matches that or if they were returned in the mail. If on the household statement. In a Photo a delivery of a partial allotment is re- ID or serialized area, the State agency ported, the State agency shall deter- shall determine if the ID serial number mine the value of the coupons not de- annotated on the authorization docu- livered and determine whether the re- ment matches the serial number on the port of receipt of a partial allotment is recipient’s ID card. Any replacement corroborated by evidence that the cou- which results in duplicate participa- pon loss was due to damage in the mail tion shall be considered a household before delivery or by a discrepancy in error, and the replacement countable, the issuance unit’s inventory; when the ID serial number shown on (2) Determine, to the extent possible, the authorization document matches the validity of the request for a re- the serial number on the recipient’s placement. This includes determining card, unless the ID card was reported whether the original issuance has been lost or stolen prior to the replacement. returned to the State agency and, in a The State agency may require house- system utilizing authorization docu- holds, on a case-by-case basis, to report ments, whether the original authoriza- the theft to a law enforcement agency tion document has been transacted and to provide verification of such re- and, if so, whether the recipient’s sig- port. nature on the authorization document (2) Prior to replacing destroyed cou- matches the signature on the ID card. pons or authorization documents, or In a Photo ID area, the State agency destroyed food that was purchased with shall determine if the ID serial number food stamp benefits, the State agency annotated on the authorization docu- shall determine that the destruction ment matches the serial number on the occurred in a household misfortune or recipient’s ID card; disaster, such as, but not limited to, a (3) Issue a replacement in accordance fire or flood. This shall be verified with paragraphs (b), (c) and (d) of this through a collateral contact, docu- section if the household is eligible; mentation from a community agency (4) Place the household on an alter- including, but not limited to, the fire nate delivery system, if warranted, in department or the Red Cross, or a accordance with paragraph (g) of this home visit. The State agency shall prosection; and vide replacements of coupons, author- (5) Take other action, such as cor- ization documents, and/or food in the recting the address on the master actual amount of the loss, but not ex- issuance file, warranted by the re- ceeding one month’s allotment, unless ported nondelivery. the exception in paragraph (b)(3) of this (f) Replacing issuances after receipt by section, applies. the household. Upon receiving a request (3) Households cannot receive a re- for replacement of an issuance reported placement for coupons lost or stolen as stolen or destroyed after receipt by after receipt. the household, the State agency shall (4) The State agency shall provide redetermine if the issuance was validly placements for improperly manufac- issued. The State agency shall also tured or mutilated coupons or author- comply with all applicable provisions ization documents as follows: in paragraphs (b), (c) and (d) of this (i) Coupons received by a household, section, as well as the following proce- and subsequently mutilated or found to dures for each type of replacement: be improperly manufactured shall be (1) Prior to replacing an authoriza- replaced in the amount of the loss to tion document which was reported sto- the household. State agencies shall re- len after receipt by the household, the place mutilated coupons when three- State agency shall determine, to the fifths of a coupon is presented by the extent possible, the validity of the re- household. The State agency shall ex- quest for replacement. For example, amine the improperly manufactured or the State agency may determine mutilated coupons to determine the va- whether the original authorization doc- lidity of the claim and the amount of ument has been transacted and, if so, coupons to be replaced. If the State whether the signature on the original agency can determine the value of the

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improperly manufactured or mutilated replacement ATP’s reported as non- coupons, the State agency shall replace delivered in a six-month period, the the unusable coupons in a dollar-for- State agency shall issue benefits to dollar exchange. After exchanging the that household under an alternate coupons and completing a Form FNS– issuance system. The two requests may 135, Affidavit of Return or Exchange of be for either an original or a replace- Food Coupons, the State agency shall ment ATP. The State agency shall destroy the coupons in accordance with keep the household on the alternate the procedures contained in § 274.7(f). If issuance system for the length of time the State agency cannot determine the the State agency determines to be nec- value of the improperly manufactured essary. The State agency may return or mutilated coupons, the State agency the household to the regular issuance shall cancel the coupons by writing or system if the State agency finds that stamping ‘‘canceled’’ across the face of the circumstances leading to the loss the coupons and forward the coupons have changed and the risk of loss has to FNS for a determination of the lessened. The placement of a household value by the U.S. Bureau of Engraving on an alternate issuance system and and Printing. the length of time the household is on (ii) Authorization documents re- this system is not subject to the fair ceived by a household and subsequently hearing process. mutilated or found to be improperly (h) Documentation and reconciliation of manufactured shall be replaced only if replacement issuances. (1) The State they are identifiable. ‘‘Identifiable’’ agency shall document in the house- means that the State agency is able to hold’s case file each request for redetermine the amount of the issuance placement, the date, the reason, and and that the authorization document whether or not the replacement was was validly issued to the household provided. This information may be re- within the last 30 days. For example, if corded exclusively on the household the authorization document serial statement required in paragraph (c) of number is legible, the State agency can this section. determine from the record-for-issuance (2) The State agency shall maintain, or manual authorization document log in readily-identifiable form, a record of to which household the authorization the replacements granted to the house- document was issued, the date of hold, the reason, the month, and issuance, and the amount. Similarly, if whether the replacement was count- the case number and validity period able as defined in paragraph (b)(2)(iv) are legible, the State agency may be of this section. The record may be a able to determine to whom the author- case action sheet maintained in the ization document was issued and the case file, notations on the master amount. If more than one authoriza- issuance file, if readily accessible, or a tion document was issued to the house- document maintained solely for this hold and the State agency cannot de- purpose. At a minimum, the system termine which authorization document shall be able to identify and differen- was mutilated, the replacement shall tiate among: be issued in the lesser amount. Improp- (i) Authorization documents or cou- erly manufactured or mutilated au- pons not received in, or stolen from, thorization documents shall be surren- the mail, and authorization documents dered to the State agency. stolen after receipt; and (g) Alternate issuance system for a (ii) Replacement issuances which are household. The State agency shall offer not subject to a replacement limit. to place a household in an alternate (3) Upon completion of reconciliation issuance system after the first report in a system utilizing authorization of nonreceipt, or when circumstances documents, the State agency shall up- exist that indicate that the household date the record required in paragraph may not receive its benefits through (h)(2) of this section to indicate wheth- the normal issuance system, such as er both the original and replacement when a household has a history of reauthorization documents were transported nonreceipt of ATP’s. After two acted. If both were not transacted, the requests for replacement of original or record shall clearly indicate that the

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replacement authorization document cordance with the requirements of was not a countable replacement. these regulations. (4) When a request for replacement is (1) State agencies shall monitor the made late in an issuance month, the re- coupon inventories of coupon issuers placement will be issued in a month and bulk storage points to ensure that subsequent to the month in which the inventories are neither excessive nor original authorization document was insufficient to meet the issuance needs issued. All replacements shall be post- and requirements. In determining rea- ed and reconciled to the month of sonable inventory needs, State agen- issuance of the replacement and may cies shall consider, among other be posted to the month of issuance of things, the ease and feasibility of re- the original authorization document, supplying such inventories from bulk so that all duplicate transactions may storage points within the State. The be identified. inventory levels at coupon issuers and (i) Further action on replacement bulk storage points should not exceed a issuances. The State agency shall take six-month supply, taking into account the following further actions on re- coupons on hand and on order. placements: (2) State agencies shall establish ac- (1) On at least a monthly basis, the counting systems for monitoring the State agency shall report to the appro- inventory activities of coupon issuers. priate office of the Postal Inspection State agencies shall review the Form Service all authorization documents FNS–250, from coupon issuers and bulk reported as stolen or lost in the mail. The State agency shall assist the Post- storage points, to determine the pro- al Service during any investigation priety and reasonableness of the inven- thereof and shall, upon request, supply tories. Forms FNS–261, Advice of Ship- the Postal Service with facsimiles of ment, Forms FNS–300, Advice of Trans- the original authorization document, if fer (or an approved State agency form), transacted, and the replacement au- and reports of returned mail-issued thorization document and a copy of the coupons, reports of replacements of nonreceipt statement. mail-issued coupons, reports of improp- The State agency shall advise the erly manufactured or mutilated cou- Postal Service if the original author- pons, reports of shortage or overage of ization document is not transacted. food coupon books and physical inven- (2) When a duplicate replacement au- tory controls shall be used by State thorization document is transacted, agencies to assure the accuracy of the State agency shall, at a minimum: monthly reports, issuers’ compliance (i) Compare the handwriting on the with required inventory levels, and the authorization documents to documents accuracy and reasonableness of coupon contained in the household’s case file, orders. including the nonreceipt statement; (b) Coupon controls. State agencies (ii) Establish a claim in accordance shall establish control and security with § 273.18, where it appears that the procedures to safeguard coupons that household has transacted, or caused are similar to those used to protect both authorization documents to be currency. The exact nature of security transacted; and arrangements will depend on State (iii) Refer the matter to the State agency evaluation of local coupon agency’s investigation unit, where in- issuance and storage facilities. These dicated. arrangements must permit the timely [54 FR 7004, Feb. 15, 1989, as amended at 54 issuance of coupons while affording a FR 51351, Dec. 15, 1989; 56 FR 63617, Dec. 4, reasonable degree of coupon security. 1991] The State agencies, as well as all persons or organizations acting on their § 274.7 Coupon management. behalf, shall: (a) Coupon inventory management. (1) Safeguard coupons from theft, em- State agencies shall establish coupon bezzlement, loss, damage, or destruc- inventory management systems which tion; ensure that coupons are requisitioned (2) Avoid unauthorized transfer, ne- and inventories are maintained in ac- gotiation, or use of coupons;

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(3) Avoid issuance and transfer of al- tiable specimen coupons to State agen- tered or counterfeit coupons; and cies for the administration of the Pro- (4) Promptly report in writing to gram and enforcement of the rules, and FNS any loss, theft, or embezzlement to authorized food firms for the pur- of coupons. pose of educating and training employ- (c) Coupon requisitioning, shipping and ees on Program operations. transferring. (1) State agencies shall ar- (1) The State agency or firm shall range for the ordering of coupons on store specimen coupons in secure stor- the Form FNS–260, Requisition for age with access limited to authorized Food Coupon Books, and the prompt personnel. The State agency or firm verification and written acceptance of should maintain a record of specimen each coupon shipment. FNS shall be coupons received. furnished with appropriate delivery (2) Specimen coupons that are muti- hours and the names of the persons au- lated, improperly manufactured, or thorized to sign delivery acknowledge- otherwise unusable, shall not be dis- ments. tributed by the State agency. Such (2) FNS shall assess the reasonable- coupons shall be destroyed by the ness and propriety of food stamp req- State agency and the destruction shall uisitions submitted by State agencies be witnessed by two persons and noted based on prior inventory changes and on the perpetual inventory records shall notify the State agency of any maintained by the FNS regional offices adjustments made to requisitions. for specimen coupons. (3) FNS shall ship coupons, in such (3) Specimen coupons shall not be denominations as it may determine issued to private individuals or firms necessary, directly to State agency re- for the purpose of collection or display. ceiving points approved by FNS. FNS shall promptly advise the State agency (e) Replacement and destruction of cou- in writing when coupons are shipped to pons and authorization documents by receiving points using Form FNS–261, issuance points. (1) The State agency Advice of Shipment. Coupons shall be shall provide for the replacement to considered delivered to the State agen- issuers of improperly manufactured or cy when FNS or its carrier has a signed mutilated coupons as provided below. receipt. Replacement provisions pertaining to (4) Once coupons have been accepted households are contained in § 274.6. by receiving points within the State, (i) The State agency shall examine any further movement of the coupons the improperly manufactured or muti- between coupon issuers and bulk stor- lated coupons to determine the validity age points within the State is at the of the claim and the amount of coupons risk of the State agency. To minimize to be replaced. the risk of loss, coupons should be (ii) If the State agency can determine shipped by armored vehicle or some the value of an improperly manufac- other method of transportation that af- tured or mutilated coupon, the State fords the State agency the maximum agency shall replace the unusable cou- security available. pon, dollar for dollar, when at least (5) In every instance when coupons three-fifths of the coupon is presented are transported within a State, the per- by the issuer. After the exchange, the son(s) transporting coupons shall: State agency shall destroy the unus- (i) Acknowledge in writing the re- able coupon in accordance with the ceipt of the coupons; procedures contained in paragraph (f) (ii) Provide as much protection for of this section. the coupons as is reasonable; (iii) If the State agency cannot deter- (iii) Advise issuance supervisors of mine the value of the improperly man- the routes to be taken, the shipment ufactured or mutilated coupons, the departure time and the estimated ar- State agency shall cancel the coupons rival time. This information, if in writ- by writing or stamping ‘‘canceled’’ ten form, may be destroyed after the across the face of the coupons and for- coupons have been received. ward the coupons to FNS for a deter- (d) Specimen coupons. FNS may pro- mination of the value by the U.S. Bu- vide upon written request, non-nego- reau of Engraving and Printing. The

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dollar amount shall be shown on the (ii) If either the coupon issuer or Form FNS–250 report. bulk storage point, or the State agency (2) The State agency shall void all cannot determine whether coupons or authorization documents mutilated or coupon books were in fact improperly otherwise rejected during the prepara- manufactured or cannot establish the tion process. The voided authorization value of the coupons involved, the documents shall either be filed for State agency shall promptly forward a audit purposes or destroyed, provided written statement of findings and the destruction is witnessed by at least canceled coupon(s) or coupon book(s) two persons and the State agency to FNS for determination. maintains a list of all destroyed au- (3) The State agency shall destroy thorization documents. Provisions per- the coupons and coupon books by burn- taining to the replacement of author- ing, shredding, tearing, or cutting so ized documents mutilated subsequent they are not negotiable. Two State to receipt by a household are provided agency officials shall witness and cer- in § 274.6. tify the destruction and report the de- (f) Destruction of unusable coupons struction information as follows: found in inventory or received as claim (i) The destruction of improperly payments. (1) The State agency shall re- manufactured, mutilated or exchanged quire coupon issuers, bulk storage coupons from coupon issuers and bulk points, and claims collection points to storage points shall be reported on the dispose of unusable coupons received Form FNS–471, Coupon Account and from the manufacturer or received as Destruction Report, and submitted payment for claims within 30 days with the Form FNS–250 for the appro- after the close of the month in which priate month. For coupons received unusable coupons shipped from the from recipients, a Form FNS–135 shall manufacturer are discovered, or are re- be completed and attached to the Form ceived from recipients as payment for FNS–471. claims. There is no dollar limit on the amount of coupons which may be dis- (ii) The destruction of coupons re- posed of by the State agency. Disposal ceived from claims collection points shall be by one of the following two that are the result of the payment of methods: household claims shall be reported on (i) Sending unusable coupons to the the Form FNS–471 (with Form FNS–135 State agency for destruction; or documentation) and submitted with (ii) Holding the unusable coupons in the Form FNS–209, Status of Claims secure storage pending examination Against Households, for the appro- and destruction by the State agency at priate rnonths. A State agency may the coupon issuance, bulk storage, or consolidate its monthly Form FNS–471 claims collection point. for claims collection destruction re- (2) Prior to the destruction of im- porting by providing one completed properly manufactured or mutilated Form FNS–471 that reflects the total coupons or coupon books that were ex- claims destruction figure for each changed, or collected from households month. However, the State agency for claims, the State agency shall: must attach a breakdown which re- (i) Verify that the coupons were im- ports the required Form FNS–471 infor- properly manufactured or mutilated. mation for each reporting point. If a If one or more boxes of coupons were State agency chooses to submit a con- improperly manufactured, the State solidated Form FNS–471, all individual agency shall contact FNS prior to dis- Forms FNS–471 must be retained by the position for instructions on the disposi- State agency for future review and tion of the coupons. If FNS has not re- audit purposes. The Form FNS–135 may sponded within the 30-day time limit, not be consolidated, and all originals of the State agency shall destroy the box that form must accompany a consoli- of coupons and document the manufac- dated Form FNS–471. turing irregularity and the book num- (g) Undeliverable or returned benefits. bers, and retain a copy of the State The State agency shall exercise the fol- agency’s request to FNS for permission lowing security and controls for au- to destroy. thorization documents and coupons

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that are undeliverable or returned dur- (d) Supporting documentation. Coupon ing the valid issuance period. Forms issuers and bulk storage points shall FNS–471 and FNS–135 shall be completed submit to the State agency supporting by the State agencies, as appropriate. documentation which will allow (1) Coupons which are in book form, verification of the monthly report as complete, and with original and un- provided in § 274.4. At a minimum, such signed covers shall be returned to in- documentation shall include docu- ventory and noted as such on the ments supporting coupon shipments, issuance log, and the Form FNS–250. transfers, and issuances. In those (2) Authorization documents shall be States using issuance systems with au- recorded in the control log noting the thorization documents, coupon issuers serial number, household name and shall submit transacted authorization case number. The documents shall be documents batched according to each kept in secure storage with limited ac- day’s activity, in accordance with the cess. The documents may be voided as long as households which report non- schedule prescribed by the State agen- delivery are provided an immediate re- cy but, in any case, not less often than placement. monthly. (h) Old series coupon exchange. House- (e) Handling of improperly manufac- holds which have old-series (no longer tured or mutilated coupons. Coupon issued) coupons shall be entitled to a issuers, and bulk storage and claims dollar-for-dollar exchange of old-series collection points shall cancel improp- coupons for current series coupons. erly manufactured or mutilated cou- Households in possession of old-series pons or coupon books by writing or coupons shall submit the coupons and a stamping ‘‘canceled’’ across the face of request for exchange to the State agen- the coupon(s) and coupon book(s). De- cy. State agencies may make direct expending upon State agency policy, the change to claimants or request FNS to coupon issuer or bulk storage point make the exchange. Forms FNS–471 and shall forward the coupons with the ap- FNS–135 shall be completed by the propriate documentation (determined State agencies, as appropriate. by the State agency) to the State agen- [54 FR 7004, Feb. 15, 1989, as amended at 54 cy, or hold the coupons in secure stor- FR 51351, Dec. 15, 1989] age, pending examination and destruction by the State agency at the coupon § 274.8 Responsibilities of coupon issuer, bulk storage point or claims issuers, and bulk storage and collection location. The documentation claims collection points. is not required if the State agency in- (a) Receipt of coupons. Coupon issuers, spects the coupons at the issuance, and bulk storage and claims collection storage or collection point. Additional points shall promptly verify and ac- requirements pertaining to the han- knowledge, in writing, the content of dling of these types of coupons by the each coupon shipment or coupon trans- State agency are provided in § 274.7(e). fer delivered to them and shall be responsible for the custody, care, control, § 274.9 Closeout of a coupon issuer. and storage of coupons. (b) Inventory levels. Coupon issuers (a) Definition of responsibilities. When- and bulk storage points shall maintain ever the services of a coupon issuer or a proper level of coupon inventory not bulk storage point are terminated, the in excess of reasonable needs, taking State agency shall perform the respon- into consideration the ease and feasi- sibilities described below. If a coupon bility of resupplying such coupon in- issuer or bulk storage point has more ventories. Such inventory levels should than one functioning unit and one of not exceed the six-month supply pro- these facilities is terminated, the cou- vided for in § 274.7(a). pon issuer or bulk storage point shall (c) Monthly reporting. Coupon issuers, fulfill the responsibilities described in and bulk storage and claims collection paragraphs (b) and (c) of this section. points shall report monthly to FNS, The coupon issuer or bulk storage through the State agency, using Form point shall notify the State agency of FNS–250, as provided in § 274.4. the pending termination of any of its

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services prior to the actual termi- seek other issuance or storage alter- nation. The State agency shall prompt- natives. ly notify FNS as provided in § 274.1(d). (b) Closeout accountability. The State § 274.10 Use of identification cards and agency shall perform a closeout audit redemption of coupons by eligible of a coupon issuer or bulk storage households. point within 30 days of termination of (a) General provisions. State agencies the issuance or storage point. The shall issue an ID card to each certified State agency shall report the findings household as proof of Program eligi- of the audit to FNS immediately upon bility. Upon request, the household or its completion. If the audit determines the authorized representative, shall that the final Form FNS–250 is incor- present the household’s ID card at rect, the State agency shall promptly issuance points, retail food stores or provide a corrected report to FNS. meal services in order to transact the (c) Transfer of coupon inventory. (1) allotment authorization or when ex- Prior to the transfer of coupon inven- changing benefits for eligible food. The tory to another coupon issuer or bulk household member or members whose storage point, the State agency shall name(s) appear on the ID card shall perform an actual physical count of sign the coupon books issued to the coupons on hand. household. (2) The State agency shall transfer (1) All ID cards shall be issued in the the inventory to another coupon issuer name of the household member who is or bulk storage point, preferably with- authorized to receive the household’s in the same project area. The transfer issuance. In areas not designated by of coupons shall be properly reported FNS as requiring Photo ID cards, the and documented by both the point ID card shall contain space for the being terminated and the point receiv- name and signature of the household ing the inventory. member to whom the coupon allotment (d) Maintenance of participant service. is to be issued and for any authorized (1) At least 30 days before actual termi- representatives designated by the nation of a coupon issuer, the State household. Section 274.5(b) provides agency shall notify project area participants of the impending closure. No- further requirements pertaining to tification shall include identification emergency authorized representatives. of alternative issuance locations and Any person listed on the ID card shall available public transportation. The sign the ID card before that person can State agency shall post notices at the use it to obtain benefits. If the house- offices of the coupon issuer of the im- hold does not name an authorized rep- pending closure and may use mass resentative, the State agency shall media or notices with allotments to ad- void that area of the ID card to prevent vise participants about the expected names and signatures being entered at closure of the issuance office. a later date. The ID card may be seri- (2) If closure of the issuer will affect ally numbered. a substantial portion of the caseload or (2) The State agency shall limit a specific geographic area, the State issuance of ID cards to the time of ini- agency shall take whatever action is tial certification, with replacements necessary to maintain participant serv- made only in instances of loss, mutila- ice without interruption. tion, destruction, changes in the per- (3) If a coupon issuer or bulk storage son authorized to obtain coupons, or point is to be closed for noncompliance when the State agency determines that with contractual requirements and al- new ID cards are needed to keep the ternative issuance facilities or systems photographs up-to-date or if the State are not readily available, the State agency changes its ID card format or agency may continue to use the coupon system. Whenever possible, the State issuer or bulk storage point for a lim- agency shall collect the ID card that it ited time. In this situation, the State is replacing. agency shall perform weekly onsite (3) The State agency shall place an reconciliations of coupon issuance. The expiration date on all temporary ID State agency shall continue to actively cards, and on the regular ID cards

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issued to households certified for deliv- arms, ammunition, and other explo- ered meals for a specific period, and to sives. Any household residing in a re- homeless households certified for res- mote section of Alaska which has been taurant meals. determined by FNS to be an area in (4) Specially-marked ID cards shall which food coupons may be used to be issued in the following cir- purchase hunting and fishing equip- cumstances: ment shall have its ID card marked (i) Eligible household members 60 with the letters ‘‘HF’’. years of age or over or members who (5) ID cards delivered to households are housebound, physically handi- by mail shall not be mailed in the same capped, or otherwise disabled to the ex- envelope with authorization documents tent that they are unable to ade- or coupons. quately prepare all their meals, and (b) Photo ID cards. (1) Photo ID cards their spouses, may use coupons to pur- shall be issued in those project areas or chase meals prepared for and delivered portions thereof with 100,000 or more to them by a nonprofit meal delivery food stamp participants, except for service authorized by FNS. Any house- those project areas serviced entirely by hold eligible for and interested in using mail issuance or an Electronic Benefit delivered meal services shall have its Transfer system, or where FNS, in con- ID card marked with the letter ‘‘M’’. sultation with the Office of the Inspec- (ii) Eligible household members 60 tor General, approves a State agency’s years of age or over and their spouses, request for an exemption. FNS shall re- or those receiving SSI and their spond to a State agency’s request for spouses, may use coupons issued to exemption within 30 days of its receipt them to purchase meals prepared espe- of the request. cially for them at communal dining fa- (i) FNS shall evaluate the January cilities authorized by FNS for that pur- participation data reported as an at- pose. Any household eligible for and in- tachment to the March Form FNS–388 terested in using communal dining fa- report. Based on the evaluation, FNS cilities in those States or project areas shall notify State agencies at the be- where restaurants are authorized to ac- ginning of each fiscal year of any areas cept food stamps, shall have its ID card that either require or no longer require marked with the letters ‘‘CD’’. In areas the use of Photo ID cards. In cases where restaurants are not authorized where an entire State is a single to accept food stamps, the State or project area, FNS shall consult with project area may mark such ID’s with the State agency to determine whether the letters ‘‘CD’’. Photo IDs should be required in any (iii) Eligible homeless households specific parts of the project area. At may use food stamp benefits to pur- the conclusion of this consultation, chase meals from restaurants author- FNS shall inform the State agency ized by FNS for such purpose. Any whether the use of Photo IDs will be homeless household eligible for, and in- mandated in any parts of the State terested in, using restaurants in those agency, based on the need to protect areas where restaurants are authorized Program integrity, and the cost-effec- to accept food stamp benefits shall tiveness of Photo ID cards. have a specially-marked ID card. The (ii) In cases where a project area State agency shall provide samples of serves between 100,000 and 110,000 par- specially-marked ID cards to author- ticipants, FNS shall inform the State ized restaurants. agency in which the project area is lo- (iv) Eligible households residing in cated that it is prepared to mandate areas of Alaska determined by FNS as the use of Photo IDs in the project areas where access to retail food stores area. FNS shall also inform the State is difficult and which rely substan- agency that it will not mandate use of tially on hunting and fishing for sub- Photo ID’s if, within 30 days of being sistence may use all or any part of the notified by FNS that Photo ID’s must coupons issued to purchase hunting be used, the State agency demonstrates and fishing equipment such as nets, to FNS that participation in the hooks, rods, harpoons and knives, but project areas has fallen below the may not use coupons to purchase fire- 100,000 participant level in the recent

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past, or justifies to FNS why participa- (iii) Households entitled to expedited tion is likely to fall below that level service if the State agency’s Photo ID during the next year. card system is incapable of producing a (2) FNS may, at any time, in con- Photo ID card in time for the house- sultation with the Office of the Inspec- hold to participate as required by tor General, designate project areas or § 273.2(i). A Photo ID card shall be portions thereof with less than 100,000 issued to the household prior to participants as requiring the use of issuance of the household’s next allot- Photo ID cards if, in reviewing such ment; factors as the level of duplicate (iv) Households certified under the issuances and results of management SSA-food stamp joint processing rules evaluation reviews, the Department de- in § 273.2(k). State agencies shall not termines that the issuance of Photo ID require such households to obtain cards in such areas would be justified. Photo IDs as long as they continue to (3) A State agency may request that be certified for food stamps at SSA of- FNS require that Photo IDs be man- fices. However, a household shall ob- dated throughout either the entire tain a Photo ID if a household member State or specified project areas. FNS or authorized representative reports to shall respond to such requests within a food stamp office for recertification; 30 days of the request and, if the re- and, quest is not approved, FNS shall jus- (v) Residents of drug/alcohol treat- tify its reasons for the disapproval to ment and rehabilitation programs. the State agency. (5) In addition to the general provi- (4) In project areas where issuance of sions in paragraph (a) of this section, Photo ID cards is mandatory, the State Photo ID cards shall include the photo- agency shall issue a Photo ID card at graph of the person who will receive the time of certification to each eligi- the household’s issuance; i.e., who will ble household except those listed in either transact the household’s author- § 274.10(b)(4). Households exempt from ization document or pick up the house- mandated Photo ID cards shall be hold’s allotment. A Photo ID card shall issued ID cards which meet the speci- be signed by only the person pictured fications in paragraph (d) of this sec- on the card, who may be the household tion except that in lieu of a photo- member or authorized representative. graph, the State agency shall annotate Only the person photographed may ob- the cards to show an exception was tain the household’s coupons. All granted to the household and that the Photo ID card formats are subject to ID card is valid. The following house- FNS approval. holds are exempt from the Photo ID re- (6) Photo ID cards shall be serially quirement: numbered and laminated after they are (i) Households certified by out-of-of- signed by the person whose photograph fice interviews as specified in appears on the card. ID cards shall also § 273.2(e)(2). However, the State agency include a color photograph of the per- shall replace the non-Photo ID card son designated by the household to ob- issued to such households with a Photo tain coupons and the household’s case ID card when the appropriate house- number or other identifying informa- hold member or authorized representation. tive visits the certification office. The (7) A Photo ID card used to receive State agency shall not require any benefits under a welfare or public as- member of such a household to visit sistance program may be adapted for the office exclusively for the purpose of food stamp purposes if it meets the issuing a Photo ID card; specifications contained in this section (ii) Household members whose reli- and can be annotated to indicate food gion does not allow them to be photo- stamp eligibility. graphed. The State agency shall re- (8) The State agency shall provide a quire such a household to provide a household with a reasonable oppor- signed statement to the effect that the tunity to obtain a food stamp Photo ID members’ religious beliefs do not allow card in any project area where its use them to be photographed; is mandated.

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(i) A household required to have a designating the emergency authorized Photo ID card shall not participate representative and attesting to the sig- until such time as a household member nature of the emergency authorized or a designated authorized representa- representative. The designation may be tive obtains such a card. If a des- on the ID card or authorization docu- ignated authorized representative does ment or a separate form. The house- not obtain the required Photo ID, the hold shall not be required to travel to household may designate a household a food stamp office to execute an emer- member or another authorized rep- gency designation. The emergency au- resentative to be photographed. thorized representative may present a (ii) If the person whose photograph separately written and signed state- appears on the ID is unable to travel to ment from the head of the household or the issuance point to obtain a par- his or her spouse, authorizing the ticular allotment, the household may issuance of the certified household’s use the emergency authorized rep- food stamps to the authorized representative procedures provided in resentative. The emergency represent- § 274.5 and in paragraph (c) of this sec- ative shall sign the written statement tion. (9) State agencies which have the ca- from the household and present the pability may develop systems to issue statement and the household ID card more than one household member a to obtain the allotment. A separate Photo ID card. These systems shall en- written designation is required each sure that the safeguards provided by time an emergency representative is Photo ID cards, as specified in this sec- authorized. tion, are maintained. (2) In any issuance system, the cash- (10) If a mutilated or altered Photo ier shall compare the signatures on the ID card is presented at the issuance issuance document and on the ID card. point, the household shall obtain a re- If they do not match, issuance shall placement Photo ID card prior to not be made. issuance. (i) If the household is required by (11) A household shall be entitled to these regulations to present a Photo ID unobtained benefits, lost as a result of card, coupons shall be issued only when being unable to obtain a particular al- the person presenting the authoriza- lotment, if the issuance month elapses tion document or requesting the cou- between the time the household re- pons is pictured on the ID card. The quested a replacement Photo ID card cashier shall write the serial number of and the delivery of that card to the the Photo ID card on the authorization household. or issuance document. (12) FNS may waive one or more of (ii) If the Photo ID card appears to be the requirements in this section if a mutilated or altered, the issuing agent State agency can demonstrate to FNS shall not issue the coupons, but shall that its alternate ID card or system require the household to obtain a re- will provide adequate safeguards placement ID card from the State against fraudulent and/or duplicate issuances. agency. (c) Emergency authorized representative (d) Eligible food. A household member and recipient identification. State agen- should sign each coupon book issued to cies shall develop a method by which a the household. The coupons may be household may designate an emergency used only by the household, or other authorized representative to obtain the persons the household selects, to pur- household’s allotment when none of chase eligible food for the household, the persons specified on the ID is avail- which includes, for certain households able. residing in certain designated areas of (1) At a minimum, the method devel- Alaska, the purchase of hunting and oped by the State agency shall require fishing equipment with coupons. a document with the signature of the Uncanceled and unendorsed coupons of emergency authorized representative $1 denomination, returned as change by as well as a place for the household authorized retail food stores, may be member named on the ID card to sign presented as payment for eligible food.

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All other detached coupons may be ac- (i) Prior payment prohibition. Coupons cepted only if accompanied by the cou- shall not be used to pay for any eligible pon book which bears the same serial food purchased prior to the time at number as the detached coupons. It is which the coupons are presented to au- the right of the household or the authorized retail food stores or meal serv- thorized representative to detach the ices. Neither shall coupons be used to coupons from the book. pay for any eligible food in advance of (e) Meals-on-wheels. Eligible house- the receipt of food, except when prior hold members 60 years of age or over or payment is for food purchased from a members who are housebound, phys- nonprofit cooperative food purchasing ically handicapped, or otherwise dis- venture. abled to the extent that they are un- (j) Cash change. When change in an able to adequately prepare all their amount less than $1 is required in a meals, and their spouses, may use cou- coupon transaction, the household pons to purchase meals prepared for shall receive the change in cash not to and delivered to them by a nonprofit exceed 99 cents. However, in the case of meal delivery service authorized by homeless food stamp households, nei- FNS. ther cash change nor credit slips shall (f) Residents of certain institutions. (1) be returned for coupons used for the Members of eligible households who are purchase of prepared meals from au- narcotics addicts or alcoholics and who thorized homeless meal providers. Such regularly participate in a drug or alco- meal providers may use uncancelled holic treatment rehabilitation program and unmarked $1 coupons which were may use food stamp benefits to pur- previously accepted for meals served to chase food prepared for them during food stamp recipients when change is the course of such program by a pri- required for $5 and $10 coupons. How- vate nonprofit organization or institu- ever, in the case of homeless food tion or publicly operated community stamp households, neither cash change mental health center which is author- nor credit slips shall be returned for ized by FNS to redeem benefits in ac- food stamps used for the purchase of cordance with §§ 278.1 and 278.2(g) of prepared meals from authorized public this chapter. and private nonprofit homeless meal (2) Eligible residents of a group living providers. Such meal providers may arrangement may use food stamp bene- use the lowest denomination coupons fits issued to them to purchase meals that are uncancelled and unmarked for prepared especially for them at a group making change in food stamp trans- living arrangement which is authorized actions. Restaurants which are author- by FNS to redeem benefits in accord- ized by FNS under § 278.1 to provide ance with §§ 278.1 and 278.2(g) of this meals to homeless food stamp recipi- chapter. ents shall return cash change to such (3) Residents of shelters for battered recipients in food stamp transactions women and children as defined in when the amount of change due is less § 278.1(g) of this chapter may use their than one dollar. If change of one dollar food stamp benefits to purchase meals prepared especially for them at a shel- or more is due, uncancelled and un- ter which is authorized by FNS to re- marked one dollar coupons shall also deem benefits in accordance with be used for change. §§ 278.1 and 278.2(g) of this chapter. [54 FR 7004, Feb. 15, 1989, as amended at 54 (g) Homeless food stamp households. FR 51352, Dec. 15, 1989; 57 FR 11249, Apr. 1, Homeless food stamp households may 1992; 61 FR 53600, Oct. 15, 1996; Amdt. 397, 70 use their food stamp benefits to pur- FR 72354, Dec. 5, 2005] chase prepared meals from authorized homeless meal providers. § 274.11 Issuance and inventory record (h) Use of ID cards. Upon request, the retention, and forms security. household or the authorized represent- (a) Availability of records. The State ative shall present the household’s ID agency shall maintain issuance, inven- card to the retail food store or meal tory, reconciliation, and other ac- service when exchanging food coupons countability records for a period of for eligible food. three years as specified in § 272.1(f) of

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this chapter. This period may be ex- § 274.12 Electronic Benefit Transfer tended at the written request of FNS. issuance system approval stand- (1) Issuance, inventory, reconcili- ards. ation, and other accountability records (a) General. This section establishes shall include all Agency, State, and rules for the approval, implementation local forms involved in the State agen- and operation of Electronic Benefit cy’s receipt, storage, handling, Transfer (EBT) systems for the Food issuance, and destruction of coupons Stamp Program as an alternative to completed by contract agents or any issuing food stamp coupons. By Octo- other individuals or entities involved ber 1, 2002, State agencies must have in issuance or inventory, as well as EBT systems implemented statewide, those completed by the State agency. unless the Secretary provides a waiver (2) In lieu of the records themselves, for a State agency that faces unusual easily retrievable microfilm, micro- barriers to implementing an EBT sys- fiche, or computer tapes which contain tem. In general, these rules apply to the required information may be main- both on-line and off-line EBT systems, tained. unless stated otherwise herein, or un- (b) Control of issuance documents. The less FNS determines otherwise for off- State agency shall control all issuance line systems during the system plan- documents which establish household ning and development process. eligibility while the documents are (b) Program administration. (1) The transferred and processed within the State food stamp agency shall submit State agency. The State agency shall Planning and Implementation Ad- use numbers, batching, inventory con- vanced Planning Documents (APDs) for trol logs, or similar controls from the FNS approval in accordance with the point of initial receipt through the requirements of § 277.18 of this chapter issuance and reconciliation process. and this section for development and The State agency shall also ensure the implementation of initial and subse- security and control of authorization quent EBT systems. The State agency documents in transit from the manu- shall implement EBT systems in a facturer to the State agency. pilot area prior to expansion Statewide (c) Accountable documents. (1) HIR or to other project areas. The areas of cards, authorization documents, and pilot operation and full-scale operation mandated Photo ID cards shall be con- shall be identified in the Planning APD sidered accountable documents. The when submitted to FNS for approval. State agency shall provide the fol- (2) The State agency shall be respon- lowing minimum security and control sible for the coordination and manage- procedures for these documents: ment of the EBT system. The Sec- (i) Preprinted serial numbers; retary may suspend or terminate some (ii) Secure storage; or all EBT system funding or withdraw (iii) Access limited to authorized per- approval of the EBT system from the sonnel; State agency upon a finding that the (iv) Bulk inventory control records; State agency or its contracted representative has failed to comply with (v) Subsequent control records main- the requirements of this section and/or tained through the point of issuance or § 277.18 of this chapter. use, and (3) All EBT systems within a State (vi) Periodic review and validation of must follow a singular EBT APD and inventory controls and records by par- system architecture submitted by the ties not otherwise involved in main- State agency. Multiple EBT designs taining control records. will be acceptable only if: such designs (2) For notices of change which ini- can be fully justified by the State tiate, update or terminate the master agency; the system differences are issuance file, and blank ID cards, the transparent to participating house- State agency shall, at a minimum, pro- holds that move within the State; oper- vide secure storage and shall limit ac- ating costs are the same or lower; and cess to authorized personnel. the ability of the different systems to [54 FR 7004, Feb. 15, 1989, as amended at 60 readily communicate (transaction FR 20183, Apr. 25, 1995] interchange) with one another.

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(4) The State agency shall indicate (A) The types of testing to be per- how it plans to incorporate additional formed; programs into the EBT system if it an- (B) The organization of the test team ticipates the addition of other public and associated responsibilities, test assistance programs concurrent with database generation, test case develop- or after implementation of the Food ment, test schedule, and the docu- Stamp Program EBT system. The mentation of test results. Acceptance State agency shall also consult with testing shall include functional re- the State agency officials responsible quirements testing, error condition for administering the Special Supple- handling and destructive testing, secu- mental Nutrition Program for Women, rity testing, recovery testing, controls Infants and Children (WIC) prior to testing, stress and throughput perform- submitting the Planning APD for FNS ance testing, and regression testing. approval. FNS may require that any or all of (c) Pilot project approval require- these tests be repeated in instances ments—(1) EBT planning APD. The where significant modifications are State agency shall comply with the made to the system after these tests two-stage approval process for APDs in are initially completed or if problems submitting an EBT system proposal to that surfaced during initial testing FNS for approval. The Planning APD warrant a retest; shall contain the requirements speci- (C) A ‘‘what-if’’ component shall also fied under § 277.18(d)(1) of this chapter, be included to permit the opportunity including a brief letter of intent, plan- for observers and participants to test ning budget, cost allocation plan, and possible scenarios in a free-form man- schedule of activities and deliverables. ner. (2) EBT Implementation APD. The EBT (D) The Department reserves the Implementation APD shall include the right to participate and conduct inde- completed documents required under pendent testing as necessary during § 277.18 of this chapter for Implementa- the Acceptance testing and appropriate tion APDs, where appropriate. In addi- events during system design, develop- tion, EBT Implementation APDs shall ment, implementation and operation. include the detailed pilot project site (iii) An acceptance test report. The description and expanded site descrip- State agency shall provide a separate tion, as described in this paragraph. report after the completion of the ac- Also, the State agency shall commit to ceptance test only in instances where completing and submitting the fol- FNS is not present at the testing or lowing documents for FNS approval when serious problems are uncovered and obtaining such approval prior to during the testing that remain unre- issuance of benefits to eligible house- solved by the end of the test session. holds in the pilot project area: The report shall summarize the activi- (i) Functional demonstration. A func- ties, describe any discrepancies, de- tional demonstration of the functional scribe the proposed solutions to dis- requirements prescribed in paragraph crepancies, and the timetable for their (f) of this section in combination with retesting and completion. In addition, the system components described by the report shall contain the State the approved System Design is rec- agency’s recommendations regarding ommended in order to identify and re- implementation of the EBT system in solve any problems prior to acceptance the pilot site. testing. The Department reserves the (iv) A prototype food retailer agree- right to participate in the Functional ment. The State agency shall enter an Demonstration if one is conducted. agreement with each food retailer that (ii) An acceptance test plan. The Ac- complies with the requirements of ceptance Test Plan for the pilot project paragraph (g)(6) of this section. shall describe the methodology to be (v) A pilot project implementation plan. utilized to verify that the EBT system The pilot project implementation plan complies with Food Stamp Program re- shall include the following: quirements and System Design speci- (A) A description of the tools, proce- fications. At a minimum, the Accept- dures, detailed schedules, and resources ance Test Plan shall address: needed to implement the pilot project;

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(B) The equipment acquisition and tion no later than one month after installation requirements, ordering completion of pilot operations. schedules, and system and component (d) Expansion requirements. The pilot testing; and expansion schedule must be delin- (C) A phase-in strategy which per- eated in the State agency’s approved mits a measured and orderly transition implementation plan. As part of the to EBT. In describing this strategy, the plan, the State agency must indicate a plan shall address training schedules suitable pilot area to serve as the basis that avoid disruption of normal shop- of the three-month analysis and report- ping patterns and operations of partici- ing; however, expansion can occur si- pating households and food retailers. multaneously with pilot operation. Training of food stamp households, Submission of an Advanced Planning State agency personnel and retailers Document Update to request FNS ap- and/or their trainers shall be coordi- proval to implement and operate the nated with the installation of equip- EBT system in areas beyond the pilot ment in retail stores; area is only required in instances (D) A description of on-going tasks where there are substantial changes to associated with fine-tuning the system the implementation plan. However, if and making any corrective actions nec- significant problems arise during the essary to meet contractual require- pilot period or expansion, the Depart- ments. The description shall also ad- ment can require that roll-out be sus- dress those tasks associated with on- pended until such problems are re- going training, document updates, solved. equipment maintenance, on-site sup- (e) Functional requirements. The State port and system adjustments, as need- agency shall ensure that the EBT sys- ed to meet Food Stamp Program re- tem is capable of performing the fol- quirements; and, lowing functional requirements prior to implementation: (E) A plan for orderly phase-out of (1) Authorizing household benefits. (i) the pilot project if it is demonstrated Issuing and replacing EBT cards to eli- during the pilot project operations that gible households; the system is not acceptable. (ii) Permitting eligible households to (vi) A contingency plan. The State select a personal identification number agency shall submit a written contin- (PINs) at least four digits in length; gency plan for FNS approval. The con- (iii) Establishing benefit cards and tingency plan shall contain informa- accounts with the central computer tion regarding the back-up issuance database; system that will be activated in the (iv) Maintaining the master house- event of an emergency shut-down hold issuance record file data and cur- which results in short-term or ex- rent authorization information; tended system inaccessibility, or total (v) Training households and other discontinuation of EBT system oper- users in system usage; ations. The contingency plan shall be (vi) Authorizing benefit delivery; incorporated into the State system se- (vii) Posting benefits to each house- curity plan after FNS approval as pre- hold’s account for regular and supple- scribed at § 277.18(p) of this chapter. mental issuances; (3) EBT Implementation APD Budget. (viii) Providing households with ac- The Implementation APD budget shall cess to information on benefit avail- be prepared and submitted for FNS ap- ability; proval in accordance with the require- (ix) Ensuring the privacy of house- ments of paragraph (k) of this section hold data and providing benefit and and § 277.18(d)(2) of this chapter. data security; (4) Pilot project reporting. The State (x) Inventorying and securing ac- agency is required to report to FNS all countable documents; and issues that arise during the pilot pe- (xi) Zeroing out benefit accounts and riod. Reports to FNS shall be provided other account authorization activity. as problems occur. In instances where (2) Providing food benefits to house- the State agency must investigate the holds. (i) Verifying the identity of au- issue, FNS must receive the informa- thorized households or authorized

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household representatives at issuance (i) Convey retailer authorization in- terminals or POS; formation provided by FNS to the sys- (ii) Verifying the PIN and/or PIN off- tem operator using the Retailer Elec- set, primary account number (PAN), tronic Benefit Transfer (EBT) Data Ex- terminal identification number and re- change (REDE) system. The State tailer identification number; agency must access the REDE files to (iii) Determining the sufficiency of ensure that the FNS retailer files used the household’s account balance in to authorize valid EBT Food Stamp order to debit or credit household ben- transactions are updated on a daily efit accounts at the point-of-sale; basis. Follow-up on actions taken re- (iv) Sending messages authorizing or garding any disqualification or with- rejecting purchases; drawal by an authorized food retailer (v) Providing back-up purchase pro- from the Food Stamp Program must cedures when the system is unavail- occur within two business days after able; receipt; (vi) Ensuring that benefits are avail- (ii) Add newly authorized food retail able and carried over from month-to- stores or third party processors to the month. EBT system as prescribed under para- (vii) Converting EBT benefits to cou- graph (g)(1)(ii) of this section. pons in accordance with paragraph (iii) Ensure that only currently au- (f)(6) of this section; and thorized retailers can access the sys- (viii) Responding to issuance prob- tem; lems in a timely manner. (iv) Monitor food retailers to ensure (3) Crediting retailers and financial in- that equipment deployment complies stitutions for redeemed benefits. (i) with paragraph (g)(4) of this section; Verifying electronic transactions flow- (v) Ensure that equipment and sup- ing to or from participating retailers’ plies are maintained in working order bank accounts; for retail stores equipped by the State (ii) Creating and maintaining a file agency or its contractor. Equipment containing the individual records of shall be replaced or repaired within 48 EBT transactions; hours; (iii) Totalling all credits accumu- (vi) Ensure that retail store employ- lated by each retailer; ees are trained in system operation (iv) Providing balance information to prior to implementation. Retailer retailers or third party processors from training shall be offered by the State individual POS terminals, as needed; agency and include the provision of ap- (v) Providing each retailer informa- propriate written and program specific tion on total deposits in the system on materials. Retailers have the option to a daily basis; waive instruction by the State agency (vi) Preparing a daily tape in a Na- if they desire. State agencies shall ditional Automated Clearinghouse for- rect retailers to confirm in writing mat or other process approved by FNS that they are waiving their option to with information on benefits redeemed training; for each retailer and in summary; (vii) Provide on-line read-only access (vii) Transmitting the automated to State EBT systems for compliance clearinghouse (ACH) tape to a financial investigations. The State agency is re- institution for transmission through quired to provide software and tele- the ACH or other method approved by communications capability as nec- FNS; essary to FNS Compliance Branch Area (viii) Transferring the information on offices, Regional offices and Field of- the ACH tape or other process approved fices so that FNS compliance inves- by FNS containing daily redemption tigators, other appropriate FNS per- activity of each retailer to the FNS sonnel and investigators from the De- Minneapolis Computer Support Center partment’s Office of Inspector General at least once weekly. Transmittal may have access to the system in order to be by tape, disc, remote job entry or conduct investigations of program other means acceptable to FNS. abuse and alleged violations; (4) Managing retailer participation. The (viii) Ensure that FNS compliance State agency shall: investigators and investigators from

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the Department’s Office of Inspector from the system host computer, to the General have access to EBT cards and switch, to the third party processors, accounts that are updated as necessary to a store’s host computer or point of to conduct food stamp investigations. sale (POS) device. These adjustments (f) Household participation—(1) Trans- may occur after the availability date action limits. No minimum dollar and may result in either a debit or amount per transaction nor maximum credit to the household. limit on the number of transactions (A) Client-initiated adjustments. The shall be established. In addition, no State agency must act on all requests transaction fees shall be imposed on for adjustments made by client house- food stamp households utilizing the holds within 90 calendar days of the EBT system to access their benefits. error transaction. The State agency (2) Access to balances. Households has 10 business days from the date the shall be permitted to determine their household notifies it of the error to in- food stamp account balances without vestigate and reach a decision on an making a purchase or standing in a adjustment and move funds into the checkout line. The State agency shall client account. This timeframe also ap- ensure that the EBT system is capable plies if the State agency or entity of providing a transaction history for a other than the household discovers a period of up two calendar months to system error that requires a credit ad- households upon request. justment to the household. Business (3) Transaction receipts. Households days are defined as calendar days other shall be provided printed receipts at than Saturdays, Sundays, and Federal the time of transaction. At a minimum holidays. this information shall: (B) Retailer-initiated adjustments. The (i) State the date, merchant’s name State agency must act upon all adjust- and location, transaction type, trans- ments to debit a household’s account action amount and remaining balance no later than 10 business days from the for the food stamp account; date the error occurred, by placing a (ii) Comply with the requirements of hold on the adjustment balance in the 12 CFR part 205 (Regulation E) in addi- household’s account. If there are insuf- tion to the requirements of this sec- ficient benefits to cover the entire ad- tion; and justment, a hold shall be placed on any (iii) Identify the food stamp house- remaining balance that exists, with the hold member’s account number (the difference being subject to availability PAN) using a truncated number or a only in the next future month. The coded transaction number. The house- household shall be given, at a min- hold’s name shall not appear on the re- imum, adequate notice in accordance ceipt except when a signature is re- with § 273.13 of this chapter. The notice quired when utilizing a manual trans- must be sent at the time the initial action voucher. hold is attempted on the household’s (4) Issuance of benefits. State agencies current month’s remaining balance, shall establish an availability date for clearly state the full adjustment household access to their benefits and amount, and advise the household that inform households of this date. any amount still owing is subject to (i) The State agency may make ad- collection from the household’s next justments to benefits posted to house- future month’s benefits. hold accounts after the posting process (1) The household shall have 90 days is complete but prior to the avail- from the date of the notice to request ability date for household access in the a fair hearing. event benefits are erroneously posted. (2) Should the household dispute the (ii) A State agency shall make ad- adjustment and request a hearing with- justments to an account to correct an in 10 days of the notice, a provisional auditable, out-of-balance settlement credit must be made to the household’s condition that occurs during the re- account by releasing the hold on the demption process as a result of a sys- adjustment balance within 48 hours of tem error. A system error is defined as the request by the household, pending an error resulting from a malfunction resolution of the fair hearing. If no re- at any point in the redemption process: quest for a hearing is made within 10

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days of the notice, the hold is released households that their card is lost or on the adjustment balance, and this stolen. amount is credited to the retailer’s ac- (v) The State agency may impose a count. If there are insufficient funds replacement fee by reducing the available in the current month to cover monthly allotment of the household re- the full adjustment amount, the hold ceiving the replacement card; however, may be maintained and settled at one the fee may not exceed the cost to re- time after the next month’s benefits place the card. If the State agency in- become available. tends to collect the fee by reducing the (iii) The appropriate management monthly allotment, it must follow FNS controls and procedures for accessing reporting procedures for collecting pro- benefit accounts after the posting shall gram income. State agencies currently be instituted to ensure that no unau- operating EBT systems must inform thorized adjustments are made in ac- FNS of their proposed collection oper- cordance with paragraph (f)(7)(iii) of ations. State agencies in the process of this section. developing an EBT system must in- (5) Issuance and replacement of cards or clude the procedure for collection of PINs. (i) The State agency shall permit the fee in their system design docu- food stamp households to select their ment. All plans must specify how the Personal Identification Number (PIN). State agency intends to account for PIN assignment procedures shall be card replacement fees and include iden- permitted in accordance with industry tification of the replacement thresh- standards as long as PIN selection is old, frequency, and circumstances in available to clients if they so desire which the fee shall be applicable. State and clients are informed of this option. agencies may establish good cause poli- (ii) In general, the State agency shall cies that provide exception rules for replace EBT cards within two business cases where replacement card fees will days following notice by the household not be collected. to the State agency that the card has (6) Benefit conversion. (i) Households been lost or stolen. In cases where the leaving an EBT State must be able to State agency is using centralized card use their electronic benefits upon relo- issuance, replacement can be extended cation. States must provide a means to take place within up to five calendar for a client to be able to use their bene- days. In all instances, the State agency fits upon relocation. A State agency must ensure that clients have in hand may convert electronic benefits to an active card and PIN with benefits paper coupons if a household is relo- available on the card, within the time cating to a State that is not interoper- frame the State agency has identified able and where electronic benefits are for card replacement. not portable from the household’s cur- (iii) The State agency shall ensure rent State of residence, or assist cli- that a duplicate account is not estab- ents in finding an authorized retail lo- lished which would permit households cation where out-of-State electronic to access more than one account in the benefits can be used. At State agency system. option, a household entering an EBT (iv) An immediate hold shall be area may be required to spend any replaced on accounts at the time notice maining food coupons prior to utilizing is received from a household regarding the EBT system to access their bene- the need for card or PIN replacement. fits. Conversion shall occur within one The State agency shall implement a re- business day following notice to the porting system which is continually State agency by the household when operative. Once a household reports inventories of food coupons are stored that their EBT card has been lost or at local agency locations. Conversion stolen, the State agency shall assume shall occur within three business days liability for benefits subsequently if the State maintains coupon inven- drawn from the account and replace tories in a central location. any lost or stolen benefits to the (ii) Requests for conversions to food household. The State agency or its coupons solely for purposes of shopping agent shall maintain a record showing outside the project area shall be pro- the date and time of all reports by hibited. However, the State agency

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may allow benefits in an EBT account ly issuance reporting requirements pre- to be converted to coupons for short- scribed under § 274.4 of this part. term absences from the EBT system (iii) Procedures shall be established area for family emergencies or similar to permit the appropriate managers to isolated occurrences. adjust benefits that have already been (iii) Splitting food stamp benefits be- posted to a benefit account prior to the tween food coupons and an electronic household accessing the account; or, benefit access card at the time of after an account has become dormant issuance shall not be permitted. or the household has not used the funds (iv) At State agency option, a limit which remain after conversion. The may be imposed on the number of con- procedures shall also be applicable to versions per household that may occur removing stale accounts for off-line annually for the purposes prescribed storage of benefits or when the benefits under paragraph (f)(6)(ii) of this sec- are expunged. Whenever benefits are tion. A limit on conversions to food expunged or stored off-line, the State coupons shall not be imposed on house- agency shall document the date, holds moving from the EBT area. amount of the benefits and storage lo- (v) The State agency shall develop cation in the household case file. procedures for conversion whenever a (8) Timely benefit availability. The household has left a State. These pro- State agency shall ensure that the EBT cedures shall not conflict with mailing system complies with the expedited restrictions regarding Authorization to service benefit delivery standard and Participate documents or other author- the normal application processing izing documents. standards prescribed by §§ 273.2 and (vi) The State agency shall round 274.2 of this chapter. EBT benefits remaining in an account (9) Access to retail stores. The EBT sys- down to the nearest dollar amount tem shall provide for minimal disrup- suitable for coupon issuance. The State tion of access to and service in retail agency shall require the household to stores by eligible households. The EBT spend any remaining balance that cannot be converted to food coupons. If a system shall not result in a significant household fails to spend the remaining increase in the cost of food or cost of benefits within one week after conver- transportation to authorized food re- sion occurs, the State agency shall ex- tail stores for food stamp households. punge the benefits from the account Checkout lanes equipped with POS de- and report the adjustment to the De- vices shall be made available to Food partment. Stamp households during all retail (7) Stale account handling. Stale ben- store hours of operation. efit accounts are those food stamp ben- (10) Household training. The State efit accounts which are not accessed agency shall provide training to each for three months or longer. household prior to implementation and (i) If EBT accounts are inactive for as needed during ongoing operation of three months or longer, the State the EBT system. Training functions for agency may store such benefits off- an EBT system may be incorporated line. into certification procedures. At a min- (A) Benefits stored off-line shall be imum, the household training shall in- made available upon reapplication or clude: re-contact by the household; (i) Content which will familiarize (B) The State agency shall attempt each household with the provisions of to notify the household of this action paragraphs (f)(1) through (f)(9) of this before storage of the benefits off-line section; and describe the steps necessary to (ii) Hands-on experience in the use of bring the benefits back on-line; the EBT equipment must be available (ii) The State agency shall expunge for households that request it or dem- benefits that have not been accessed by onstrate a need for that kind of train- the household after a period of one ing; year. Issuance reports shall reflect the (iii) Notification to the household of adjustment to the State agency the procedures for manual transactions issuance totals to comply with month- and re-presentation;

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(iv) The appropriate utilization and computer or hotline number to log the security of the Personal Identification transaction and obtain an authoriza- Number; tion number. If authorization cannot (v) Each household’s responsibilities be obtained before or at the time of for reporting loss or damage to the purchase, the retailer assumes the risk EBT card and who to report them to, for sufficient benefits being available both during and outside business hours. in the household’s account. Any alter- Information on a 24 hour hotline tele- nate method cannot be burdensome on phone number shall be provided to each either the household or the retailer, household during training; and it must include acceptable privacy (vi) Written materials and/or other and security features. Such systems information, including the specific shall only be available to retailers that rights to benefits in an EBT system, cannot be equipped with a POS ter- shall be provided as prescribed under 7 minal at the time of sale. CFR 272.4(b) for bilingual households (ii) Newly authorized retailers shall and for households with disabilities. have access to the EBT system within Written materials shall be prepared at two weeks after the receipt of the FNS an educational reading level suitable authorization notice. However, when- for food stamp households; ever a retailer chooses to employ a (vii) Information on the signs or third party processor to drive its ter- other appropriate indicators located in minals or elects to drive its own termi- checkout lanes that enable the house- nals, access to the system shall be ac- hold to identify lanes equipped to accomplished within a 30 day period or a cept EBT cards. mutually agreed upon time to enable (viii) Disclosure information regard- the third party interface specifications ing adjustments and a household’s and any State required functional cer- rights to notice, fair hearings, and pro- tification to be performed by the State visional credits. The disclosure must agency and/or its contractor. also state where to call to dispute an (2) Authorized retailers shall not be adjustment and request a fair hearing. required to pay costs essential to and State agencies that have already im- directly attributable to EBT system plemented EBT shall have one year in operations as long as the equipment or which to grandfather adjustment dis- services are provided by the State closure into their training materials. agency or its contractor and are uti- (g) Retailer participation. (1) All au- lized solely for the Food Stamp Pro- thorized retailers must be afforded the gram. In addition, if Food Stamp Pro- opportunity to participate in the EBT gram equipment is deployed under con- system. An authorized food retailer tract to the State agency, the State shall not be required to participate in agency may, with USDA approval, an EBT system. share appropriate costs with retailers (i) Retailers who do not have imme- if the equipment is also utilized for diate access to telephones at the time commercial purposes. The State agen- of purchase shall be accommodated by cy may choose to charge retailers rea- an alternative system (e.g., manual sonable fees in the following cir- vouchers with preliminary or delayed cumstances: telephone verification) for redeeming (i) Cost for the replacement of lost, food sales to eligible food stamp cus- stolen or damaged equipment; tomers. These retailers include sta- (ii) The cost of materials and supplies tionary food stores which opt to make for POS terminals not provided by the home deliveries to food stamp house- State agency; holds, house-to-house trade routes (iii) Telecommunication costs for all which operate on standing orders from non-EBT use by retailers when lines customers, e.g. milk and bread delivery are provided by the State agency. In routes, food buying cooperatives au- addition, State agencies may remove thorized to participate as well as other phone lines from retailers in instances food retailers authorized under § 278.1 where there is significant misuse of the of this chapter. Prior to delivery or lines. upon returning to the store, the re- (3) The State agency shall ensure tailer shall telephone the EBT central that a sufficient number of authorized

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food retailers have agreed to partici- dering the EBT system area, the State pate throughout the area in which the agency and food retailer shall nego- EBT system will operate to ensure that tiate a mutually agreed level of ter- eligible food stamp households will not minal deployment up to the number of suffer a significant reduction in their lanes per store. The State agency may choice of retail food stores and that a consult with the appropriate FNS field sufficient number of retail food stores office in order to determine the preserving minority language populations vious food stamp redemption activity are participating. that could be utilized in determining (4) The EBT system shall be imple- the initial number of terminals to de- mented and operated in a manner that ploy in newly authorized retailers or maintains equal treatment for food border stores. The State agency shall stamp households in accordance with examine household shopping patterns § 278.2(b) of this chapter. The following in the EBT operating area in order to requirements for the equal treatment establish the needs for border store of food stamp households shall directly equipment. The need to deploy equip- apply to EBT systems: ment outside the State is limited to (i) Retailers shall not establish spe- neighboring States that are not inter- cial checkout lanes which are only for operable due to exemptions for techno- food stamp households or welfare cus- logical barriers or temporary waivers. tomers. If special lanes are designated State agencies will also need to make for the purpose of accepting other elec- accommodations for border stores in tronic debit or credit cards and/or interoperable States that are deemed other payment methods such as necessary for client access. To do so, checks, food stamp customers with State agencies must ensure that proce- EBT cards may also be assigned to dures are in place to process manual such lanes as long as other commercial vouchers in instances when the system customers are assigned there as well. is down or for those retailers that do (ii) POS terminals shall be deployed not have POS equipment. Redemption as follows in EBT systems requiring information shall remain confidential. food stamp households to participate: (D) Any food retailer shall be able to (A) For an authorized food retail store with food stamp benefit redemp- submit further evidence that it war- tion amounting to 15 percent or more rants additional terminals after the of total food sales, all checkout lanes initial POS terminals are deployed. shall be equipped; Food stamp households may also sub- (B) For an authorized food retail mit evidence to the State agency that store with Food Stamp benefit redemp- additional POS terminals are needed. tions representing less than 15 percent State agencies may provide retailers of total food sales, supermarkets shall, with additional terminals above the at a minimum, receive one terminal for minimum number required by this every $11,000 in monthly redemption paragraph at customer service booths activity up to the number of lanes per or other locations if appropriate. store. All other food retailers shall re- (5) The State agency shall ensure ceive one terminal for every $8,000 in that the EBT system provides credits monthly redemption activity up to the to the financial institution holding the number of lanes per store. However, a accounts for retailers or third party State agency may utilize an alter- processors within two business days of native deployment formula that per- the daily cut-over period for retailer mits equipment deployment at higher settlement. The cut-over period is the levels than required by this paragraph time of day established by the system up to the number of lanes in each in which a transaction day is estab- store. The State agency shall review lished for settlement and reconcili- terminal deployment on a yearly basis ation. and shall be authorized to remove ex- (6) The State agency shall enter into cess terminals if actual redemption ac- an agreement with each authorized tivity warrants a reduction. food retailer. The retailer agreement (C) For newly authorized food retail- shall describe the terms and conditions ers and authorized food retailers bor- of participation in the Food Stamp

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EBT system. At a minimum, the agree- seconds. Leased line systems rent tele- ment shall: communications carriers specifically (i) Describe all terms and conditions to connect to the central authorizing with respect to equipment ownership, computer. For dial-up systems, 95 per- lease arrangements, handling and cent of the EBT transactions shall be maintenance for which the State agen- processed within 15 seconds or less and cy and merchant are liable; all EBT transactions shall be processed (ii) Describe the agreed upon proce- within 20 seconds or less. Dial-up sys- dures and policies for participation and tems utilize existing telecommuni- withdrawal from the EBT system; cations lines to dial up and connect to (iii) Comply with all Food Stamp the central computer at the time of the Program regulations with respect to transaction. Processing response time retailer participation in the program shall be measured at the POS terminal and treatment of Food Stamp Program from the time the ‘enter’ or ‘send’ key households. This shall include specific is pressed to the receipt and display of requirements with respect to the de- authorization or disapproval informa- ployment of terminals and the identi- tion. Third party processors, as defined fication of checkout lanes for food in paragraph (h)(5) of this section, shall stamp customers; be required by the State agency to (iv) Delineate the liabilities during comply with the same processing re- system downtime and the associated sponse times required of the primary responsibilities of each party with re- processor. spect to the use of off-line and/or (ii) The EBT system shall provide re- manually entered data, paper vouchers, ports, as determined by the State agen- and re-presented vouchers. cy, that document transaction proc- (h) Performance and technical stand- essing response time and the number ards. The State agency shall ensure and type of problematic transactions that EBT systems comply with Point that could not be processed within the of Sale (POS) technical standards es- standard response time. tablished by the American National (2) System availability and reliability. Standards Institute (ANSI) or Inter- (i) The EBT system central computer national Organization for Standardiza- shall be available 99.9 percent of sched- tion (ISO) where applicable. This in- uled up-time, 24 hours a day, seven cludes the draft EBT ISO 8583 Proc- days per week. Scheduled up-time shall essor Interface Technical Specifica- mean the time the database is avail- tions contained in the ANSI standards, able for transactions excluding sched- which delineates a standard message uled downtime for routine mainte- format for retailers and third parties. nance. The total system, including the In addition, the State agency shall en- system’s central computer, any net- sure that the EBT system meets per- work or intermediate processing facili- formance and technical standards in ties and cardholder authorization proc- the areas of system processing speeds, essors, shall be available 98 percent of system availability and reliability, scheduled up-time, 24 hours per day, 7 system security, system ease-of-use, days per week. Scheduled downtime for minimum card and terminal require- routine maintenance shall occur during ments, performance bonding, and a non-peak transaction periods. State minimum transaction set. With prior certification procedures shall deter- written approval from FNS, the State mine whether intermediate processing agency may utilize the prevailing in- facilities and cardholder authorization dustry performance standards in its re- processors are capable of complying gion in lieu of those identified in this with system availability standards pre- section. The standards shall be in- scribed herein prior to permitting the cluded in all requests for proposals and interface with the central computer contracts. system. (1) System processing speeds. (i) For (ii) The system central computer leased line systems, 98 percent of EBT shall permit no more than 2 inaccurate transactions shall be processed within EBT transactions for every 10,000 EBT 10 seconds or less and all EBT trans- transactions processed. The transactions shall be processed within 15 actions to be included in measuring

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system accuracy shall include all types clude separate checks against the con- of food stamp transactions permitted trol files in order to validate each at POS terminals and processed transaction prior to authorization and through the host computer, manual limiting the number of unsuccessful transactions entered into the system, PIN attempts that can be made uti- credits to household accounts, and lizing standard industry practices be- funds transfers to retailer accounts. fore the card is deactivated; (iii) Reconciliation reports and other (C) Communications network secu- information regarding problematic rity that utilizes the Data Encryption transactions shall be made available to Standard algorithm to encrypt the the State agency by the system oper- PIN, at a minimum, from the point of ator, individual retailers, households entry. Other security may include au- or financial institutions as appro- thentication codes and check-sum dig- priate. Reports on problematic trans- its, in combination with data encoded actions, including inaccurate trans- on the magnetic stripe such as the PIN actions shall be delineated by the and/or PIN offset, to ensure data secu- source of the problem such as card fail- rity during electronic transmission. ure, POS terminal failure, interruption Any of the network security measures of telecommunications, or other com- may be utilized together or separately ponent failure. Errors shall be resolved and may be applied at the terminal or in a timely manner. central computer as indicated in the (3) System security. As an addition to approved system design to ensure com- or component of the Security Program munications control; required of Automated Data Processing (D) Manual procedures that provide systems prescribed under § 277.18(p) of for secure access to the system with this chapter, the State agency shall en- minimal risk to household or retailer sure that the following EBT security accounts. Manual procedures may in- requirements are established: clude the utilization of manager identi- (i) Storage and control measures to fication codes in obtaining telephonic control blank unissued EBT cards and authorization from the central com- PINs, and unused or spare POS devices; puter system; requirements for sepa- (ii) Measures to ensure communica- rate entry with audio response unit tion access control. Communication verification and authorization number; controls shall include the transmission and/or the utilization of 24 hour hotline of transaction data and issuance infor- telephone numbers to authorize trans- mation from point-of-sale terminals to actions. work-stations and terminals at the (iii) Message validation shall include data processing center. The following but shall not be limited to: specific security measures shall be in- (A) Message format checks for com- cluded, as appropriate, in the system pleteness of the message, correct order design documentation, operating proof data, existence of control char- cedures or the State agency Security acters, number and size of data fields Program: and appropriate format standards as (A) Computer hardware controls that specified in the approved system de- ensure acceptance of data from author- sign; ized terminals only. These controls (B) Range checks for acceptable date shall include the use of mechanisms fields, number and valid account num- such as retailer identification codes, bers, purchase and refund upper limita- terminal identifiers and user identi- tions in order to prevent and control fication codes, and/or other mecha- damage to the system accounts; nisms and procedures recognized by the (C) Reversals of messages that are industry; not fully processed and recorded. (B) Software controls, placed at ei- (iv) Administrative and operational ther the terminal or central computer procedures shall ensure that: or both, that establish separate control (A) Functions affecting an account files containing lists of authorized re- balance are separated or dually con- tailers, terminal identifying codes, and trolled during processing and when re- user access and identification codes. questing Federal reimbursement EBT system software controls shall in- through a concentrator bank under the

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provisions of paragraph (i) of this sec- from the Master File and Issuance File, tion. These functions may include but network transactions from point-of- are not limited to the set up of ac- sale terminals to EBT central com- counts, transmittal of funds to and puter database and system file updates. from accounts, access to files to change (vi) The State agency shall incor- account records, and transmittal of re- porate the contingency plan approved tailer deposits to the ACH network or by FNS prior to pilot implementation other means approved by FNS for cred- and subsequently updated as part of iting retailer bank accounts; the Expansion Implementation Plan (B) Passwords, identity codes or into the Security Program. other security procedures must be uti- (4) System ease-of-use. (i) For all sys- lized by State agency or local per- tem users, the State agency shall en- sonnel and at data processing centers; sure that the system: (C) Software programming changes (A) Minimizes the number of separate shall be dual controlled to the extent steps required to complete a trans- possible; action; (D) System operations functions (B) Minimizes the number of codes or shall be segregated from reconciliation commands needed to make use of the duties; system; (v) A separate EBT security compo- (C) Makes available clear and com- nent shall be incorporated into the prehensive account balance informa- State agency Security Program for tion with a minimum number of ac- Automated Data Processing (ADP) sys- tions necessary; tems where appropriate and as pre- (D) Provides training and instruc- scribed under § 277.18(p) of this chapter. tions for all system users especially The periodic risk analyses required by those persons with disabilities; the Security Program shall address the (E) Makes available prompts on POS following items specific to an EBT sys- terminals or balance only terminals, tem: where appropriate; (A) EBT system vulnerability to (F) Identifies procedures for problem theft and unauthorized use; resolution; (B) Completeness and timeliness of the reconciliation system; (G) Provides reasonable accommoda- (C) Vulnerability to tampering with tion for the needs of households with or creating household accounts; disabilities in keeping with the Ameri- (D) Erroneous posting of issuances to cans with Disabilities Act of 1990. household accounts; (ii) In addition to the requirements of (E) Manipulation of retailers’ ac- paragraph (h)(4)(i) of this section, the counts such as creation of false trans- State agency shall ensure that retail- actions or intrusion by unauthorized ers utilizing the EBT system: computer users; (A) Have available manual backup (F) Capability to monitor systematic procedures; abuses at POS terminals such as debits (B) Can obtain timely information on for a complete allotment, excessive daily credits to their banks; manual issuances, and multiple manual (C) Have available deposit informa- transactions at the same time. Such tion in a format readily comparable to monitoring may be accomplished information maintained in the store; through the use of exception reporting; and (G) Tampering with information on (D) Have available instructions on re- the ACH tape or similar information solving problems with equipment and utilized in a crediting method approved retailer accounts. by FNS; and, (5) Third party processors. Third party (H) The availability of a complete processors are financial institutions, audit trail. A complete audit trail cardholder authorization processors shall, at a minimum, be able to provide other than the party with which the a complete transaction history of each State agency has contracted for EBT individual system activity that affects services, and food retailers driving an account balance. The audit trail their own terminals that are capable of shall include the tracking of issuances relaying electronic transactions to a

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central database computer for author- (iv) State agencies may require the ization. The State agency shall afford use of a photograph of one or more retailers the opportunity to use third household members on the card. If the party processors and shall provide State agency does require the EBT interface specifications and certifi- cards to contain a photo, it must estab- cation standards in order for the third lish procedures to ensure that all ap- party processor to participate in the propriate household members or au- EBT system. thorized representatives are able to ac- (i) In order to participate in a Food cess benefits from the account as nec- Stamp Program EBT system, a third essary. party processor must be able to meet (7) POS terminals. POS terminals all third party interface specifications shall meet the following requirements: and certification standards associated (i) Balance information shall not be with this section. The State agency displayed on the screen of the POS ter- shall make available to third party minal except for balance-only inquiry processors the third party interface terminals; specifications prior to implementation (ii) PINs shall not be displayed at the of the EBT system to enable third terminal; and party processors to access the data- (iii) PIN encryption shall occur from base. Third party processors shall un- the point of entry in a manner which dergo functional and acceptance tests prevents the unsecured transmission as specified by the State agency; between any point in the system. (ii) Third party processors shall be liable for transactions until the trans- (8) Performance bonding. The State action has been electronically accepted agency may require a performance by the contracted vendor or an inter- bond in accordance with § 277.8 of this mediate processing facility; chapter or utilize other contractual (iii) The State agency shall ensure clauses it deems necessary to enforce that third party processors and food re- the requirements of this section. tailers driving their own terminals (9) Minimum transaction set. At a min- comply with this section and all appli- imum, the State agency shall ensure cable Food Stamp Program regula- that the EBT system, including third tions. party processors and retailers driving (6) Minimum card requirements. (i) The their own terminals, is capable of pro- State agency shall ensure that the fol- viding for authorizing or rejecting pur- lowing information is printed on the chases, refunds or customer credits, card: voids or cancellations, key entered (A) The address of the office where a transactions, balance inquiries and set- card can be returned if found or no tlement or close-out transactions. The longer in use; system must be capable of completing (B) The abbreviated statement of this transaction set across State bor- nondiscrimination, which reads as fol- ders nationwide in accordance with lows: ‘‘The USDA is an equal oppor- standards specified in paragraph (h)(10) tunity provider and employer.’’ In lieu of this section. of printing the required information on (10) Interoperability. State agencies the EBT card, the State agency shall must adopt uniform standards to facili- provide each household a card jacket or tate interoperability and portablilty sleeve containing the nondiscrimina- nationwide. The term ‘‘interoper- tion statement. ability’’ means the EBT system must (ii) FNS reserves the right to require enable a coupon issued in the form of State agencies to place a Department an EBT card to be redeemed in any logo on the EBT card and/or sleeves or State. The term ‘‘portablity’’ means jackets. the EBT system must enable a coupon (iii) EBT cards and/or sleeves or jack- issued in the form of an EBT card to be ets shall not contain the name of any used in any State by a household to State or local official. EBT informa- purchase food at a retail food store or tional materials shall not indicate as- a wholesale food concern approved sociation with any political party or under the Food Stamp Act of 1977. The other political affiliation. standards must include the following:

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(i) EBT system connectivity. State connected to the State’s authorization agencies are responsible for estab- system. Each terminal operator that lishing telecommunications links, uses a routing table for routing ac- transaction switching facilities and quired transactions must, within seven any other arrangements with other calendar days of receiving an IIN rout- State agencies necessary for the routing table update, modify its routing ta- ing of interoperable transactions to bles to reflect the updated routing in- such other State EBT authorization formation. systems. State agencies are also re- (iv) Third Party Processor Require- sponsible for facilitating the settlements. Each Third Party Processor or ment of such interoperable trans- terminal operator must have primary actions and the handling of adjust- responsibility and liability for oper- ments. These connections need not be ating the telecommunications and direct connections between State au- processing system (including software thorization systems but may be facili- and hardware) through which trans- tated through agreements and linkages actions initiated at POS terminals it with other designated agents or third owns, operates, controls or for which it party processors. All State agencies has signed an agreement to accept EBT must agree to the timing and disposi- transactions, are processed and routed, tion of disputes, error resolution, and directly or indirectly, to the appro- adjustments in accordance with De- priate State authorization system. partment regulations at § 273.13(a), Each terminal operator must maintain § 273.15(k) and paragraph (f) of this sec- the necessary computer hardware and tion. State agencies or their designated software to interface either directly agents must draw funds from State with a State authorization system or food stamp accounts for food stamp with a third party service provider to benefits transacted by that State’s obtain access to one or more State au- food stamp recipients, regardless of thorization systems. Each terminal op- where benefits were transacted. erator must establish a direct or indi- (ii) Message format. Each authoriza- rect telecommunications connection tion system must use the International for the routing of transactions to the Organization for Standards (ISO) 8583 State authorization system or to a message format, modified for EBT, in a processor directly or indirectly conversion mutually agreed to between nected to the State authorization sys- the authorization agent and the party tem. connected for all transactions. Each (v) REDE File. The State agency must authorization system must process ensure that their EBT system verifies each financial transaction as a single FNS retailer numbers for all interstate message financial transaction, except transactions against the National for pre-authorized transactions and re- REDE file of all FNS EBT retailers to versals, processed as paired trans- validate these transactions. actions. (11) Waivers. The State agency may (iii) Card Primary Account Number request a waiver from the Department (PAN) Requirements. Track 2 on each for a temporary exemption from com- card shall contain the PAN. Each Gov- pliance with the requirements for ernment entity must obtain an Issuer interoperability and portability, as Identification Number (IIN) from the found in this section, if they can ade- American Banker’s Association (ABA). quately demonstrate that: (1) There are The IIN should be included as the first unusual technological barriers to the six digits of the Primary Account implementation of interoperability; Number. The PAN must comply with and (2) it is in the best interest of the International Organization for Stand- FSP to grant the waiver. All waivers ards (ISO) 7812, Identification Cards— must specify a date by which the State Numbering System and Registration agency will achieve interoperability Procedures for Issuer Identifiers. Each and portability. State agency must be responsible for (i) Concentrator bank responsibilities. generating, updating, and distributing The concentrator bank shall be a Fed- IIN files of all States to each retailer, erally insured financial institution or processor, or acquirer that is directly other entity acceptable to the Federal

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Reserve which has the capability to (1) Reconciliation. Reconciliation take retailer credits and/or debits, ob- shall be conducted and records kept as tained from the EBT system operator, follows: and transmit them to the ACH network (i) Reconciliation of benefits posted operated by the Federal Reserve or to household accounts on the central through another process for crediting computer against benefits on the retailers approved by FNS. Trans- Issuance Authorization File; mittal shall be by tape or on-line in a (ii) Reconciliation of individual format suitable for the Automated household account balances against ac- Clearinghouse (ACH) or as approved by count activities on a daily basis; FNS. (iii) Reconciliation of each individual (1) The minimum functions of the retail store’s food stamp transactions concentrator bank are: per POS terminal and in total to depos- (i) Preparing a daily ACH tape or its on a daily basis; other crediting process approved by (iv) Verification of retailer’s credits FNS with information on benefits re- against deposit information entered deemed and creditable to each retailer; into the ACH network; (ii) Transferring the ACH tape or (v) Reconciliation of total funds en- other crediting process approved by tered into, exiting from, and remaining FNS to the Federal Reserve or other in the system each day; (vi) Maintenance of audit trails that entity approved by FNS; document the full cycle of issuance (iii) Initiating and accepting reim- from benefit allotment posting to the bursement from the appropriate U.S. State issuance authorization file Treasury account through the Auto- through posting to point-of-sale trans- mated Standard Application for Pay- actions at retailers through settlement ment (ASAP) system or other payment of retailer credits. process approved by FNS. At the op- (2) Management reports. The State tion of FNS, the State agency may des- agency shall require the EBT system to ignate another entity as the initiator provide reports that enable the State of reimbursement for food stamp re- agency to manage the system. The redemptions provided the entity is ac- ports shall be available to the State ceptable to FNS and U.S. Treasury. agency or FNS as requested on a time- (iv) Cooperating in the reconciliation ly basis and consist of: of discrepancies and error resolution (i) Information on how the system when necessary. operates relative to its performance (2) With the approval of FNS, another standards, the incidence, type and procedure, other than the ACH system, cause of system problems, and utiliza- may be utilized to credit retailer action patterns. counts and/or debit FNS’ account, if it (ii) Retailer transaction data sub- meets the needs of FNS and the EBT mitted to FNS on a monthly basis. system. This data must be submitted in the (3) The State agency shall be liable specified format in accordance with the for any errors in the creation of the required schedule. ACH tape or its transmission. The (iii) Data detailing by specified cat- State agency may transfer the liability egory the amount of food stamp bene- associated with creation of the ACH fits issued or returned through the tape, its transmission or another cred- EBT system. Data shall be provided in iting process approved by FNS as ap- a format and mechanism specified by propriate to the EBT system operator FNS to the FNS Account Management or the concentrator bank. Appropriate Agent as the benefits become available system security administrative and to recipients. This data will be used to operational procedures shall be insti- increase or decrease the food stamp tuted in accordance with paragraph EBT benefit funding authorization for (h)(3) of this section. the State’s ASAP account. (j) Reconciliation, management report- (3) Pilot project reports. The State ing, examinations and audits. The EBT agency shall provide quarterly reports system shall provide reports and docu- as described in paragraph (c)(4) of this mentation pertaining to the following: section during the pilot project.

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(4) Program reporting. When benefits (vi) FNS and the USDA OIG shall are initially issued through an EBT rely on SAS No. 70 reports on EBT system, the State agency shall report transaction processing services pro- as required by FNS in § 274.4 and in ac- vided by contractors to the State. FNS cordance with the FNS instructions and USDA OIG reserve the right to specific to EBT issuances. conduct other reviews or audits if nec- (5) Examinations and audits. (i) The essary. state agency must obtain an examina- (vii) EBT services provided directly tion by an independent auditor of the by the State are not subject to SAS No. transaction processing of the State 70 examination requirements of this EBT service provider regarding the section but remain subject to the sin- issuance, redemption, and settlement gle audit requirements at 7 CFR 277.7 of Food Stamp Program benefits. The and the Office of Management and examination must be done at least an- Budget Circular A–133. nually and the report must be com- (k) Federal Financial Participation. (1) pleted ninety days after the examina- The cost of administering statewide tion period ends. Subsequent examina- benefit issuance after implementation tions must cover the entire period of the EBT system shall be funded at since the previous examination. Ex- the regular Federal financial participa- aminations must follow the American tion rate. Institute of Certified Public Account- (2) The State agency shall comply ants (AICPA) Statement on Auditing with the provisions set forth under 7 Standards No. 70, Service Organiza- CFR 277.18 and appendix A of 7 CFR tions (SAS No. 70), requirements for re- 277.18 in determining and claiming al- ports on controls placed in operation lowable costs for the EBT system. and tests of the operating effectiveness (3) Access to system documentation, of the controls. including cost records of contractors or (ii) The examination report must in- subcontractors shall be made available clude a list of all States whose systems and incorporated into contractual operate under the same control envi- agreements in accordance with ronment. Auditors conducting the ex- § 277.18(k) of this chapter. amination must follow EBT guidance (4) State agencies may receive one contained in the Office of Management hundred percent federal funding for the and Budget (OMB) Circular A–133 Com- costs they incur for switching and set- pliance Supplement to the extent the tling all food stamp interstate trans- guidelines refer to FSP benefits. (For actions. For purposes of this section, availability of OMB Circulars ref- the term ‘‘switching’’ means the rout- erenced in this section, see 5 CFR ing of an interstate transaction that 1310.3.) consists of transmitting the details of (iii) The State agency must retain a a transaction electronically recorded copy of the SAS No.70 examination re- through the use of an EBT card in one port. State to the issuer of the card that is (iv) The State agency shall respond in another State; and the term ‘‘set- to written requests from the Food and tling’’ means movement, and reporting Nutrition Service (FNS), USDA Office such movement, of funds from an EBT of the Inspector General (OIG), or the card issuer located in one to a retail General Accounting Office (GAO) for food store, or wholesale food concern, completed SAS No.70 examination re- that is located in another State, to ac- ports by providing the report within complish an interstate transaction. thirty days of receipt of the written re- The total amount of one hundred per- quest. cent funding available annually is lim- (v) The State agency shall respond to ited to $500,000 nationwide. Once the written requests from FNS, OIG, or $500,000 limitation is exceeded, federal GAO to view auditor’s workpapers from financial participation reverts to the SAS No. 70 reports by arranging to standard fifty percent program reim- have workpapers made available within bursement rate and procedure. In order thirty days of receipt of the written re- to qualify for this funding, the State quest. agency must:

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(i) Adhere to the standard of inter- (A) The manual transaction occurred operability and portability adopted by because the host computer was down a majority of State agencies for inter- and authorization was obtained by the operability costs incurred for the pe- retailer for the transaction; or riod from February 11, 2000 through (B) The manual transaction occurred September 30, 2002; because telephone lines were down. (ii) Meet standards of interoper- (ii) Re-presentation of manual vouch- ability and portability under para- ers shall not be permitted when the graphs (e) and (h) of this section for EBT card, magnetic stripe, PIN pad, costs incurred after September 30, 2002; card reader, or POS terminal fails and (iii) Sign and submit, in each fiscal telephone lines are operational. Man- year for which the State agency re- ual transactions shall not be utilized to quests enhanced funding, an Interoper- extend credit to a household via re- ability Funding Agreement to comply presentation when the household’s ac- with the administrative procedures es- count balance is insufficient to cover tablished by the Department. The the planned purchase. State agency must submit the signed (iii) The State agency may debit the agreement to the Department before benefit allotment of a household fol- the end of the fiscal year in which lowing the insufficient funds trans- costs are incurred in order to qualify action in either of two ways: for payment for that fiscal year, and (A) Any amount which equals at least $10 or up to 10% of the trans- (iv) Submit requests for payment on action. This amount will be deducted a quarterly basis after the end of the monthly until the total balance owed quarter in which interoperability costs is paid-in-full. State agencies may opt are incurred, in accordance with the to re-present at a level that is less than Department’s administrative proce- the 10% maximum, however, this lesser dures. Requests for payments shall be amount must be applied to all house- due February 15 (for the period October holds. through December), May 15 (January (B) $50 in the first month and the through March), August 15 (April greater of $10 or 10% of the allotment through June), and November 15 (July in subsequent months until the total through September). Requests for pay- balance owed is paid-in-full. If the ment submitted after the required date monthly allotment is less than $50, the for a quarter shall not be considered State shall debit the account for $10. until the following quarter, when such (2) The State agency shall establish requests for payments are scheduled to procedures for determining the validity be processed. of each re-presentation and subsequent (l) Re-presentation. The State agency procedures authorizing a debit from a shall ensure that a manual purchase household’s monthly benefit allotment. system is available for use during The State agency may ask households times when the EBT system is inacces- to voluntarily pay the amount of a re- sible. presented transaction or arrange for a (1) Under certain circumstances, faster schedule of payment than identi- when a manual transaction occurs due fied in paragraph (l)(1)(iii) of this sec- to the inaccessibility of the host com- tion. puter and the transaction is rejected (3) The State agency shall ensure because insufficient funds are available that retailers provide notice to house- in a household’s account, the State holds at the time of the manual trans- agency may permit the re-presentation action that re-presentation may occur of the transaction during subsequent if there are insufficient benefits in the months. At the State agency’s option, account to cover the transaction. The re-presentation may be permitted with- statement shall be printed on the paper in the EBT system as follows: voucher or on a separate sheet of (i) Re-presentation of manual vouch- paper. The State agency shall also pro- ers when there are insufficient funds in vide notice to the household prior to the EBT account to cover the manual the month when a benefit allotment is transaction may be permitted only reduced when a re-presentation is nec- under the following circumstances: essary. Notice shall be provided to the

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household for each insufficient trans- with the balance remaining in the ac- action that is to be re-presented in a count through a one-step process; future month. The notice shall be pro- (B) The transaction should be in ac- vided prior to the month it occurs and cordance with the standard message shall state the amount of the reduction format requirements for store and for- in the benefit allotment. ward; and (4) The Department shall not accept (C) Re-presentation, as described in liability under any circumstances for paragraph (m) of this section, to obtain the overissuance of benefits due to the the uncollected balance from current utilization of manual vouchers, includ- or future months’ benefits shall not be ing those situations when the host allowed for store-and-forward trans- computer is inaccessible or tele- actions. communications lines are not func- (n) Ownership rights and procurement tioning. However, the State agency, in requirements. (1) The State agency shall consultation with authorized retailers comply with the software and auto- and with the mutual agreement of the mated data processing equipment own- State agency’s vendor, if any, may ac- ership rights prescribed under §§ 277.13 cept liability for manual purchases and 277.18(l) of this chapter. within a specified dollar limit. Costs (2) The State agency shall comply associated with liabilities accepted by with the procurement standards pre- the State agency shall not be reimburs- scribed under § 277.18(j) of this chapter. able. Under service agreements, the procure- (5) The State agency shall be strictly ment of equipment and services which liable for manual transactions that re- will be utilized in a Food Stamp EBT sult in excess deductions from a house- system shall be conducted in accord- hold’s account. ance with the provisions set forth (m) Store-and-Forward. As an alter- under § 277.18(f) of this chapter. native to manual transactions: [57 FR 11249, Apr. 1, 1992; 57 FR 44791, Sept. (1) State agencies may opt to allow 29, 1992, as amended by Amdt. 378, 64 FR retailers, at the retailer’s own choice 48938, Sept. 9, 1999; 65 FR 10678, Feb. 29, 2000; and liability, to perform store-and-for- Amdt. 385, 65 FR 33439, May 24, 2000; Amdt. ward transactions when the EBT sys- 378, 65 FR 41325, July 5, 2000; Amdt. 384, 65 FR tem cannot be accessed for any reason. 49724, Aug. 15, 2000; Amdt. 390, 65 FR 59110, The retailer would be able to forward Oct. 4, 2000; Amdt. 384, 68 FR 37697, June 25, the transaction to the host one time 2003; Amdt. 394, 70 FR 18270, Apr. 11, 2005; within 24 hours of when the system Amdt. 397, 70 FR 72354, Dec. 5, 2005] again becomes available. Should the 24- hour window cross into the beginning PART 275—PERFORMANCE of a new benefit issuance period, retail- REPORTING SYSTEM ers may draw against all available benefits in the account. Subpart A—Administration (2) State agencies may also opt, in in- Sec. stances where there are insufficient 275.1 General scope and purpose. funds to authorize an otherwise ap- 275.2 State agency responsibilities. provable store-and-forward trans- 275.3 Federal monitoring. action, to allow the retailer to collect 275.4 Record retention. the balance remaining in the client’s account, in accordance with the re- Subpart B—Management Evaluation (ME) quirements detailed in this section. In Reviews States that elect not to give retailers 275.5 Scope and purpose. this option, all store-and-forward 275.6 Management units. transactions with insufficient funds 275.7 Selection of sub-units for review. will be denied in full. 275.8 Review coverage. (i) State Agencies may elect to allow 275.9 Review process. store and forward to provide remaining balances to retailers as follows: Subpart C—Quality Control (QC) Reviews (A) The EBT processor may provide 275.10 Scope and purpose. partial approval of the store-and-for- 275.11 Sampling. ward transaction, crediting the retailer 275.12 Review of active cases.

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275.13 Review of negative cases. an amount equal to 50 percent of all ad- 275.14 Review processing. ministrative costs involved in each State agency’s operation of the pro- Subpart D—Data Analysis and Evaluation gram. The Act further authorizes the 275.15 Data management. Secretary to increase the percentage share if: Subpart E—Corrective Action (i) The State agency’s payment error rate is less than or equal to 5.90 per- 275.16 Corrective action planning. 275.17 State corrective action plan. cent, and 275.18 Project area/management unit cor- (ii) The State agency’s negative case rective action plan. error rate is less than the national 275.19 Monitoring and evaluation. weighted mean negative case error rate for the prior fiscal year. Subpart F—Responsibilities for Reporting on (2) If a State agency qualifies for an Program Performance increased percentage share, the 275.20 ME review schedules. amount of increase will be an addi- 275.21 Quality control review reports. tional percentage point for each full 275.22 Administrative procedure. tenth of a percentage point by which the payment error rate is less than six Subpart G—Program Performance percent, up to a maximum of 60 percent of administrative costs. Those State 275.23 Determination of State agency program performance. agencies not receiving the increased 275.24 High performance bonuses. share of funding shall develop and implement corrective action plans to re- AUTHORITY: 7 U.S.C. 2011–2036. duce payment errors. Corrective action EDITORIAL NOTE: OMB control numbers re- shall be completed as required in sub- lating to this part 275 are contained in § 271.8. part E of this section. [Amdt. 160, 45 FR 15898, Mar. 11, 1980, as Subpart A—Administration amended by Amdt. 266, 52 FR 3407, Feb. 4, 1987; Amdt. 328, 56 FR 60051, Nov. 27, 1991] § 275.1 General scope and purpose. (a) Under the Food Stamp Act, each § 275.2 State agency responsibilities. State agency is responsible for the ad- (a) Establishment of the performance re- ministration of the Food Stamp Pro- porting system. (1) The State agency gram in accordance with the Act, Reg- shall establish a continuing perform- ulations, and the State agency’s plan ance reporting system to monitor proof operation. To fulfill the require- gram administration and program op- ments of the Act, each State agency erations. The method for establishing shall have a system for monitoring and each component of the system is iden- improving its administration of the tified and explained in subparts B program. The State agency is also re- through F of this part. The components sponsible for reporting on its adminis- of the State agency’s performance re- tration to FNS. These reports shall porting system shall be: identify program deficiencies and the (i) Data collection through manage- specific administrative action proposed ment evaluation (ME) reviews and to meet the program requirements es- quality control (QC) reviews; tablished by the Secretary. If it is de- (ii) Analysis and evaluation of data termined, however, that a State has from all sources; failed without good cause to meet any (iii) Corrective action planning; of the program requirements estab- (iv) Corrective action implementa- lished by the Secretary, or has failed to tion and monitoring; and carry out the approved State plan of (v) Reporting to FNS on program per- operation, the Department shall sus- formance. pend and/or disallow from the State (2) The State agency must ensure such funds as are determined to be ap- corrective action is effected at the propriate in accordance with part 276 of State and project area levels. this chapter. (b) Staffing standards. The State (b)(1) The Food Stamp Act authorizes agency shall employ sufficient State the Secretary to pay each State agency level staff to perform all aspects of the

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Performance Reporting System as re- and shall ensure that the State agen- quired in this part of the regulations. cy’s own corrective action plan is The staff used to conduct QC reviews amended and that FNS is provided this shall not have prior knowledge of ei- information at the time of the next for- ther the household or the decision mal semiannual update to the State under review. Where there is prior agency’s Corrective Action Plan, as re- knowledge, the reviewer must dis- quired in § 275.17. qualify her/himself. Prior knowledge is (a) Reviews of State Agency’s Adminis- defined as having: tration/Operation of the Food Stamp Pro- (1) Taken any part in the decision gram. FNS shall conduct an annual re- that has been made in the case; (2) any view of certain functions performed at discussion of the case with staff who the State agency level in the adminis- participated in the decision; or (3) any tration/operation of the program. FNS personal knowledge of or acquaintance will designate specific areas required with persons in the case itself. To en- to be reviewed each fiscal year. sure no prior knowledge on the part of (b) Reviews of State Agency’s Manage- QC or ME reviewers, local project area ment Evaluation System. FNS will re- staff shall not be used to conduct QC or view each State agency’s management ME reviews; exceptions to this require- evaluation system on a biennial basis; ment concerning local level staff may however, FNS may review a State be granted with prior approval from agency’s management evaluation sys- FNS. However, local personnel shall tem on a more frequent basis if a reg- not, under any circumstances, partici- ular review reveals serious deficiencies pate in ME reviews of their own project in the ME system. The ME review will areas. include but not be limited to a deter- [Amdt. 160, 45 FR 15898, Mar. 11, 1980, as mination of whether or not the State amended by Amdt. 266, 52 FR 3407, Feb. 4, agency is complying with FNS regula- 1987] tions, an assessment of the State agency’s methods and procedures for con- § 275.3 Federal monitoring. ducting ME reviews, and an assessment The Food and Nutrition Service shall of the data collected by the State agen- conduct the review described in this cy in conducting the reviews. section to determine whether a State (c) Validation of State Agency error agency is operating the Food Stamp rates. FNS shall validate each State Program and the Performance Report- agency’s payment error rate and ing System in accordance with pro- underissuance error rate, as described gram requirements. The Federal rein § 275.23(c), during each annual qual- viewer may consolidate the scheduling ity control review period. Federal vali- and conduct of these reviews to reduce dation reviews shall be conducted by the frequency of entry into the State reviewing against the Food Stamp Act agency. FNS regional offices will con- and the regulations, taking into ac- duct additional reviews to examine count any FNS-authorized waivers to State agency and project area oper- deviate from specific regulatory provi- ations, as considered necessary to de- sions. FNS must validate the State termine compliance with program re- agency’s negative case error rate, as quirements. FNS shall notify the State described in § 275.23(d), when the State agency of any deficiencies detected in agency’s payment error rate for an an- program or system operations. Any de- nual review period appears to entitle it ficiencies detected in program or sys- to an increased share of Federal admin- tem operations which do not neces- istrative funding for that period as out- sitate long range analytical and eval- lined in § 277.4(b)(2) of this chapter, and uative measures for corrective action its reported negative case error rate for development shall be immediately cor- that period is less than two percentage rected by the State agency. Within 60 points above the national weighted days of receipt of the findings of each mean negative case error rate for the review established below, State agen- prior fiscal year. However, this require- cies shall develop corrective action ad- ment will not preclude the Federal re- dressing all other deficiencies detected view of any negative case for other rea- in either program or system operations sons as determined appropriate by

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FNS. Any deficiencies detected in a sample size as determined in accord- State agency’s QC system shall be in- ance with § 275.11(b)(1). cluded in the State agency’s corrective (ii) FNS Regional Offices will con- action plan. The findings of validation duct case record reviews to the extent reviews shall be used as outlined in necessary to determine the accuracy of § 275.23(e)(6). the State agency’s findings using the (1) Payment error rate. The validation household’s certification records and review of each State agency’s payment the State agency’s QC records as the error rate shall consist of the following basis of determination. The FNS Re- actions: gional Office may choose to verify any (i) FNS will select a subsample of a aspects of a State agency’s QC findings State agency’s completed active cases, through telephone interviews with par- as follows: ticipants or collateral contacts. In ad- (A) For State agencies that deter- dition, the FNS Regional Office may mine their active sample sizes in ac- choose to conduct field investigations cordance with § 275.11(b)(1)(ii), the Fed- to the extent necessary. eral review sample for completed ac- (iii) Upon the request of a State tive cases is determined as follows: agency, the appropriate FNS Regional Office will assist the State agency in Average monthly reviewable Federal subsample target caseload (N) (n′) completing active cases reported as not completed due to household refusal to 31,489 and over ...... n′=400 10,001 to 31,488 ...... n′=.011634 N+33.66 cooperate. 10,000 and under ...... n′=150 (iv) FNS will also review the State agency’s sampling procedures, esti- (B) For State agencies that deter- mation procedures, and the State agen- mine their active sample sizes in ac- cy’s system for data management to cordance with § 275.11(b)(1)(iii), the Fed- ensure compliance with §§ 275.11 and eral review sample for completed ac- 275.12. tive cases is determined as follows: (v) FNS validation reviews of the State agency’s active sample cases will Average monthly reviewable Federal subsample target caseload (N) (n′) be conducted on an ongoing basis as the State agency reports the findings 60,000 and over ...... n′=400 10,001 to 59,999 ...... n′=.005 N+100 for individual cases and supplies the 10,000 and under ...... n′=150 necessary case records. FNS will begin the remainder of each State agency’s (C) In the above formula, n’ is the validation review as soon as possible minimum number of Federal review after the State agency has supplied the sample cases which must be selected necessary information regarding its when conducting a validation review, sample and review activity. except that FNS may select a lower (2) Underissuance error rate. The vali- number of sample cases if: dation review of each State agency’s (1) The State agency does not report underissuance error rate shall occur as a change in sampling procedures asso- a result of the Federal validation of the ciated with a revision in its required State agency’s payment error rate as sample size within 10 days of effecting outlined in paragraph (c)(1) of this sec- the change; and/or tion. (2) The State agency does not com- (3) Negative case error rate. The valida- plete the number of case reviews speci- tion review of each State agency’s neg- fied in its approved sampling plan. ative case error rate shall consist of (D) The reduction in the number of the following actions: Federal cases selected will be equal to (i) FNS will select a subsample of a the number of cases that would have State agency’s completed negative been selected had the Federal sampling cases, as follows: interval been applied to the State Average monthly reviewable Federal subsample target agency’s shortfall in its required sam- ′ ple size. This number may not be exact negative caseload (N) (n ) due to random starts and rounding. 5,000 and over ...... n′=160 (E) In the above formula, N is the 501 to 4,999 ...... n′=.0188 N+65.7 ′ State agency’s minimum active case Under 500 ...... n =75

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(A) In the above formula, n’ is the or disposition of an individual QC case minimum number of Federal review disagree. sample cases which must be selected (B) The arbitration review shall be when conducting a validation review, limited to the point(s) within the Fed- except that FNS may select a lower eral findings or disposition that the number of sample cases if: State agency disputes. However, if the (1) The State agency does not report arbitrator in the course of the review a change in sampling procedures asso- discovers a mathematical error in the ciated with a revision in its required computational sheet, the arbitration sample size within 10 days of effecting shall correct the error while calcu- the change; and/or lating the allotment. (2) The State agency does not com- (ii) The FNS Arbitrator(s) shall be an plete the number of case reviews speci- individual or individuals who are not fied in its approved sampling plan. directly involved in the validation ef- (B) The reduction in the number of fort. Federal cases selected will be equal to (iii) With the exception of the re- the number of cases that would have strictions contained in paragraph been selected had the Federal sampling (c)(4)(iii), for an arbitration request to interval been applied to the State be considered, it must be received by agency’s shortfall in its required sam- the appropriate FNS regional office ple size. This number may not be exact within 20 calendar days of the date of due to random starts and rounding. receipt by the State agency of the re- (C) In the above formula, N is the gional office case findings. In the event State agency’s minimum negative case the last day of this time period falls on sample size as determined in accord- a Saturday, Sunday, or Federal or ance with § 275.11(b)(2). State holiday, the period shall run to (ii) FNS Regional Offices will con- the end of the next work day. The duct case record reviews to the extent State agency shall be restricted in its necessary to determine whether the eligibility to request arbitration of an household case record contained sufficient documentation to justify the individual case if that case was not dis- State agency’s QC findings of the cor- posed of and the findings reported in rectness of the State agency’s decision accordance with the timeframes speci- to deny, suspend or terminate a house- fied in § 275.21(b)(2). For each day late hold’s participation. that a case was disposed of and the (iii) FNS will also review each State findings reported, the State agency agency’s negative case sampling and shall have one less day to request arbi- review procedures against the provi- tration of the case. sions of §§ 275.11 and 275.13. (iv) When the State agency requests (iv) FNS will begin each State agen- arbitration, it shall submit all required cy’s negative sample case validation documentation to the appropriate FNS review as soon as possible after the regional office addressed to the atten- State agency has supplied the nection of the FNS Arbitrator. The FNS essary information, including case regional office QC staff may submit an records and information regarding its explanation of the Federal position re- sample and review activity. garding a case to the FNS Arbitrator. (4) Arbitration. (i) Whenever the State (A) A complete request is one that agency disagrees with the FNS re- contains all information necessary for gional office concerning individual QC the arbitrator to render an accurate, case findings and the appropriateness timely decision. of actions taken to dispose of an indi- (B) If the State agency’s request is vidual case, the State agency may re- not complete the arbitrator shall make quest that the dispute be arbitrated on a decision based solely on the available a case-by-case basis by an FNS Arbi- documents. trator, subject to the following limita- (v) The FNS Arbitrator shall have 20 tions. calendar days from the date of receipt (A) The State agency may only re- of a State agency’s request for arbitra- quest arbitration when the State agen- tion to review the case and make a de- cy’s and FNS regional office’s findings cision.

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(5) Household cooperation. Households losses to the program, participants, or are required to cooperate with Federal potential participants. QC reviewers. Refusal to cooperate [Amdt. 160, 45 FR 15898, Mar. 11, 1980, as shall result in termination of the amended by Amdt. 237, 47 FR 57669, Dec. 28, household’s eligibility. The Federal re- 1982; Amdt. 260, 49 FR 6303, Feb. 17, 1984; viewer shall follow the procedures in Amdt. 266, 52 FR 3407, Feb. 4, 1987; 53 FR 1604, § 275.12(g)(1)(ii) in order to determine Jan. 21, 1988; 54 FR 23951, June 5, 1989; Amdt. whether a household is refusing to co- 309, 55 FR 1672, Jan. 18, 1990; Amdt. 328, 56 FR 60051, Nov. 27, 1991; Amdt. 366, 62 FR 29658, operate with the Federal QC reviewer. June 2, 1997; Amdt. 373, 64 FR 38294, July 16, If the Federal reviewer determines that 1999; 68 FR 59523, Oct. 16, 2003] the household has refused to cooperate, as opposed to failed to cooperate, the § 275.4 Record retention. household shall be reported to the (a) The State agency shall maintain State agency for termination of eligi- Performance Reporting System records bility. to permit ready access to, and use of, (d) Assessment of Corrective Action. (1) these records. Performance Reporting FNS will conduct will conduct a com- System records include information prehensive annual assessment of a used in data analysis and evalution, State agency’s corrective action proc- corrective action plans, corrective ac- ess by compiling all information rel- tion monitoring records in addition to ative to that State agency’s corrective ME review records and QC review action efforts, including the State records as explained in paragraphs (b) agency’s system for data analysis and and (c) of this section. To be readily ac- evaluation. The purpose of this assess- cessible, system records shall be re- ment and review is to determine if: tained and filed in an orderly fashion. identified deficiencies are analyzed in Precautions should be taken to ensure terms of causes and magnitude and are that these records are retained without properly included in either the State or loss or destruction for the 3-year period Project Area/Management Unit correc- required by these regulations. Informa- tion obtained on individual households tive action plan; the State agency is for Performance Reporting System implementing corrective actions ac- purposes shall be safeguarded in according to the appropriate plan; target cordance with FNS policies on disclo- completion dates for reduction or sure of information for the Food Stamp elimination of deficiencies are being Program. met; and, corrective actions are effec- (b) ME review records consist of thor- tive. In addition, FNS will examine the ough documentation of review findings, State agency’s corrective action moni- sources from which information was toring and evaluative efforts. The as- obtained, procedures used to review sessment of corrective action will be Food Stamp Program requirements in- conducted at the State agency, project cluding sampling techniques and lists, area, and local level offices, as nec- and ME review plans. The State agency essary. must submit documented evidence of (2) In addition, FNS will conduct on- review findings to the FNS Regional site reviews of selected corrective ac- Office upon request for purposes of tions as frequently as considered nec- evaluating State corrective action essary to ensure that State agencies plans. are implementing proposed corrective (c) QC review records consist of actions within the timeframes speci- Forms FNS–380, Worksheet for Inte- fied in the State agency and/or Project grated TANF, Food Stamps and Med- Area/Management Unit corrective ac- icaid Quality Control Reviews, FNS– tion plans and to determine the effec- 380–1, Integrated Review Schedule, tiveness of the corrective action. The FNS–245, Negative Quality Control Re- on-site reviews will provide State agen- view Schedule, and Form FNS–248, Sta- cies and FNS with a mechanism for tus of Sample Selection and Comple- tion; other materials supporting the re- early detection of problems in the cor- view decision; sample lists; sampling rective action process to minimize frames; tabulation sheets; and reports

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of the results of all quality control retains the authority for approving any views during each review period. alternate schedule and may approve a schedule in whole or in part. Until FNS [Amdt. 160, 45 FR 15898, Mar. 11, 1980, as amended by Amdt. 260, 49 FR 6304, Feb. 17, approval of an alternate schedule is ob- 1984; Amdt. 262, 49 FR 50597, Dec. 31, 1984] tained, the State agency shall conduct reviews in accordance with paragraph Subpart B—Management (b)(1) of this section. (3) FNS may require the State agen- Evaluation (ME) Reviews cy to conduct additional on-site re- § 275.5 Scope and purpose. views when a serious problem is detected in a project area which could re- (a) Objectives. Each State agency sult in a substantial dollar or service shall ensure that project areas operate loss. the Food Stamp Program in accord- (4) State agencies shall also establish ance with the Act, regulations, and a system for monitoring those project FNS-approved State Plan of Operation. areas’ operations which experience a To ensure compliance with program re- significant influx of migratory workers quirements, ME reviews shall be con- during such migrations. This require- ducted to measure compliance with the ment may be satisfied by either sched- provisions of FNS regulations. The ob- uling ME reviews to coincide with such jectives of an ME review are to: migrations or by conducting special re- (1) Provide a systematic method of views. As part of the review the State monitoring and assessing program op- agency shall contact local migrant erations in the project areas; councils, advocate groups, or other or- (2) Provide a basis for project areas ganizations in the project area to en- to improve and strengthen program op- sure that migrants are receiving the erations by identifying and correcting required services. deficiencies; and (3) Provide a continuing flow of infor- [Amdt. 160, 45 FR 15900, Mar. 11, 1980, as mation between the project areas, the amended by Amdt. 262, 49 FR 50597, Dec. 31, States, and FNS, necessary to develop 1984; Amdt. 266, 52 FR 3408, Feb. 4, 1987] the solutions to problems in program § 275.6 Management units. policy and procedures. (b) Frequency of review. (1) State (a) Establishment of management units. agencies shall conduct a review once For the purpose of ME reviews, State every year for large project areas, once agencies may, subject to FNS approval, every two years for medium project establish ‘‘management units’’ which areas, and once every three years for are different from project areas des- small project areas, unless an alternate ignated by FNS for participation in the schedule is approved by FNS. The most program. For example, State-estab- current and accurate information on lished welfare districts, regions or active monthly caseload available at other administrative structures within the time the review schedule is devel- a State may be so designated. Manage- oped shall be used to determine project ment units can be designated as either area size. large, medium, or small for purposes of (2) A request for an alternate review frequency of review. However, estab- schedule shall be submitted for ap- lishment of management units solely proval in writing with a proposed for the purpose of reducing the fre- schedule and justification. In any al- quency of review will not be approved ternate schedule, each project area by FNS. must be reviewed at least once every (b) FNS approval of management units. three years. Approval of an alternate State agencies shall submit requests schedule is dependent upon a State for establishment of management units agency’s justification that the project to FNS, which shall have final author- areas that will be reviewed less fre- ity for approval of such units as well as quently than required in paragraph any changes in those previously ap- (b)(1) of this section are performing proved by FNS. adequately and that previous reviews (1) The following minimum criteria indicate few problems or that known must be met prior to requesting FNS problems have been corrected. FNS re- approval:

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(i) The proposed management unit pons to participating households and must correspond with existing State- storing coupons shall be designated as established welfare districts, regions, an issuance office. or other administrative structures; and (3) Data management unit (DMU). Any (ii) The unit must have supervisory sub-unit which has the responsibility control over Food Stamp Program op- for maintaining the household issuance erations within that geographic area record (HIR) masterfile shall be des- and have authority for implementation ignated as a DMU. of corrective action. (4) Bulk storage point. Any sub-unit (2) In submitting the request for FNS which has the responsibility for accept- approval, the State agency shall in- ing and storing supplies of coupons clude the following information regard- prior to shipment to issuance sites ing the proposed management unit: shall be designated as a bulk storage (i) That the proposed management point. unit meets the minimum criteria de- (5) Reporting point. Any sub-unit scribed in paragraphs (b)(1) (i) and (ii) which has the responsibility for prepa- of this section; ration and submittal of Form FNS–250 (ii) Geographic coverage, including for more than one issuance unit shall the names of the counties/project areas be designated as a reporting point, re- within the unit and the identification gardless of whether or not the unit ac- (district or region number) and loca- tually issues coupons. tion (city) of the office which has supervisory control over the management (b) Reviewing Issuance Offices and unit; Bulk Storage Points. The issuance office (iii) Food Stamp Program participa- and bulk storage point review required tion, including the number of persons by § 274.1(c)(2) of this chapter may be and number of households; satisfied through the ME review sys- (iv) The number of certification of- tem. fices; (c) Combined responsibilities. (1) When (v) The number of issuance units; a sub-unit has more than one of the (vi) The dollar value of allotments areas of functional responsibility speci- issued as reflected in the most recent fied in paragraph (a) of this section, it available data; and shall be included in each applicable (vii) Any other relevant information. classification and if selected for review, all functions performed shall be [Amdt. 160, 45 FR 15900, Mar. 11, 1980; 45 FR 23637, Apr. 8, 1980, as amended by Amdt. 266, examined. For example, if a sub-unit 52 FR 3408, Feb. 4, 1987] has an organizational entity which certifies households and also has an entity § 275.7 Selection of sub-units for re- which regularly issues coupons, the view. sub-unit shall be designated as both a (a) Definition of sub-units. Sub-units certification and an issuance office. are the physical locations of organiza- Thus, in an HIR issuance system, sub- tional entities within project areas re- units designated as issuance offices sponsible for operating various aspects would usually also be designated as of the Food Stamp Program, exclusive DMU’s since the HIR masterfile is usu- of Post Offices which may issue cou- ally maintained at the issuance site in pons. Sub-units shall be classified this system. based upon functional responsibility as (2) Certain sub-units shall not be des- one or more of the following. ignated as having combined respon- (1) Certification office. Any sub-unit sibilities, even though they may per- which has the responsibility for accept- form certain functions related to more ing applications, conducting inter- than one of the areas. For example, views, determining eligibility, main- coupon issuers must maintain a level taining (or having easy access to) of coupon inventory to ensure that par- casefiles, and transmitting information ticipants’ needs are met on a daily to the data management unit shall be basis but do not supply other issuance designated as a certification office. sites with bulk supplies of coupons. (2) Issuance office. Any sub-unit which Such a sub-unit would not be classified has the responsibility for issuing cou- as a bulk storage point. Certification

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offices may issue coupons in emer- of national scope. State agencies have gency situations or to meet the re- 60 days in which to establish a plan quirements of expedited service but do schedule for such reviews. not routinely issue coupons to house- (b) State agencies shall be respon- holds under standard certifications. In sible for reviewing each national target these and similar situations, the sub- area or other program requirement unit would be classified based upon its based upon the provisions of the regu- primary function exclusively. However, lations governing the Food Stamp Pro- when any sub-unit is selected, all program and the FNS-approved Plan of gram requirements specified in § 275.8 Operation. If FNS approves a State which the sub-unit has responsibility agency’s request for a waiver from a for, shall be reviewed. program requirement, any different (d) Itinerant issuance and certification policy approved by FNS would also be points. Units which certify households reviewed. When, in the course of a re- and/or issue coupons as satellites of a view, a project area is found to be out central sub-unit shall not be classified of compliance with a given program re- as independent sub-units. Units may be quirement, the State agency shall iden- identified as itinerant when they do tify the specifics of the problem includ- not operate on a regular basis, retain ing: the extent of the deficiency, the certification records, store coupons, cause of the deficiency, and, as applica- transmit information directly to the ble, the specific procedural require- DMU and/or develop FNS–250 reports ments the project area is misapplying. independently. Examples of such units [Amdt. 266, 52 FR 3408, Feb. 4, 1987, as amend- include mobile units, short term or ed by Amdt. 356, 59 FR 29713, June 9, 1994] seasonal operations, and units which may operate on a regular basis but do § 275.9 Review process. not meet the criteria for a sub-unit de- (a) Review procedures. State agencies scribed in paragraph (a) of this section. shall review the program requirements However, when a sub-unit is selected specified for review in § 275.8 of this for review which acts as a parent unit part using procedures that are ade- for itinerant service points, at least quate to identify problems and the one itinerant point per sub-unit shall causes of those problems. As each be reviewed if operational at the time project area’s operational structure of the review. will differ, State agencies shall review (e) Selection of Sub-units for Review. each program requirement applicable State agencies shall select a represent- to the project area in a manner which ative number of sub-units of each cat- will best measure the project area’s egory for on-site review in order to de- compliance with each program require- termine a project area’s compliance ment. with program standards. (b) ME review plan. (1) State agencies [Amdt. 160, 45 FR 15900, Mar. 11, 1980; 45 FR shall develop a review plan prior to 23638, Apr. 8, 1980; 45 FR 46784, July 11, 1980, each ME review. This review plan shall as amended by Amdt. 266, 52 FR 3408, Feb. 4, specify whether each project area is 1987] large, medium, or small and shall contain: § 275.8 Review coverage. (i) Identification of the project area (a) During each review period, State to be reviewed, program areas to be re- agencies shall review the national tar- viewed, the dates the review will be get areas of program operation speci- conducted, and the period of time that fied by FNS. FNS will notify State the review will cover; agencies of the minimum program (ii) Information secured from the areas to be reviewed at least 90 days project area regarding its caseload and before the beginning of each annual reorganization; view period, which is the Federal fiscal (iii) Identification of the certifi- year. FNS may add additional areas cation offices, issuance offices, bulk during the review period if deemed nec- storage points, reporting points, and essary. The FNS headquarters office data management units selected for re- will add national target areas during view and the techniques used to select the review period only for deficiencies them;

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(iv) Identification of whether the (viii) Any pertinent comments con- State agency is using the ME review to cerning the sub-unit’s operation. monitor coupon issuers and bulk stor- (2) State agencies shall promptly for- age points as discussed § 274.1(c)(2). At ward review findings to the appropriate State agency option it may also indi- State office for analysis, evaluation, cate whether the State agency is using and corrective action planning. Review the ME review process to perform non- worksheets shall be retained in an or- discrimination reviews; and derly fashion and made available to (v) A description of the review meth- FNS upon request. od(s) the State agency plans to use for [Amdt. 160, 45 FR 15900, Mar. 11, 1980; 45 FR each program area being reviewed. 25375, Apr. 15, 1980, as amended by Amdt. 266, (2) ME review plans shall be main- 52 FR 3409, Feb. 4, 1987; Amdt. 356, 59 FR tained in an orderly fashion and be 29713, June 9, 1994] made available to FNS upon request. (c) Review methods. (1) State agenices Subpart C—Quality Control (QC) shall determine the method of review- Reviews ing the program requirements associated with each program area. For some § 275.10 Scope and purpose. areas of program operation it may be (a) As part of the Performance Re- necessary to use more than one method porting System, each State agency is of review to determine if the project responsible for conducting quality con- area is in compliance with program re- trol reviews. For food stamp quality quirements. The procedures used shall control reviews, a sample of households be adequate to identify any problems shall be selected from two different and the causes of those problems. categories: Households which are par- (2) State agencies shall ensure that ticipating in the Food Stamp Program the method used to review a program (called active cases) and households for requirement does not bias the review which participation was denied, sus- findings. Bias can be introduced pended or terminated (called negative through leading questions, incomplete cases). Reviews shall be conducted on reviews, incorrect sampling tech- active cases to determine if households niques, etc. are eligible and receiving the correct (d) Review worksheet. (1) State agen- allotment of food stamps. The deter- cies shall use a review worksheet to mination of whether the household re- record all review findings. For each ceived the correct allotment will be sub-unit reviewed the State agency made by comparing the eligibility data shall, on the worksheet, identify: gathered during the review against the (i) The sub-unit being reviewed; amount authorized on the master issuance file. Reviews of negative cases (ii) Each program requirement re- shall be conducted to determine wheth- viewed in the sub-unit; er the State agency’s decision to deny, (iii) The method used to review each suspend or terminate the household, as program requirement; of the review date, was correct. Quality (iv) A description of any deficiency control reviews measure the validity of detected; food stamp cases at a given time (the (v) The cause(s) of any deficiency de- review date) by reviewing against the tected, if known; Food Stamp Program standards estab- (vi) The number of casefiles and/or lished in the Food Stamp Act and the program records selected and examined Regulations, taking into account any within the sub-unit, identification of FNS authorized waivers to deviate those selected (record case number, from specific regulatory provisions. household name, etc.), the proportion FNS and the State agency shall ana- which were not subject to review, as lyze findings of the reviews to deter- well as the method used to select the mine the incidence and dollar amounts sample; of errors, which will determine the (vii) Where applicable, the numerical State agency’s liability for payment extent of any deficiency detected errors and eligibility for enhanced through examination of program funding in accordance with the Food records; and Stamp Act of 1977, as amended, and to

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plan corrective action to reduce exces- pling, and monitoring sample selection sive levels of errors for any State agen- and assignment. A time schedule for cy that is not entitled to enhanced each step in the sampling procedures funding. shall be included. If appropriate, the (b) The objectives of quality control sampling plan shall include a descrip- reviews are to provide: tion of its relationship, to other Feder- (1) A systematic method of meas- ally-mandated quality control samples uring the validity of the food stamp (e.g., Temporary Assistance for Needy caseload; Families or Medicaid). (2) A basis for determining error (2) Criteria. Sampling plans proposing rates; non-proportional integrated sampling, (3) A timely continuous flow of infor- or other alternative designs shall docu- mation on which to base corrective ac- ment compliance with the approval cri- tion at all levels of administration; and teria in paragraph (b)(4) of this section. (4) A basis for establishing State All sampling plans shall: agency liability for errors that exceed (i) Conform to principles of prob- the National standard and State agen- ability sampling; cy eligibility for enhanced funding. (ii) Specify and explain the basis for (c) The review process is the activity the sample sizes chosen by the State necessary to complete reviews and doc- agency; ument findings of all cases selected in the sample for quality control reviews. (iii) If the State agency has chosen The review process shall consist of: (1) an active sample size as specified in Case assignment and completion moni- paragraph (b)(1)(iii) of this section, in- toring; (2) case reviews; (3) supervisory clude a statement that, whether or not review of completed worksheets and the sample size is increased to reflect schedules; and (4) transmission of com- an increase in participation as dis- pleted worksheets and schedules to the cussed in paragraph (b)(3) of this sec- State agency for centralized data com- tion, the State agency will not use the pilation and analysis. size of the sample chosen as a basis for challenging the resulting error rates. [Amdt. 149, 44 FR 45893, Aug. 3, 1979, as (iv) If the State agency has chosen a amended by Amdt. 260, 49 FR 6304, Feb. 17, negative sample size as specified in 1984; 54 FR 7016, Feb. 15, 1989; Amdt. 328, 56 FR 60051, Nov. 27, 1991; Amdt. 373, 64 FR paragraph (b)(2)(ii) of this section, in- 38294, July 16, 1999] clude a statement that, whether or not the sample size is increased to reflect § 275.11 Sampling. an increase in negative actions as dis- (a) Sampling plan. Each State agency cussed in paragraph (b)(3) of this sec- shall develop a quality control sam- tion, the State agency will not use the pling plan which demonstrates the in- size of the sample chosen as a basis for tegrity of its sampling procedures. challenging the resulting error rates. (1) Content. The sampling plan shall (3) Design. FNS generally rec- include a complete description of the ommends a systematic sample design frame, the method of sample selection, for both active and negative samples and methods for estimating character- because of its relative ease to admin- istics of the population and their sam- ister, its validity, and because it yields pling errors. The description of the a sample proportional to variations in sample frames shall include: source, the caseload over the course of the an- availability, accuracy, completeness, nual review period. (To obtain a sys- components, location, form, frequency tematic sample, a State agency would of updates, deletion of cases not sub- select every kth case after a random ject to review, and structure. The de- start between 1 and k. The value of k is scription of the methods of sample se- dependent upon the estimated size of lection shall include procedures for: es- the universe and the sample size.) A timating caseload size, overpull, com- State agency may, however, develop an putation of sampling intervals and ran- alternative sampling design better dom starts (if any), stratification or suited for its particular situation. clustering (if any), identifying sample Whatever the design, it must conform cases, correcting over-or undersam- to commonly acceptable statistical

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theory and application (see paragraph (iv) In the formulas in paragraphs (b)(4) of this section). (b)(1)(ii) and (iii) of this section n is the (4) FNS review and approval. The required active case sample size. This State agency shall submit its sampling is the minimum number of active cases plan to FNS for approval as a part of subject to review which must be se- its State Plan of Operation in accord- lected each review period. Also in the ance with § 272.2(e)(4). In addition, all formulas, N is the average monthly sampling procedures used by the State participating caseload subject to qual- agency, including frame composition, ity control review (i.e., households construction, and content shall be fully which are included in the active uni- documented and available for review verse defined in paragraph (e)(1) of this by FNS. section) during the annual review pe- (b) Sample size. There are two samples riod. for the food stamp quality control re- (2) Negative cases. (i) Unless a State view process, an active case sample and agency chooses to select and review a a negative case sample. The size of number of negative cases determined both these samples is based on the by the formulas provided in paragraph State agency’s average monthly case- (b)(2)(ii) of this section and has in- load during the annual review period. cluded in its sampling plan the reli- Costs associated with a State agency’s ability certification required by para- sample sizes are reimbursable as speci- graph (a)(2)(iv) of this section, the min- fied in § 277.4. imum number of negative cases to be (1) Active cases. (i) All active cases selected and reviewed by a State agen- shall be selected in accordance with cy during each annual review period standard procedures, and the review shall be determined as follows: findings shall be included in the cal- Average monthly reviewable Minimum annual sample culation of the State agency’s payment negative caseload (N) size (n) error and underissuance error rates. 5,000 and over ...... n=800 (ii) Unless a State agency chooses to 500 to 4,999 ...... n=150+[0.144(N¥500 )] select and review a number of active Under 500 ...... n=150 cases determined by the formulas provided in paragraph (b)(1)(iii) of this sec- (ii) A State agency which includes in tion and has included in its sampling its sampling plan the statement re- plan the reliability certification required by paragraph (a)(2)(iv) of this quired by paragraph (a)(2)(iii) of this section may determine the minimum section, the minimum number of active number of negative cases to be selected cases to be selected and reviewed by a and reviewed during each annual re- State agency during each annual review period as follows: view period shall be determined as fol- Average monthly reviewable Minimum annual sample lows: negative caseload (N) size (n)

Average monthly reviewable Minimum annual sample 5,000 and over ...... n=680 caseload (N) size (n) 684 to 4,999 ...... n=150+[ 0.1224(N¥683 )] Under 684 ...... n=150 60,000 and over ...... n=2400 10,000 to 59,999 ...... n=300+[0.042(N¥10,000)] Under 10,000 ...... n=300 (iii) In the formulas in this paragraph (b)(2), n is the required negative sample (iii) A State agency which includes in size. This is the minimum number of its sampling plan the statement re- negative cases subject to review which quired by paragraph (a)(2)(iii) of this must be selected each review period. section may determine the minimum (iv) In the formulas in this paragraph number of active cases to be selected (b)(2), N is the average monthly num- and reviewed during each annual re- ber of negative cases which are subject view period as follows: to quality control review (i.e., households which are part of the negative Average monthly reviewable Minimum annual sample universe defined in paragraph (e)(2) of caseload (N) size (n) this section) during the annual review 60,000 and over ...... n=1020 period. 12,942 to 59,999 ...... n=300+[0.0153(N¥12,941)] (3) Unanticipated changes. Since the Under 12,942 ...... n=300 average monthly caseloads (both active

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and negative) must be estimated at the once for the negative sample as the re- beginning of each annual review period, sult of separate and distinct instances unanticipated changes can result in the of denial, suspension or termination, it need for adjustments to the sample shall be reviewed each time. size. FNS shall not penalize a State (2) Corrections. Excessive undersam- agency that does not adjust its sample pling must be corrected during the an- size if the actual caseload during a re- nual review period. Excessive oversam- view period is less than 20 percent larg- pling may be corrected at the State er than the estimated caseload ini- agency’s option. Cases which are tially used to determine sample size. If dropped to compensate for oversam- the actual caseload is more than 20 per- pling shall be reported as not subject cent larger than the estimated case- to review. Because corrections must load, the larger sample size appropriate not bias the sample results, cases for the actual caseload will be used in which are dropped to compensate for computing the sample completion rate. oversampling must comprise a random (4) Alternative designs. The active and subsample of all cases selected (includ- negative sample size determinations ing those completed, not completed, assume that State agencies will use a and not subject to review). Cases which systematic or simple random sample are added to the sample to compensate design. State agencies able to obtain for undersampling must be randomly results of equivalent reliability with selected from the entire frame in ac- smaller samples and appropriate design cordance with the procedures specified may use an alternative design with in paragraphs (b), (c)(1), and (e) of this FNS approval. To receive FNS ap- section. All sample adjustments must proval, proposals for any type of alter- be fully documented and available for native design must: review by FNS. (i) Demonstrate that the alternative (d) Required sample size. A State agen- design provides payment error rate es- cy’s required sample size is the larger timates with equal-or-better predicted of either the number of cases selected precision than would be obtained had which are subject to review or the the State agency reviewed simple ran- number of cases chosen for selection dom samples of the sizes specified in paragraphs (b)(1) and (b)(2) of this sec- and review according to paragraph (b) tion. of this section. (ii) Describe all weighting, and esti- (e) Sample frame. The State agency mation procedures if the sample design shall select cases for quality control is non-self-weighted, or uses a sampling review from a sample frame. The technique other than systematic sam- choice of a sampling frame shall de- pling. pend upon the criteria of timeliness, (iii) Demonstrate that self-weighting completeness, accuracy, and adminis- is actually achieved in sample designs trative burden. Complete coverage of claimed to be self-weighting. the sample universes, as defined in (c) Sample selection. The selection of paragraph (f) of this section, must be cases for quality control review shall assured so that every household sub- be made separately for active and neg- ject to quality control review has an ative cases each month during the an- equal or known chance of being se- nual review period. Each month each lected in the sample. Since the food State agency shall select for review ap- stamp quality control review process proximately one-twelfth of its required requires an active and negative sample, sample, unless FNS has approved other two corresponding sample frames are numbers of cases specified in the sam- also required. pling plan. (1) Active cases. The frame for active (1) Substitutions. Once a household cases shall list all households which has been identified for inclusion in the were: (i) Certified prior to, or during, sample by a predesigned sampling pro- the sample month; and (ii) issued bene- cedure, substitutions are not accept- fits for the sample month, except for able. An active case must be reviewed those households excluded from the each time it is selected for the sample. universe in paragraph (f)(1) of this sec- If a household is selected more than tion. State agencies may elect to use

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either a list of certified eligible house- certified prior to, or during, the sample holds or a list of households issued an month and receiving food stamps for allotment. If the State agency uses a the sample month, except for the fol- list of certified eligible households, lowing: those households which are issued ben- (i) A household in which all the mem- efits for the sample month after the bers had died or had moved out of the frame has been compiled shall be in- State before the review could be under- cluded in a supplemental list. If the taken or completed; State agency uses an issuance list, the (ii) A household receiving food State agency shall ensure that the list stamps under a disaster certification includes those households which do not authorized by FNS; actually receive an allotment because (iii) A household which is under in- the entire amount is recovered for re- vestigation for intentional Program payment of an overissuance in accord- violation, including a household with a ance with the allotment reduction pro- pending administrative disqualifica- cedures in § 273.18. tion hearing; (2) Negative cases. The frame for nega- (iv) A household appealing an adverse tive cases shall list: action when the review date falls with- (i) All households whose applications in the time period covered by contin- for food stamp benefits were denied by ued participation pending the hearing; an action in the sample month or effec- or tive for the sample month except those (v) A household receiving restored excluded from the universe in para- benefits in accordance with § 273.17 but graph (f)(2) of this section. If a house- not participating based upon an ap- hold is subject to more than one denial proved application. Other households action in a single sample month, each excluded from the active case universe action shall be listed separately in the during the review process are identified sample frame; and in § 275.12(g). (ii) All households whose food stamp (2) Negative cases. The universe for benefits were suspended or terminated negative cases shall include all house- by an action in the sample month or ef- holds whose applications for food fective for the sample month except stamps were denied or whose food those excluded from the universe in stamp benefits were suspended or ter- paragraph (f)(2) of this section. minated by an action in the sample (3) Unwanted cases. A frame may in- month except the following: clude cases for which information is (i) A household which had its case not desired (e.g., households which closed due to expiration of the certifi- have been certified but did not actually cation period; participate during the sample month). (ii) A household denied food stamps When such cases cannot be eliminated under a disaster certification author- from the frame beforehand and are se- ized by FNS; lected for the sample, they must be ac- (iii) A household which withdrew an counted for and reported as being not application prior to the agency’s deter- subject to review in accordance with mination; the provisions in §§ 275.12(g) and (iv) A household which is under ac- 275.13(e). tive investigation for Intentional Pro- (f) Sample universe. The State agency gram Violation; shall ensure that its active and nega- (v) A household which was denied, tive case frames accurately reflect but subsequently certified within the their sample universes. There are two normal 30 day processing standard, sample universes for the food stamp using the same application form; quality control review process, an ac- (vi) A household which was suspended tive case universe and a negative case or terminated but the suspension or universe. The exceptions noted below termination did not result in a break for both universes are households not in participation that is the result of de- usually amenable to quality control re- liberate State agency action. There view. would be no break in participation if (1) Active cases. The universe for ac- the household is authorized to receive tive cases shall include all households its full allotment in the month for

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which the suspension or termination § 275.12 Review of active cases. was effective other than continuation (a) General. A sample of households of benefits pending a fair hearing. Pro which were certified prior to, or dur- rated benefits are not considered to be ing, the sample month and issued food a full allotment; stamp benefits for the sample month (vii) A household which has been sent shall be selected for quality control re- a notice of pending status but which view. These active cases shall be re- was not actually denied participation; viewed to determine if the household is (viii) A household which was termi- eligible and, if eligible, whether the nated for failure to file a complete household is receiving the correct al- monthly report by the extended filing lotment. The determination of a house- date, but reinstated when it subse- hold’s eligibility shall be based on an quently filed the complete report be- examination and verification of all ele- fore the end of the issuance month; ments of eligibility (i.e., basic program (ix) Other households excluded from requirements, resources, income, and deductions). The elements of eligibility the negative case universe during the are specified in §§ 273.1 and 273.3 review process as identified in through 273.9. The verified cir- § 275.13(e). cumstances and the resulting benefit (g) Demonstration projects/SSA proc- level determined by the quality control essing. Households correctly classified review shall be compared to the bene- for participation under the rules of an fits authorized by the State agency as FNS-authorized demonstration project of the review date. When changes in which FNS determines to significantly household circumstances occur, the re- modify the rules for determining viewer shall determine whether the households’ eligibility or allotment changes were reported by the partici- level, and households participating pant and handled by the agency in ac- based upon an application processed by cordance with the rules set forth in Social Security Administration per- §§ 273.12, 273.13 and 273.21, as appro- sonnel shall be included in the selec- priate. For active cases, the review tion and review process. They shall be date shall always fall within the sam- included in the universe for calculating ple month, either the first day of a cal- sample sizes and included in the sample endar or fiscal month or the day of cer- frames for sample selection as specified tification, whichever is later. The rein paragraphs (b) through (e) of this view of active cases shall include: a section. In addition, they shall be in- household case record review; a field cluded in the quality control review re- investigation, except as provided in paragraph (b) of this section; the iden- ports as specified in § 275.21(e) and in- tification of any variances; an error cluded in the calculation of a State analysis; and the reporting of review agency’s completion rate as specified findings. in § 275.23(e)(6). However, all results of (b) Household case record review. The reviews of active and negative dem- reviewer shall examine the household onstration project/SSA processed cases case record to identify the specific shall be excluded from the determina- facts relating to the household’s eligi- tion of State agencies’ active and nega- bility and basis of issuance. If the re- tive case error rates, payment error viewer is unable to locate the house- rates, and underissuance error rates as hold case record, the reviewer shall described in § 275.23(c). The review of identify as many of the pertinent facts these cases shall be conducted in ac- as possible from the household issuance cordance with the provisions specified record. The case record review shall in- in §§ 275.12(h) and 275.13(f). clude all information applicable to the case as of the review month, including [Amdt. 260, 49 FR 6304, Feb. 17, 1984; 49 FR 14495, Apr. 12, 1984, as amended by Amdt. 262, the application and worksheet in effect 49 FR 50598, Dec. 31, 1984; Amdt. 266, 52 FR as of the review date. Documentation 3409, Feb. 4, 1987; Amdt. 328, 56 FR 60051, Nov. contained in the case record can be 27, 1991; Amdt. 366, 62 FR 29658, June 2, 1997; used as verification if it is not subject Amdt.373, 64 FR 38295, July 16, 1999; 68 FR to change and applies to the sample 59523, Oct. 16, 2003] month. If during the case record review

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the reviewer can determine and verify (1) Personal interviews. Personal inter- the household’s ineligibility the review views shall be conducted in a manner can be terminated at that point, pro- that respects the rights, privacy, and vided that if the determination is based dignity of the participants. Prior to on information not obtained from the conducting the personal interview, the household then the correctness of that reviewer shall notify the household information must be confirmed as pro- that it has been selected, as part of an vided in paragraph (c)(2) of this sec- ongoing review process, for review by tion. The reviewer shall utilize infor- quality control, and that a personal mation obtained through the case face-to-face interview will be con- record review to complete column (2) of ducted in the future. The method of no- the Integrated Worksheet, Form FNS– tifying the household and the speci- 380, and to tentatively plan the content ficity of the notification shall be deter- of the field investigation. mined by the State agency, in accord- (c) Field investigation. A full field in- ance with applicable State and Federal vestigation shall be conducted for all laws. The personal interview may take active cases selected in the sample place at the participant’s home, at an month except as provided in paragraph appropriate State agency certification (b) of this section. A full field inves- office, or at a mutually agreed upon al- tigation shall include a review of any ternative location. The State agency information pertinent to a particular shall determine the best location for case which is available through the the interview to take place, but would State Income and Eligibility be subject to the same provisions as Verification System (IEVS) as speci- those regarding certification inter- fied in § 272.8. If during the field inves- views at § 273.2(e)(2) of this chapter. tigation the reviewer determines and Those regulations provide that an of- verifies the household’s ineligibility, fice interview must be waived under the review can be terminated at that certain hardship conditions. Under point, provided that if the determina- such hardship conditions the quality tion is based on information not ob- control reviewer shall either conduct tained from the household then the the personal interview with the partici- correctness of that information must pant’s authorized representative, if one be confirmed as provided in paragraph has been appointed by the household, (c)(2) of this section. In Alaska an ex- or with the participant in the partici- ception to this requirement can be pant’s home. Except in Alaska, when made in those isolated areas not reach- an exception to the field investigation able by regularly scheduled commer- is made in accordance with this sec- cial air service, automobile, or other tion, the interview with the partici- public transportation provided one pant may not be conducted by phone. fully documented attempt to contact During the personal interview with the the household has been made. Such participant, the reviewer shall: cases may be completed through (i) Explore with the head of the casefile review and collateral contact. household, spouse, authorized rep- The field investigation will include resentative, or any other responsible interviews with the head of household, household member, household cir- spouse, or authorized representative; cumstances as they affect each factor contact with collateral sources of in- of eligibility and basis of issuance; formation; and any other materials and (ii) Establish the composition of the activity pertinent to the review of the household; case. The scope of the review shall not (iii) Review the documentary evi- extend beyond the examination of dence in the household’s possession and household circumstances which di- secure information about collateral rectly relate to the determination of sources of verification; and household eligibility and basis of (iv) Elicit from the participant issuance status. The reviewer shall uti- names of collateral contacts. The re- lize information obtained through the viewer shall use, but not be limited to, field investigation to complete column these designated collateral contacts. If (3) of the Integrated Worksheet, Form required by the State, the reviewer FNS–380. shall obtain consent from the head of

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the household to secure collateral in- issuance shall be included in the error formation. If the participant refuses to analysis. Such variances shall include sign the release of information form, but not be limited to those resulting the reviewer shall explain fully the from a State agency’s failure to take consequences of this refusal to cooper- the disqualification action related to ate (as contained in paragraph (g)(1)(ii) SSN’s specified in § 273.6(c), and related of this section), and continue the re- to work requirements, specified in view to the fullest extent possible. § 273.7(f). (2) Collateral contacts. The reviewer (2) Variances excluded from error anal- shall obtain verification from collat- ysis. The following variances shall be eral contacts in all instances when ade- excluded from the determination of a quate documentation was not available household’s eligibility and basis of from the participant. This second party issuance for the sample month: verification shall cover each element of (i) Any variance resulting from the eligibility as it affects the household’s nonverified portion of a household’s eligibility and coupon allotment. The gross nonexempt income where there is reviewer shall make every effort to use conclusive documentation (a listing of the most reliable second party what attempts were made to verify and verification available (for example, why they were unsuccessful) that such banks, payroll listings, etc.), in accord- income could not be verified at the ance with FNS guidelines, and shall time of certification because the thoroughly document all verification source of income would not cooperate obtained. If any information obtained in providing verification and no other by the QC reviewer differs from that sources of verification were available. given by the participant, then the re- If there is no conclusive documentation viewer shall resolve the differences to as explained above, then the reviewer determine which information is correct shall not exclude any resulting vari- before an error determination is made. ance from the error determination. The manner in which the conflicting This follows certification policy out- information is resolved shall include lined in § 273.2(f)(1)(i). recontacting the participant unless the (ii) Any variance in cases certified participant cannot be reached. When under expedited certification proce- resolving conflicting information re- dures resulting from postponed viewers shall use their best judgement verification of an element of eligibility based on the most reliable data avail- as allowed under § 273.2(i)(4)(i). able and shall document how the dif- Verification of gross income, deduc- ferences were resolved. tions, resources, household composi- (d) Variance identification. The re- tion, alien status, or tax dependency viewer shall identify any element of a may be postponed for cases eligible for basic program requirement or the basis expedited certification. However, if a of issuance which varies (i.e., informa- case certified under expedited proce- tion from review findings which indi- dures contains a variance as a result of cates that policy was applied incor- a residency deficiency, a mistake in rectly and/or information verified as of the basis of issuance computation, a the review date that differs from that mistake in participant identification, used at the most recent certification or incorrect expedited income account- action). For each element that varies, ing, the variance shall be included in the reviewer shall determine whether the error determination. This exclusion the variance was State agency or par- shall only apply to those cases which ticipant caused. The results of these are selected for QC review in the first determinations shall be coded and re- month of participation under expedited corded in column (5) of the Integrated certification. Worksheet, Form FNS–380. (iii) Any variance subsequent to cer- (1) Variances included in error analysis. tification in an element of eligibility Except for those variances in an ele- or basis of issuance which was not re- ment resulting from one of the situa- ported and was not required to have tions described in paragraph (d)(2) of been reported as of the review date. this section, any variance involving an The elements participants are required element of eligibility or basis of to report and the time requirements

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for reporting are specified in §§ 273.12(a) Verification Number or the INS Form and 273.21(h) and (i), as appropriate. If, G–845, as annotated by INS. however, a change in any element is re- (B) A variance based on the State ported, and the State agency fails to agency’s wait for the response of INS act in accordance with §§ 273.12(c) and to the State agency’s request for offi- 273.21(j), as appropriate, any resulting cial verification of the alien’s docu- variance shall be included in the error mentation. The reviewer shall exclude determination. such variance only if the State agency (iv) Any variance in deductible ex- properly used SAVE and the State penses which was not provided for in agency provides the reviewer with ei- determining a household’s benefit level ther: in accordance with § 273.2(f)(3)(i)(B). (1) The date of request, if the State This provision allows households to agency was waiting for an automated have their benefit level determined response; or without providing for a claimed ex- (2) A copy of the completed Form G– pense when the expense is questionable 845, if the State agency was waiting for and obtaining verification may delay secondary verification from INS. certification. If such a household sub- (vii) Subject to the limitations pro- sequently provides the needed vided in paragraphs (d)(2)(vii)(A) verification for the claimed expense through (d)(2)(vii)(F) of this section and the State agency does not redeter- any variance resulting from applica- mine the household’s benefits in action of a new Program regulation or cordance with § 273.12(c), any resulting variance shall be included in the error implementing memorandum (if one is determination. sent to advise State agencies of a (v) Any variance resulting from use change in Federal law, in lieu of regu- by the State agency of information lations during the first 120 days from concerning households or individuals the required implementation date. from an appropriate Federal source, (A) When a regulation allows a State provided that such information is cor- agency an option to implement prior to rectly processed by the State agency. the required implementation date, the An appropriate Federal source is one date on which the State agency choos- which verifies: Income that it provides es to implement may, at the option of directly to the household; deductible the State, be considered to be the re- expenses for which it directly bills the quired implementation date for pur- household; or other household cir- poses of this provision. The exclusion cumstances which it is responsible for period would be adjusted to begin with defining or establishing. To meet the this date and end on the 120th day that provisions for correct processing, the follows. States choosing to implement eligibility worker must have appro- prior to the required implementation priately acted on timely information. date must notify the appropriate FNS In order to be timely, information Regional Office, in writing, prior to im- must be the most current that was plementation that they wish the 120 available to the State agency at the day variance exclusion to commence time of the eligibility worker’s action. with actual implementation. Absent (vi) Two variances relating to the Im- such notification, the exclusionary pe- migration and Naturalization Service’s riod will commence with the required (INS) Systematic Alien Verification for implementation date. Entitlements (SAVE) Program. (B) A State agency shall not exclude (A) A variance based on a verification variances which occur prior to the of alien documentation by INS. The re- States implementation. viewer shall exclude such variance only (C) A State agency which did not im- if the State agency properly used plement until after the exclusion pe- SAVE and the State agency provides riod shall not exclude variances under the reviewer with: this provision. (1) The alien’s name; (D) Regardless of when the State (2) The alien’s status; and agency actually implemented the regu- (3) Either the Alien Status lation, the variance exclusion period Verification Index (ASVI) Query shall end on the 120th day following the

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required implementation date, includ- include: inadequate documentation of ing the required implementation date each household member’s exempt sta- defined in paragraph (d)(2)(vii)(A) of tus; work registration form for each this section. nonexempt household member not (E) For purposes of this provision, completed at the time of application implementation occurs on the effective and every six months thereafter; and date of State agency’s written state- the household not advised of its respon- wide notification to its eligibility sibility to report any changes in the workers. exempt status of any household mem- (F) This variance exclusion applies to ber. changes occasioned by final regula- (e) Error analysis. The reviewer shall tions or interim regulations. In the analyze all appropriate variances in case of a final regulation issued fol- completed cases, in accordance with lowing an interim regulation, the ex- paragraph (d) of this section, which are clusion applies only to significant based upon verified information and changes made to the earlier interim determine whether such cases are ei- regulation. A significant change is one ther eligible, eligible with a basis of which the final regulation requires the issuance error, or ineligible. The re- State agency to implement on or after view of an active case determined ineli- publication of a final rule. gible shall be considered completed at (viii) Any variance resulting from in- the point of the ineligibility deter- correct written policy that a State mination. For households determined agency acts on that is provided by a eligible, the review shall be completed Departmental employee authorized to to the point where the correctness of issue Food Stamp Program policy and the basis of issuance is determined, ex- that the State agency correctly applies. For purposes of this provision, cept in the situations outlined in para- written Federal policy is that which is graph (g) of this section. In the event issued in regulations, notices, hand- that a review is conducted of a house- books, category three and four Policy hold which is receiving restored or ret- Memoranda under the Policy Interpre- roactive benefits for the sample month, tation Response System, and regional the portion of the allotment which is policy memoranda issued pursuant to the restored or retroactive benefit these. Written Federal policy is also a shall be excluded from the determina- letter from the Food and Nutrition tion of the household’s eligibility and/ Service to a State agency which con- or basis of issuance. A food stamp case tains comments on the State agency’s in which a household member(s) re- food stamp manual or instructions. ceives public assistance shall be re- (ix) Any variance in a child support viewed in the same manner as all other deduction which was the result of an food stamp cases, using income as re- unreported change subsequent to the ceived. The determination of a house- most recent certification action shall hold’s eligibility and the correctness of be excluded from the error determina- the basis of issuance shall be deter- tion. mined based on data entered on the (3) Other findings. Findings other computation sheet as well as other in- than variances made during the review formation documented on other por- which are pertinent to the food stamp tions of the Integrated Worksheet, household or the case record may be Form FNS–380, as appropriate. acted on at the discretion of the State (f) Reporting of review findings. All in- agency. Examples of such findings are: formation verified to be incorrect dur- an incorrect age of a household mem- ing the review of an active case shall ber which is unrelated to an element of be reported to the State agency for ap- eligibility; an overdue subsequent cer- propriate action on an individual case tification; no current application on basis. This includes information on all file; insufficient documentation; incor- variances in elements of eligibility and rect application of the verification re- basis of issuance in both error and quirements specified in part 273; and nonerror cases. In addition, the re- deficiencies in work registration proce- viewer shall report the review findings dural requirements. Such deficiencies on the Integrated Review Schedule,

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Form FNS–380–1, in accordance with (1) Cases reported as not complete. Ac- the following procedures: tive cases shall be reported as not com- (1) Eligibility errors. If the reviewer de- pleted if the household case record can- termines that a case is ineligible, the not be located and the household itself occurrence and the total allotment is not subsequently located; if the issued in the sample month shall be household case record is located but coded and reported. Whenever a case the household cannot be located unless contains a variance in an element the reviewer attempts to locate the which results in an ineligibility deter- household as specified in this para- mination and there are also variances graph; or if the household refuses to co- in elements which would cause a basis operate, as discussed in this paragraph. of issuance error, the case shall be All cases reported as not complete treated as an eligibility error. The re- shall be reported to the State agency viewer shall also code and report any for appropriate action on an individual variances that directly contributed to case basis. Without FNS approval, no the error determination. In addition, if active case shall be reported as not the State agency has chosen to report completed solely because the State information on all variances in ele- agency was unable to process the case ments of eligibility and basis of review in time for it to be reported in issuance, the reviewer shall code and accordance with the timeframes speci- report any other such variances which fied in § 275.21(b)(2). were discovered and verified during the (i) If the reviewer is unable to locate course of the review. the participant either at the address (2) Basis of issuance errors. If the re- indicated in the case record or in the viewer determines that food stamp al- issuance record and the State agency is lotments were either overissued or not otherwise aware of the partici- underissued to eligible households in pant’s current address, the reviewer the sample month, in an amount ex- shall attempt to locate the household ceeding $25.00, the occurrence and the by contacting at least two sources amount of the error shall be coded and which the State agency determines are reported. The reviewer shall also code most likely to be able to inform the re- and report any variances that directly viewer of the household’s current ad- contributed to the error determination. dress. Such sources include but are not In addition, if the State agency has limited to: chosen to report information on all (A) The local office of the U.S. Postal variances in elements of eligibility and Service; basis of issuance, the reviewer shall (B) The State Motor Vehicle Depart- code and report any other such ment; variances which were discovered and (C) The owner or property manager of verified during the course of the re- the residence at the address in the case view. record; and (3) Automated Federal Information Ex- (D) Any other appropriate sources change System Errors. Variances result- based on information contained in the ing from the use by the State agency of case record, such as public utility com- information received from automated panies, telephone company, employers, Federal information exchange systems, or relatives. Once the reviewer has at- which are excluded in accordance with tempted to locate the household and § 275.12(d)(2)(v), shall be coded and re- has documented the response of each ported as variances. They shall not, source contacted, if the household still however, be used in determining a cannot be located and the State agency State’s error rates. has documented evidence that the (g) Disposition of case reviews. Each household did actually exist, the State case selected in the sample of active agency shall report the active case as cases must be accounted for by not subject to review. In these situa- classifying it as completed, not com- tions documented evidence shall be pleted, or not subject to review. These considered adequate if it either docu- case dispositions shall be coded and re- ments two different elements of eligi- corded on the Integrated Review bility or basis of issuance, such as a Schedule, Form FNS–380–1. copy of a birth certificate for age and

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pay status for income; or documents if there is any question as to whether the statement of a collateral contact the household has merely failed to co- indicating that the household did exist. operate, as opposed to refused to co- FNS Regional Offices will monitor the operate, the household shall not be re- results of the contacts which State ported to the State agency for termi- agencies make in attempting to locate nation. households. (2) Cases not subject to review. Active (ii) If a household refuses to cooper- cases which are not subject to review, ate with the quality control reviewer if they have not been eliminated in the and the State agency has taken other sampling process, shall be eliminated administrative steps to obtain that co- in the review process. In addition to operation without obtaining it, the cases listed in § 275.11(f)(1), these shall household shall be notified of the include: penalities for refusing to cooperate (i) Death of all members of a house- with respect to termination and re- hold if they died before the review application, and of the possibility that could be undertaken or completed; its case will be referred for investiga- (ii) The household moved out of State tion for willful misrepresentation. If a before the review could be undertaken household refuses to cooperate after or completed; such notice, the reviewer may attempt (iii) The household, at the time of the to complete the case and shall report review, is under active investigation the household’s refusal to the State for intentional Food Stamp Program agency for termination of its participa- violation, including a household with a tion without regard for the outcome of pending administrative disqualifica- that attempt. For a determination of tion hearing; refusal to be made, the household must (iv) A household receiving restored be able to cooperate, but clearly dem- benefits in accordance with § 273.17 but onstrate that it will not take actions not participating based upon an ap- that it can take and that are required proved application for the sample to complete the quality control review month; process. In certain circumstances, the (v) A household dropped as a result of household may demonstrate that it is correction for oversampling; unwilling to cooperate by not taking (vi) A household participating under actions after having been given every disaster certification authorized by reasonable opportunity to do so, even FNS for a natural disaster; though the household or its members (vii) A case incorrectly listed in the do not state that the household refuses active frame; to cooperate. Instances where the (viii) A household appealing an ad- household’s unwillingness to cooperate verse action when the review date falls in completing a quality control review within the time period covered by con- has the effect of a refusal to cooperate tinued participation pending the hear- shall include the following: ing; (A) The household does not respond (ix) A household that did not receive to a letter from the reviewer sent Cer- benefits for the sample month; or tified Mail-Return Receipt Requested (x) A household that still cannot be within 30 days of the date of receipt; located after the reviewer has at- (B) The household does not attend an tempted to locate it in accordance with agreed upon interview with the re- paragraph (g)(1)(i) of this section. viewer and then does not contact the (h) Demonstration projects/SSA proc- reviewer within 10 days of the date of essing. Households correctly classified the scheduled interview to reschedule for participation under the rules of a the interview; or demonstration project which estab- (C) The household does not return a lishes new FNS-authorized eligibility signed release of information state- criteria or modifies the rules for deter- ment to the reviewer within 10 days of mining households’ eligibility or allot- either agreeing to do so or receiving a ment level shall be reviewed following request from the reviewer sent Cer- standard procedures provided that FNS tified Mail-Return Receipt Requested. does not modify these procedures to re- However, in these and other situations, flect modifications in the treatment of

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elements of eligibility or basis of given for the denial, suspension, or ter- issuance in the case of a demonstration mination is correct or whether the de- project. If FNS determines that infor- nial, suspension, or termination is cor- mation obtained from these cases rect for any other reason documented would not be useful, then they may be in the casefile. When the case record excluded from review. A household alone does not prove ineligibility, the whose most recent application for par- reviewer may attempt to verify the ticipation was processed by Social Se- element(s) of eligibility in question by curity Administration personnel shall telephoning either the household and/ be reviewed following standard proce- or a collateral contact(s). Through the dures. This includes applications for rereview of the household case record, certification, provided such an applica- the reviewer shall complete the house- tion is processed by the SSA as allowed hold case record sections and document in § 273.2(k)(2)(ii). the reasons for denial, suspension or [Amdt. 260, 49 FR 6306, Feb. 17, 1984; 49 FR termination on the Negative Quality 14495, Apr. 12, 1984, as amended by Amdt. 264, Control Review Schedule, Form FNS– 51 FR 7207, Feb. 28, 1986; Amdt. 295, 52 FR 245. 29658, Aug. 11, 1987; 53 FR 39443, Oct. 7, 1988; (c) Error analysis. (1) A negative case 53 FR 44172, Nov. 2, 1988; Amdt. 324, 55 FR shall be considered correct if the re- 48834, Nov. 23, 1990; Amdt. 362, 61 FR 54292, viewer is able to verify through docu- Oct. 17, 1996; Amdt. 366, 62 FR 29659, June 2, mentation in the household case record 1997; Amdt. 373, 64 FR 38296, July 16, 1999; 67 FR 41619, June 19, 2002] or collateral contact that a household was correctly denied, suspended or ter- § 275.13 Review of negative cases. minated from the program. Whenever (a) General. A sample of households the reviewer is unable to verify the whose applications for food stamp ben- correctness of the State agency’s deci- efits were denied or whose food stamp sion to deny, suspend or terminate a benefits were suspended or terminated household’s participation through such by an action in the sample month or ef- documentation or collateral contact, fective for the sample month shall be the negative case shall be considered selected for quality control review. incorrect. These negative cases shall be reviewed (2) The reviewer shall exclude a vari- to determine whether the State agen- ance when the State agency erro- cy’s decision to deny, suspend, or ter- neously denied, suspended or termi- minate the household, as of the review nated a household’s participation based date, was correct. Depending on the on an erroneous verification of alien characteristics of individual State sys- documentation by the Immigration and tems, the review date for negative Nationalization Services (INS) System- cases could be the date of the agency’s atic Alien Verification for Entitle- decision to deny, suspend, or terminate ments (SAVE) Program. The reviewer program benefits, the date on which shall exclude the variance only if the the decision is entered into the com- State agency properly used SAVE, and puter system, the date of the notice to the State agency provides the reviewer the client, or the date the negative ac- with: tion becomes effective. However, State (i) The alien’s name; agencies must consistently apply the (ii) The alien’s status; and same definition for review date to all (iii) Either the Alien Status sample cases of the same classification. Verification Index (ASVI) Query The review of negative cases shall in- Verification Number or the INS Form clude a household case record review; G–845, as annotated by INS. an error analysis; and the reporting of (d) Reporting of review findings. When review findings, including procedural a negative case is incorrect, this infor- problems with the action regardless of mation shall be reported to the State the validity of the decision to deny, agency for appropriate action on an in- suspend or terminate. dividual case basis, such as recomputa- (b) Household case record review. The tion of the coupon allotment and res- reviewer shall examine the household toration of lost benefits. In addition, case record and verify through docu- the reviewer shall code and record the mentation in it whether the reason error determination on the Negative

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Quality Control Review Schedule, § 275.14 Review processing. Form FNS–245. (a) General. Each State agency shall (e) Disposition of case review. Each use FNS handbooks, worksheets, and case selected in the sample of negative schedules in the quality control review cases must be accounted for by process. classifying it as completed, not com- (b) Handbooks. The reviewer shall fol- pleted, or not subject to review. These low the procedures outlined in the case dispositions shall be coded and re- Quality Control Review Handbook, corded on the Negative Quality Control FNS Handbook 310, to conduct quality Review Schedule, Form FNS–245. control reviews. In addition, the sam- (1) Cases reported as not complete. Neg- ple of active and negative cases shall ative cases shall be reported as not be selected in accordance with the completed if the reviewer, after all rea- sampling techniques described in the sonable efforts, is unable to locate the Quality Control Sampling Handbook, case record. In no event, however, shall FNS Handbook 311. any negative case be reported as not (c) Worksheets. The Integrated Review completed solely because the State Worksheet, Form FNS–380, shall be agency was unable to process the case used by the reviewer to record required review in time for it to be reported in information from the case record, plan accordance with the timeframes speci- and conduct the field investigation, fied in § 275.21(b)(2), without prior FNS and record findings which contribute to approval. This information shall be re- the determination of eligibility and ported to the State agency for appro- basis of issuance in the review of active priate action on an individual case cases. In some instances, reviewers basis. may need to supplement Form FNS–380 (2) Cases not subject to review. Nega- with other forms. The State forms for tive cases which are not subject to re- appointments, interoffice communica- view, if they have not been eliminated tions, release of information, etc., in the sampling process, shall be elimi- should be used when appropriate. nated in the review process. In addition (d) Schedules. Decisions reached by to cases listed in § 275.11(f)(2), these the reviewer in active case reviews shall include: shall be coded and recorded on the In- (i) A household which was dropped as tegrated Review Schedule, Form FNS– a result of a correction for oversam- 380–1. Such active case review findings pling; must be substantiated by information (ii) A household which was listed in- recorded on the Integrated Review correctly in the negative frame. Worksheet, Form FNS–380. In negative (f) Demonstration projects/SSA proc- case reviews, the review findings shall essing. A household whose application be coded and recorded on the Negative has been denied or whose participation Quality Control Review Schedule, has been suspended or terminated Form FNS–245, and supplemented as under the rules of an FNS-authorized necessary with other documentation demonstration project shall be re- substantiating the findings. viewed following standard procedures [Amdt. 260, 49 FR 6310, Feb. 17, 1984, as unless FNS provides modified proce- amended by Amdt. 262, 49 FR 50598, Dec. 31, dures to reflect the rules of the dem- 1984] onstration project. If FNS determines that information obtained from these Subpart D—Data Analysis and cases would not be useful, then these Evaluation cases may be excluded from review. A household whose application has been § 275.15 Data management. processed by SSA personnel and is sub- (a) Analysis. Analysis is the process sequently denied participation shall be of classifying data, such as by areas of reviewed following standard proce- program requirements or use of error- dures. prone profiles, to provide a basis for [Amdt. 260, 49 FR 6309, Feb. 17, 1984, as studying the data and determining amended at 53 FR 39443, Oct. 7, 1988; Amdt. trends including significant character- 373, 64 FR 38296, July 16, 1999] istics and their relationships.

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(b) Evaluation. Evaluation is the amined to determine if they are attrib- process of determining the cause(s) of utable to a single cause and can be ef- each deficiency, magnitude of the defi- fectively eliminated by a single action. ciency, and geographic extent of the Deficiencies and causes identified must deficiency, to provide the basis for also be compared to the results of past planning and developing effective cor- corrective action efforts to determine rective action. if the new problems arise from the (c) Each State agency must analyze causal factors which contributed to the and evaluate at the State and project occurrence of previously identified de- area levels all management informa- ficiencies. tion sources available to: (f) Data analysis and evaluation must (1) Identify all deficiencies in pro- be an ongoing process to facilitate the gram operations and systems; development of effective and prompt (2) Identify causal factors and their corrective action. The process shall relationships; also identify when deficiencies have (3) Identify magnitude of each defi- been eliminated through corrective ac- ciency, where appropriate (This is the tion efforts, and shall provide for the frequency of each deficiency occurring reevaluation of deficiencies and causes based on the number of program when it is determined that corrective records reviewed and where applicable, action has not been effective. the amount of loss either to the pro- (g) Identification of High Error Project gram or participants or potential par- Areas/Counties/Local Offices. FNS may ticipants in terms of dollars. The State use quality control information to de- agency shall include an estimate of the termine which project areas/counties/ number of participants or potential local offices have reported payment participants affected by the existence error rates that are either significantly of the deficiency, if applicable); greater than the State agency average (4) Determine the geographic extent or greater than the national error of each deficiency (e.g., Statewide/indi- standard of the Program. When FNS vidual project area or management notifies a State agency that a ‘‘high unit); and, error’’ area exists, the State agency (5) Provide a basis for management shall ensure that corrective action is decisions on planning, implementing, developed and reported in accordance and evaluating corrective action. with the provisions of § 275.17. If FNS (d) In the evaluation of data, situa- identifies a ‘‘high error’’ locality which tions may arise where the State agency a State agency has previously identi- identifies the existence of a deficiency, fied as error-prone and taken appro- but after reviewing all available man- priate action, no further State agency shall be required. If a State agency’s agement information sources sufficient corrective action plan fails to address information is not available to make a problems in FNS-identified ‘‘high determination of the actual causal fac- error’’ areas, FNS may require a State tor(s), magnitude, or geographic extent agency to implement new or modified necessary for the development of ap- cost-effective procedures for the cer- propriate corrective action. In these tification of households. situations, the State agency shall be responsible for gathering additional [Amdt. 160, 45 FR 15909, Mar. 11, 1980, as data necessary to make these deter- amended by Amdt. 266, 52 FR 3409, Feb. 4, minations. This action may include, 1987; Amdt. 320, 55 FR 6240, Feb. 22, 1990] but is not limited to, conducting additional full or partial ME reviews in one Subpart E—Corrective Action or more project areas/management units or discussions with appropriate § 275.16 Corrective action planning. officials. (a) Corrective action planning is the (e) Deficiencies identified from all process by which State agencies shall management information sources must determine appropriate actions to re- be analyzed and evaluated together to duce substantially or eliminate defi- determine their causes, magnitude, and ciencies in program operations and pro- geographic extent. Causes indicated vide responsive service to eligible and deficiencies identified must be ex- households.

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(b) The State agency and project cy and/or project area/management area(s)/management unit(s), as appro- unit shall establish an order of priority priate, shall implement corrective ac- to ensure that the most serious defi- tion on all identified deficiencies. Defi- ciencies are addressed immediately and ciencies requiring action by the State corrected as soon as possible. Primary agency or the combined efforts of the factors to be considered when deter- State agency and the project area(s)/ mining the most serious deficiencies management unit(s) in the planning, are: development, and implementation of (1) Magnitude of the deficiency as de- corrective action are those which: fined in § 275.15(c)(3) of this part; (1) Result from a payment error rate (2) Geographic extent of the defi- of 6 percent or greater (actions to cor- ciency (e.g., Statewide/project area or rect errors in individual cases, how- management unit); ever, shall not be submitted as part of the State agency’s corrective action (3) Anticipated results of corrective plan); actions; and (2) Are the cause for non-entitlement (4) High probability of errors occur- to enhanced funding for any reporting ring as identified through all manage- period (actions to correct errors in in- ment evaluation sources. dividual cases however, shall not be (d) In planning corrective action, the submitted as part of the State agency’s State agency shall coordinate actions corrective action plan); in the areas of data analysis, policy de- (3) Are the causes of other errors/defi- velopment, quality control, program ciencies detected through quality con- evaluation, operations, administrative trol, including error rates of 1 percent cost management, civil rights, and or more in negative cases (actions to training to develop appropriate and ef- correct errors in individual cases, how- fective corrective action measures. ever, shall not be submitted as part of the State agency’s corrective action [Amdt. 160, 45 FR 15909, Mar. 11, 1980, as amended by Amdt. 169, 46 FR 7263, Jan. 23, plan); 1981; Amdt. 262, 49 FR 50598, Dec. 31, 1984; (4) Are identified by FNS reviews, Amdt. 266, 52 FR 3409, Feb. 4, 1987; Amdt. 328, GAO audits, contract audits, or USDA 56 FR 60052, Nov. 27, 1991; 68 FR 59523, Oct. 16, audits or investigations at the State 2003] agency or project area level (except deficiencies in isolated cases as indicated § 275.17 State corrective action plan. by FNS); and, (a) State agencies shall prepare cor- (5) Result from 5 percent or more of rective action plans addressing those the State agency’s QC sample being deficiencies specified in § 275.16(b) re- coded ‘‘not complete’’ as defined in quiring action by the State agency or § 275.12(g)(1) of this part. This standard the combined efforts of the State agen- shall apply separately to both active cy and the project area(s)/management and negative samples. unit(s). This corrective action plan is (6) Result in under issuances, im- an open-ended plan and shall remain in proper denials, or improper termi- effect until all deficiencies in program nations of benefits to eligible households where such errors are caused by operations have been reduced substan- State agency rules, practices or proce- tially or eliminated. State agencies dures. shall provide updates to their correc- (c) The State agency shall ensure tive action plans through regular, that appropriate corrective action is semiannual updates. These semiannual taken on all deficiencies including each updates shall be received by FNS by case found to be in error by quality May 1st and November 1st respectively. control reviews and those deficiencies Such updates must contain: requiring corrective action only at the (1) Any additional deficiencies identi- project area level. Moreover, when a fied since the previous corrective ac- substantial number of deficiencies are tion plan update; identified which require State agency (2) Documentation that a deficiency level and/or project area/management has been corrected and is therefore unit corrective action, the State agen- being removed from the plan; and

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(3) Any changes to planned corrective plans for or in cooperation with the actions for previously reported defi- project area. These project area/man- ciencies. agement unit corrective action plans (b) Content. State corrective action shall be open-ended and shall remain in plans shall contain, but not necessarily effect until all deficiencies in program be limited to, the following, based on operations have been reduced substan- the most recent information available: tially or eliminated. Any deficiencies (1) Specific description and identi- detected through any source not pre- fication of each deficiency; viously reported to the State agency (2) Source(s) through which the defi- which require incorporation into the ciency was detected; Project Area/Management Unit Correc- (3) Magnitude of each deficiency, if tive Action Plan shall be submitted to appropriate, as defined in § 275.15(c)(3) the State agency within 60 days of of this part; identification. As deficiencies are re- (4) Geographic extent of the deficiency (e.g., Statewide/project area or duced substantially or eliminated, the management unit—specific project project area/management unit shall no- areas in which the deficiency occurs); tify the State agency in writing. The (5) Identification of causal factor(s) project area/management unit shall be contributing to the occurrence of each responsible for documenting why each deficiency; deficiency is being removed from the (6) Identification of any action al- Plan. The removal of any deficiency ready completed to eliminate the defi- from the Plan will be subject to State ciency; agency and FNS review and validation. (7) For each deficiency, an outline of (b) Content. Project area/management actions to be taken, the expected out- unit corrective action plans shall con- come of each action, the target date for tain all the information necessary to each action, and the date by which enable the State agency to monitor each deficiency will have been elimi- and evaluate the corrective action nated; and properly. Also, State agencies shall es- (8) For each deficiency, a description tablish requirements for project area/ of the manner in which the State agen- management units in planning, imple- cy will monitor and evaluate the effec- menting and reporting corrective ac- tiveness of the corrective action in tion to assist the State agency’s efforts eliminating the deficiency. to fulfill its responsibilities for deter- (c) FNS will provide technical assist- mining which deficiencies must be ad- ance in developing corrective action dressed in the State corrective action plans when requested by State agen- plan. States should consider requiring cies. project area/management unit plans to (d) State agencies will be held ac- include the following, based on the countable for the efficient and effective most recent information available: operation of all areas of the program. (1) Specific description and identi- FNS is not precluded from issuing a fication of each deficiency; warning as specified in part 276 because a deficiency is included in the State (2) Source(s) through which the defi- agency’s corrective action plan. ciency was detected; (3) Magnitude of each deficiency, if [Amdt. 160, 45 FR 15909, Mar. 11, 1980, as appropriate, as defined in § 275.15(c)(3) amended by Amdt. 266, 52 FR 3409, Feb. 4, of this part; 1987] (4) Geographic extent of the defi- § 275.18 Project area/management unit ciency (throughout the project area/ corrective action plan. management unit or only in specific of- (a) The State agency shall ensure fices); that corrective action plans are pre- (5) Identification of causal factor(s) pared at the project area/management contributing to the occurrence of each unit level, addressing those defi- deficiency; ciencies not required to be included in (6) Identification of any action al- the State corrective action plan. State ready completed to eliminate the defi- agencies may elect to prepare these ciency;

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(7) For each deficiency, an outline of FNS regional office at least 60 days actions to be taken, the expected out- prior to the beginning of the next come of each action, the target date for year’s review period (the Federal fiscal each action, the date by which each de- year). These schedules must ensure ficiency will have been eliminated; and that all project areas/management (8) For each deficiency, a description units will be reviewed within the re- of the manner in which the project quired time limits. Each schedule shall area/management unit will monitor identify the project areas/management and evaluate the effectiveness of the units in each classification and list corrective action in eliminating the de- each project area to be reviewed by ficiency. month or by quarter. A State agency [Amdt. 160, 45 FR 15909, Mar. 11, 1980] may submit a request to use an alternate review schedule at any time. The § 275.19 Monitoring and evaluation. alternate schedule shall not be effec- (a) The State agency shall establish a tive until approved by FNS in accord- system for monitoring and evaluating ance with § 275.5(b)(2). corrective action at the State and (b) State agencies shall notify the ap- project area levels. Monitoring and propriate FNS regional office of all evaluation shall be an ongoing process changes in review schedules. to determine that deficiencies are [Amdt. 266, 52 FR 3410, Feb. 4, 1987] being substantially reduced or eliminated in an efficient manner and that § 275.21 Quality control review re- the program provides responsive serv- ports. ice to eligible households. (b) The State agency shall ensure (a) General. Each State agency shall that corrective action on all defi- submit reports on the performance of ciencies identified in the State Correc- quality control reviews in accordance tive Action Plan and Project Area/ with the requirements outlined in this Management Unit Corrective Action section. These reports are designed to Plan is implemented and achieves the enable FNS to monitor the State agen- anticipated results within the specified cy’s compliance with Program require- time frames. The State agency shall ments relative to the Quality Control monitor and evaluate corrective action Review System. Every case selected for at the State and project levels through review during the sample month must a combination of reports, field reviews, be accounted for and reflected in the and examination of current data avail- appropriate report(s). able through program management (b) Individual cases. The State agency tools and other sources. shall report the review findings on each (c) In instances where the State case selected for review during the agency and/or the project area/manage- sample month. For active cases, the ment unit determines that the pro- State agency shall submit the edited posed corrective action is not effective findings of the Integrated Review in reducing substantially or elimi- Schedule, Form FNS–380–1. For nega- nating deficiencies, the State agency tive cases, the State agency shall sub- and/or the project area/management mit a summary report which is pro- unit shall promptly reevaluate the de- duced from the edited findings on indi- ficiency, causes, and the corrective ac- vidual cases which are coded on the tion taken, and develop and implement Negative Quality Control Review new corrective actions. Schedule, Form FNS–245. The review findings shall be reported as follows: [Amdt. 160, 45 FR 15909, Mar. 11, 1980] (1) The State agency shall input and edit the results of each active and neg- Subpart F—Responsibilities for Re- ative case into the FNS supplied com- porting on Program Perform- puter terminal and transmit the data ance to the host computer. For State agencies that do not have FNS supplied ter- § 275.20 ME review schedules. minals, the State agency shall submit (a) Each State agency shall submit the results of each QC review in a for- its review schedule to the appropriate mat specified by FNS. Upon State

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agency request, FNS will consider ap- of all QC reviews on the Form FNS–247, proval of a change in the review results Statistical Summary of Sample Dis- after they have been reported to FNS. tribution or other format specified by (2) The State agency shall dispose of FNS. This report shall be submitted to and report the findings of 90 percent of FNS so that it is received no later than all cases selected in a given sample 105 days from the end of the annual re- month so that they are received by view period. Every case selected in the FNS within 75 days of the end of the active or negative sample must be ac- sample month. All cases selected in a counted for and reported to FNS, in- sample month shall be disposed of and cluding cases not subject to review, not the findings reported so that they are completed, and completed. received by FNS within 95 days of the (e) Demonstration projects/SSA proc- end of the sample month. essing. The State agency shall identify (3) The State agency shall supply the the monthly status of active and nega- FNS Regional Office with individual tive demonstration project/SSA proc- household case records and the perti- essed cases (i.e., those cases described nent information contained in the indi- in § 275.11(g)) on the Form FNS–248, de- vidual case records, or legible copies of scribed in paragraph (c) of this section. that material, as well as legible hard In addition, the State agency shall copies of individual Forms FNS–380, identify the annual results of such FNS–380–1, and FNS–245 or other FNS- cases on the Form FNS–247, described approved report forms, within 10 days in paragraph (d) of this section. of receipt of a request for such information. [Amdt. 260, 49 FR 6310, Feb. 17, 1984, as (4) For each case that remains pend- amended by Amdt. 262, 49 FR 50598, Dec. 31, ing 95 days after the end of the sample 1984; Amdt. 266, 52 FR 3410, Feb. 4, 1987] month, the State agency shall immediately submit a report that includes § 275.22 Administrative procedure. an explanation of why the case has not Reports on program performance are been disposed of, documentation de- intended to provide the State an oppor- scribing the progress of the review to tunity to determine compliance with date, and the date by which it will be program requirements, identify and re- completed. If FNS determines that the solve emerging problems, and assess above report does not sufficiently jus- the effectiveness of actions that have tify the case’s pending status, the case been taken to correct existing prob- shall be considered overdue. Depending lems. States’ reports enable FNS to as- upon the number of overdue cases, FNS sess the nationwide status of eligibility may find the State agency’s QC system and basis of issuance determinations, to be inefficient or ineffective and sus- to ensure State compliance with Fed- pend and/or disallow the State agency’s eral requirements, to assist States in Federal share of administrative funds improving and strengthening their pro- in accordance with the provisions of grams, and to develop Federal policies. § 276.4. Reports must be submitted in duplicate (c) Monthly status. The State agency to the appropriate FNS Regional Office shall report the monthly progress of according to the time frames estab- sample selection and completion on the lished in §§ 275.20, 275.21, and 275.22 of Form FNS–248, Status of Sample Selec- this part. tion and Completion or other format specified by FNS. This report shall be [Amdt. 160, 45 FR 15911, Mar. 11, 1980. Redes- ignated at 52 FR 3410, Feb. 4, 1987] submitted to FNS so that it is received no later than 105 days after the end of the sample month. Each report shall Subpart G—Program Performance reflect sampling and review activity for a given sample month. § 275.23 Determination of State agency (d) Annual results. The State agency program performance. shall annually report the results of all (a) FNS shall determine the effi- quality control reviews during the re- ciency and effectiveness of a State’s view period. For this report, the State administration of the Food Stamp Pro- agency shall submit the edited results gram by measuring:

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(1) State compliance with the stand- were reported as having been eligible ards contained in the Food Stamp Act, at the time of denial, suspension or ter- regulations, and the State Plan of Op- mination (as described in § 275.13(c)) eration; and based upon certification policy as set (2) State efforts to improve program forth in part 273. operations through corrective action. (5) Demonstration projects/SSA proc- (b) This determination shall be made essing. The reported results of reviews based on: of active and negative demonstration (1) Reports submitted to FNS by the project/SSA processed cases, as de- State; scribed in § 275.11(g), shall be excluded (2) FNS reviews of State agency oper- from the estimate of the active case ations; error rate, payment error rate, (3) State performance reporting sys- underissuance error rate, and negative tems and corrective action efforts; and case error rate. (4) Other available information such (d) Federal enhanced funding. (1) Be- as Federal audits and investigations, fore making enhanced funding avail- civil rights reviews, administrative able to a State agency, as described in cost data, complaints, and any pending § 277.4(b), FNS will: litigation. (i) Validate the State agency’s esti- (c) State agency error rates. FNS shall mated payment error rate, estimate each State agency’s error underissuance error rate, and negative rates based on the results of quality case error rate, as provided for in control review reports submitted in ac- § 275.3(c); cordance with the requirements out- (ii) Ensure that the sampling tech- lined in § 275.21. The State agency’s ac- niques used by the State agency are tive case error, payment error, FNS-approved procedures, as estab- underissuance error, and negative case lished in § 275.11; and error rates shall be estimated as fol- (iii) Validate the State agency’s lows: quality control completion rate to en- (1) Active case error rate. The active sure that all of the minimum required case error rate shall include the pro- sample cases, of both active and nega- portion of active sample cases which tive quality control samples, have been were reported as ineligible or as receiv- completed. This completion standard is ing an incorrect allotment (as de- applied separately to the active and scribed in § 275.12(e)) based upon certifi- negative case samples, and the State cation policy as set forth in part 273. agency’s estimated payment and (2) Payment error rate. (i) For fiscal underissuance error rates will be ad- years prior to Fiscal Year 1986, the justed separately, if necessary, to ac- payment error rate shall include the count for those required cases not com- value of the allotments overissued, in- pleted, in accordance with the proce- cluding overissuances to ineligible dures described in paragraph (e)(6)(iii) cases, for those cases included in the of this section for adjustment of the active error rate. payment error rate. (ii) For Fiscal Year 1986 and subse- (2) After validation and any nec- quent fiscal years, the payment error essary adjustment of estimated error rate shall include the value of the al- rates: lotments overissued, including those to (i) A State agency with a combined ineligible cases, and the value of allot- payment error rate and underissuance ments underissued for those cases in- error rate of less than five percent for cluded in the active error rate. an annual review period for Fiscal Year (3) Underissuance error rate. Prior to 1983 through Fiscal Year 1985, or a pay- Fiscal Year 1986, the underissuance ment error rate of less than five per- error rate shall include the value of the cent for an annual review period for allotments reported as underissued for Fiscal Year 1986 through Fiscal Year those cases included in the active case 1988, shall be eligible for a 60 percent error rate. Federally funded share of administra- (4) Negative case error rate. The negative costs, provided that the State tive case error rate shall be the propor- agency’s negative case error rate for tion of negative sample cases which that period is less than the national

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weighted mean negative case error rate cy shall pay or have its share of admin- for the prior fiscal year; istrative funding reduced by an amount (ii) Beginning with Fiscal Year 1989, equal to the product of: a State agency with a payment error (A) The value of all allotments issued rate less than or equal to 5.90 percent by the State agency in the fiscal year; and with a negative case error rate less multiplied by than the national weighted mean nega- (B) The lesser of— tive case rate for the prior fiscal year (1) The ratio of the amount by which will have its Federally funded share of the payment error rate of the State administrative costs increased by one agency for the fiscal year exceeds the percentage point to a maximum of 60 national performance measure for the percent for each full one-tenth of a per- fiscal year, to the national perform- centage point by which the payment error rate is less than six percent. ance measure for the fiscal year, or (3) State agencies entitled to en- (2) One; multiplied by hanced funding shall receive the addi- (C) The amount by which the pay- tional funding on a retroactive basis ment error rate of the State agency for only for the review period in which the fiscal year exceeds the national their error rates are less than the lev- performance measure for the fiscal els described in paragraph (d)(2) of this year. section. (3) Establishment of payment error rates (e) State agencies’ liabilities for pay- and liability. For Fiscal Year 2003 and ment error rates. (1) At the end of each subsequent years, FNS shall announce fiscal year, each State agency’s pay- a national performance measure not ment error rate over the entire fiscal later than June 30 after the end of the year will be computed, as described in fiscal year. The national performance paragraph (e)(6) of this section, and measure is the sum of the products of evaluated to determine whether the each State agency’s error rate times payment error rate goals established in that State agency’s proportion of the the following paragraphs have been total value of national allotments met. issued for the fiscal year using the (2) State agencies’ liabilities for pay- most recent issuance data available at ment error—Fiscal Year 1992 through Fis- the time the State agency is notified of cal Year 2002. Each State agency that its payment error rate. Once an- fails to achieve its payment error rate nounced, the national performance goal during a fiscal year shall be liable measure for a given fiscal year will not as specified in the following para- be subject to change. The national per- graphs. formance measure announced under (i) For Fiscal Year 1992 through Fis- this paragraph (e)(3) is not subject to cal Year 2002, FNS shall announce a na- administrative or judicial review. Li- tional performance measure within 30 ability for payment shall be estab- days following the completion of the lished for Fiscal Year 2004 and beyond case review and the arbitration proc- whenever there is a 95 percent statis- esses for the fiscal year. The national tical probability that, for the second or performance measure is the sum of the subsequent consecutive fiscal year, a products of each State agency’s pay- State agency’s payment error rate ex- ment error rate times that State agen- ceeds 105 percent of the national per- cy’s proportion of the total value of national allotments issued for the fiscal formance measure. The amount of the year using the most recent issuance liability shall be equal to the product data available at the time the State of: agency is notified of its payment error (i) The value of all allotments issued rate. Once announced, the national per- by the State agency in the (second or formance measure for a given fiscal subsequent consecutive) fiscal year; year will not be subject to change. multiplied by (ii) For any fiscal year in which a (ii) The difference between the State State agency’s payment error rate ex- agency’s payment error rate and 6 per- ceeds the national performance meas- cent; multiplied by ure for the fiscal year, the State agen- (iii) 10 percent.

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(4) Relationship to warning process and does not automatically result in a de- negligence. (i) States’ liability for pay- termination of good cause for an error ment error rates as determined above rate in excess of the national perform- are not subject to the warning process ance measure. The State agency must of § 276.4(d). demonstrate that the event had an ad- (ii) FNS shall not determine neg- verse and uncontrollable impact on ligence (as described in § 276.3) based on program operations during the relevant the overall payment error rate for period, and the event caused an uncon- issuances to ineligible households and trollable increase in the error rate. overissuances to eligible households in Good cause relief will only be consid- a State or political subdivision thereof. ered for that portion of the error rate/ FNS may only establish a claim under liability attributable to the unusual § 276.3 for dollar losses from failure to event. The following are unusual comply, due to negligence on the part events which State agencies may use of the State agency (as defined under as a basis for requesting good cause re- § 276.3), with specific certification relief and specific information that must quirements. Thus, FNS will not use the be submitted to justify such requests results of States’ QC reviews to deter- for relief: mine negligence. (iii) Whenever a State is assessed for (A) Natural disasters such as those an excessive payment error rate, the under the authority of the Stafford Act State shall have the right to request an of 1988 (Pub. L. 100–707), which amended appeal in accordance with procedures the Disaster Relief Act of 1974 (Pub. L. set forth in part 283 of this chapter. 93–288) or civil disorders that adversely While FNS may determine a State to affect program operations. be liable for dollar loss under the provi- (1) When submitting a request for sions of this section and the negligence good cause relief based on this exam- provisions of § 276.3 of this chapter for ple, the State agency shall provide the the same period of time, FNS shall not following information: bill a State for the same dollar loss (i) The nature of the disaster(s) (e.g. under both provisions. If FNS finds a a tornado, hurricane, earthquake, State liable for dollar loss under both flood, etc.) or civil disorder(s)) and evi- the QC liability system and the neg- dence that the President has declared a ligence provisions, FNS shall adjust disaster; the billings to ensure that two claims (ii) The date(s) of the occurrence; are not made against the State for the (iii) The date(s) after the occurrence same dollar loss. when program operations were af- (5) Good cause—(i) Events. When a fected; State agency with otherwise effective (iv) The geographic extent of the oc- administration exceeds the tolerance currence (i.e. the county or counties level for payment errors as described in where the disaster occurred); this section, the State agency may (v) The proportion of the food stamp seek relief from liability claims that caseload whose management was af- would otherwise be levied under this fected; section on the basis that the State agency had good cause for not achiev- (vi) The reason(s) why the State ing the payment error rate tolerance. agency was unable to control the ef- State agencies desiring such relief fects of the disaster on program admin- must file an appeal with the Depart- istration and errors; ment’s Administrative Law Judge (vii) The identification and expla- (ALJ) in accordance with the proce- nation of the uncontrollable nature of dures established under part 283 of this errors caused by the event (types of er- chapter. The five unusual events de- rors, geographic location of the errors, scribed below are considered to have a time period during which the errors oc- potential for disputing program oper- curred, etc.). ations and increasing error rates to an (viii) The percentage of the payment extent that relief from a resulting li- error rate that resulted from the occur- ability or increased liability is appro- rence and how this figure was derived; priate. The occurrence of an event(s) and

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(ix) The degree to which the payment the State agency can demonstrate had error rate exceeded the national per- program operations adversely impacted formance measure in the subject fiscal due to the event (such as a county that year. diverted significant numbers of food (2) The following criteria and meth- stamp certification or administrative odology will be used to assess and staff). The amount of the waiver of li- evaluate good cause in conjunction ability will be determined using the with the appeals process, and to deter- following linear equation: Ia/Ib × [M/12 mine that portion of the error rate/li- or Mp/18] × L, where Ia is the issuance ability attributable to the uncontrol- for the first full month immediately lable effects of a disaster or civil dis- preceding the unusual event for the order: Geographical impact of the dis- county affected; Ib is the State’s total aster; State efforts to control impact issuance for the first full month imme- on program operations; the proportion diately preceding the unusual event; M/ of food stamp caseload affected; and/or 12 is the number of months in the sub- the duration of the disaster and its im- ject fiscal year that the unusual event pact on program operations. Adjust- had an adverse impact on program op- ments for these factors may result in a waiver of all, part, or none of the error erations; Mp/18 is the number of rate liabilities for the applicable pe- months in the last half (April through riod. As appropriate, the waiver September) of the prior fiscal year that amount will be adjusted to reflect the unusual event had an adverse im- States’ otherwise effective administra- pact on program operations; L is the tion of the program based upon the de- total amount of the liability for the gree to which the error rate exceeds fiscal year. Mathematically this for- the national performance measure. For mula could result in a waiver of more example, a reduction in the amount than 100% of the liability, however, no may be made when a State agency’s re- more than 100% of a State’s liability cent error rate history indicates that will be waived for any one fiscal year. even absent the events described, the Under this approach, unless the State State agency would have exceeded the agency can demonstrate a direct un- national performance measure in the controllable impact on the error rate, review period. the effects of disasters or civil dis- (3) If a State agency has provided in- orders that ended prior to the second sufficient information to determine a half of the prior fiscal year will not be waiver amount for the uncontrollable considered. effects of a natural disaster or civil dis- (B) Strikes by State agency staff nec- order using factual analysis, the waiver essary to determine Food Stamp Pro- amount shall be evaluated using the gram eligibility and process case following formula and methodology changes. which measures both the duration and (1) When submitting a request for intensity of the event: Duration will be good cause relief based on this exam- measured by the number of months the ple, the State agency shall provide the event had an adverse impact on pro- following information: gram operations. Intensity will be a (i) Which workers (i.e. eligibility proportional measurement of the workers, clerks, data input staff, etc.) issuances for the counties affected to the State’s total issuance. This ratio and how many (number and percentage will be determined using issuance fig- of total staff) were on strike or refused ures for the first full month imme- to cross picket lines; diately preceding the disaster. This fig- (ii) The date(s) and nature of the ure will not include issuances made to strike (i.e., the issues surrounding the households participating under disaster strike); certification authorized by FNS and al- (iii) The date(s) after the occurrence ready excluded from the error rate cal- when program operations were af- culations under § 275.12(g)(2)(vi). fected; ‘‘Counties affected’’ will include coun- (iv) The geographic extent of the ties where the disaster/civil disorder strike (i.e. the county or counties occurred, and any other county that where the strike occurred);

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(v) The proportion of the food stamp (C) A significant growth in food caseload whose management was af- stamp caseload in a State prior to or fected; during a fiscal year, such as a 15 per- (vi) The reason(s) why the State cent growth in caseload. Caseload agency was unable to control the ef- growth which historically increases fects of the strike on program adminis- during certain periods of the year will tration and errors; not be considered unusual or beyond (vii) Identification and explanation of the State agency’s control. the uncontrollable nature of errors (1) When submitting a request for caused by the event (types of errors, good cause relief based on this exam- geographic location of the errors, time ple, the State agency shall provide the period during which the errors oc- following information: curred, etc.); (i) The amount of growth (both ac- (viii) The percentage of the payment tual and percentage); error rate that resulted from the strike (ii) The time the growth occurred and how this figure was derived; and (what month(s)/year); (ix) The degree to which the payment (iii) The date(s) after the occurrence error rate exceeded the national per- when program operations were af- formance measure in the subject fiscal fected; year. (iv) The geographic extent of the (2) The following criteria shall be caseload growth (i.e. Statewide or in used to assess, evaluate and respond to which particular counties); claims by the State agency for a good (v) The impact of caseload growth; cause waiver of liability in conjunction (vi) The reason(s) why the State with the appeals process, and to deter- agency was unable to control the ef- mine that portion of the error rate/li- fects of caseload growth on program ability attributable to the uncontrol- administration and errors; lable effects of the strike: Geographical (vii) The percentage of the payment impact of the strike; State efforts to error rate that resulted from the case- control impact on program operations; load growth and how this figure was the proportion of food stamp caseload derived; and affected; and/or the duration of the (viii) The degree to which the error strike and its impact on program oper- rate exceeded the national performance ations. Adjustments for these factors measure in the subject fiscal year. may result in a waiver of all, part, or (2) The following criteria and meth- none of the error rate liabilities for the odology shall be used to assess and applicable period. For example, the evaluate good cause in conjunction amount of the waiver might be reduced with the appeals process, and to deter- for a strike that was limited to a small mine that portion of the error rate/li- area of the State. As appropriate, the ability attributable to the uncontrol- waiver amount will be adjusted to re- lable effects of unusual caseload flect States’ otherwise effective admin- growth: Geographical impact of the istration of the program upon the de- caseload growth; State efforts to con- gree to which the error rate exceeded trol impact on program operations; the the national performance measure. proportion of food stamp caseload af- (3) If a State agency has provided in- fected; and/or the duration of the case- sufficient information to determine a load growth and its impact on program waiver amount for the uncontrollable operations. Adjustments for these fac- effects of a strike using factual anal- tors may result in a waiver of all, part, ysis, a waiver amount shall be evalu- or none of the error rate liabilities for ated by using the formula described in the applicable period. As appropriate, paragraph (e)(5)(i)(A) of this section. the waiver amount will be adjusted to Under this approach, unless the State reflect States’ otherwise effective ad- agency can demonstrate a direct un- ministration of the program based controllable impact on the error rate, upon the degree to which the error rate the effects of strikes that ended prior exceeded the national performance to the second half of the prior fiscal measure. For example, a reduction in year will not be considered. the amount may be made when a State

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agency’s recent error rate history indi- than 100% of a State’s liability will be cates that even absent the events de- waived for any one fiscal year. scribed, the State agency would have (D) A change in the Food Stamp Pro- exceeded the national performance gram or other Federal or State pro- measure in the review period. Under gram that has a substantial adverse this approach, unless the State agency impact on the management of the Food can demonstrate a direct uncontrol- Stamp Program of a State. Requests lable impact on the error rate, the ef- for relief from errors caused by the un- fects of caseload growth that ended controllable effects of unusual program prior to the second half of the prior fis- changes other than those variances al- cal year will not be considered. ready excluded by § 275.12(d)(2)(vii) will (3) If the State agency has provided be considered to the extent the pro- insufficient information to determine a gram change is not common to all waiver amount for the uncontrollable States. effects of caseload growth using factual (1) When submitting a request for analysis, the waiver amount shall be good cause relief based on unusual evaluated using the following five-step changes in the Food Stamp or other calculation: Federal or State programs, the State (i) Step 1, determine the average agency shall provide the following in- number of households certified to par- formation: ticipate statewide in the Food Stamp (i) The type of change(s) that oc- Program for the base period consisting curred; of the twelve consecutive months end- (ii) When the change(s) occurred; ing with March of the prior fiscal year; (iii) The nature of the adverse effect (ii) Step 2, determine the percentage of the changes on program operations of increase in caseload growth from the and the State agency’s efforts to miti- base period (Step 1) using the average gate these effects; number of households certified to par- (iv) Reason(s) the State agency was ticipate statewide in the Food Stamp unable to adequately handle the Program for any twelve consecutive change(s); months in the period beginning with (v) Identification and explanation of April of the prior fiscal year and end- the uncontrollable errors caused by the ing with June of the current fiscal changes (types of errors, geographic lo- year; cation of the errors, time period during (iii) Step 3, determine the percentage which the errors occurred, etc.); the error rate for the subject fiscal (vi) The percentage of the payment year, as calculated under paragraph error rate that resulted from the ad- (e)(2)(i) of this section, exceeds the na- verse impact of the change(s) and how tional performance measure deter- this figure was derived; and mined in accordance with paragraph (vii) The degree to which the pay- (e)(2)(i) of this section; ment error rate exceeded the national (iv) Step 4, divide the percentage of performance measure in the subject fis- caseload growth increase arrived at in cal year. step 2 by the percentage the error rate (2) The following criteria will be used for the subject fiscal year exceeds the to assess and evaluate good cause in national performance measure as de- conjunction with the appeals process, termined in step 3; and and to determine that portion of the (v) Step 5, multiply the quotient ar- error rate/liability attributable to the rived at in step 4 by the liability uncontrollable effects of unusual amount for the current fiscal year to changes in the Food Stamp Program or determine the amount of waiver of li- other Federal and State programs; ability. State efforts to control impact on pro- (4) Under this methodology, caseload gram operations; the proportion of food growth of less than 15% and/or occur- stamp caseload affected; and/or the during in the last three months of the ration of the unusual changes in the subject fiscal year will not be consid- Food Stamp Program or other Federal ered. Mathematically this formula and State programs and the impact on could result in a waiver of more than program operations. Adjustments for 100% of the liability however, no more these factors may result in a waiver of

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all, part, or none of the error rate li- in conjunction with the appeals proc- abilities for the applicable period. As ess, and to determine that portion of appropriate, the waiver amount will be the error rate/liability attributable to adjusted to reflect States’ otherwise ef- the uncontrollable effects of a signifi- fective administrative of the program cant circumstance beyond the control based upon the degree to which the of the State agency, other than those error rate exceeded the national per- set forth in paragraph (e)(5)(i)(E) of formance measure. this section: Geographical impact of (E) A significant circumstance be- the significant circumstances; State ef- yond the control of the State agency. forts to control impact on program op- Requests for relief from errors caused erations; the proportion of food stamp by the uncontrollable effect of the sig- caseload affected; and/or the duration nificant circumstance other than those of the significant circumstances and specifically set forth in paragraphs the impact on program operations. Ad- (e)(5)(i)(A) through (e)(5)(i)(D) of this justments for these factors may result section will be considered to the extent in a waiver of all, part, or none of the that the circumstance is not common error rate liabilities for the applicable to all States, such as a fire in a certifi- period. As appropriate, the waiver cation office. amount will be adjusted to reflect (1) When submitting a request for States’ otherwise effective administra- good cause relief based on significant tion of the program based upon the de- circumstances, the State agency shall gree to which the error rate exceeded provide the following information: the national performance measure. (i) The significant circumstances (ii) Adjustments. When good cause is that the State agency believes uncon- found under the criteria in paragraphs trollably and adversely affected the (e)(5)(i)(A) through (e)(5)(i)(E) of this payment error rate for the fiscal year section, the waiver amount may be ad- in question; justed to reflect States’ otherwise ef- ( ) Why the State agency had no con- ii fective administration of the program trol over the significant cir- based upon the degree to which the cumstances; error rate exceeds the national per- (iii) How the significant cir- formance measure. cumstances had an uncontrollable and adverse impact on the State agency’s (iii) Evidence. When submitting a re- error rate; quest to the ALJ for good cause relief, (iv) Where the significant cir- the State agency shall include such cumstances existed (i.e. Statewide or data and documentation as is nec- in particular counties); essary to support and verify the infor- (v) When the significant cir- mation submitted in accordance with cumstances existed (provide specific the requirements of paragraph (e)(5) of dates whenever possible); this section so as to fully explain how (vi) The proportion of the food stamp a particular significant cir- caseload whose management was af- cumstance(s) uncontrollable affected fected; its payment error rate. (vii) Identification and explanation of (iv) Finality. The initial decision of the uncontrollable errors caused by the the ALJ concerning good cause shall event (types of errors, geographic loca- constitute the final determination for tion of the errors, time period during purposes of judicial review without fur- which the errors occurred, etc.); ther proceedings as established under (viii) The percentage of the payment the provisions of §§ 283.17 and 283.20 of error rate that was caused by the sig- this chapter. nificant circumstances and how this (6) Determination of payment error figure was derived; and rates. As specified in § 275.3(c), FNS will (ix) The degree to which the payment validate each State agency’s estimated error rate exceeded the national per- payment error rate through re- formance measure in the subject fiscal reviewing the State agency’s active year. case sample and ensuring that its sam- (2) The following criteria shall be pling, estimation, and data manage- used to assess and evaluate good cause ment procedures are correct.

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(i) Once the Federal case reviews (C) The regressed error rates are have been completed and all differences given by r1′=y1′/u, yielding the re- with the State agency have been iden- gressed overpayment error rate, and tified, FNS shall calculate regressed r2′=y2′/u, yielding the regressed under- error rates using the following linear payment error rate, where u is the av- regression equations. erage value of allotments issued to par- (A) y1′=y1+b1(X1¥x1), where y1′ is the ticipating households in the State average value of allotments overissued agency sample. to eligible and ineligible households; y1 (D) After application of the adjust- is the average value of allotments ment provisions of paragraph (e)(6)(iii) overissued to eligible and ineligible of this section, the adjusted regressed households in the rereview sample ac- payment error rate shall be calculated cording to the Federal finding, b1 is the to yield the State agency’s payment estimate of the regression coefficient error rate for use in the reduced and regressing the Federal findings of al- enhanced funding determinations de- lotments overissued to eligible and in- scribed in paragraphs (d) and (e) of this eligible households on the cor- section. Prior to Fiscal Year 1986, the responding State agency findings, x1 is adjusted regressed payment error rate the average value of allotments is given by r1″. For Fiscal Year 1986 and overissued to eligible and ineligible after, the adjusted regressed payment households in the rereview sample ac- error rate is given by r1″+r2″. cording to State agency findings, and (ii) If FNS determines that a State X is the average value of allotments 1 agency has sampled incorrectly, esti- overissued to eligible and ineligible mated improperly, or has deficiencies households in the full quality control in its QC data management system, sample according to State agency’s FNS will correct the State agency’s findings. In stratified sample designs payment error rate based upon a cor- Y , X , and x are weighted averages 1 1 1 rection to that aspect of the State and b is a combined regression coeffi- 1 agency’s QC system which is deficient. cient in which stratum weights sum to If FNS cannot accurately correct the 1.0 and are proportional to the esti- State agency’s deficiency, FNS will as- mated stratum caseloads subject to resign the State agency a payment error view. rate based upon the best information (B) y2′=y2+b2(X2¥x2), where y2′ is the average value of allotments available. After consultation with the underissued to households included in State agency, this assigned payment error rate will then be used in the the active error rate, y2 is the average value of allotments underissued to par- above described liability determination ticipating households in the rereview and in determinations for enhanced sample according to the Federal find- funding under paragraph (d) of this section. State agencies shall have the ing, b2 is the estimate of the regression coefficient regressing the Federal find- right to appeal assignment of an error ings of allotments underissued to par- rate in this situation in accordance ticipating households on the cor- with the procedures of part 283. (iii) Should a State agency fail to responding State agency findings, x2 is the average value of allotments complete 98 percent of its required underissued to participating house- sample size, FNS shall adjust the State holds in the rereview sample according agency’s regressed error rates using to State agency findings, and X2 is the the following equations: average value of allotments (A) r1″=r1′+2(1–C)S1, where r1″ is the underissued to participating house- adjusted regressed overpayment error holds in the full quality control sample rate, r1′ is the regressed overpayment according to the State agency’s find- error rate computed from the formula ings. In stratified sample designs y2, in paragraph (e)(6)(i)(C) of this section, X2, and x2 are weighted averages and b1 C is the State agency’s rate of comple- is a combined regression coefficient in tion of its required sample size ex- which stratum weights sum to 1.0 and pressed as a decimal value, and S1 is are proportional to the estimated stra- the standard error of the State agency tum caseloads subject to review. sample overpayment error rate. If a

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State agency completes all of its re- (e)(2) and (e)(3) of this section within 30 quired sample size, then r1″=r1′. days from the date on which the bill (B) r2″=r2′+2(1–C)S2, where r2″ is the for collection (after a determination on adjusted regressed underpayment error any request for a waiver for good rate, r2′ is the regressed underpayment cause) is received by the State agency, error rate computed from the formula the State agency shall be liable for in- in paragraph (e)(6)(i)(C) of this section, terest on any unpaid portion of such C is the State agency’s rate of comple- claim accruing from the date on which tion of its required sample size ex- the bill for collection was received by pressed as a decimal value, and S2 is the State agency. This situation ap- the standard error of the State agency plies unless the State agency appeals sample underpayment error rate. If a the claim under part 283 of the regula- State agency completes all of its re- tions. If the State agency agrees to pay ″ ′ quired sample size, then r2 =r2 . the claim through reduction in Federal (7) FNS Timeframes. The case review financial participation for administra- process and the arbitration of all dif- tive costs, this agreement shall be conference cases shall be completed by sidered to be paying the claim. If the May 31 following the end of the fiscal State agency appeals such claim (in year. FNS shall determine and an- whole or in part), the interest on any nounce the national average payment unpaid portion of the claim shall ac- error rate for the fiscal year by June 30 crue from the date of the decision on following the end of the fiscal year. At the administrative appeal, or from a the same time FNS shall notify all date that is one year after the date the State agencies of their individual pay- bill is received, whichever is earlier, ment error rates and payment error until the date the unpaid portion of the rate liabilities, if any. FNS shall pro- payment is received. vide a copy of each State agency’s notice to its respective chief executive of- (ii) If the State agency pays such ficer and legislature. FNS shall initiate claim (in whole or in part) and the collection action on each claim for claim is subsequently overturned such liabilities before the end of the through administrative or judicial ap- fiscal year following the reporting pe- peal, any amounts paid by the State riod in which the claim arose unless an agency above what is actually due administrative appeal relating to the shall be promptly returned with inter- claim is pending. Such appeals include est, accruing from the date the pay- requests for good cause waivers and ad- ment was received until the date the ministrative and judicial appeals pur- payment is returned. suant to Section 14 of the Food Stamp (iii) Any interest assessed under this Act. While the amount of a State’s li- paragraph shall be computed at a rate ability may be recovered through off- determined by the Secretary based on sets to their letter of credit as identi- the average of the bond equivalent of fied in § 277.16(c) of this chapter, FNS the weekly 90-day Treasury bill auc- shall also have the option of billing a tion rates during the period such inter- State directly or using other claims est accrues. The bond equivalent is the collection mechanisms authorized discount rate (i.e., the price the bond is under the Federal Claims Collection actually sold for as opposed to its face Act, depending upon the amount of the value) determined by the weekly auc- State’s liability. FNS is not bound by tion (i.e., the difference between the the timeframes referenced in this sub- discount rate and face value) converted paragraph in cases where a State fails to an annualized figure. The Secretary to submit QC data expeditiously to shall use the investment rate (i.e., the FNS and FNS determines that, as a re- rate for 365 days) compounded in sim- sult, it is unable to calculate a State’s ple interest for the period for which the payment error rate and payment error claim is not paid. Interest billings shall rate liability within the prescribed be made quarterly with the initial bill- timeframe. ing accruing from the date the interest (8) Interest charges. (i) To the extent is first due. Because the discount rate that a State agency does not pay a for Treasury bills is issued weekly, the claim established under paragraphs interest rate for State agency claims

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shall be averaged for the appropriate quired by law for State agency admin- weeks. istration including corrective action. (9) Suspension and waiver of liabilities Therefore, basic training of eligibility for investments in program management workers or a continuing corrective ac- activities. In connection with the settle- tion from a Corrective Action Plan ment of all or a portion of a QC liabil- shall not be acceptable. The State ity for FY 1986 through Fiscal Year 2002 agency may include a previous initia- QC review periods, the Department tive in its plan; however, the State may suspend and subsequently waive agency would have to demonstrate that all or part of a State agency’s payment the initiative is entirely funded by error rate liability claim based on the State money, represents an increase in State agency’s offsetting investment in spending and there are no remaining program management activities in- Federal funds earmarked for the activ- tended to reduce errors measured by ity. the QC system. A State agency may (C) Investment activities must be submit a request to the Department for funded in full by the State agency, review of planned investments in pro- without any matching Federal funds gram management activities intended until the entire investment amount to reduce error rates as part of a pro- agreed to is spent. Amounts spent in posed settlement of all or a portion of excess of the settlement amount in- a QC liability at any time during the cluded in the plan may be subject to QC liability claim process. Federal matching funds. (i) The State agency’s investment (ii) The request shall include: plan activity or activities must meet (A) A statement of the amount of the following conditions to be accepted money that is a quality control liabil- by the Department: ity claim that is to be offset by invest- (A) The activity or activities must be ment in program improvements; directly related to error reduction in (B) A detailed description of the the ongoing program, with specific ob- planned program management activ- jectives regarding the amount of error ity; reduction, and type of errors that will (C) Planned expenditures, including be reduced. The costs of demonstra- time schedule and anticipated cost tion, research, or evaluation projects breakdown; under sections 17 (a) through (c) of the (D) Anticipated impact of the activ- Act will not be accepted. The State ity, identifying the types of errors ex- agency may direct the investment plan pected to be affected; to a specific project area or implement (E) Documentation that the funds the plan on a statewide basis. In addi- would not replace expenditures already tion, the Department will allow an in- earmarked for an ongoing effort; and vestment plan to be tested in a limited (F) A statement that the expendi- area, as a pilot project, if the Depart- tures are not simply a reallocation of ment determines it to be appropriate. resources. A request by the State agency for a (iii) The State’s and the Depart- waiver of existing rules will not be ac- ment’s agreement to settle all, part, or ceptable as a component of the invest- none of the QC liability claim under ment plan. The State agency must sub- this paragraph is final and not subject mit any waiver request through the to further appeal within the Depart- normal channels for approval and re- ment. An agreement to settle all or ceive approval of the request prior to part of a State agency’s QC liability including the waiver in the investment claim will result in suspension of the plan. Waivers that have been approved claim for the specified amount, pend- for the State agency’s use in the ongoing the State’s satisfactory completion ing operation of the program may con- of the initiative or action taken by the tinue to be used. Department under the provisions of (B) The program management activ- paragraph (e)(9)(vi) of this section. ity must represent a new or increased (iv) The State agency shall submit expenditure. The proposed activity modifications to the plan to the De- must also represent an addition to the partment for approval, prior to imple- minimum program administration re- mentation. Expenditures made prior to

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approval by the Department may not ity. FNS and the State shall settle any be used in offsetting the liability. waiver amount or reinvestment (v) Each State agency which has all amount before the end of the fiscal or part of a claim suspended under this year in which the liability amount is provision shall submit periodic docu- determined unless an administrative mented reports according to a schedule appeal relating to the claim is pending. in its approved investment plan. At a If a State agency appeals its liability minimum, these reports shall contain: determination, if the State agency (A) A detailed description of the ex- began required reinvestment activities penditure of funds, including the prior to an appeal determination, and source of funds and the actual goods if the liability amount is reduced to $0 and services purchased or rented with through the appeal, FNS shall pay to the funds; the State agency an amount equal to 50 (B) A detailed description of the ac- percent of the new investment amount tual activity; and that was included in the liability (C) An explanation of the activity’s amount subject to the appeal. If FNS effect on errors, including an expla- wholly prevails on a State agency’s ap- nation of any discrepancy between the peal, FNS will require the State agency planned effect and the actual effect. to invest all or a portion of the amount (vi) Any funds that the State agen- designated for reinvestment during the cy’s reports do not document as spent appeal to be reinvested or to be repaid as specified in the investment plan to the Federal government. may be withdrawn by the Department from the reduction in QC liability. Be- [Amdt. 160, 45 FR 15912, Mar. 11, 1980] fore the reduction is withdrawn, the EDITORIAL NOTE: For FEDERAL REGISTER ci- State agency will be provided an oppor- tations affecting § 275.23, see the List of CFR tunity to provide the missing docu- Sections Affected, which appears in the mentation. Finding Aids section of the printed volume and on GPO Access. (vii) If the reduction in QC liability is withdrawn, the Department shall § 275.24 High performance bonuses. charge interest on the funds not spent according to the plan, in accordance (a) General rule. (1) FNS will award with section 602 of the Hunger Preven- bonuses totaling $48 million for each tion Act of 1988, which amended section fiscal year to State agencies that show 13(a)(1) of the Food Stamp Act of 1977. high or improved performance in ac- (viii) The Department’s determina- cordance with the performance meas- tion to withdraw a reduction in QC li- ures under paragraph (b) of this sec- ability is not appealable within the De- tion. partment. (2) FNS will award the bonuses no (10) Resolution of liabilities for FY 2003 later than September 30th of the fiscal and beyond. FNS may: waive all or a year following the performance meas- portion of the liability; require the urement year. State agency to reinvest up to 50 per- (3) A State agency is not eligible for cent of the liability in activities to im- a bonus payment in any fiscal year for prove program administration, which which it has a liability amount estab- new investment money shall not be lished as a result of an excessive pay- matched by Federal funds; designate up ment error rate in the same year. If a to 50 percent of the liability as ‘‘at- State is disqualified from receiving a risk’’ for repayment if a liability is es- bonus payment under this paragraph tablished based on the State agency’s (a)(3), and the State is not tied for a payment error rate for the subsequent bonus, the State with the next best fiscal year; or assert any combination performance will be awarded a bonus of these options. Once FNS establishes payment. its proposed liability resolution plan, (4) The determination whether, and the amount assigned as at-risk is not in what amount, to award a perform- subject to settlement negotiation be- ance bonus payment is not subject to tween FNS and the State agency and administrative or judicial review. may not be reduced unless an appeal (5) In determining the amount of the decision revises the total dollar liabil- award, FNS will first award a base

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amount of $100,000 to each State agen- vious fiscal year, as determined in ac- cy that is an identified winner in each cordance with this part. category. Subsequently, FNS will di- (2) Negative error rate. FNS will divide vide the remaining money among the $6 million among the 6 States with the States in each category (see paragraph lowest and the most improved negative (b) of this section) in proportion to the error rates as specified in paragraphs size of their caseloads (the average (b)(2)(i) and (b)(2)(ii) of this section. number of households per month for (i) Lowest negative error rate. FNS will the fiscal year for which performance provide bonuses to the 4 States with is measured). the lowest negative error rates based (6) A State cannot be awarded two on the validated quality control nega- bonuses in the same category; the rel- tive error rates for the performance evant categories are payment accuracy year as determined in accordance with (which is outlined in paragraph (b)(1) of this part. this section), negative error rate (which is outlined in paragraph (b)(2) of (ii) Most improved negative error rate. this section), or program access index FNS will provide bonuses to the 2 (which is outlined in paragraph (b)(3) of States with the largest percentage this section). If a State is determined point decrease in their negative error to be among the best and the most im- rates, based on the comparison of the proved in a category, it will be awarded performance measurement year’s vali- a bonus only for being the best. The dated quality control negative error next State in the best category will be rates with those of the previous fiscal awarded a bonus as being among the year, as determined in accordance with best States. this part. A State agency is not eligible (7) Where there is a tie to the fourth for a bonus under this criterion if the decimal point for the categories out- State’s negative error rate for the fis- lined in paragraphs (b)(1) through (b)(4) cal year is more than 50 percent above of this section, FNS will add the addi- the national average. tional State(s) into the category and (3) Program access index (PAI). FNS the money will be divided among all will divide $12 million among the 8 the States in accordance with para- States with the highest and the most graph (a)(5) of this section. improved level of participation as spec- (b) Performance measures. FNS will ified in paragraphs (b)(3)(i) through measure performance by and base (b)(3)(iii) of this section. The PAI is the awards on the following categories of ratio of participants to persons with performance measures: incomes below 125 percent of poverty, (1) Payment accuracy. FNS will divide as calculated in accordance with para- $24 million among the 10 States with graph (b)(3)(iii) of this section (the PAI the lowest and the most improved com- was formerly known as the participant bined payment error rates as specified access rate (PAR)). in paragraphs (b)(1)(i) and (b)(1)(ii) of (i) High program access index. FNS this section. will provide bonuses to the 4 States (i) Excellence in payment accuracy. FNS will provide bonuses to the 7 with the highest PAI as determined in States with the lowest combined pay- accordance with paragraph (b)(3)(iii) of ment error rates based on the validated this section. quality control payment error rates for (ii) Most improved program access the performance measurement year as index. FNS will provide bonuses to the determined in accordance with this 4 States with the most improved PAI part. as determined in accordance with para- (ii) Most improved in payment accu- graph (b)(3)(iii) of this section. racy. FNS will provide bonuses to the 3 (iii) Data. For the number of partici- States with the largest percentage pants (numerator), FNS will use the point decrease in their combined pay- administrative annual counts of par- ment error rates based on the compari- ticipants minus new participants cer- son of the validated quality control tified under special disaster program payment error rates for the perform- rules by State averaged over the cal- ance measurement year and the pre- endar year. For the number of people

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below 125 percent of poverty (denomi- PART 276—STATE AGENCY LIABIL- nator), FNS will use the Census Bu- ITIES AND FEDERAL SANCTIONS reau’s March Supplement to the Cur- rent Population Survey’s (CPS) count Sec. of people below 125 percent of poverty 276.1 Responsibilities and rights. for the same calendar year. FNS will 276.2 State agency liabilities. reduce the count in each State where a 276.3 Negligence or fraud. Food Distribution Program on Indian 276.4 Suspension/disallowance of adminis- Reservations (FDPIR) program is oper- trative funds. 276.5 Injunctive relief. ated by the administrative counts of 276.6 Good cause. the number of individuals who partici- 276.7 Administrative review process. pate in this program averaged over the AUTHORITY: 7 U.S.C. 2011–2036. calendar year. FNS will reduce the count in California by the Census Bu- EDITORIAL NOTE: OMB control numbers re- reau’s percentage of people below 125% lating to this part 276 are contained in § 271.8. of poverty in California who received § 276.1 Responsibilities and rights. Supplemental Security Income in the previous year. FNS reserves the right (a) Responsibilities. (1) State agencies to use data from the American Commu- shall be responsible for establishing nity Survey (ACS) in lieu of the CPS, and maintaining secure control over and to use the count of people below coupons and cash for which the regulations designate them accountable. Ex- 130 percent of poverty, should these cept as otherwise provided in these reg- data become available in a timely fash- ulations, any shortages or losses of ion and prove more accurate. Such a coupons and cash shall strictly be a substitution would apply to all States. State agency liability and the State (4) Application processing timeliness. agency shall pay to FNS, upon demand, FNS will divide $6 million among the 6 the amount of the lost or stolen cou- States with the highest percentage of pons or cash, regardless of the cir- timely processed applications. cumstances. (i) Data. FNS will use quality control (2) State agencies shall be respon- data to determine each State’s rate of sible for preventing losses or shortages application processing timeliness. of Federal funds in the issuance of ben- (ii) Timely processed applications. A efits to households participating in the timely processed application is one Program. FNS shall strictly hold State that provides an eligible applicant the agencies liable for all losses, thefts and ‘‘opportunity to participate’’ as defined unaccounted shortages that occur dur- in § 274.2 of this chapter, within thirty ing issuance, unless otherwise speci- days for normal processing or 7 days fied. Issuance functions begin with the for expedited processing. New applica- State agency’s creation of a record-for- tions that are processed outside of this issuance to generate each month’s standard are untimely for this meas- issuances from the master issuance ure, except for applications that are file. Shortages or losses which result properly pended in accordance with from any functions that occur prior to § 273.2(h)(2) of this chapter because the creation of the record-for-issuance verification is incomplete and the are subject to either paragraph (a)(3) of State agency has taken all the actions this section or subpart C—Quality Con- described in § 273.2(h)(1)(i)(C) of this trol (QC) Reviews, of part 275—Per- chapter. Such applications will not be formance Reporting System. included in this measure. Applications (3) State agencies shall be respon- that are denied will not be included in sible for preventing losses of Federal this measure. funds in the certification of households (iii) Evaluation of applications. Only for participation in the Program. If applications that were filed on or after FNS makes a determination that there the beginning of the performance has been negligence or fraud on the part of a State agency in the certifi- measurement (fiscal) year will be eval- cation of households for participation uated under this measure. in the Program, FNS is authorized to [70 FR 6322, Feb. 7, 2005] bill the State agency for an amount

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equal to the amount of coupons issued (ii) Losses resulting from authoriza- as a result of the negligence or fraud. tion documents lost in transit from a (4) State agencies shall be respon- manufacturer to the State agency and sible for efficiently and effectively ad- untransacted authorization documents ministering the Program by complying lost in transit from an issuer to the with the provisions of the Act, the reg- State agency; and ulations issued pursuant to the Act, (iii) The value of coupons overissued and the FNS-approved State Plan of and coupons issued without authoriza- Operation. A determination by FNS tion, except for those duplicate that a State agency has failed to com- issuances in the correct amount that ply with any of these provisions may are the result of replacement issuances result in FNS seeking injunctive relief made in accordance with § 274.6. to compel compliance and/or a suspen- Overissuances and unauthorized sion or disallowance of the Federal issuances for which State agencies are share of the State agency’s administra- liable include, but are not limited to: tive funds. FNS has the discretion to Single unmatched issuances, duplicates determine in each instance of non- made that are not in accordance with compliance, whether to seek injunctive § 274.6, and transacted authorization relief or to suspend or disallow admin- documents that are altered, counter- istrative funds. FNS may seek injunc- feit, from out-of-State or expired (in- tive relief and suspend or disallow cluding those unsigned by the des- funds simultaneously or in sequence. ignated household member and/or not (b) Rights. State agencies may appeal date stamped by the issuer). all claims brought against them by (2) Coupon shortages and/or losses for FNS and shall be afforded an adminis- which State agencies shall be held trative review by a designee of the Sec- strictly liable include, but are not lim- retary as provided in § 276.7. State ited to, the following: agencies may seek judicial review of (i) Thefts; any final administrative determination (ii) Embezzlements; made by the Secretary’s designee, as (iii) Cashier errors (e.g., errors by the provided in § 276.7(j). personnel of issuance offices in the [54 FR 7016, Feb. 15, 1989] counting of coupon books); (iv) Coupons lost in natural disasters § 276.2 State agency liabilities. if a State agency cannot provide rea- (a) General provisions. Notwith- sonable evidence that the coupons were standing any other provision of this destroyed and not redeemed; subchapter, State agencies shall be re- (v) Issuances which cannot be sup- sponsible to FNS for any financial ported by the required documentation; losses involved in the acceptance, stor- (vi) Issuances made to households not age and issuance of coupons. All cou- currently certified; pon issuance shall be documented, and (vii) Issuance loss during an official the State agency shall make available investigation, unless the investigation to the Department all primary docu- was reported directly to FNS prior to mentation (or secondary, if the pri- the loss; and mary has been inadvertently de- (viii) Unexplained causes. stroyed) when required to do so. State (3) State agencies shall submit writ- agencies shall pay to FNS, upon de- ten reports on significant losses unless mand, the amount of any such losses. those losses were investigated by the (b) Coupon shortages, losses, unauthor- Office of the Inspector General, USDA. ized issuances, overissuances and undocu- (4) A State agency shall be held mented issuances. (1) State agencies strictly liable for mail issuance losses shall be strictly liable for: that are in excess of the tolerance level (i) Coupon shortages and losses that that corresponds to the preselected re- occur any time after coupons have been porting unit. Each State agency shall accepted by receiving points within the select one of the three following units State and that occur during storage or annually and report the selection as the movement of coupons between bulk provided in §§ 272.2(a)(2) and storage point issuers and claims collec- 272.2(d)(1)(iii). Where reporting units tion points within the State; issue less than $300,000 in mail issuance

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in a quarter, the State agency shall be replacements of returned mail liable for all losses in excess of $1,500 issuances. for the quarter. (vi) The State agency’s liability shall (i) If a State agency elects to report be computed using data from Form and have liabilities based on an exist- FNS–259, Food Stamp Mail Issuance ing county or project area level of mail Report, or alternative reporting docu- issuance, then the State agency shall ment accepted in advance by FNS and be strictly liable to FNS for the value the State agency, which is submitted of all mail issuance losses in excess of for the quarter for the particular re- five-tenths (.5) percent of the dollar porting unit agreed to by FNS and the value of each reporting unit’s quarterly State agency, as provided in mail issuance. This level shall be used §§ 272.2(a)(2) and 272.2(d)(1)(iii). if the State agency does not designate (5) State agencies shall be held strict- one of the three levels herein by May ly liable for the following 15, 1989, and by August 15 in years overissuances: thereafter. (i) The value of overissued coupons (ii) If a State agency elects to report issued as a result of a State agency’s and have liabilities based on an exist- failure to comply with a directive ing administrative level higher than issued by FNS in accordance with the the county or project area provided in provisions of § 271.7, to reduce, suspend paragraph (b)(4)(i) of this section, but or cancel allotments; lower than the Statewide level of mail (ii) The value of coupons overissued issuance provided in paragraph (b)(4)(iii) of this section, then the State by the State agency as a result of a agency shall be strictly liable to FNS court order or settlement agreement of for the value of all mail issuance losses a court suit which was not reported to in excess of thirty-five hundreths (.35) FNS in accordance with the provisions percent per quarter of the dollar value of § 272.4(e); and of each reporting unit’s quarterly mail (iii) The value of coupons overissued issuance. State agencies shall not cre- as a result of a State agency entering ate new administrative units for the into an out-of-court settlement of a sole purpose of reporting mail issuance court suit, the terms of which violate losses. Federal laws or regulations. (iii) If a State agency elects to report (6) Coupon shortages and losses shall and have liabilities based on a State be determined from the Form FNS–250, level of mail issuance, then the State Food Coupon Accountability Report agency shall be strictly liable to FNS and its supporting documents and from for the value of all mail issuance losses the Form FNS–46, Issuance System in excess of thirty hundreths (.30) per- Reconciliation Report. Losses of Fed- cent per quarter of the dollar value of eral moneys resulting from each State agency’s total quarterly overissuances shall be determined from mail issuance. sources such as audits, Performance (iv) FNS reserves the right to make Reporting System Reviews, Federal re- all determinations on reporting reviews, investigations and explanatory quirements and on administrative divi- reports prepared by the State agency. sions within the State for the purpose (7) State agencies shall be held strict- of determining and assessing liability ly liable for overissuances resulting for mail issuance losses. FNS also re- from Electronic Benefit Transfer sys- serves the right to revise such deter- tem errors and unauthorized account minations as necessary. Revisions will activities. Such overissuances shall in- be communicated to State agencies by clude but not be limited to: FNS. The liability assessment will be Overissuances to household accounts based on the revised reporting require- that are accessed and used by house- ment for the next full fiscal quarter. holds, replacement benefits to a house- (v) For the purpose of this section, hold’s account due to unauthorized use ‘‘mail issuance’’ means all original of the benefits in a household’s ac- coupon issuances distributed through count, benefits drawn from an EBT ac- the mail. ‘‘Mail loss’’ means all re- count after the household has reported placements of mail issuances except for that the EBT card is lost or stolen to

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the State or its agent, overdraft situa- or amounts which have been deter- tions due to the use of manual back-up mined through the use of statistically procedures approved by the State agen- valid projections. When a statistically cy, overcredits to a retailer account valid projection is used, the method- and transfer of funds to an illegitimate ology will include a 95 percent, one- account. sided confidence level. (c) Cash Losses. State agencies are (3) FNS will base its determinations liable to FNS for cash losses when of negligence on information drawn money collected by State agencies from any of a number of sources. These from recipient claims has been lost, information sources include, but are stolen or otherwise not remitted to not limited to, State and Federal Per- FNS in accordance with the provision formance Reporting reviews, State and of § 273.18(h). The amount of such losses Federal audits and investigations, shall be determined from the sources State corrective action plans and any outlined in paragraph (6) of this sec- required reports. tion. (4) Failure by the State agency to (d) State agency payment to FNS. State remit payment upon demand, within agencies shall be billed for the exact the specified time period, may result in amount of losses specified in this sec- FNS recovering the lost funds through tion. If a State agency fails to pay the offsets to the State agency’s Letter of billing, FNS shall offset the amount of Credit, in accordance with § 277.16(c). loss from the State agency’s Letter of (c) Fraud provisions. For purposes of Credit in accordance with § 277.16(c). this subsection, the term fraud shall [54 FR 7016, Feb. 15, 1989, as amended at 54 mean the wrongful acquisition or FR 51351, Dec. 15, 1989; 57 FR 11259, Apr. 1, issuance of food coupons by the State 1992; 57 FR 44791, Sept. 29, 1992; Amdt. 342, 59 agency or its officers, employees or FR 2733, Jan. 19, 1994; Amdt. 388, 65 FR 64589, agents, including issuance agents, Oct. 30, 2000] through false representation or con- § 276.3 Negligence or fraud. cealment of material facts. State agencies shall be liable to FNS for the (a) General. If FNS determines that amount of loss of Federal funds as a re- there has been negligence or fraud on sult of fraud. Failure by the State the part of the State agency in the cer- agency to remit payment on demand tification of applicant households, the by FNS, within the time period speci- State agency shall, upon demand, pay fied, may result in offsets to the Letter to FNS a sum equal to the amount of of Credit in accordance with § 277.16(c). coupons issued as a result of such negligence or fraud. [Amdt. 168, 45 FR 77263, Nov. 21, 1980, as (b) Negligence provisions. (1) FNS may amended by Amdt. 262, 49 FR 50598, Dec. 31, determine that a State agency has 1984; Amdt. 356, 59 FR 29713, June 9, 1994] been negligent in the certification of applicant households if a State agency § 276.4 Suspension/disallowance of ad- disregards Food Stamp Program re- ministrative funds. quirements contained in the Food (a) General provisions. (1) FNS shall Stamp Act, the regulations issued pur- make determinations of the efficiency suant to the Act, the FNS-approved and effectiveness of State agencies’ ad- State Plan of Operation and a loss of ministration of the Food Stamp Pro- Federal funds results or a State agency gram in accordance with the provisions implements procedures which deviate of § 275.25. When making such deter- from food stamp requirements con- minations, FNS shall use all informa- tained in the Food Stamp Act, the food tion that is available relating to State stamp regulations, the FNS-approved agencies’ administration of the Pro- State Plan of Operation without first gram. This information includes, but is obtaining FNS approval, and the imple- not limited to, information received mentation of the procedures results in from Performance Reporting System a loss of Federal funds. reviews, Federal reviews, audits, inves- (2) In computing amounts of losses of tigations, corrective action plans, fi- Federal funds due to negligence, FNS nancial management reviews, and the may use actual, documented amounts public.

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(2) FNS may determine a State agen- adhere to the cost principles of part 277 cy’s administration of the Program to and appendix A, FNS shall provide be inefficient or ineffective if the State State agencies with written advance agency fails to comply with the food notification that such action is being stamp requirements established by the considered. If a State agency does not Food Stamp Act, the regulations issued respond to such an advance notifica- pursuant to the Act, or the FNS-ap- tion to the satisfaction of FNS, FNS proved State Plan of Operation. shall provide the State agency with a (3) If FNS determines that a State formal warning of the possibility of agency’s administration of the Pro- suspension or disallowance action. gram is inefficient or ineffective, FNS However, when a State agency fails to may warn the State agency that a sus- meet the objectives in a corrective ac- pension and/or disallowance of admin- tion plan, FNS may omit the advance istrative funds is being considered. notification and immediately issue a After a State agency receives a warn- formal warning. ing, FNS may either suspend or dis- (1) Advance notification. Immediately allow administrative funds or take upon becoming aware that a deficiency both actions in sequence, depending on or deficiencies in a State agency’s ad- the statement in the warning. ministration of the Program may war- (b) Suspension. A suspension of funds rant the suspension and/or disallow- is an action by FNS to temporarily ance of Federal funds, FNS shall advise withhold all or a portion of the Federal the State agency in writing of the defi- share of one or more of the cost cat- ciency and shall provide a specific pe- egories of a State agency’s budget for riod of time for correction of such defi- administration of the Food Stamp Pro- ciency or deficiencies. The time period gram. Suspensions of funds shall re- allowed the State agency for corrective main in effect until FNS determines action will vary according to the na- that a State agency has taken ade- ture of the deficiency. quate corrective action to correct the (2) Formal warning. FNS shall issue a problem causing the suspension, in formal warning to a State agency if the which event the suspension will be re- State fails to correct to the satisfac- scinded, or until FNS decides to dis- tion of FNS the deficiencies noted in allow the suspended funds. FNS shall an advance notification within the suspend funds in accordance with time specified in the advance notifica- § 277.16. tion. FNS may also issue a formal (c) Disallowance. (1) A disallowance of warning to a State agency without funds is an action by FNS in which re- first issuing an advance notification if imbursement is denied for otherwise a State agency fails to comply with a reimbursable administrative costs corrective action plan. claimed by a State agency in one or (i) Formal warnings shall include the more of the cost categories of a State following information: agency’s budget for Program adminis- (A) Specific descriptions of the defi- tration. ciencies, explaining how the State (2) In accordance with § 277.16, FNS agency is out of compliance with Pro- has the option of disallowing funds in gram requirements; another cost category, or all or a por- (B) A Statement as to whether Fed- tion of the entire Letter of Credit if the eral funds will be suspended, disallowed disallowance is based on a finding that or both, if appropriate; the State agency failed to take a re- (C) The amount of Federal funds that quired action. FNS may disallow funds will be suspended and/or disallowed or after previously suspending such funds an estimate of the amount if actual or may disallow funds immediately fol- cost are unavailable; and lowing the expiration of the formal (D) A statement of FNS’ willingness warning under the conditions specified to assist State agencies is resolving the in paragraph (e) of this section. deficiencies. (d) Warning process. Prior to taking (ii) A State agency shall have 30 days action to suspend or disallow Federal from receipt of a formal warning to funds, except those funds which are dis- submit evidence that it is in compli- allowed when a State agency fails to ance or to submit a corrective action

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proposal, including the date the State (b) Requesting injunctive relief. Prior agency will be in compliance. to seeking injunctive relief to require (iii) When the deficiency cannot be compliance, FNS shall notify the State corrected within 30 days of receipt of a agency of the determination of non- formal warning but the State agency compliance and provide the State agen- submits an acceptable plan for cor- cy with a specific period of time to correcting the deficiency, FNS shall hold rect the deficiency. The Secretary the formal warning in abeyance pend- shall have the discretion to determine ing completion of the actions con- the time periods State agencies will tained in the plan within the time have to correct deficiencies. If the specified in the plan. State agency does not correct the fail- (iv) FNS shall cancel a formal warn- ure within the specified time period ing when the State agency submits evi- and the Department decides to seek in- dence that shows, to the satisfaction of junctive relief, the Secretary shall FNS, that the deficiency has been refer the matter to the Attorney Gen- eliminated. eral with a request that injunctive re- (e) Suspension/disallowance of funds. lief be sought to require compliance. The Administrator of FNS shall notify [Amdt. 168, 45 FR 77263, Nov. 21, 1980] State agencies in writing by certified mail or through personal service that § 276.6 Good cause. administrative funds are being sus- (a) When a State agency has failed to pended or disallowed. Such action may comply with provisions of the Act, the occur when any of the following situa- regulations issued pursuant to the Act, tions arise: or the FNS-approved State Plan of Op- (1) A State agency fails to respond to eration, and, thus, is subject to the sus- the deficiencies cited in a formal warn- pension/disallowance and injunctive re- ing within 30 days of receiving the lief provisions in §§ 276.4 and 276.5, FNS warning; may determine that the State had good (2) The response by a State agency to cause for the noncompliance. FNS shall the deficiencies cited in a formal warn- evaluate good cause in these situations ing is unsatisfactory to FNS; or on a case-by-case basis, based on any (3) A State agency fails to meet the one of the following criteria: commitments it made in its corrective (1) Natural disasters or civil dis- action proposal and a formal warning orders that adversely affect Program had been held in abeyance pending operations; completion of that corrective action. (2) Strikes by State agency staff; (f) Appeals. After FNS has taken ac- (3) Change in the Food Stamp Pro- tion to disallow Federal funds the gram or other Federal or State pro- State agency may request an appeal in grams that result in a substantial ad- accordance with the procedures speci- verse impact upon a State agency’s fied in § 276.7. management of the Program; and (4) Any other circumstances in which [Amdt. 168, 45 FR 77263, Nov. 21, 1980, as amended by Amdt. 266, 52 FR 3410, Feb. 4, FNS determines good cause to exist. 1987] (b) If FNS determines that food cause existed for a State agency’s failure to § 276.5 Injunctive relief. comply with required provisions and standards, FNS shall not suspend or (a) General. If FNS determines that a disallow administrative funds nor seek State agency has failed to comply with injunctive relief to compel compliance the Food Stamp Act, the regulations with the provisions and standards. issued pursuant to the Act, or the FNS- approved State Plan of Operations, the [Amdt. 168, 45 FR 77263, Nov. 21, 1980] Secretary may seek injunctive relief against the State agency to require § 276.7 Administrative review process. compliance. The Secretary may re- (a) General. (1) Whenever FNS asserts quest injunctive relief concurrently a claim against a State agency, the with negligence billings and sanctions State agency may appeal the claim by against State agencies affecting ad- requesting an administrative review. ministrative funds. FNS claims that may be appealed are

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billings resulting from financial losses until the end of the next day which is involved in the acceptance, storage, not a Saturday, Sunday or Federal or and issuance of coupons (§ 276.2), bil- State holiday. lings based on charges of negligence or (e) Stay of administrative action. With fraud (§ 276.3), and disallowances of one exception, the filing of a timely ap- Federal funds for State agency failures peal and request for administrative re- to comply with the Food Stamp Act, view shall automatically stay the ac- regulations, or the FNS-approved State tion of FNS to collect the claim as- Plan of Operations (§ 276.4). serted against the State agency until a (2) A State agency aggrieved by a decision is reached on the acceptability claim shall have the option of request- of the appeal, and in the case of an ac- ing a hearing to present its position in ceptable appeal, until a final deter- addition to a review of the record and mination has been issued. The excep- any written submission presented by tions to this provision are those claims the State agency. Unless cir- that are asserted against State agen- cumstances warrant differently, hear- cies due to State agency failure to ings of appeals of negligence claims comply with an order to reduce, sus- and disallowances of Federal funds pend or cancel benefits in accordance shall be before an Appeals Board and with § 271.7. In situations where a State hearings of appeals of other claims agency does not reduce, suspend or shall be before a single hearing official. cancel benefits as directed and FNS In any case, the people reviewing the takes action to disallow administrative claim shall be people who were not in- funds or bill the State agency, the dis- volved in the decision to file the claim. allowance and/or billing shall remain (b) Notice of claim. When asserting a in effect during the review process. claim against a State agency, FNS Should the Appeals Board uphold the shall provide the notice to the State State agency, all disallowed funds and/ agency using any delivery method as or funds collected as a result of the long as the method provides evidence billing shall be restored to the State of the delivery. agency promptly. (c) Filing an appeal. A State agency (f) Acknowledging an appeal. Upon re- aggrieved by claims asserted against it ceipt of an appeal and request for ad- may file written appeals with the Sec- ministrative review, the Executive retary, U.S. Department of Agri- Secretary shall provide the State agen- culture, c/o the Executive Secretary, cy with a written acknowledgment of State Food Stamp Appeals Board, Food the appeal, including a statement of and Nutrition Service, USDA, Wash- whether or not the appeal is timely and ington, DC 20250, requesting an oppor- can be accepted. A copy of each ac- tunity to present information in sup- knowledgment shall be provided to port of its position. The State agency FNS. The acknowledgment of a timely shall attach a copy of the FNS claim to and acceptable appeal and request for its appeal. Appeals must be filed with administrative review shall also in- the Executive Secretary or postmarked clude a copy of Secretary’s Memo- within 10 days of the date of delivery of randum No. 2003, Revised, ‘‘State Food the notice of claim. If the State agency Stamp Appeals Board,’’ and the iden- does not appeal within the prescribed tity of the Appeals Board member(s) 10-day period, the FNS decision on the designated by the Secretary to review claim shall be final. No extension shall the claim. be granted in the time allowed for fil- (g) Submitting additional information. ing an appeal. (1) State agencies shall have 30 days (d) Computation of time. In computing from their request for an appeal to sub- any period of time prescribed or al- mit five sets of the following informa- lowed under these procedures, the day tion to the Executive Secretary of the of delivery of any notice of action, ac- Appeals Board: knowledgment, or reply shall not be in- (i) A clear, concise identification of cluded. The last day of the period so the issue or issues in dispute; computed shall be included unless it is (ii) The State agency’s position with a Saturday, Sunday or Federal or State respect to the issue or issues in dis- holiday. In that case, the period runs pute;

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(iii) The pertinent facts and reasons presiding officer at the hearing. The in support of the State agency’s posi- presiding officer shall have full author- tion with respect to the issue or issues ity to ensure a fair and impartial pro- in dispute; ceeding, avoid delays, maintain order (iv) All pertinent documents, cor- and decorum, receive evidence, exam- respondence and records which the ine witnesses, and otherwise regulate State agency believes are relevant and the course of the hearing. The State helpful toward a more thorough under- agency may represent itself at the standing of the issue or issues in dis- hearing or be represented by counsel. pute; (3) The Appeals Board or hearing offi- (v) The relief sought by the State cial shall receive into evidence the oral agency; testimony of State agency witnesses (vi) The identity of the person(s) pre- and any documents which are relevant senting the State agency’s position and material. Neither the Department when a hearing is involved; and nor FNS is required to present wit- (vii) A list of prospective State agen- nesses at the hearing. However, the De- cy witnesses when a hearing is in- partment and FNS shall make staff volved. available to provide any information or (2) At the request of the Executive clarification requested by the Appeals Secretary, FNS shall promptly submit Board or hearing official. Under no cir- five complete sets of all documents, cumstances shall the Department or correspondence and records compiled FNS introduce new evidence at the by FNS in support of its claim. hearing. Departmental and FNS staff, (3) The Executive Secretary shall as well as State agency witnesses, shall provide each person hearing an appeal be subject to examination by the Ap- and FNS with a complete set of the peals Board or hearing official. Depart- State agency information when it is re- mental and FNS staff shall not be sub- ceived. The Executive Secretary shall ject to cross-examination by State also provide each person hearing an ap- agency representative or counsel. Like- peal and the State agency with a com- wise, State agency witnesses shall not plete set of the information supplied by be subject to cross-examination by De- FNS when it is received. partmental or FNS staff. Each side (h) Scheduling and conducting hearings. When a hearing is afforded, the shall be permitted to make a closing Appeals Board or hearing official has statement to the Appeals Board or up to 60 days from receipt of the State hearing official upon completion of the agency’s information, outlined in para- taking of evidence and testimony. graph (g) of this section, to schedule (4) FNS and the State agency shall and conduct the hearing. The Execu- have the opportunity to submit addi- tive Secretary shall advise the State tional written information to the Ap- agency of the time, date and location peals Board or hearing official within of the hearing at least 10 days in ad- 10 days after the close of the hearing. vance of the hearing. The State agency No new factual material may be intro- is solely responsible for ensuring the duced except as it directly relates to attendance of all State agency wit- evidence or testimony presented at the nesses at the hearing. hearing. Five complete sets of such in- (1) A hearing is an informal pro- formation must be filed with the Exec- ceeding designed to permit the State utive Secretary or postmarked prior to agency an opportunity to present its the expiration of the 10-day deadline position before a neutral third party. for it to be considered. Because the final determination is sub- (5) An official verbatim transcript of ject to judicial review and trial de each hearing shall be kept on file in novo, the Appeals Board and hearing of- the Office of the Executive Secretary ficial shall not be bound by the rules of for public inspection. A copy shall be civil procedure applicable in the court furnished to FNS and the State agency. or by the adjudicatory requirements of Anyone wishing to purchase a copy the Administrative Procedures Act. may make arrangements to do so with (2) The Appeals Board Chairman, his the commercial reporting service in- designee or the hearing official is the volved.

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(i) Final determination. (1) When a for cause, the requester shall be noti- hearing is afforded, a final determina- fied and the prescribed period of time tion shall be made within 30 days of the shall resume from the date of denial. hearing, and the final determination (2) The Appeals Board or hearing offi- shall take effect 30 days after delivery cial may grant itself such additional of the notice of this final decision to time as it may reasonably require to the State agency. When a hearing is complete any of its assigned respon- not held, a final determination shall be sibilities. If the Appeals Board or hear- made within 30 days after receipt of the ing official does find it necessary to State agency’s information. The final grant itself an extension of time, the determination shall take effect 30 days Executive Secretary shall notify all after delivery of the notice of the final parties in writing. decision to the State agency. [Amdt. 168, 45 FR 77263, Nov. 21, 1980, as (2) The Appeals Board or hearing offi- amended by Amdt. 274, 51 FR 18752, May 21, cial shall either uphold the claim, deny 1986; Amdt. 356, 59 FR 29714, June 9, 1994; the claim, or adjust the claim down- Amdt. 397, 70 FR 72354, Dec. 5, 2005] ward in such amounts and for such reasons as the Appeals Board or hearing PART 277—PAYMENTS OF CERTAIN official shall determine and declare. ADMINISTRATIVE COSTS OF The final determination is not subject STATE AGENCIES to reconsideration. (j) Judicial review. State agencies ag- Sec. grieved by the final determination may 277.1 General purpose and scope. obtain judicial review and trial de novo 277.2 Definitions. by filing a complaint against the 277.3 Budgets and budget revision proce- United States within 30 days after the dures. date of delivery of the final determina- 277.4 Funding. tion, requesting the court to set aside 277.5 Methods of payment. 277.6 Standards for financial management the final determination. The final de- systems. termination shall remain in effect dur- 277.7 Cash depositories. ing the period the judicial review or 277.8 Bonding and insurance. any appeal therefrom is pending unless 277.9 Administrative costs principles. the court temporarily stays such ad- 277.10 Program income. ministrative action after a showing 277.11 Financial reporting requirements. that irreparable injury will occur ab- 277.12 Retention and custody of records. 277.13 Property. sent a stay and that the State agency 277.14 Procurement standards. is likely to prevail on the merits of the 277.15 [Reserved] case. 277.16 Suspension, disallowance and pro- (k) Extension of time. (1) No extension gram closeout. of time shall be permitted a State 277.17 Audit requirements. agency in which to file an initial re- 277.18 Establishment of an Automated Data quest for an administrative review. All Processing (ADP) and Information Re- trieval System. other requests from the State agency or from FNS for the extension of any APPENDIX A TO PART 277—PRINCIPLES FOR DE- TERMINING COSTS APPLICABLE TO ADMINIS- deadline contained in § 276.7 of these TRATION OF THE FOOD STAMP PROGRAM BY regulations or imposed by the Appeals STATE AGENCIES Board or hearing official shall be granted only for good cause shown and AUTHORITY: 7 U.S.C. 2011–2036. only when received by the Executive SOURCE: Amdt. 188, 45 FR 85702, Dec. 30, Secretary before the expiration of the 1980, unless otherwise noted. particular deadline involved. All re- EDITORIAL NOTE: OMB control numbers requests for an extension shall be in writ- lating to this part 277 are contained in § 271.8. ing. Filing a request for an extension stops the running of the prescribed pe- § 277.1 General purpose and scope. riod of time. When a request for an ex- (a) Purpose. This part establishes uni- tension is granted, the requester shall form requirements for the management be notified in writing of the amount of of administrative funds provided to additional time granted. When a re- State agencies and sets forth principles quest is denied for being untimely or for claiming costs of activities paid

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with administrative funds under the ices; and adjustments of overpayments Food Stamp Program, and the Food or erroneous charges. Distribution Program and Food Stamp Disbursements refers to the transfer of Program on Indian Reservations. funds by the state agency to pay for (b) Scope and applicability. Upon com- Program costs resulting from pur- pliance with the provisions of this part, chased or expired goods and services. payments to State agencies will be Expendable personal property means made for cost(s) incurred for adminis- all tangible personal property other tration of the Food Stamp Program than nonexpendable property. and for administration of the Food Dis- Program funds means money, or prop- tribution Program on Indian Reserva- erty provided in lieu of money, paid for tions. To ensure maximum practical or furnished by FNS to a State agency. uniformity, deviation(s) by a State Funds available to the State agency agency from this part may be author- may include contributions from third ized only when necessary to meet pro- parties including other Federal agen- gram objectives, to conserve program cies. funds, or when essential to the public In-kind contributions refers to the interest. However, any deviations from value of noncash contributions. Only this part must be authorized by the Ad- when authorized by Federal legislation ministrator of FNS. may property purchased with Federal § 277.2 Definitions. funds be considered as a State agency’s in-kind contribution. In-kind contribu- For the purpose of this part the term: tions may be for the value of real and/ Accrued expenditures means the or nonexpendable personal property or charges incurred by the State agency the value of goods and services pro- during a given period for liabilities in- vided specifically to the project or pro- curred, benefits received or for goods gram. and services used during this period. Nonexpendable personal property Accrued income means the net value means tangible personal property hav- of earnings during a given period re- ing a useful life of more than one year sulting from services and goods pro- and an acquisition cost of more than vided whether or not payment has been $300 per unit. A State agency may use realized. its own definition of nonexpendable Acquisition cost refers to nonexpend- personal property provided that such able personal property acquired by pur- definition would at least include all chase and means the net invoice price tangible personal property as defined of the property including any attach- herein. ments, accessories or auxiliary apparatus necessary to make the property Obligations are the amounts of orders usable for the purpose for which it was placed, contracts awarded, services re- acquired. Ancillary charges such as ceived, and similar transactions during taxes, duty, protection in-transit in- a given period which require payment. surance, freight or installation shall be Offset means a method to recover included in or excluded from acquisi- funds due FNS through use of the Let- tion cost in accordance with the State ter of Credit system. Recovery is ac- agency’s regular accounting practices. complished by accounting adjustments Approval or authorization by FNS to increase Federal funds on hand or means documentation evidencing con- disbursed. sent prior to incurring specific costs. OMB means the Office of Manage- Applicable credits refer to those re- ment and Budget. ceipts or reduction of expenditure-type Personal property means property of transactions which offset or reduce ex- any kind except real property. It may pense items allocable to programs as be tangible (having physical existence) direct or indirect costs. Examples of or intangible (having no physical exist- such transactions are: Purchase dis- ence) such as patents, inventions and counts; rebates or allowances; recov- copyrights. eries or indemnities on losses; sale of Program means both the Food Stamp publications, equipment, and scrap; in- Program and the Food Distribution come from personal or incidental serv- Program on Indian Reservations.

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Program closeout means the process § 277.4 Funding. by which FNS determines that all ap- (a) General. This section sets allow- plicable administrative and financial able cost standards for activities of processes have been completed by the State agencies in administering the State agency and FNS terminates the Food Stamp Program and Food Dis- program in the affected project area or tribution Program on Indian Reserva- areas. tions. Project costs are allowable costs as set (b) Federal reimbursement rate. The forth in this part. base percentage for Federal payment Real property means land, land im- shall be 50 percent of State agencies’ provements, structure and appur- allowable Food Stamp Program admin- tenances thereto, excluding movable istrative costs. This rate includes reim- machinery and equipment. bursement for food stamp informa- State agency means the organization tional activities but not for recruit- as defined in 7 CFR 271.1. ment activities. Recruitment activities State agency costs means the State are those activities designed to per- agency outlays from its funds available suade an individual who has made an for program administration. Unless au- informed choice not to apply for food thorized by Federal legislation, costs stamps to change his or her decision charged to other Federal grants or to and apply. other Federal contracts may not be (1) A State agency’s federally funded considered as State agency costs reim- share of Food Stamp Program adminis- bursable under this authority. trative costs shall be increased when Subagency means the organization or its error rate, as determined through person to which a State agency makes the quality control process described in any payment for acquisition of goods, part 275, meets certain standards. materials or services for use in admin- (i) For the period beginning October istering the program and which is ac- 1, 1982, through September 30, 1988, a countable to the State agency for the State agency with a payment error use of funds provided. rate of five percent or less in the cor- Terms and conditions means legal re- responding fiscal year shall have its quirements imposed by the Federal federally funded share of Program ad- Government under statute, regula- ministrative costs increased to 60 per- tions, contracts, agreements or other- cent, provided that the State agency’s wise. negative case error rate is less than the Unliquidated obligation represents the national weighted mean negative case amount of obligations not yet paid. rate for the fiscal year prior to the period of enhanced funding. Unobligated balance means the portion of the Federal funds authorized (ii) For the period beginning October less all allowable costs and unpaid obli- 1, 1988, and review periods thereafter, a State agency with a payment error gations of the State agency. rate less than or equal to 5.90 percent § 277.3 Budgets and budget revision and with a negative case error rate less procedures. than the National weighted mean negative case error rate for the prior fiscal The preparation, content, submittal, year shall have its Federally funded and revision requirements for the State share of Food Stamp Program adminis- Food Stamp Program Budget shall be trative costs increased by one percent- as specified in § 272.2. The application age point to a maximum of 60 percent for funds and budget requirements for for each full one-tenth of a percentage the Food Distribution Program on In- point by which the payment error rate dian Reservations shall be as specified is less than six percent. in § 283.9. State agencies must submit a (2) Funding of demonstration budget to FNS as part of the State projects approved by FNS will be at a Plan each fiscal year. Upon approval of rate agreed to by FNS in accordance the budget by FNS, administrative with the requirements outlined in part funds will be provided. 282.

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(3) The reimbursement of administration shall not be reduced based upon tive costs to State agencies admin- the agency’s payment error rate. istering the program on Indian reserva- (8) Employment and training pro- tions shall be in accordance with the gram grants, as outlined in § 273.7(d) requirements of parts 281 and 283. shall be 100 percent federally-funded. (4) For the period beginning October (c) Matching costs. State agency costs 1, 1980, a State agency’s federally fund- for Federal matching funds may con- ed share of Food Stamp Program ad- sist of: ministrative costs shall be increased to (1) Charges reported on a cash or ac- 65 percent when the State agency’s cu- crual basis by the State agency as mulative allotment error rate is less project costs. than five percent; provided that the (2) Project costs financed with cash State agency’s negative case error rate contributed or donated to the State is less than the national weighted agency by other non-Federal public mean negative case error rate for the 6- agencies and institutions. month period of enhanced funding. (3) Project costs represented by serv- This provision shall not apply to any ices and real or personal property do- period after the April through Sep- nated by other non-Federal public tember 1982 period. agencies and institutions. (5) For the period beginning October (d) All cash or in-kind contributions 1, 1980, a State agency’s federally fund- except as provided in paragraph (e) of ed share of Food Stamp Program ad- this section shall be allowable as part ministrative costs shall be increased to of the State agency’s share of program 60 percent when the State agency’s cu- costs when such contributions: mulative allotment error rate is less (1) Are verifiable; than eight percent; provided that the (2) Are not contributed for another State agency’s negative case error rate federally-assisted program, unless au- is less than the national weighted thorized by Federal legislation; mean negative case error rate for the 6- (3) Are necessary and reasonable for month period of enhanced funding. accomplishment of project objectives; This provision shall not apply to any (4) Are charges that would be allow- period after the April through Sep- able under this part; tember 1982 period. (5) Are not paid by the Federal Gov- (6) For the 6-month period beginning ernment under another assistance October 1, 1980, a State agency with a agreement unless authorized under the 25 percent or greater reduction in its other agreement and its subject laws cumulative allotment error rate from and regulations; and one 6-month period to the comparable (6) Are in the approved budget. period of the next fiscal year shall be (e) The value of services rendered by entitled to a 55 percent federally fund- volunteers or the value of goods con- ed share of Food Stamp Program ad- tributed by third parties, exclusive of ministrative costs; provided that, ef- the State and Federal agencies, are un- fective with the 6-month period begin- allowable for reimbursement purposes ning October 1, 1981, the State agency’s under the Food Stamp Program. The negative case error rate is less than the value of services rendered by volun- national weighted mean negative case teers shall be allowable only to meet error rate for the period of enhanced any matching administrative costs re- funding. This provision shall not apply quirements for the Food Distribution to any period after the April through Program on Indian Reservations. September 1982 period. (f) The expenses (e.g. travel, lodging, (7) Beginning October 1982, the feder- meals) of persons working with volun- ally funded share of administrative teer or nonprofit organizations which costs, as identified in paragraph (b) of receive training and assistance pursu- this section may be decreased based ant to § 272.4(d)(2) are not allowable. upon its payment error rate as de- (g) Investigations of authorized retail scribed in § 275.23. The rates of Federal or wholesale food concerns when per- funding for the activities identified in formed in coordination with the USDA paragraphs (b)(2) and (b)(3) of this sec- Office of Inspector General and FNS

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shall be funded at the 50 percent Fed- § 277.6 Standards for financial man- eral reimbursement rate. agement systems. [Amdt. 188, 45 FR 85702, Dec. 30, 1980] (a) General. This section prescribes standards for financial management EDITORIAL NOTE: For FEDERAL REGISTER ci- systems in administering program tations affecting § 277.4, see the List of CFR Sections Affected, which appears in the funds by the State agency and its sub- Finding Aids section of the printed volume agencies or contractors. and on GPO Access. (b) Responsibilities. Financial management systems for program funds in the § 277.5 Methods of payment State agency shall provide for: (a) This section sets forth FNS meth- (1) Accurate, current, and complete ods for authorizing funds for State disclosure of the financial results of agencies. program activities in accordance with Federal reporting requirements. (b) The ‘‘Letter of Credit’’ (LOC) (SF– 1193A) is the document by which an of- (2) Records which identify the source ficial of FNS authorizes a State agency and application of funds for FNS or State agency activities supporting the to draw funds from the United States administration of the Program. These Treasury. This shall be the preferred records shall show authorizations, obli- method of payment for State agencies gations, unobligated balances, assets, which receive at least $120,000 per year liabilities, outlays and income of the and meet the requirements prescribed State agency, its subagencies and in OMB Circular A–102, Attachment J. agents. (c) State agencies shall request pay- (3) Records which identify unallow- ment(s) by submitting Request for able costs and offsets resulting from Payment on Letter of Credit and Sta- FNS or other determinations as speci- tus of Funds Report (Treasury Form fied in § 277.16 and the disposition of SF–183) to the appropriate United these amounts. Accounting procedures States Treasury Regional Disbursing must be in effect to prevent a State Office with a copy to FNS. agency from claiming these costs under (d) State agencies not meeting the ongoing program administrative cost requirements for the LOC method of reports. payment or failing to meet LOC report- (4) Effective control and accounting requirements, including those re- ability by the State agency for all pro- quiring adjustments to cash balances gram funds, property, and other assets to liquidate amounts owed to FNS, acquired with program funds. State shall be provided funds by Treasury agencies shall adequately safeguard all check in accordance with the provi- such assets and shall assure that they sions of Department of the Treasury are used solely for program authorized Circular 1075. purposes unless disposition has been (e) Payments for proper charges in- made in accordance with § 277.13. curred by State agencies will not be (5) Controls which minimize the time withheld unless such payments are sus- between the receipt of Federal funds pended or disallowed pursuant to from the United States Treasury and § 277.16. When a payment is withheld, their disbursement for program costs. payment adjustments will be made in In the Letter of Credit system, the accordance with § 277.16. When FNS col- State agency shall make drawdowns lects an indebtedness, whether due to a from the U.S. Treasury through a U.S. disallowance or an offset for amounts Treasury Regional Disbursing Office as which the State agency has been billed nearly as possible to the time of mak- but which it has failed to pay without ing the disbursements. cause acceptable to FNS, FNS shall (6) Procedures to determine the rea- provide reasonable notice to the State sonableness, allowability, and agency, and shall require appropriate allocability of costs in accordance with accounting adjustment to cash bal- the applicable provisions prescribed in ances for which the State agency is ac- appendix A to this part. countable to the Federal government (7) Support and source documents for to liquidate the indebtedness. costs.

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(8) An audit trail including identi- § 277.9 Administrative costs principles. fication of time periods, initial and (a) This section prescribes specific summary accounts, cost determination policies and procedures governing and allocation procedures, cost centers State agencies for funding under this or other accounting procedures to sup- part. port any costs claimed for program ad- (b) The incremental cost of certifying ministration. TANF households for Food Stamp Pro- (9) Periodic audits by qualified indi- gram benefits are allowable costs for viduals who are independent of those FNS reimbursement. who maintain Federal program funds (c) When costs for administering the as prescribed in § 277.17. program are claimed for reimburse- (10) Methods to resolve audit findings ment, the audit trail must identify the and recommendations and to follow up specific activities, locations, or time on corrective or preventive actions. periods as defined in this section. (c) The standards in § 277.6(b) apply to (1) Direct cost. Allowable direct costs subagencies or contractors involved may be charged to the Food Stamp with program funding. Program at the 50 percent or higher funding level as specified in this part. § 277.7 Cash depositories. (2) Indirect cost. Allowable indirect costs may also be claimed at the 50 per- (a) The term ‘‘cash depositories’’ recent or higher reimbursement funding fers to banks or other institutions level as specified in this part and ap- which maintain accounts where Food pendix A. Stamp Program funds are deposited (3) Direct and indirect costs claimed and from which withdrawals are made for program cost reimbursement must to meet administrative costs of the be incurred for the time periods, the State agency. activities or for the locations for which (b) State agencies are encouraged to the rates are approved by FNS. use minority owned banks to expand (d) All State agency Cost Allocation opportunities for minority enterprises. Plans for determining the costs of ad- (c) FNS shall not: ministering the program must be ap- (1) Require physical segregation in a proved by the cognizant Federal agen- cash depository of program funds from cy. All Cost Allocation Plans involving other State agency funds. program funds shall be submitted to (2) Establish any eligibility require- FNS for review. ments for cash depositories in which [Amdt. 188, 45 FR 85702, Dec. 30, 1980, as program funds are deposited by the amended by Amdt. 385, 65 FR 33440, May 24, State agency. 2000]

§ 277.8 Bonding and insurance. § 277.10 Program income. (a) General. In administering FNS (a) Program income is gross income program funds, State agencies shall ob- resulting from activities financed with program funds. Such earnings exclude serve their regular requirements and interest income but include income practices with respect to bonding and from service fees, usage or rental fees, insurance. FNS will not impose addi- sale of assets purchased with program tional bonding and insurance require- funds, and royalties on patents and ments, including fidelity bonding, copyrights. above those normally required by the (b) Interest earned on advances of State agency. program administrative funds shall be (b) Loan guarantees. FNS makes no remitted to FNS except for interest guarantee of any loan or payment of earned on advances to States or instru- money borrowed by a State agency for mentalities of a State as provided by administering the program. State the Intergovernmental Cooperation agencies shall not make any assur- Act of 1968 (Pub. L. 90–577) and ad- ances to any lender or contractor that vances to tribal organizations under FNS will furnish funds for loan pay- the Indian Self-Determination Act ments. (sections 102 through 104).

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(c) Income resulting from the sale of (2) Frequency. The report (Form SF– real and personal property whose ac- 269) shall be required quarterly. quisition cost was borne in whole or in (3) Exceptions. Those State agencies part with Program funds shall be re- that receive payments under the U.S. mitted to FNS or applied to the Fed- Treasury check system shall submit to eral share of current program costs in FNS a Quarterly Report of Federal accordance with § 277.13. All other sales Cash Transactions (Form SF–272). proceeds will be handled in accordance (4) Due dates. Quarterly reports shall with § 277.13. be due April 30 (for the period January (d) Unless there is a prior agreement through March), July 30 (April through between FNS and the State agency, the June), October 30 (July through Sep- State agency shall have no obligation tember), January 30 (October through to FNS with respect to royalties re- December). Final reports are due De- ceived from copyrights or patents pro- cember 30 for all completed Federal fis- duced as a result of activities financed cal years (October 1 through September with program administrative funds. 30) or 90 days after termination of Fed- (e) Any other income earned under eral financial support. Requests from activities supported by program admin- State agencies for extension of report- istrative funds may be retained by the ing due dates may be approved, if nec- State agency if they are deducted from essary. the gross program administrative costs (d) Time limit for State agencies to file for the purposes of determining net claims. (1) After the deadline in para- costs and FNS’s share of net cost. graph (c)(4) of this section for the final (f) State agencies shall record the re- SF–269 report, State agencies shall use ceipt and expenditure of revenues such the form specified by FNS as needed as taxes, special assessments, levies, within three years of the end of the fines, etc., as a part of program fund Federal fiscal year to amend a prior ex- transactions when such revenues are penditure report pertaining to such specifically earmarked for program Federal fiscal year. The three-year refund projects. porting deadline may be extended by FNS if litigation, an audit, or a claim § 277.11 Financial reporting require- is unresolved at the end of the three- ments. year period. The reporting form shall (a) General. This section prescribes be used to amend prior expenditure re- requirements for the State agencies to ports, and to request reimbursement report financial information to FNS. for any additional funding due, or to (b) Authorized forms and instructions. pay back to FNS any inadvertent prior (1) Only forms specified by this part, or overclaim. Requests for reimbursement other forms authorized by FNS, may be will only be honored if the claim is used for obtaining financial informa- filed within the timeframe in para- tion from State agencies for the pro- graph (d)(2) of this section. FNS re- gram. serves the right to bill State agencies (2) All instructions for use in connec- for amounts due FNS resulting from an tion with the form specified in overclaim, even if no reporting form § 277.11(c) shall be followed. FNS may has been submitted. prescribe supplementary instructions. (2) Subject to the availability of (3) State agencies shall submit the funds from the appropriation for the original and two copies of forms re- year in which the expenditure was in- quired by this section unless FNS ap- curred, FNS may reimburse State proves a waiver of this requirement. agencies for an allowable expenditure (4) The forms and instructions in this only if the State agency files a claim part shall be available to the State with FNS for that expenditure within agency and to the public upon request two years after the calendar quarter in to FNS Regional Offices as set out in which the State agency (or local agen- § 271.6(b). cy) incurred the cost. FNS will con- (c) Financial status report—(1) Form. sider non-cash expenditures such as de- State agencies shall use the standard preciation to have been made in the Financial Status Report (Form SF–269) quarter the expenditure was recorded to report program costs. in the accounting records of the State

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agency in accordance with generally to circumstances beyond the State accepted accounting principles. agency’s control such as Acts of God or (3) For Automated Data Processing documented action or inaction of the (ADP) expenditures approved under Federal Government. It does not in- § 277.18(c), subject to the availability of clude neglect or administrative inad- funds and required FNS approval re- equacy on the part of the State, State lated to the Advance Planning Docu- agency, legislature, or any of their of- ment, FNS may reimburse State agen- fices or employees. cies for allowable expenditures at the appropriate rate in effect at the time [Amdt. 188, 45 FR 85702, Dec. 30, 1980, as amended by Amdt. 385, 65 FR 33440, May 24, the equipment or service was received 2000] only if the State agency files for a claim with FNS within two years after § 277.12 Retention and custody of the calendar quarter in which the cost records. was incurred. FNS will consider non- cash expenditures such as depreciation (a) Retention period. All financial to have been made in the quarter the records, supporting documents, statis- expenditure was recorded in the ac- tical records, negotiated contracts, and counting records of the State agency in all other records pertinent to program accordance with generally accepted ac- funds shall be maintained for three counting principles. years from the date of submission of (4) States wishing to request an ex- the annual financial status report of tension of the deadline in paragraphs the relevant fiscal year to which they (d)(2) and (d)(3) of this section must apply except that: submit the request in writing to FNS (1) If any litigation, claim, or audit is prior to the applicable deadline. The started before the expiration of the State agency’s request for an extension three-year period, the applicable must include a specific explanation, records shall be retained until these justification, and documentation of have been resolved. why the claim will be late and when (2) In the case of a payment by a the claim will be filed. State agency to a subagency or con- (5) The time limits in paragraphs tractor using program funds, the State (d)(2) and (d)(3) of this section will not agency, USDA, the Comptroller Gen- apply to any of the following: eral of the United States, or any of (i) Any claim for an adjustment to their duly authorized representatives, prior year costs previously claimed shall have access to any book, docu- under an interim rate concept; ments, papers and records of the sub- (ii) Any claim arising from an audit agency or contractor which the State exception as defined in this section. An agency, USDA, or the Comptroller Gen- audit exception means a proposed ad- eral of the United States or any of justment by the Department to any ex- their duly authorized representatives, penditure claimed by a State agency by determine are pertinent to administra- virtue of a Federal-or State-initiated tion of the specific FNS program funds, audit. The audit must comply with the for the purpose of making audit, exam- requirements of § 277.17 and 7 CFR part ination, excerpts, and transcripts. 3015, and must have been started within (b) Restrictions on public access. Unless 3 years of the date of submission of the required by laws, FNS will not place final SF–269 of the relevant Federal fis- restrictions on State agencies which cal year to which it applies. limit public access to their records or (iii) Any claim resulting from a the records of their subagencies or con- court-ordered retroactive payment. tractors that are pertinent to the ad- However, this provision does not bind ministrative funding provided by FNS FNS to a State or Federal court deci- except when the State agency can dem- sion when FNS was not a party to the onstrate that such records must be action; kept confidential and would have been (iv) Any claim for which FNS deter- excepted from disclosure pursuant to mines there was good cause for the the Freedom of Information Act (5 State agency’s not filing it within the U.S.C. 552) if the records had belonged time limit. Good cause is lateness due to FNS.

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§ 277.13 Property. amount of compensation shall be com- (a) General. This section prescribes puted by applying the percentage of policies and procedures governing title, FNS participation in the cost of the use, disposition of real and personal property to the current fair market property for which acquisition costs value of the property. were borne, in whole or in part, as a di- (3) Disposition. If the State agency rect charge to FNS funds, and owner- has no need for the property, disposi- ship rights or intangible personal prop- tion of the property shall be made as erty developed, in whole or in part, follows: with FNS funds. State agencies may (i) If the property had a total acquisi- follow their own property management tion cost of less than $1,000 per unit, policies and procedures provided they the State agency may sell the property observe the requirements of this sec- and retain the proceeds. tion. With respect to property covered (ii) If the property had an acquisition by this section, FNS may not impose cost of $1,000 or more per unit, the on State agencies any requirement (in- State agency shall: cluding property reporting require- (A) If instructed to ship the property ments) not authorized by this section elsewhere, the State agency shall be re- unless specifically required by Federal imbursed with an amount which is laws. computed by applying the percentage (b) Nonexpendable personal property— of the State agency’s participation in (1) Title. Title to nonexpendable per- the cost of the property to the current sonal property whose acquisition cost fair market value of the property, plus is borne, in whole or in part, by FNS any shipping or interim storage costs shall vest in the State agency upon ac- incurred. quisition, and shall be subject to the (B) If instructed to otherwise dispose restrictions on use and dispositions set of the property, the State agency shall forth in this section. be reimbursed by FNS for the cost in- (2) Use. (i) The State agency shall use curred in such disposition. the property in the program as long as there is a need for such property to ac- (C) If disposition or other instruc- complish the purpose of the program. tions are not issued by FNS within 120 (ii) When there is no longer a need for days of a request from the State agen- the property to accomplish the purpose cy, the State agency shall sell the of the program, the State agency shall property and reimburse FNS an use the property where needed in ad- amount which is computed by applying ministration of other programs in the the percentage of FNS participation in following order of priority: the cost of the property to the sales (A) Other federally-funded programs proceeds. The State agency may, how- of FNS. ever, deduct and retain from FNS’s (B) Other federally-funded programs share $100 or 10 percent of the proceeds, of USDA. whichever is greater, for the State (C) Other federally-funded programs. agency selling and handling expenses. (iii) When the State agency no longer (c) Transfer of title to certain property. has need for such property in any of its (1) Where FNS determines that an item federally financed activities, the prop- of nonexpendable personal property erty may be used for the State agen- with an acquisition cost of $1,000 or cy’s own official activities in accord- more which is to be wholly borne by ance with the following standards: FNS is unique, difficult, or costly to (A) If the property had a total acqui- replace, FNS may reserve the right to sition cost of less than $1,000, the State require the State agency to transfer agency may use the property without title of the property to the Federal reimbursement to FNS. Government or to a third party named (B) For all such property not covered by FNS. under paragraph (b)(2)(iii)(A) of this (2) Such reservation shall be subject section, the State agency may retain to the following: the property for its own use, provided a (i) The right to require transfer of fair compensation is made to FNS for title may be reserved only by means of the FNS share of the property. The an expressed special condition under

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which funds were authorized for acqui- pute the percentage, if and when the sition of the property, or, if approval property is disposed of. for the acquisition of the property is (vi) Location, use and condition of given after the funds are awarded, by the property. means of a written stipulation at the (vii) Ultimate disposition data in- time such approval is given. cluding sales price or the method used (ii) The property must be sufficiently to determine current fair market value described to enable the State agency to if the State agency reimburses FNS for determine exactly what property is in- its share. volved. (viii) Trade-in value of any property (3) FNS may not exercise the right to purchased with Federal funds where reserve until the State agency no their trade-in value reduces the acqui- longer needs the property in the activ- sition cost of new property. ity for which it was acquired. Such (2) A physical inventory of property need shall be assumed to end with ter- shall be taken and the results rec- mination of the activity in which the onciled with the property records at property was used unless the State least once every two years to verify the agency continues to use the property existence, current utilization, and con- in other program-related activities tinued need for the property. after the termination date and dem- (3) A control system shall be in effect onstrates to FNS a continued need for to ensure adequate safeguards to pre- such use in the program. vent loss, damage, or theft to the prop- (4) To exercise the right, FNS must erty. Any loss, damage, or theft of non- issue disposition instructions to the expendable personal property shall be State agency not later than 120 days investigated and properly documented. after the State agency no longer needs (4) Adequate maintenance procedures the property in the activity for which shall be implemented to keep the prop- it was acquired. If instructions are not erty in good condition. issued within that time, FNS’s right (5) Proper sales procedures shall be shall lapse, and the State agency shall implemented to keep the property in act in accordance with the applicable good condition. standards in paragraphs (b)(2) and (b)(3) (e) Expendable personal property—(1) of this section. Title. Title to expendable personal (5) The State agency shall be entitled property, whose acquisition cost was to reimbursement with an amount borne in whole or in part by FNS, shall which is computed by applying the per- vest in the State agency. centages of the State agency’s partici- (2) Use. The State agency shall use pation in the acquisition cost of the the property in the program as long as property to the current fair market there is a need for such property to ac- value of the property, and for any rea- complish the purpose of the program. sonable shipping and interim storage (3) Disposition. When there is no costs it incurs pursuant to FNS’s dis- longer a need for the property in the position instructions. program and there is a residual inven- (d) Property management standards. tory exceeding $1,000 the State agency State agencies’ property management shall: standards for nonexpendable personal (i) Use the property in other federally property covered by this section shall sponsored projects or programs; include the following procedural re- (ii) Retain the property for use on quirements: non-federally sponsored activities; or, (1) Property records shall be main- (iii) Sell it. tained accurately and provide for: (4) Compensation. FNS must be com- (i) A description of the property. pensated for its share if the alternative (ii) Manufacturer’s serial number or in paragraph (e)(3)(i) of this section is other identification number. not followed. The amount of compensa- (iii) Acquisition date and cost. tion shall be computed in the same (iv) Source of the property. manner as for nonexpendable personal (v) Percentage of FNS funds used in property. the acquisition of the property, or suf- (f) Patents and inventions. If any proficient information to be able to com- gram activity produced patents, patent

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rights, processes or inventions in the limited to sources evaluations, pro- course of work aided by FNS, such fact tests, disputes and claims. FNS shall shall be promptly and fully reported to not substitute its judgment for that of FNS. Unless there is prior agreement the State agency unless the matter is between the State agency and FNS on primarily a Federal concern. Viola- disposition of such items, FNS shall de- tions of laws shall be referred to the termine whether protection on such in- local, State or Federal authority hav- vention or discovery shall be sought ing jurisdiction. and how the rights in the invention or (2) State agencies shall use their own discovery—including rights under any procurement procedures provided that patent issued thereon—shall be dis- procurements paid in whole or in part posed of and administered in order to with FNS program funds meet the protect the public interest consistent standards set forth in this part. with ‘‘Government Patent Policy’’ (b) Review of proposed contracts. State (President’s Memorandum for Heads of agencies shall submit proposed con- Excecutive Departments and Agencies, tracts and related procurement docu- August 23, 1971), and State of Govern- ments to FNS for preaward review and ment Patent Policy as printed in title approval when: 37 CFR, chapters I and II. (1) The procurement is expected to (g) Copyrights. When a program activ- exceed $10,000 and is to be awarded ity results in a book or other copy- without competition or only one bid or rightable materials, the author or offer is received in response to solicita- State agency is free to copyright the tion; work, but FNS reserves a royalty-free, (2) The procurement expected to ex- nonexclusive and irrevocable right to ceed $10,000 specifies a ‘‘brand name’’ reproduce, publish or otherwise use and product; or to authorize others to use the work for government purposes. This includes (3) FNS has determined that the copyrights on ADP software as speci- State agency’s procurement procedures fied in appendix A. or operation fails to comply with one or more significant aspects of this sec- § 277.14 Procurement standards. tion. (a) General. This section establishes (c) Code of conduct. The State agency standards and guidelines for the pro- shall maintain a written code or stand- curement of supplies, equipment, con- ards of conduct which shall govern the struction and other services whose cost performance of its officers, employees, is borne in whole or in part by FNS or agents engaged in the award and ad- program funds. These standards ensure ministration of contracts borne in that such materials are obtained in an whole or in part with FNS program effective and economical manner and funds. No employee, officer, or agent of in compliance with the provisions of the State agency shall participate in applicable Federal law and Executive the selection, or in the award or ad- orders. No additional procurement ministration of a contract supported in standards will be imposed by FNS upon whole or in part by FNS program funds State agencies unless specifically re- if a conflict of interest, real or appar- quired by Federal law, or Executive or- ent, would be involved. Such conflict ders, or authorized by the Adminis- would arise when: trator for Federal Procurement Policy, (1) The employee, officer, or agent; Office of Management and Budget. (2) Any member of his/her immediate (1) These standards do not relieve the family; State agency of any contractual re- (3) His or her partner; or sponsibilities under its contracts. The (4) An organization which employs, State agency is responsible, in accord- or is about to employ, any of the ance with good administrative practice above, has a financial or other interest and sound business judgment, for the in the firm selected for award. The settlement of all contractual and ad- State agency’s officers, employees, or ministrative issues arising out of pro- agents shall neither solicit nor accept curements entered into in support of gratuities, favors, or anything of mone- the program. These include but are not tary value from contractors, potential

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contractors, or parties to subagree- (v) Using the services and assistance ments. State agencies may set min- of the Small Business Administration, imum rules where the financial inter- the Office of Minority Business Enter- est is not substantial or the gift is an prise of the Department of Commerce unsolicited item of nominal intrinsic and the Community Services Adminis- value. To the extent permitted by tration, as appropriate. State or local law or regulations, such (vi) If any subcontracts are to be let, standards of conduct shall provide for requiring the prime contractor to take penalties, sanctions, or other discipli- the affirmative steps in paragraphs nary actions for violations of such (e)(1) (i) through (v) of this section. standards by the State agency’s offi- (2) State agencies shall take similar cers, employees, or agents, or by con- appropriate affirmative action in sup- tractors or their agents. port of women’s business enterprises. (d) Procurement procedures. The State (3) State agencies are encouraged to agency shall establish procurement procure goods and services from labor procedures which provide that proposed surplus areas, as defined by the Depart- procurement actions shall be reviewed ment of Labor. by State agency officials to avoid the (4) FNS shall impose no additional purchase of unnecessary or duplicative regulations or requirements in the items. Consideration should be given to foregoing areas unless specifically consolidation or dividing the purchase mandated by law or Executive order. into smaller units, to obtain a more economical purchase. Where appropriate, (f) Selection procedures. All State an analysis shall be made of lease agency procurement transactions shall versus purchase alternatives, and any be conducted in a manner that provides other appropriate analyses, to deter- maximum open and free competition mine which approach would be the with this section. Procurement proce- most economical. To foster greater dures shall not contain features which economy and efficiency, State agencies restrict or eliminate competition. The are encouraged to enter into State and State agency shall have written selec- local intergovernmental agreements tion procedures which shall provide, as for procurement or use of common a minimum, the following procedural goods and services. requirements: (e) Contracting with small and minority (1) Solicitation of offers, whether by firms, women’s business enterprises and competitive sealed bid or competitive labor surplus area firms. (1) It is FNS negotiation, shall contain a clear and policy to award a fair share of con- accurate description of the technical tracts to small and minority business requirements for the material, product, firms. State agencies must take affirm- or service desired. Descriptions shall ative steps to assure that small and not, in competitive procurements, con- minority businesses are utilized when tain features which unduly restrict possible as sources of supplies, equip- competition. Descriptions may include ment, construction and services. State a statement of the qualitative nature agency affirmative steps shall include of the material, product or service de- the following: sired and, when necessary, shall set (i) Including qualified small and mi- forth those minimum essential charac- nority businesses on solicitation lists. teristics and standards to which it (ii) Assuring that small and minority must conform if it is to satisfy its in- businesses are solicited whenever they tended use. When it is impractical or are potential sources. uneconomical to describe clearly and (iii) When economically feasible, di- accurately the technical requirements, viding total requirements into smaller a ‘‘brand name or equal’’ description tasks or quantities so as to permit may be used to define the performance maximum small and minority business or requirements of the material, prod- participation. uct or service desired. The specific fea- (iv) Where the requirement permits, tures of the named brand which must establishing delivery schedules which be met by offerors shall be clearly stat- will encourage participation by small ed. State agencies shall clearly set and minority business. forth all requirements which offerors

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must fulfill and all other factors to be of known suppliers. In addition, the in- used in evaluating bids or proposals. vitation shall be publicly advertised. (2) State agencies shall make awards (B) The invitation for bids, including only to responsible contractors that specifications and pertinent attach- possess the potential ability to perform ments, shall clearly define the items or successfully under the terms and condi- services needed in order for the bidders tions of a proposed procurement. Con- to properly respond to the invitation. sideration shall be given to such mat- (C) All bids shall be opened publicly ters as contractor integrity, compli- at the time and place stated in the in- ance with public policy, record of past vitation for bids. performance, and financial and tech- (D) A firm-fixed-price contract award nical resources. shall be made by written notice by the (g) Procurement methods. State agency State agency to that responsible bidder procurements made in whole or in part whose bid, conforming to the invita- with program funds shall be by one of tion for bids, is lowest. Where specified the following methods: in the bidding documents, factors such (1) Small purchase procedures are those as discounts, transportation costs and relatively simple and informal procure- life cycle costs shall be considered in ment methods that are sound and ap- determining which bid is lowest. Pay- propriate for a procurement of services, ment discounts may only be used to de- supplies, or other property, costing in termine low bid when prior experience the aggregate not more than $10,000. of the State agency indicates that such State agencies shall comply with State discounts are generally taken. or local small purchase dollar limits (E) Any or all bids may be rejected under $10,000. If small purchase proce- by the State agency when there are dures are used for a procurement under sound documented business reasons in the program, price or rate quotations the best interest of the program. shall be obtained from an adequate (3) In competitive negotiation, pro- number of qualified sources. posals are requested from a number of sources and the Request for Proposal is (2) In competitive sealed bids (formal publicized, negotiations are normally advertising), sealed bids are publicly conducted with more than one of the solicited and a firm-fixed-price con- sources submitting offers, and either a tract (lump sum or unit price) is fixed-price or cost-reimbursable type awarded to the responsible bidder contract is awarded, as appropriate. whose bid, conforming with all the ma- Competitive negotiation may be used if terial terms and conditions of the invi- conditions are appropriate for the use tation for bids, is lowest in price. of formal advertising. If competitive (i) In order for the State agency to negotiation is used for procurement use this method of procurement the under a grant, the following require- following conditions, as a minimum, ments shall apply: must prevail: (i) Proposals shall be solicited from (A) A complete, adequate, and real- an adequate number of qualified istic specification or purchase descrip- sources to permit reasonable competition is available. tion consistent with the nature and re- (B) Two or more responsible suppliers quirements of the procurement. The are willing and able to compete effec- Request for Proposals shall be pub- tively for the State agency’s business. licized and reasonable requests by (C) The procurement lends itself to a other sources to compete shall be hon- firm-fixed-price contract, and selection ored to the maximum extent prac- of the successful bidder can appro- ticable. priately be made principally on the (ii) The Request for Proposal shall basis of price. identify all significant evaluation fac- (ii) If formal advertising is used for a tors, including price or cost where re- procurement under a grant, the fol- quired and their relative importance. lowing requirements shall apply: (iii) The State agency shall provide (A) A sufficient time prior to the procedures for technical evaluation of date set for opening of bids, bids shall the proposals received, determinations be solicited from an adequate number of responsible offerors for the purpose

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of written or oral discussions, and se- shall include, but are not necessarily lection for contract award. limited to, information pertinent to (iv) Award may be made to the re- the rationale for the method of pro- sponsible offeror whose proposal will be curement, the selection of contract most advantageous to the State agen- type, the contract selection or rejec- cy, price and other factors considered. tion, and the basis for the cost or price. Unsuccessful offerors should be noti- (j) Contract provisions. In addition to fied promptly. provisions defining a sound and com- (v) State agencies may utilize complete procurement contract, State petitive negotiation procedures for pro- agencies shall include the following curement of architectural/engineering contract provisions or conditions in all professional services whereby competi- procurement contracts and sub- tors’ qualifications are evaluated and contracts as required by this provision, the most qualified competitor is se- Federal law, or FNS: lected subject to negotiation of fair (1) Contracts other than small pur- and reasonable compensation. chases shall contain provisions or con- (4) Noncompetitive negotiation is pro- ditions which will allow for adminis- curement through solicitation of a pro- trative, contractual, or legal remedies posal from only one source, or after so- in instances where contractors violate licitation of a number of sources, com- or breach contract terms, and provide petition is determined inadequate. for such sanctions and penalties as Noncompetitive negotiation may be may be appropriate. used when the award of a contract is (2) All contracts in excess of $10,000 infeasible under small purchase, com- shall contain suitable provisions for petitive bidding (formal advertising) or termination by the State agency in- competitive negotiation procedures. cluding the manner by which it will be Awards of contracts by noncompetitive effected and the basis for settlement. negotiation are limited to the fol- In addition, such contracts shall de- lowing: scribe conditions under which the con- (i) The item is available only from a single source; tract may be terminated for default as (ii) Public exigency or emergency well as conditions where the contract when the urgency for the requirement may be terminated because of cir- will not permit a delay incident to cumstances beyond the control of the competitive procurement; contractor. (iii) FNS authorizes noncompetitive (3) All contracts awarded in excess of procurement; or $10,000 by State agencies and their con- (iv) After solicitation of a number of tractors or subagencies shall contain a sources, competition is determined in- provision requiring compliance with adequate. Executive Order 11246, entitled ‘‘Equal (h) Contract pricing. The cost plus a Employment Opportunity,’’ as amend- percentage of cost and percentage of ed by Executive Order 11375, and as construction cost method(s) of con- supplemented in Department of Labor tracting may not be used by a State regulations (29 CFR part 60). agency. State agencies shall perform (4) All contracts and subcontracts for some form of cost or price analysis in construction or repair shall include a connection with every procurement ac- provision for compliance with the tion including contract modifications. Copeland ‘‘Anti-Kickback’’ Act (18 Costs or prices based on estimated U.S.C. 874) as supplemented in Depart- costs for contracts, paid in whole or in ment of Labor regulations (29 CFR part part by FNS program funds, shall be al- 3). This Act provides that each con- lowed only to the extent that costs in- tractor or subagency shall be prohib- curred or cost estimates included in ne- ited from inducing, by any means, any gotiated prices are consistent with person employed in the construction, Federal cost principles. completion, or repair of public work, to (i) State agency procurement records. give up any part of the compensation State agencies shall maintain records to which he is otherwise entitled. The sufficient to detail the significant his- State agency shall report all suspected tory of a procurement. These records or reported violations to FNS.

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(5) Where applicable, all contracts documents, papers, and records of the awarded by State agencies and subcontractor which are directly pertinent agencies in excess of $2,000 for con- to that specific contract, for the pur- struction contracts in excess of $2,500 pose of making audit, examination, ex- for other contracts which involve the cerpts, and transcriptions. State agen- employment of mechanics or laborers cies shall require contracts to main- shall include a provision for compli- tain all required records for three years ance with sections 103 and 107 of the after the State agency makes final Contract Work Hours and Safety payments or all other pending matters Standards Act (40 U.S.C. 327 through are closed, whichever is last. 330) as supplemented by Department of (8) Contracts, subcontracts, and sub- Labor regulations (29 CFR part 5). grants of amounts in excess of $100,000 Under section 103 of the Act, each con- shall contain a provision which re- tractor shall be required to compute quires compliance with all applicable the wages of every mechanic and la- standards, orders, or requirements borer on the basis of a standard work issued under section 306 of the Clean day of 8 hours and a standard work Air Act, section 508 of the Clean Water week of 40 hours. Work in excess of the Act, Executive Order 11738, and Envi- standard work day or work week is per- ronmental Protection Agency (EPA) missible provided that the work is regulations, which prohibit the use compensated at a rate of not less than under nonexempt Federal contract, 11⁄2 times the basic rate for all hours grants, or loans of facilities included worked in excess of 8 hours in any cal- on the EPA List of Violating Facili- endar day or 40 hours in the work ties. The provision shall require report- week. Section 107 of the Act is applica- ing of violations to the FNS and to the ble to construction work and provides USEPA Assistant Administrator for that no laborer or mechanic shall be Enforcement. required to work in surroundings or under working conditions which are (9) Contracts shall recognize manda- unsanitary, hazardous, or dangerous to tory standards and policies relating to his health and safety as determined energy efficiency which are contained under construction, safety, and health in the State energy conservation plan standards promulated by the Secretary issued in compliance with the Energy of Labor. These requirements do not Policy and Conservation Act (Pub. L. apply to the purchases of supplies or 94–165). materials or articles ordinarily avail- (k) Contract administration. State able on the open market, or contracts agencies shall maintain a contract ad- for transportation or transmission of ministration system insuring that con- intelligence. tractors perform in accordance with (6) The contract shall include notice the terms, conditions, and specifica- of FNS requirements and regulations tions of their contracts or purchase or- pertaining to reporting and print ders. rights under any contract involving research, developmental, experimental, § 277.15 [Reserved] or demonstration work with respect to any discovery or invention which § 277.16 Suspension, disallowance and program closeout. arises or is developed in the course of or under such contract, and of FNS re- (a) Suspension. When a State agency quirements and regulations pertaining has materially failed to comply with to copyrights and rights to data so de- any of the provisions contained in the rived. Act, regulations, or FNS-approved (7) All negotiated contracts (except State Plan of Operation, FNS may, those awarded by small purchases pro- after written notification to the State cedures) awarded by State agencies agency, temporarily withhold some or shall include a provision to the effect all Federal reimbursements for costs of that the State agency, FNS, the Comp- administration of the Food Stamp Pro- troller General of the United States, or gram in accordance with § 276.4. Adjust- any of their duly authorized represent- ments will be made either by adjusting atives, shall have access to any books, the Letter of Credit authorization or

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by not allowing the State agency to (iii) The State agency shall submit to withdraw funds. FNS within 90 days after the date of (b) Disallowance. (1) FNS may dis- termination of the program, all re- allow costs in accordance with part 276 quired financial, performance, and and effect nonpayment for some or all other reports. FNS may grant exten- costs incurred by a State agency which sions when requested by the State are normally allowable but are deter- agency. mined by FNS to be nonreimbursable (iv) FNS shall adjust the amount au- because the State agency has failed to thorized by the Letter of Credit in comply with any of the provisions con- order to effect payment of any tained in the Act, regulations, or FNS- amounts due the State agency, and if approved State Plan of Operation. appropriate, shall bill the State agency (2) FNS may also disallow costs and for any amounts due to FNS. The institute recovery of Federal funds amounts of such billings shall be when a State agency fails to adhere to promptly remitted to FNS. the cost principles of this part and ap- (v) In the event a final audit has not pendix A. been performed prior to the closeout of the program, FNS shall retain the (c) Offsets to the Letter of Credit. (1) right to disallow costs or recover funds FNS may recover funds when owed by resulting from the final audit findings. the State agency to FNS through off- (2) Provisions of § 277.13 apply for any sets to the Letter of Credit. Offsets property acquired with program funds shall include: or received from the Federal Govern- (i) Costs determined by FNS to be ment in connection with the program disallowed under the provisions of this and which was in use in the affected part; project area or areas. (ii) Unallowable costs resulting from audit or investigation findings; [Amdt. 188, 45 FR 85702, Dec. 30, 1980, as amended by Amdt. 342, 59 FR 2733, Jan. 19, (iii) Amounts owed which have been 1994] billed to the State agency and which the State agency has failed to pay § 277.17 Audit requirements. without cause acceptable to FNS; or (a) General. This section sets forth (iv) Amounts owed to FNS for title the audit requirements for State agen- IV reimbursements and recipient cies that receive FNS program funds. claims collections which were reported Audits shall be conducted on an organi- on the FNS–209 and which the State zation-wide basis. Such audits are to agency has failed to pay. determine whether: (2) The amounts recovered through (1) Financial operations are con- the offset procedure should be in one ducted properly; lump sum. If recovery of funds through (2) The financial statements are pre- the offset procedure is not possible in sented fairly; one lump sum, FNS shall make appro- (3) The organization has complied priate adjustments to recover the funds with laws and regulations affecting the in not more than three fiscal years. expenditure of Federal funds; (d) Program transfer or termination. (1) (4) Internal procedures have been es- When termination or transfer of a tablished to meet the objectives of fed- State program has been agreed upon by erally assisted programs; and FNS, the following closeout procedure (5) Financial reports to the Federal shall be observed: Government contain accurate and reli- (i) Upon request, FNS shall make or able information. arrange for prompt payment to the Except where required by law, no addi- State agency for allowable costs not tional requirements for audit will be covered by previous payments. imposed by FNS unless approved by the (ii) The State agency shall imme- Office of Management and Budget diately refund to FNS any unobligated (OMB). The provisions of this section balance of cash withdrawn by the State do not limit the authority of FNS to agency for the administration of the make audits of State agencies, their program in the affected State or Indian subdivisions, and subcontracts. How- reservation. ever, if independent audits arranged for

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by State agencies meet the require- (d) Audit coverage. A representative ments prescribed herein, FNS shall number of charges to Federal funds rely on them, and any additional audit shall be tested. The test shall be rep- work already done. resentative of: (b) Audit standards. (1) State agencies (1) The universe of Federal funds re- shall use their own procedures to ar- ceived, and range for independent audits, and to (2) All cost categories that materi- prescribe the scope of audits, provided ally affect the award. The test is to de- that the audits comply with the re- termine whether the charges: quirements set forth in this section. (i) Are necessary and reasonable for Where contracts are awarded for audit the proper administration of the pro- services, the contracts shall include a gram; reference to OMB Circular A–102, At- (ii) Conform to any limitations or ex- tachment P. clusions in the award; (2) Audits shall be made in accord- (iii) Were given consistent account- ance with the General Accounting Of- ing treatments and applied uniformly fice ‘‘Standards for Audit of Govern- to both federally assisted and other ac- mental Organizations, Programs, Ac- tivities of the State agency; tivities, and Functions, the Guidelines (iv) Were net of applicable credits; for Financial and Compliance Audits of (v) Did not include costs property Federally Assisted Program,’’ and any chargeable to other federally assisted compliance supplements approved by programs; OMB, and generally accepted auditing (vi) Were properly recorded (i.e., cor- standards established by the American rect amount, date) and supported by Institute of Certified Public Account- source documentation; ants. (vii) Were approved in advance, if (c) Purpose of audit. Audits will in- subject to prior approval in accordance clude, at a minimum, an examination with Financial Management Circular of the systems of internal control, sys- 74–4; tems established to ensure compliance (viii) Were incurred in accordance with laws and regulations affecting the with competitive purchasing proce- expenditure of Federal funds, financial dures, if covered by OMB Circular A– transactions and accounts, and finan- 102, Attachment O; and cial statements and reports of State (ix) Were allocated equitably to bene- agencies. These examinations are to fiting activities, including non-Federal determine whether: activities. (1) There is effective control over and (3) Audits usually will be made annu- proper accounting for revenues expend- ally, but not less frequently than every itures, assets, and liabilities. two years. (2) The financial statements are pre- (4) If the auditors become aware of sented fairly in accordance with gen- irregularities in the State agency, sub- erally accepted accounting principles. agency or subcontractor, the auditor (3) The Federal financial reports (in- shall promptly notify the cognizant cluding Financial Status Reports, Cash agency and State agency management Reports, and claims for advances and officials above the level of involve- reimbursements) contain accurate and ment. Irregularities include such mat- reliable financial data; and are preters as conflict of interest, falsification sented in accordance with the terms of of records or reports, and misappro- applicable agreements, and in accord- priation of funds and other assets. ance with Attachment H of OMB Cir- (e) Audit report. The audit report cular A–102. shall include: (4) Federal funds are being expended (1) Financial statements, including in accordance with the terms of appli- footnotes, of the State agency, sub- cable agreements and those provisions agency, or subcontractor organization. of Federal law or regulations that (2) The auditor’s comments on the fi- could have a material effect on the financial statements which should: nancial statements or on the awards (i) Identify the statements examined tested. and the period covered.

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(ii) Identify the various programs audit agencies, a single quality assess- under which the organization received ment review will be arranged. Federal funds, and the amounts re- (2) Assure that all audit reports of ceived for each program. State agencies that affect federally as- (iii) State that the audit was done in sisted programs are received, reviewed, accordance with paragraph (d) of this and distributed to appropriate Federal section. audit officials. These officials will be (iv) Express an opinion as to whether responsible for distributing audit re- the financial statements are fairly pre- ports to their program officials. sented in accordance with generally ac- (3) Whenever significant inadequacies cepted accounting principles. If an un- in an audit are disclosed, the State qualified opinion cannot be expressed, state the nature of the qualification. agency will be advised and the auditor (3) The auditor’s comments on com- will be called upon to take corrective pliance and internal control which action. If corrective action is not should: taken, the cognizant agency shall no- (i) Include comments on weaknesses tify the State agency and Federal in and noncompliance with the systems awarding agencies of the facts and its of internal control, separately identi- recommendation. Major inadequacies fying material weaknesses. or repetitive substandard performance (ii) Identify the nature and impact of of independent auditors shall be re- any noted instances of noncompliance ferred to appropriate professional bod- with the terms of agreements and ies. those provisions of Federal law or regu- (4) Assure that satisfactory audit lation that could have a material effect coverage is provided in a timely man- on the financial statements and re- ner and in accordance with the provi- ports. sions of this section. (iii) Contain an expression of positive (5) Provide technical advice and act assurance with respect to compliance as a liaison between Federal agencies, with requirements for tested items, independent auditors and State agen- and negative assurance for untested cies. items. (6) Maintain a followup system on (4) Comments on the accuracy and completeness of financial reports and audit findings and investigative mat- claims for advances or reimbursements ters to assure that audit findings are to Federal agencies. resolved. (5) Comments on corrective action (7) Inform other affected audit agen- taken or planned by the State agency. cies of irregularities uncovered. The (f) Record retention. Work paper and audit agencies, in turn, shall inform all reports shall be retained for a min- appropriate officials in their agencies. imum of three years from the date of State or local government law enforce- the audit report unless the auditor is ment and prosecuting authorities shall notified in writing by the cognizant also be informed of irregularities with- agency of the need to extend the reten- in their jurisdiction. tion period. The audit workpapers shall (8) Recipients shall require subrecipi- be made available upon request to the ents that are local governments of In- cognizant agency or its designees and dian tribal governments to adopt the the General Accounting Office or its requirements in paragraphs (d) through designees. (f) of this section. The recipient shall (g) Cognizant agency responsibilities. ensure that the subrecipient audit re- The cognizant agency shall have the ports are received as required, and following responsibilities: shall submit the reports to the cog- (1) Obtain or make quality assess- nizant agency. The cognizant agency ment reviews of the work of non-Fed- eral audit organizations, and provide will have the responsibility for those the results to other interested audit reports described in paragraph (g) of agencies. If a non-Federal audit organi- this section. zation is responsible for audits of State agencies that have different cognizant

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§ 277.18 Establishment of an Auto- Automated Data Processing Equipment mated Data Processing (ADP) and or hardware means: Information Retrieval System. (1) Electronic digital computers, re- (a) Scope and application. This section gardless of size, capacity, or price, that establishes conditions for initial and accept data input, store data, perform continuing authority to claim Federal calculations, and other processing financial participation (FFP) for the steps, and prepare information; costs of the planning, development, ac- (2) All peripheral or auxiliary equip- quisition, installation and implementa- ment used in support of electronic dig- tion of ADP equipment and services ital computers whether selected and used in the administration of the Food acquired with the computer or sepa- Stamp Program. Due to the nature of rately; the procurement of ADP equipment (3) Data transmission or communica- and services, current State agency ap- tions equipment that is selected and proved cost allocation plans for ongo- acquired solely or primarily for use ing operational costs shall not apply to with a configuration of ADP equipment ADP system development costs under which includes an electronic digital this section unless documentation re- computer; and quired under paragraph (c) of this sec- (4) Data input equipment used to tion is submitted to and approvals are enter directly or indirectly into an obtained from FNS. electronic digital computer, peripheral (b) Definitions: or auxiliary equipment, or data trans- Acceptance Documents means written mission, or communication equipment. evidence of satisfactory completion of Automated Data Processing Services an approved phase of work or contract, means: and acceptance thereof by the State (1) Services to operate ADP equip- agency. ment, either by private sources, or by Advance Planning Document for Project employees of the State agency, or by Implementation or Implementation APD State or local organizations other than means a written plan of action request- the State agency; and/or ing Federal financial participation (2) Services provided by private (FFP) to acquire and implement ADP sources or by employees of the State services and/or equipment. agency or by State and local organiza- Advance Planning Document for Project tions other than the State agency to Planning or Planning APD means a perform such tasks as feasibility stud- brief written plan of action that re- ies, system studies, system design ef- quests FFP to accomplish the planning forts, development of system specifica- necessary for a State agency to deter- tions, system analysis, programming mine the need for and plan the acquisi- and system implementation. This in- tion of ADP equipment and/or services, cludes system training, systems devel- and to acquire information necessary opment, site preparation, data entry, to prepare an Implementation APD. and personal services related to auto- Advance Planning Document Update mated systems development and oper- (APDU) means an annual self-certifi- ations that are specifically identified cation by the State agency on the sta- as part of a Planning APD or Imple- tus of project development activities mentation APD. and expenditures in relation to the ap- Data Processing means the prepara- proved Planning APD or Implementa- tion of source media containing data or tion APD. An APDU may also be sub- basic elements of information and the mitted as needed to request funding ap- use of such source media according to proval for project continuation when- precise rules of procedures to accom- ever significant project changes occur plish such operations as classifying, or are anticipated. sorting, calculating, summarizing, re- Automated Data Processing or ADP cording, and transmitting. means data processing performed by a Emergency situation means a situation system of electronic or electrical ma- where: chines so interconnected and inter- (1) The State agency can dem- acting as to minimize the need for onstrate to FNS an immediate need to human assistance or intervention. acquire ADP equipment or services in

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order to continue operation of the Food the State or local agency and the State Stamp Program; and or local central data processing facility (2) The State agency can clearly doc- whenever a central data processing fa- ument that the need could not have cility provides ADP services to the been anticipated or planned for and the State or local agency. need prevents the State from following Software means a set of computer the prior approval requirements of programs, procedures, and associated § 277.18(c). documentation used to operate the Feasibility Study means a preliminary hardware. study to determine whether it is suffi- System specifications means informa- ciently probable that effective and effi- tion about the new ADP systems, such cient use of ADP equipment or systems as: Workload descriptions, input data, would warrant a substantial invest- information to be maintained and proc- ment of staff, time, and money being essed, data processing techniques, and requested, and whether the plan can be output data, which is required to deter- accomplished successfully. mine the ADP equipment and software Functional Requirements Specification necessary to implement the system de- means an initial definition of the pro- sign. posed system, which documents the System study means the examination goals, objectives, user or programmatic of existing information flow and oper- requirements, the operating environ- ational procedures within an organiza- ment, and the proposed design method- tion. The study consists of three basic ology, e.g., centralized or distributed. phases: Data gathering or investigation This document details what the new of the present system and new informa- system and/or hardware should do, not tion requirements; analysis of the data how it is to do it. The Specification gathered in the investigation; and syn- document shall be based upon a clear thesis, or refitting, of the parts and re- and accurate description of the func- lationships uncovered through the tional requirements for the project, analysis into an efficient system. and shall not, in competitive procure- (c) General acquisition requirements— ments, lead to requirements which un- (1) Requirement for prior FNS approval. A duly restrict competition. State agency shall obtain prior written General Systems Design means a com- approval from FNS as specified in para- bination of narrative and diagrams de- graph (c)(2) of this section when it scribing the generic architecture of a plans to acquire ADP equipment or system as opposed to the detailed ar- services with proposed FFP that it an- chitecture of the system. A general ticipates will have total acquisition systems design may include a systems costs of $5 million or more in Federal diagram; narrative identifying overall and State funds. This applies to both logic flow and systems functions; a de- competitively bid and sole source ac- scription of equipment needed (includ- quisitions. A State agency shall also ing processing, data transmission and obtain prior written approval from storage requirements); a description of FNS of its justification for a sole other resource requirements which will source acquisition when it plans to ac- be necessary to operate the system; a quire ADP equipment or services non- description of system performance re- competitively from a nongovernmental quirements; and a description of the source which has a total State and environment in which the system will Federal acquisition cost of more than operate, including how the system will $1 million but no more than $5 million. function within that environment. The State agency shall request prior Regular funding or regular FFP rate FNS approval by submitting the Plan- means any Federal reimbursement rate ning APD, the Implementation APD or authorized by § 277.4(b). the justification for the sole source ac- Request for Proposal or RFP means the quisition signed by the appropriate document used for public solicitations State official to the FNS Regional Of- of competitive proposals from qualified fice. However, a State agency shall ob- sources as outlined in § 277.14(g)(3). tain prior written approval from FNS Service Agreement means the docu- for the acquisition of ADP equipment ment, described in § 277.18(f), signed by or services to be utilized in an EBT

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system regardless of the cost of the ac- agency shall obtain prior written ap- quisition. proval from FNS for contracts which (2) Specific prior approval requirements. are associated with an EBT system re- (i) For ADP equipment and services ac- gardless of the cost. quisitions which require prior approval (C) Contract amendments; unless spe- as specified in paragraph (c)(1) of this cifically exempted by FNS, the State section, the State agency shall obtain agency shall obtain prior written ap- the prior written approval of FNS for: proval before the contract amendment (A) The Planning APD prior to enter- may be signed by the State agency. ing into contractual agreements or However, contract amendments involv- making any other commitment for ac- ing cost increases of up to $1 million or quiring the necessary planning serv- time extensions of up to 120 days, and ices; which are an integral part of the ap- (B) The Implementation APD prior to proved APD need not be submitted to entering into contractual agreements FNS. States will be required to submit or making any other commitment for contract amendments under these the acquisition of ADP equipment or threshold amounts on an exception services. basis or if the contract amendment is (ii) For ADP equipment and services not adequately described and justified acquisitions requiring prior approval as in an APD. Amendments to contracts specified in paragraph (c)(1) of this sec- for EBT systems shall be permitted tion, prior approval of the following within the approved funding cap. State documents associated with such acqui- agencies shall submit copies of any sitions is also required: contract amendments or contract ex- (A) RFP’s; unless specifically extensions to FNS with an accompanying empted by FNS, the State agency shall analysis of the impact the changes obtain prior written approval of the would have upon the approved issuance RFP before the RFP may be released. cap. However, RFPs costing up to $5 million (iii) The State agency must obtain for competitive procurements and up prior written approval from FNS as to $1 million for noncompetitive acqui- specified in paragraphs (c)(2) (i) and (ii) sitions from non-governmental sources of this section in order to claim and re- and which are an integral part of the ceive reimbursement for the associated approved APD need not be submitted costs of the ADP acquisition. to FNS. States will be required to submit RFPs under this threshold amount (3) Approval requirements. (i) For ADP on an exception basis or if the procure- equipment and service acquisitions re- ment strategy is not adequately de- quiring prior approval as specified in scribed and justified in an APD. The paragraph (c)(1) of this section, the State agency shall obtain prior written State agency shall submit the fol- approval from FNS for Request for Pro- lowing documents to FNS for approval: posals which are associated with an (A) Feasibility studies, when specifi- EBT system regardless of the cost. cally required by FNS as a condition of (B) Contracts; unless specifically ex- approving the Planning APD. When re- empted by FNS, the State agency shall quired by FNS for approval, the State obtain prior written approval before agency shall submit the feasibility the contract may be signed by the study no later than 90 days after its State agency. However, contracts cost- completion. ing up to $5 million for competitive (B) APD Updates, as required by procurements and up to $1 million for paragraph (e) of this section, on an an- noncompetitive acquisitions from non- nual or as needed basis. governmental sources, and which are (ii) The State agency must obtain an integral part of the approved APD FNS approval of the documents speci- need not be submitted to FNS. States fied in paragraph (c)(3)(i) of this sec- will be required to submit contracts tion in order to claim and receive reim- under this threshold amount on an ex- bursement for the associated costs of ception basis or if the procurement the ADP acquisition. strategy is not adequately described (4) Approval by the State agency. Ap- and justified in an APD. The State proval by the State agency is required

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for all documents specified in this reg- of those resources, and the assignments ulation prior to submission for FNS ap- of roles and responsibilities for project proval. In addition, State agency ap- planning activities. The State agency proval is also required for those acqui- shall include a description of resources sitions of ADP equipment and services to be procured and procurement meth- not requiring prior approval by FNS. ods; (5) Prompt action on requests for prior (iv) The State agency’s schedule of approval. FNS will reply promptly to activities and deliverables during State requests for prior approval. If project planning, including a descrip- FNS has not provided written approval, tion and schedule of procurement ac- disapproval or a request for additional tivities to be undertaken in support of information within 60 days of FNS’ let- the planning project; and ter acknowledging receipt of the (v) A proposed budget which shall State’s request, the request will be identify costs for project planning ac- deemed to have provisionally met the tivities by Federal fiscal year. The prior approval requirement in para- budget shall include an estimate of graph (c) of this section. However, pro- prospective cost distribution to par- visional approval will not exempt a ticipating Federal agencies and the State from having to meet all other method for cost allocation. The State Federal requirements which pertain to agency shall also include an estimate the acquisition of ADP equipment and of the total project costs, including services. Such requirements remain both the cost of the planning project subject to Federal audit and review. and the cost of any eventual ADP (d) APD content requirements—(1) equipment and/or services acquisition, Planning APD. The State agency may which will be used only for determining request FFP for the costs of deter- whether the threshold of §§ 277.18(c)(1) mining the need for and planning the is met. An estimate of total project acquisition of ADP equipment or serv- cost for an EBT system shall not be re- ices through the submission of the quired to be incorporated into the Planning APD. The State agency may Planning APD budget. request FFP for the costs of planning (2) Implementation APD. The State activities beginning with initial agency may request FFP to acquire project inception through the perform- ADP equipment and services through ance of necessary systems and alter- the submission of the Implementation natives analyses, selection and design, APD. The State agency may request including the completion of a general FFP for the necessary activities to de- systems design. The Planning APD velop, acquire, install and implement shall contain the following informa- the proposed ADP system or acquisition: tion. The Implementation APD shall (i) The State agency’s description of contain the following information, the programmatic and organizational where appropriate: needs and/or problems to be addressed (i) The State agency shall complete by the proposed ADP acquisition and and submit a functional requirements the specific objectives to be accom- specification document; plished under the Planning APD; (ii) The State agency shall submit a (ii) The State agency’s commitment feasibility study and associated alter- to complete the following, where ap- natives analyses, which include the propriate, as part of project planning transfer or modification of an existing activities: a functional requirements system from a similar State or juris- specification document, feasibility diction in the examination of alter- study, alternatives analysis, cost-ben- natives. State agencies which reject efit analysis, and a general system de- the transfer or modification of an ex- sign. If an existing ADP system is to be isting system must provide an analysis transferred, the State agency may plan describing the barriers to system to use the general system design of the transfer as part of the feasibility transferred system. study. The analysis of barriers to sys- (iii) The State agency’s description tem transfer shall include a compari- of the organization, required State and son of the costs of overcoming the contractual resources and availability problem in transferring an operational

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system to the costs of developing a new the bases of proposed rates for the op- system; eration of the ADP system. The budget (iii) The State agency shall submit activities shall be presented on a Fed- the new or transferred general systems eral fiscal year basis in a clear fashion design and shall also document the in- to associate costs with each planned tended approaches, plans and tech- activity. The budgets must identify all niques to develop or modify specific as- development costs separately from any pects of the proposed ADP system or ongoing operational costs. Costs must acquisition including hardware, soft- be distinguished by developmental ware, telecommunications, system projects and developmental time peri- testing, and data security; ods. Actual costs claimed must be (iv) The State agency shall describe reconciliable to projected costs as pro- the anticipated resource requirements posed and approved by FNS in the for implementation of the ADP project, APD. the resources planned to be available (e) APD Update—(1) General submis- for the project, and plans for aug- sion requirements. The State agency menting resources to meet resource re- shall submit an APD Update for FNS quirements; approval for all approved Planning and (v) The State agency shall indicate Implementation APD’s when total ac- the principal events and schedule of acquisition costs exceed $5 million. The tivities, milestones, and deliverables APD Update shall be submitted to the during implementation of the project; FNS Regional Office within 90 days (vi) The State agency shall submit a after the annual anniversary date of proposed budget which identifies costs the original APD approval, unless the for intended project development and submission date is specifically altered implementation activities by Federal by FNS. fiscal year and shall include a consider- (2) Content requirements. The APD Up- ation of all possible Implementation date represents a self-certification by APD activity costs (e.g., system con- the State agency of project status in version, computer capacity planning, relation to the provisions of the ap- supplies, training, and miscellaneous proved Planning APD and Implementa- ADP expenses). The budget shall con- tion APD. The Annually Updated APD tain an estimate of prospective cost shall include: distribution and methods for allocating (i) Project activity status. (A) The costs to participating Federal agencies; status of all major tasks and mile- (vii) The State agency shall docu- stones in the approved Planning APD, ment the scope, methodology, evalua- Implementation APD or previous APD tion criteria and results of cost-benefit Update’s for the past year. The APD analyses for evaluating the selected de- Update shall include all major tasks sign and alternatives. The cost-benefit and milestones completed in the past analysis shall include a statement indi- year and degree of completion for un- cating the period of time the State finished tasks. agency intends to use the proposed (B) The status of all project equipment or system; and deliverables completed in the past year (viii) The State agency shall describe and degree of completion for unfinished the security and interface require- products. ments to be employed and the backup (C) Reports of past and/or anticipated and contingency procedures available. problems or delays in meeting target (3) APD Budget. The proposed budget dates in the approved Planning APD, for both the Planning APD and the Im- Implementation APD or previous APD plementation APD shall include cost Update’s for the remainder of the distribution plans containing the bases project. The Annually Updated APD for proposed rates, both direct and in- shall include an explanation of the direct, for costs associated with system need to extend any major project tar- planning, development, acquisition or get dates. implementation, as appropriate. The (ii) Project expenditures. (A) A de- budget proposals accompanying the tailed accounting for all expenditures Implementation APD shall also include for project development over the past proposed cost distribution plans and year.

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(B) An explanation of differences be- kept on file by the State agency and be tween projected expenses in the ap- available for Federal review, and shall: proved Planning or Implementation (1) Identify the ADP services that APD, or previous APD Update’s, and will be provided; actual expenditures for the past year. (2) Include, preferably as an amend- If changes in costs are reported, FNS able attachment, a schedule of charges may require the submission of a re- for each identified ADP service, and a vised cost-benefit analysis as a condi- certification that these charges apply tion for approval of the APD Update. equally to all users; (C) Changes to the allocation basis in (3) Include a description of the meth- the approved APD’s cost allocation od(s) of accounting for the services ren- methodology. dered under the agreement and com- (iii) Changes to the approved APD. puting services charges; (A) Revised language for all changes (4) Include assurances that services to the approved APD or previous APD provided will be timely and satisfac- Updates shall be submitted as part of tory; the APD Update, unless submitted sep- (5) Include assurances that informa- arately by the State agency as the tion in the computer system as well as changes occurred throughout the year. access, use and disposal of ADP data (B) Changes in project management will be safeguarded in accordance with and/or contractor services. provisions of §§ 272.1(c) and 277.13; (3) Submission as needed. In addition (6) Require the provider to obtain to the requirement for approval of an prior approval pursuant to § 277.18(c)(1) APD Update on an annual basis, as from FNS for ADP equipment and ADP specified in paragraph (e)(1) of this sec- services that are acquired from com- tion, the State agency may submit an mercial sources primarily to support APD Update on a more frequent or as the Food Stamp Program and requires needed basis, in order to obtain a com- the provider to comply with § 277.14 for mitment of FFP whenever significant procurements related to the service project changes occur. Without such agreement. ADP equipment and serv- approval, the State agency is at risk ices are considered to be primarily ac- for funding of project activities which quired to support the Food Stamp Pro- are not in compliance with the terms gram when the Program may reason- and conditions of the approved APD ably be expected to either be billed for and subsequently approved APD Up- more than 50 percent of the total dates, until such time as approval is charges made to all users of the ADP specifically granted by FNS. At a min- equipment and services during the time imum, the State agency should con- period covered by the service agree- sider submission of an APD Update ment, or directly charged for the total whenever any of the following changes cost of the purchase or lease of ADP occur or are anticipated: equipment or services; (i) A significant increase ($1 million (7) Include the beginning and ending or more) in total project costs; dates of the period of time covered by (ii) A significant schedule extension the service agreement; and (60 days or more) for major milestones; (8) Include a schedule of expected (iii) A significant change in procure- total charges to the Program for the ment approach, and/or scope of pro- period of the service agreement. curement activities beyond that ap- (g) Conditions for receiving FFP—(1) A proved in the APD; State agency may receive FFP at the (iv) A change in system concept, or a 50 percent reimbursement rate for the change to the scope of the project; or costs of planning, design, development (v) A change to the approved cost al- or installation of ADP and information location methodology. retrieval systems if the proposed sys- (f) Service agreements. The State agen- tem will: cy shall execute service agreements (i) Assist the State agency in meet- when data processing services are to be ing the requirements of the Food provided by a State central data proc- Stamp Act; essing facility or another State or local (ii) Meet the program standards spec- agency. Service agreements shall be ified in § 272.10(b)(1), (b)(2), and (b)(3) of

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this chapter, except for the require- agency’s need to proceed with the ac- ments in § 272.10(b)(2)(vi), (b)(2)(vii), quisition prior to obtaining formal and (b)(3)(ix) of this chapter to eventu- FNS approval; and ally transmit data directly to FCS; (iii) A description of the adverse im- (iii) Be likely to provide more effi- pact which would result if the State cient and effective administration of agency does not immediately acquire the program; and the ADP equipment and/or services. (iv) Be compatible with such other (2) Upon receipt of a written request systems utilized in the administration for emergency acquisition FNS shall of State agency plans under the pro- provide a written response to the State gram of Temporary Assistance for agency within 14 days. The FNS re- Needy Families (TANF). sponse shall: (2) State agencies seeking FFP for (i) Inform the State agency that the the planning, design, development or request has been disapproved and the installation of automated data proc- reason for disapproval; or, essing and information retrieval sys- (ii) Inform the State agency that tems shall develop Statewide systems FNS recognizes that an emergency sit- which are integrated with TANF. In uation exists and the State agency cases where a State agency can dem- must submit a formal request for ap- onstrate that a local, dedicated, or sin- proval by FNS which includes the in- gle function (issuance or certification formation specified at § 277.18(d)(2) only) system will provide for more effi- within 90 days from the date of the cient and effective administration of the program, FNS may grant an excep- State agency’s initial written request. tion to the Statewide integrated re- (iii) If FNS approves the request sub- quirement. These exceptions will be mitted under paragraph (h)(1) of this based on an assessment of the proposed section, FFP will be available from the system’s ability to meet the State date the State agency acquires the agency’s need for automation. Systems ADP equipment and services. funded as exceptions to this rule, how- (i) Cost determination and claiming ever, should be capable to the extent costs—(1) Cost determination. Actual necessary, of an automated data ex- costs must be determined in compli- change with the State agency system ance with an FNS approved budget and used to administer TANF. In no cir- appendix A to this part, and must be cumstances will funding be available reconcilable with the FNS funding for systems which duplicate other level. There shall be no payments pur- State agency systems, whether pres- suant to this section to the extent that ently operational or planned for future a State agency is reimbursed for such development. costs pursuant to any other Federal (h) Emergency acquisition requirements. program or uses ADP systems for pur- The State agency may request FFP for poses not connected with the Food the costs of ADP equipment and serv- Stamp Program. The State agency ap- ices acquired to meet emergency situa- proved cost allocation plan must be tions which preclude the State agency amended to disclose the methods which from following the prior approval re- will be used to identify and classify quirements of § 277.18(c). FNS may pro- costs to be claimed. This methodology vide FFP in emergency situations if must be submitted to FNS as part of the following conditions are met: the request for FNS approval of fund- (1) The State agency must submit a ing as required in paragraph (d)(3) of written request to FNS prior to the ac- this section. Any costs funded pursuant quisition of any ADP equipment or to these regulations shall be excluded services. The written request must be in determining the State agency’s ad- sent by registered mail and shall in- ministrative costs under any other sec- clude: tion of this part. (i) A brief description of the ADP (2) Cost identification for purposes of equipment and/or services to be ac- FFP claims. State agencies shall assign quired and an estimate of their costs; and claim the costs incurred under an (ii) A brief description of the cir- approved APD in accordance with the cumstances which result in the State following criteria:

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(i) Development costs. Using its nor- claimed. FNS shall provide this mal departmental accounting system, amount as a total authorization for the State agency shall specifically such funding which may not be exceed- identify what items of costs constitute ed unless amended by FNS. FNS’s de- development costs, assign these costs termination of the amount of this au- to specific project cost centers, and dis- thorization shall be based on the budg- tribute these costs to funding sources et submitted by the State agency. Ac- based on the specific identification, as- tivities not included in the approved signment and distribution outlined in budget, as well as continuation of ap- the approved APD. The methods for proved activities beyond scheduled distributing costs set forth in the APD deadlines in the approved plan, shall should provide for assigning identifi- require FNS approval of an amended able costs, to the extent practicable, State budget for payment. Requests to directly to program/functions. The amend the budget authorization ap- State agency shall amend the cost allo- proved by FNS shall be submitted to cation plan required by § 277.9 to in- FNS prior to claiming such expenses. clude the approved APD methodology (j) Procurement requirements. (1) Pro- for the identification, assignment and curements of ADP equipment and serv- distribution of the development costs. ices are subject to the procurement (ii) Operational costs. Costs incurred standards prescribed by § 277.14 regard- for the operation of an ADP system less of any conditions for prior ap- shall be identified and assigned by the proval, except the requirements of State agency to funding sources in ac- § 277.14(b)(1) and (2) regarding review of cordance with the approved cost alloca- proposed contracts. Those standards tion plan required by § 277.9. include a requirement for maximum (iii) Service agreement costs. States practical open and free competition re- that operate a central data processing gardless of whether the procurement is facility shall use their approved cen- formally advertised or negotiated. tral service cost allocation plan re- (2) The standards prescribed by quired by OMB Circular A–87 to iden- § 277.14, as well as the requirement for tify and assign costs incurred under prior approval, apply to ADP services service agreements with the State and equipment acquired by a State or agency. The State agency shall then local agency, and the ADP services and distribute these costs to funding equipment acquired by a State or local sources in accordance with paragraphs central data processing facility pri- (i)(2)(i) and (i)(2)(ii) of this section. marily to support the Food Stamp Pro- (3) Capital expenditures. The State gram. agency shall charge the costs of ADP (3) The competitive procurement pol- equipment having unit acquisition icy prescribed by § 277.14 shall be appli- costs or total aggregate costs, at the cable except for ADP services provided time of acquisition, of more than by the agency itself, or by other State $25,000 by means of depreciation or use or local agencies. allowance, unless a waiver is specifi- (k) Access to the system and records. cally granted by FNS. If the equipment Access to the system in all aspects, in- acquisition is part of an APD that is cluding but not limited to design, de- subject to the prior approval require- velopment, and operation, including ments of paragraph (c)(2) of this sec- work performed by any source, and in- tion, the State agency may submit the cluding cost records of contractors and waiver request as part of the APD. subcontractors, shall be made available (4) Claiming costs. Prior to claiming by the State agency to FNS or its au- funding under this section the State thorized representatives at intervals as agency shall have complied with the are deemed necessary by FNS, in order requirements for obtaining approval to determine whether the conditions and prior approval of § 277.18(c). for approval are being met and to de- (5) Budget authority. FNS approval of termine the efficiency, economy and requests for funding shall provide noti- effectiveness of the system. Failure to fication to the State agency of the provide full access by appropriate budget authority and dollar limita- State and Federal representatives to tions under which such funding may be all parts of the system shall result in

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suspension and/or termination of Food conducted by or for FNS to assure com- Stamp Program funds for the costs of pliance with approved APD’s, proper the system and its operation. use of ADP resources, and the ade- (l) Ownership rights—(1) Software(i) quacy of State or local agency ADP op- The State or local government shall in- erations. clude a clause in all procurement in- (o) Disallowance of Federal financial struments which provides that the participation. If FNS finds that any State or local government shall have ADP acquisition approved under the all ownership rights in any software or provisions of § 277.18(c) fails to comply modifications thereof and associated with the criteria, requirements, and documentation designed, developed or other undertakings described in the ap- installed with FFP under this section. proved or modified APD, payment of (ii) FNS reserves a royalty-free, non- FFP may be disallowed. exclusive, and irrevocable license to re- (p) ADP system security requirements produce, publish, or otherwise use and and review process—(1) ADP system secu- to authorize others to use for Federal rity requirements. State and local agen- Government purposes, such software, cies are responsible for the security of modifications, and documentation. all ADP projects under development, (iii) Proprietary operating/vendor and operational systems involved in software packages (e.g., ADABAS or the administration of the Food Stamp TOTAL) which are provided at estab- Program. State and local agencies lished catalog or market prices and shall determine appropriate ADP secu- sold or leased to the general public rity requirements based on recognized shall not be subject to the ownership industry standards or standards gov- provisions in paragraphs (l)(1)(i) and erning security of Federal ADP sys- (l)(1)(ii) of this section. FFP is not tems and information processing. available for proprietary applications (2) ADP security program. State agen- software developed specifically for the cies shall implement and maintain a Food Stamp Program. comprehensive ADP Security Program (2) Automated data processing equip- for ADP systems and installations in- ment. The policies and procedures gov- volved in the administration of the erning title, use and disposition of Food Stamp Program. ADP Security property purchased with Food Stamp Programs shall include the following Program funds, which appear at 7 CFR components. 277.13 are applicable to automated data (i) Determination and implementa- processing equipment. tion of appropriate security require- (m) Use of ADP systems. ADP systems ments as prescribed in paragraph (p)(1) designed, developed or installed with of this section. FFP shall be used for the period of (ii) Establishment of a security plan time specified in the APD, unless FNS and, as appropriate, policies and proce- determines that a shorter period is jus- dures to address the following areas of tified. ADP security: (n) Basis for continued Federal finan- (A) Physical security of ADP re- cial participation. FNS will continue sources; FFP at the levels approved in the Plan- (B) Equipment security to protect ning APD and the Implementation equipment from theft and unauthorized APD provided that project develop- use; ment proceeds in accordance with the (C) Software and data security; conditions and terms of the approved (D) Telecommunications security; APD and that ADP resources are used (E) Personnel security; for the purposes authorized. FNS will (F) Contingency plans to meet crit- use the APD Update to monitor ADP ical processing needs in the event of project development. The submission short- or long-term interruption of of the report prescribed in § 277.18(e) for service; the duration of project development is (G) Emergency preparedness; and a condition for continued FFP. In addi- (H) Designation of an Agency ADP tion, periodic onsite reviews of ADP Security Manager. project development and State and (iii) Periodic risk analyses. State local agency ADP operations may be agencies shall establish and maintain a

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program for conducting periodic risk State agency under FNS-approved State analyses to ensure that appropriate, Plans of Operation. The principles are for the cost-effective safeguards are incor- purpose of cost determination and are not in- porated into new and existing systems. tended to identify the circumstances or dictate the extent of Federal and State or local In addition, risk analyses shall be per- participation in the financing of the Pro- formed whenever significant system gram. They are designed to provide that all changes occur. federally assisted programs bear their fair (3) ADP system security reviews. State share of costs recognized under these prin- agencies shall review the ADP system ciples, except where restricted or prohibited security of installations involved in by law. No provision for profit or other in- the administration of the Food Stamp crement above cost is intended. Program on a biennial basis. At a min- (2) Policy guides. The application of these imum, the reviews shall include an principles is based on the fundamental prem- evaluation of physical and data secu- ises that: (a) State agencies are responsible for the rity, operating procedures, and per- efficient and effective administration of the sonnel practices. State agencies shall Food Stamp Program through the applica- maintain reports of their biennial ADP tion of sound management practice. system security reviews, together with (b) The State agency assumes the responsi- pertinent supporting documentation, bility for seeing that Food Stamp Program for Federal on-site review. funds have been expended and accounted for (4) Applicability. The security require- consistent with underlying agreements and ments of this section apply to all ADP program objectives. systems used by State and local gov- (c) Each State agency, in recognition of its own unique combination of staff facilities ernments to administer the Food and experience, will have the primary re- Stamp Program. sponsibility for employing whatever form of (5) Costs. Costs incurred for com- organization and management techniques as plying with the provisions of para- may be necessary to assure proper and effi- graphs (p)(1) through (p)(3) of this sec- cient administration. tion are considered regular administra- (3) Application. These principles will be ap- tive costs which are funded at the reg- plied by FNS in determining costs incurred ular FFP level. by State agencies receiving FNS payments for administering the Food Stamp Program. [Amdt. 319, 55 FR 4355, Feb. 7, 1990, as amend- (B) Definitions. ed by Amdt. 345, 57 FR 11259, Apr. 1, 1992; Approval or authorization by FNS means Amdt. 342, 59 FR 2733, Jan. 19, 1994; Amdt. documentation evidencing consent prior to 368, 61 FR 33643, June 28, 1996; Amdt. 385, 65 incurring specific costs. FR 33440, May 24, 2000] Cognizant Federal Agency means the Fed- eral agency recognized by OMB as having the APPENDIX A TO PART 277—PRINCIPLES predominate interest in terms of program FOR DETERMINING COSTS APPLICA- dollars. BLE TO ADMINISTRATION OF THE Cost allocation plan means the documenta- FOOD STAMP PROGRAM BY STATE tion identifying, accumulating, and distrib- AGENCIES uting allowable costs of program administration together with the allocation methods This appendix sets forth the procedures im- used. plementing uniform requirements for the ne- Cost, as used herein, means cost as deter- gotiations and approval of cost allocation mined on a cash, accrual, or other basis ac- plans with State agencies, in accordance ceptable to FNS as a discharge of the State with the provisions of Federal Management agency’s accountability for FNS funds. Circular (FMC) 74–4 and OASC–10, ‘‘Cost Cost center means a pool, summary ac- Principles and Procedures for Establishing count, objective or area established for the Cost Allocation Plans and Indirect Cost accumulation of costs. Such areas include Rates for Grants and Contracts with the Fed- objective organizational units, functions, ob- eral Government,’’ U.S. Department of jects or items of expense, as well as ultimate Health, Education, and Welfare. This mate- cost objective(s) including specific costs, rial is adapted substantially from the cir- products, projects, contracts, programs and cular; changes have been made only when other operations. necessary in order to conform with legisla- Federal agency means FNS and also any tive constraints. department, agency, commission, or instru- (A) Purpose and scope. mentality in the executive branch of the (1) Objectives. This appendix sets forth prin- Federal Government which makes grants to ciples for determining the allowable costs of or contracts with State or local govern- administering the Food Stamp Program by ments.

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Payments for administrative costs means accounting principles appropriate to the cir- reimbursement or advances for costs to cumstances. State agencies pursuant to any agreement (f) Not be allocable to or included as a cost whereby FNS provides funds to carry out to any other federally financed program in programs, services, or activities in connec- either the current or a prior period. tion with administration of the Food Stamp (g) Be the net of all applicable credits. Program. The principles and policies stated (2) Allocable costs. in this appendix as applicable to program (a) A cost allocable to a particular cost ob- payments in general also apply to any State jective to the extent of benefits received by agency obligations under a cost reimburse- such objective. ment type of agreement performed by a sub- (b) Any cost allocable to a particular pro- agency, including contracts and sub- gram or cost objective under these principles contracts. may not be shifted to other Federal pro- Food Stamp Program administration grams to overcome fund deficiencies, avoid means those activities and operations of the restrictions imposed by law or grant agree- State agency which are necessary to carry ment, or for other reasons. out the purposes of the Food Stamp Act, in- (c) Where an allocation of joint cost will cluding any portion of the Program financed ultimately result in charges to the Program, by the State agency. an allocation plan will be required as pre- Local unit means any political subdivision scribed in section I of these principles. of government below the State level. (3) Applicable credits. Other agencies of the State means depart- (a) Applicable credits refer to those re- ments or agencies of the State or local unit ceipts or reduction of expenditure-type which provide goods, facilities, and services transactions which offset or reduce expense to a State agency. items allocable to programs as direct or indi- Subagencies means the organization or rect costs. Examples of such transactions person to which a State agency makes any are: Purchase discounts; rebates or allow- payment for acquisition of goods, materials ances; recoveries or indemnities on losses; or services for use in administering the Food sale of publications, equipment, and scrap; Stamp Program and which is accountable to income from personal or incidental services; the State agency for the use of the funds pro- and adjustments of overpayments or erro- vided. neous charges. Service, as used herein, means goods and (b) Applicable credits may also arise when facilities, as well as services. Federal funds are received or are available Supporting services means auxiliary func- from sources other than FNS to finance options necessary to sustain the direct effort of erations or capital items donated or financed administering the Program. These services by the Federal Government to fulfill match- may be centralized in the State agency or in ing requirements under another program. some other agency, and include procure- These types of credits should likewise be ment, payroll, personnel functions, mainte- used to reduce related expenditures in deter- nance and operation of space, data proc- mining the rates or amounts applicable to a essing, accounting, budgeting, auditing, mail given program. and messenger service, and the like. (D) Composition of cost. (C) Basic guidelines. (1) Total cost. The total cost of a program (1) Factors affecting allowability of costs. is comprised of the allowable direct cost in- To be allowable under the Program, costs cident to its performance, plus its allocable must meet the following general criteria: portion of allowable indirect costs, less ap- (a) Be necessary and reasonable for proper plicable credit. and efficient administration of the Program, (2) Classification costs. There is no universal be allocable thereto under these principles, rule for classifying certain costs as either di- and, except as specifically provided herein, rect or indirect under every accounting sys- not be a general expense required to carry tem. A cost may be direct with respect to out the overall responsibilities of State or some specific service or function, but indi- local governments. rect with respect to a program or other ulti- (b) Be authorized or not prohibited under mate cost objective. However, it is essential State or local laws or regulations. that each item of cost be treated consist- (c) Conform to any limitations or exclu- ently either as a direct or an indirect cost. sions set forth in these principles, Federal Specific guides for determining direct and Laws, or other governing limitations as to indirect costs allocable under the Program types or amounts of cost items. are provided in the section which follows. (d) Be consistent with policies, regulations, (E) Direct costs. and procedures that apply uniformly to both (1) General. Direct costs are those that can federally assisted and other activities of the be identified specifically with a particular unit of government of which the State agen- cost objective. These costs may be charged cy is a part. directly to the Program, contracts, or to (e) Be accorded consistent treatment other programs against which costs are fi- through application of generally accepted nally lodged. Direct costs may also be

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charged to cost objectives used for the accu- a State agency’s indirect services cannot be mulation of costs pending distribution in the readily determined as in the case of a small course to programs and other ultimate costs self-contained or isolated activity. When this objectives. method is used, a determination should be (2) Application. Typical direct costs charge- made that the amount negotiated will be ap- able to the Program are: proximately the same as the actual indirect (a) Compensation of employees for the cost that may be incurred. Such amounts ne- time and effort devoted specifically to the gotiated in lieu of indirect costs will be administration of the Program. treated as an offset to total indirect ex- (b) Cost of materials acquired, consumed, penses of the State agency before allocation or expended specifically for the purpose of to remaining activities. The base on which the Program. such remaining expenses are allocated (c) Equipment and other approved capital should be appropriately adjusted. expenditures. (3) Limitation on indirect costs. (d) Other items of expense incurred specifi- (a) Some Federal programs may be subject cally for efficiently and effectively admin- to laws that limit the amount of indirect istering the Program. cost that may be allowed. Agencies that (e) Service furnished specifically for the sponsor programs of this type will establish Program by other agencies, provided such procedures which will assure that the charges are consistent with criteria outlined amount actually allowed for indirect costs in section G of these principles. under each such program does not exceed the (F) Indirect costs. maximum allowable under the statutory (1) General. Indirect costs are those (a) in- limitation or the amount otherwise allow- curred for a common or joint purpose bene- able under these principles, whichever is the fiting more than one cost objective, and (b) smaller. not readily assignable to the cost objectives specifically benefited, without effort dis- (b) When the amount allowable under a proportionate to the result achieved. The statutory limitation is less than the amount term indirect cost as used herein applies to otherwise allocable as indirect costs under costs of this type originating in the State these principles, the amount not recoverable agency, as well as those incurred by other as indirect costs under a program may not be departments in supplying goods, services, shifted to another federally sponsored pro- and facilities, to the State agency. To facili- gram or contract. tate equitable distribution of indirect ex- (G) Cost incurred by other agencies of the penses to the cost objectives served, it may State. be necessary to establish a number of pools (1) General. The cost of service provided by of indirect costs within a State agency or in other agencies may only include allowable other agencies providing services to a State direct costs of the service plus a pro rata agency. Indirect cost pools should be distrib- share of allowable supporting costs and su- uted to benefiting cost objectives on bases pervision directly required in performing the which will produce an equitable result in service, but not supervision of a general na- consideration of relative benefits derived. ture such as that provided by the head of a (2) State agency indirect costs. All State department and his staff assistants not di- agency indirect costs, including the various rectly involved in operations. However, su- levels of supervision, are eligible for alloca- pervision by the head of a department or tion to the program provided they meet the agency whose sole function is providing the conditions set forth in their principles. In service furnished would be an eligible cost. lieu of determining the actual amount of Supporting costs include those furnished by State agency indirect cost allocable to the other units of the supplying department or program the following methods may be used: by other agencies. (a) Predetermined fixed rates for indirect (2) Alternative methods of determining indi- costs. A predetermined fixed rate for com- rect cost. In lieu of determining actual indi- puting indirect costs applicable to program rect cost related to a particular service fur- administration may be negotiated annually nished by other agencies of the State, either in situations where the cost experience and of the following alternative methods may be other pertinent facts available are deemed used provided only one method is used for a sufficient to enable the parties to reach an specific service during the fiscal year in- informed judgment (1) as to the probable volved. level of indirect costs in the State agency (a) Standard indirect rate. An amount equal during the period to be covered by the nego- to ten percent of direct labor cost in pro- tiated rate, and (2) that the amount allow- viding the service performed by other agen- able under the predetermined rate would not cies of the State (excluding overtime, shift, exceed actual indirect costs. or holiday premiums, and fringe benefits) (b) Negotiated lump sum for overhead. A ne- may be allowed in lieu of actual allowable gotiated fixed amount in lieu of indirect indirect cost for that service. costs may be appropriate under cir- (b) Predetermined fixed rate. A predeter- cumstances where the benefits derived from mined fixed rate for indirect cost of the unit

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or activity providing service may be nego- mit the plans when required will cause the tiated as set forth in section F(2)(a) of these State agency to become delinquent. In the principles. event a State becomes delinquent, FNS will (H) Cost incurred by State agency for oth- not provide for the recovery of central serv- ers. The principles provided in section G will ice and indirect costs, and such costs already also be used in determining the cost of serv- made and claimed against Food Stamp Pro- ices provided by the State agency to another gram funds will be subject to disallowance. agency. (6) Negotiation and approval of cost alloca- (I) Cost allocation plan. tion plans for States. The cognizant Federal (1) A cost allocation will be required to agency, in collaboration with Federal agen- support the distribution of any indirect cies concerned, will be responsible for nego- costs. All costs allocable to the Food Stamp tiation, approval, and audit of cost alloca- Program under cost allocation plans will be tion plans. supported by formal accounting records (7) Negotiation and approval of cost alloca- which will substantiate the propriety of tion plans for local governments. Cost alloca- eventual charges. tion plans will be retained at the local gov- (2) There are two types of cost allocation ernment level for audit by the cognizant plans: Federal agency except in those cases where (a) Statewide or central service cost allo- that agency requests that cost allocation cation plan identifies and distributes the plans be submitted to it for negotiation and cost of services provided by support organi- approval. zations to those departments or units par- (8) A current list of cognizant Federal ticipating in Federal programs. agencies is maintained by the Office of Man- (b) Indirect cost proposals distribute the agement and Budget. administrative or joint costs incurred by the (9) Resolution of problems. The Office of State agency and the cost of service allo- Management and Budget will lend assistance cable to it under the Statewide or central in resolving problems encountered by Fed- service cost allocation plan in a ratio to all eral agencies on cost allocation plans. work performed by the State agency. The (10) Approval by FNS. FNS reserves the process involves applying a percentage rela- right to disapprove costs not meeting the tionship of indirect cost to direct cost. (3) Requirements. The cost allocation plan general criteria outlined in section C of of the State agency shall cover all allocated these principles. FNS shall promptly notify costs of the department as well as costs to be the State agency in writing of the dis- allocated under plans of other agencies or or- approval, the reason for the disapproval and ganizational units which are to be included the effective date. Costs incurred by State in the costs of federally sponsored programs. agencies after disapproval may not be The cost allocation plans of all the agencies charged to FNS unless if FNS subsequently rendering services to the State agency, to approves the cost. the extent feasible, should be presented in a Standards for Selected Items of Cost single document. (4) Instructions for preparation of cost alloca- A. Allowable cost. Standards for allow- tion plans. The Department of Health and ability of costs are established by Federal Human Services, in consultation with the Management Circular 74–4. These standards other Federal agencies concerned, will be re- will apply regardless of whether a particular sponsible for developing and issuing the in- item of cost is treated as direct or indirect. structions for use by State agencies in prepa- Failure to mention a particular item of cost ration of cost allocation plans. This respon- in these standards is not intended to imply sibility applies to both central support serv- that it is either allowable or unallowable. ices at the State and local government level Rather, determination of allowability in and indirect cost proposals of individual each case should be based on the treatment State agencies. of standards provided for similar or related (5) Submitting plans for approval. items of cost. The allowability of the se- (a) Responsibility for approving cost allo- lected items of cost is subject to the general cation plans for individual State agencies policies and principles as stated in Attach- has been assigned by the Office of Manage- ment A to Federal Management Circular 74– ment and Budget to the cognizant Federal 4. agency. (1) Accounting. The cost of establishing and (b) State cost allocation plans must be sub- maintaining accounting and other informa- mitted to the cognizant Federal agency tion systems required for the management of within six months after the last day of the the Food Stamp Program is allowable. This State’s fiscal year. Upon request by the includes costs incurred by central service State agency, an extension of time for subagencies of the State government for these mittal of the cost allocation plan may be purposes. The cost of maintaining central ac- granted by the cognizant Federal agency. It counting records required for overall State is essential that cost allocation plans be sub- or local government purposes, such as appro- mitted in a timely manner. Failure to sub- priation and fund accounts by the Treasurer,

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Comptroller, or similar officials, is consid- ing the period of performance in the admin- ered to be a general expense of government istration of the program including but not and is not allowable. necessarily limited to wages, salaries, and (2) Advertising. Advertising media includes supplementary compensation and benefits as newspapers, magazines, radio and television defined in section A.(13) of these principles. programs, direct mail, trade papers, and the The costs of such compensation are allow- like. The advertising costs allowable are able to the extent that total compensation those which are solely for: for individual employees: is reasonable for (a) Recruitment of personnel required for the services rendered; follows an appoint- the Program; ment made in accordance with State or local (b) Solicitation of bids for the procurement government laws and rules and which meets of goods and services required; Federal Merit System or other requirements, (c) Disposal of scrap or surplus materials where applicable; and is determined and sup- acquired in the performance of the agree- ported as provided in section A of these prin- ment; and ciples. Compensation for employees engaged (d) Other purposes specifically provided for in federally assisted activities will be consid- by FNS regulations or approved by FNS in ered reasonable to the extent that it is con- the administration of the Food Stamp Pro- sistent with that paid for similar work in gram. other activities of the State or local govern- (3) Advisory councils. Costs incurred by ment. In cases where the kinds of employees State advisory councils or committees estab- required for the Food Stamp Program activi- lished to carry out Food Stamp Program ties are not found in the other activities of goals are allowable. The cost of like organi- the State or local government, compensation zations is allowable when used to improve will be considered reasonable to the extent the efficiency and effectiveness of the Pro- that it is comparable to that paid for similar gram. work in the labor market in which the em- (4) Audit service. The cost of audits nec- ploying government competes for the kind of essary for the administration and manage- employees involved. Compensation surveys ment of functions related to the Program is providing data representative of the labor allowable. market involved will be an acceptable basis (5) Bonding. Costs of premiums on bonds for evaluating reasonableness. covering employees who handle Food Stamp (b) Payroll and distribution of time. Amounts Program funds or food coupons are allow- charged to the program for personal services, able. The amount of allowable coverage shall regardless of whether treated as direct or in- be limited to the anticipated maximum direct costs, will be based on payrolls docu- amount of food stamp funds or food coupons mented and approved in accordance with the handled at one time by that employee. generally accepted practice of the State or (6) Budgeting. Costs incurred for the devel- local agency. Payrolls must be supported by opment, preparation, and execution of budg- time and attendence or equivalent records ets are allowable. Costs for services of a cen- for individual employees. Distribution of sal- tral budget office are generally not allowable aries and wages of employees chargeable to since these are costs of general government. more than one program or other cost objec- However, where employees of the central tive will be supported by appropriate time budget office actively participate in the reports or approved time study methodolo- State agency’s budget process, the cost of gies. The method used should be included in services identifiable to the Food Stamp Pro- the cost allocation plan and should be ap- gram are allowable. proved by FNS. (7) Building lease management. The adminis- (11) Depreciation and use allowance. trative cost for lease management which in- (a) State agencies may be compensated for cludes review of lease proposals, mainte- the use of buildings, capital improvements, nance of a list of available property for and equipment through use allowances or de- lease, and related activities is allowable. preciation. Use allowances are the means of (8) Central stores. The cost of maintaining providing compensation in lieu of deprecia- and operating a central stores organization tion or other equivalent costs. However, a for supplies, equipment, and materials used combination of the two methods may not be either directly or indirectly for the Food used in connection with a single class of Stamp Program is allowable. fixed assets. (9) Communications. Communication costs (b) The computation of depreciation or use incurred for telephone calls or service, tele- allowances will be based on acquisition cost. graph, teletype service, wide area telephone Where actual cost records have not been service (WATS), centrex, telpak (tie lines), maintained, a reasonable estimate of the postage, messenger service and similar ex- original acquisition cost may be used in the penses are allowable. computation. The computation will exclude (10) Compensation for personal services. the cost of any portion of the cost of build- (a) General. Compensation for personal ings and equipment donated or borne di- services includes all remuneration, paid cur- rectly or indirectly by the Federal Govern- rently or accrued, for services rendered dur- ment through charges to Federal programs

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or otherwise, irrespective of where title was pension plans, severance pay, and the like, originally vested or where it presently re- provided such benefits are granted under ap- sides. In addition, the computation will also proved plans and are distributed equitably to exclude the cost of acquisition of land. De- programs and to other activities. preciation or a use allowance on idle or ex- (14) Employee morale, health And welfare cess facilities is not allowable, except when costs. The costs of health or first-aid clinics specifically authorized by FNS. and/or infirmaries, recreational facilities, (c) Where the depreciation method is fol- employees’ counseling services, employee in- lowed, adequate property records must be formation publications, and any related ex- maintained, and any generally accepted penses incurred in accordance with general method of computing depreciation may be State or local policy, are allowable. Income used. However, the method of computing de- generated from any of these activities will preciation must be consistently applied for be offset against expenses. any specific asset or class of assets for all af- (15) Exhibits. Costs of exhibits relating spe- fected federally sponsored programs and cifically to the Food Stamp Program are al- must result in equitable charges considering lowable. the extent of the use of the assets for the (16) Legal expenses. The cost of legal ex- benefit of such programs. penses required in the administration of the (d) In lieu of depreciation, a use allowance program is allowable. Legal services fur- for buildings and improvements may be com- nished by the chief legal officer of a State or puted at an annual rate not exceeding two local government or his staff solely for the percent of acquisition cost. The use allow- purpose of discharging his general respon- ance for equipment (excluding items prop- sibilities as legal officer are unallowable. erly capitalized as building cost) will be Legal expenses for the prosecution of claims computed at an annual rate not exceeding against the Federal Government is unallow- six and two-thirds percent of acquisition cost able. of usable equipment. (17) Maintenance and repair. Costs incurred (e) No depreciation or use charge may be for necessary maintenance, repair, or upkeep allowed on any assets that would be consid- of property which neither add to the perma- ered as fully depreciated, provided, however, nent value of the property nor appreciably that reasonable use charges may be nego- prolong its intended life, but keep it in an ef- tiated for any such assets if warranted after ficient operating condition, are allowable. taking into consideration the cost of the fa- (18) Materials and supplies. The cost of ma- cility or item involved, the estimated useful terials and supplies necessary to carry out life remaining at time of negotiation, the ef- the program is allowable. Purchases made fect of any increased maintenance charges or specifically for the program should be decreased efficiency due to age, and any charged thereto at their actual prices after other factors pertinent to the utilization of deducting all cash discounts, trade dis- the facility or item for the purpose con- counts, rebates, and allowances received by templated. the State agency. Withdrawals from general (12) Disbursing service. The cost of dis- stores or stockrooms should be charged at bursing program funds by the State Treas- cost under any recognized method of pricing urer or other designated officer is allowable. consistently applied. Incoming transpor- Disbursing services cover the processing of tation charges are a proper part of material checks or warrants, from preparation to re- cost. demption, including the necessary records of (19) Memberships, subscriptions and profes- accountability and reconciliation of such sional activities. records with related cash accounts. (a) The cost of membership in civic, business, (13) Employee fringe benefits. Costs identi- technical, and professional organizations is fied are allowable to the extent that total allowable, provided: compensation for employees is reasonable as (i) The benefit from the membership is re- defined in paragraph (10)(a) of these prin- lated to the program, ciples. (ii) The expenditure is for agency member- (a) Employee benefits in the form of reg- ship, ular compensation paid to employees during (iii) The cost of the membership is reason- periods of authorized absences from the job, ably related to the value of the services or such as for annual leave, sick leave, court benefits received, and leave, military leave, and the like, if they (iv) The expenditure is not for membership are provided pursuant to an approved leave in an organization which devotes a substan- system, and the cost thereof is equitably al- tial part of its activities to influencing legis- located to all related activities, including lation. federally assisted programs. (b) Reference material. The cost of books, (b) Employee benefits in the form of em- and subscriptions to civic, business, profes- ployers’ contributions or expense for social sional, and technical periodicals is allowable security, employees’ life and health insur- when related to the program. ance plans, unemployment insurance cov- (c) Meetings and conferences. Costs are al- erage, workers’ compensation insurance, lowable when the primary purpose of the

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meeting is the dissemination of technical in- diem or mileage basis in lieu of actual costs formation relating to the program and they incurred, or on a combination of the two. are consistent with regular practices fol- The charges must be consistent with those lowed for other activities of the State agen- normally allowed in like circumstances in cy. nonfederally sponsored activities. The dif- (20) Motor pools. The costs of a service or- ference in cost between first-class air accom- ganization which provides automobiles to modations and less-than-first-class air ac- user State agencies at a mileage or fixed commodations is unallowable except when rate and/or provides vehicle maintenance, in- less-than-first-class air accommodations are spection and repair services are allowable. not reasonably available. Notwithstanding (21) Payroll preparation. The cost of pre- the provisions of paragraphs C (7) and (10), paring payrolls and maintaining necessary travel costs of officials covered by those wage records is allowable. paragraphs, when specifically related to (22) Personnel administration. Costs for the grant programs, are allowable with the prior recruitment, examination, certification, approval of a grantor agency. classification, training, establishment of pay B. Costs allowable with approval of FNS. standards, and related activities for the pro- (1) Automated Data Processing. The costs of gram are allowable. acquiring data processing equipment and (23) Printing and reproduction. Cost for services used in the administration of the printing and reproduction services necessary Food Stamp Program are allowable. The for program administration including but costs of ADP equipment and services acquisi- not limited to forms, reports, manuals, and tions which exceed the prior approval cost information literature, is allowable. Publica- thresholds specified in § 277.18(c) are allow- tion costs of reports or other media relating able upon the prior written approval of FNS. to program accomplishments or results are Requests for prior approval of such costs allowable. shall be in accordance with the provisions of (24) Procurement service. The cost of pro- § 277.18. curement service, including solicitation of (2) Building space and related facilities. The bids, preparation and award of contracts, and cost of space in privately or publicly owned all phases of contract administration in pro- buildings used for the benefit of the Program viding goods, facilities and services for the is allowable subject to the following condi- program is allowable. tions. (25) Prosecution activities. The costs of in- (a) The total cost of space, whether in a vestigations and prosecutions of intentional privately or publicly owned building, may Food Stamp Program violations are allow- not exceed the rental cost of comparable able. Costs of investigation, prosecution, or space and facilities in a privately owned claims collection which are performed by building in the same locality. agencies other than the State agency shall (b) The cost of space may not be charged to be based on a formal agreement between the FNS for periods of nonoccupancy, without State or local agency and provider agency. authorization of FNS. These interagency agreements shall meet (i) Rental cost. The rental cost of space in the requirements of this part in regard to al- a privately-owned building is allowable. lowable charges. Funding under these inter- (ii) Maintenance and operation. The cost of agency agreements shall be provided by the utilities, insurance, security, janitorial serv- State agency from their funds and funds ices, elevator service, upkeep of grounds, made available by FNS. normal repairs and alterations and the like, (26) Taxes. In general, taxes or payments in are allowable to the extent they are not oth- lieu of taxes which the State agency is le- erwise included in rental or other charges for gally required to pay are allowable. space. (27) Training and education. The cost of in- (iii) Rearrangements and alterations. Costs service training, customarily provided for incurred for rearrangement and alteration of employee development which directly or in- facilities required specifically for the pro- directly benefits the program is allowable. gram or those that materially increase the Out-of-service training involving extended value or useful life of the facilities (section periods of time is allowable only when spe- B(3) of these principles) are allowable when cifically authorized by FNS. specifically approved by FNS. (28) Transportation. Costs incurred for (iv) Depreciation and use allowances on pub- freight, cartage, express, postage, and other licly owned buildings. These costs are allow- transportation costs relating either to goods able as provided in paragraph A(11) of these purchased, delivered, or moved from one lo- principles. cation to another are allowable. (v) Occupancy of space under rental-purchase (29) Travel. Travel costs are allowable for or a lease with option-to-purchase agreement. expenses for transportation, lodging, subsist- The cost of space procured under such ar- ence, and related items incurred by employ- rangements is allowable when specifically ees who are in travel status on official busi- approved by FNS. ness incident to the program. Such costs (3) Capital expenditures. The cost, net of may be charged on an actual basis, on a per any credits, of facilities, equipment, other

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capital assets, and repairs which materially tions not a part of the State agency is allow- increase the value or useful life of capital as- able. Prior authorization must be obtained sets, and/or of nonexpendable personal prop- from FNS for cost exceeding a total of $2,500. erty, having a useful life of more than one (8) Proposal costs. Costs of preparing indi- year and a net acquisition cost of more than rect cost proposals or amendments for allo- $5,000 per unit after allocation to FNS as cating, distributing, and implementing pro- projected for one year after purchase, is al- visions for payment of portions of the costs lowable when such procurement is specifi- of administering the Food Stamp Program cally approved by FNS. No such approval by the State agency are allowable. shall be granted unless the State agency (9) Cost incurred by agencies other than the shall demonstrate to FNS that such a cost is: State. The cost of services provided by other (a) Necessary and reasonable for proper agencies (including municipal governments) and efficient administration of the program, may only include allowable direct costs plus and allocable thereto under the principles a pro rata share of allowable supporting provided herein; and costs and supervision directly required in (b) That procurement of such item or items performing the service. Allowable supporting has been or will be made in accordance with costs are those services which may be cen- the standards set out in § 277.14. In no case tralized and includes such functions as pro- shall such a cost become a program charge curement, payroll, personnel services, main- against FNS prior to approval in writing by tenance and operation of space, data proc- FNS of the procurement and the cost. When essing, accounting, budgeting, auditing, mail assets acquired with Food Stamp funds are and messenger service and the like. Super- (i) sold, (ii) no longer available for use in a vision costs will not include supervision of a federally sponsored program, or (iii) used for general nature such as that provided by the purposes not authorized by FNS, FNS’s eq- head of a department and his staff assistants uity in the asset will be refunded in the same not directly involved in the operation of the proportion as Federal participation in its program. In lieu of determining actual indi- cost. In case any assets are traded on new rect cost related to a particular service per- items, only the net cost of the newly ac- formed by another agency, either of the fol- quired assets is allowable. lowing alternative methods may be used dur- (4) Insurance. ing the fiscal year involved and is specifi- (a) Cost of insurance to secure the State cally provided for in the indirect cost pro- agency against financial losses involved in posal: the acceptance, storage, and issuance of food (a) Standard indirect rate equal to ten per- coupons and ATP cards is allowable with cent of direct labor cost in providing the FNS approval. service (excluding overtime, shift or holiday (b) Costs of other insurance in connection premiums, and fringe benefits) may be al- with the general conduct of activities are allowed in lieu of actual allowable cost. lowable subject to the following limitations: (b) A predetermined fixed rate for indirect (i) Types and extent and cost of coverage cost of the unit or activity providing service will be in accordance with general State or may be negotiated. local government policy and sound business C. Unallowable costs. The following costs practice. shall not be allowable: (ii) Costs of insurance or contributions to (1) Costs of determining food stamp eligibility any reserve covering the risk of loss of, or incidental to the determination of TANF eligi- damage to, Federal Government property are bility are not chargeable to FNS. unallowable except to the extent that FNS (2) Bad debts. Any losses arising from un- approves such cost. collectable accounts or other claims, and re- (5) Management studies. The cost of man- lated costs, are unallowable. agement studies to improve the effectiveness (3) Contingencies. Contributions to a con- and efficiency of program management for tingency reserve or any similar provision for the Food Stamp Program is allowable. How- unforeseen events are unallowable. ever, FNS must approve cost in excess of (4) Contributions and donations. Unallow- $2,500 for studies performed by outside con- able. sultants or agencies other than the State (5) Entertainment. Costs whose purpose is agency. for amusement, social activities, and inci- (6) Preagreement costs. Costs incurred prior dental costs relating thereto, such as meals, to the effective date of approval of the beverages, lodgings, rentals, transportation, amended indirect cost proposal or the re- and gratuities are unallowable. vised Statewide cost allocation plan, wheth- (6) Fines and penalties. Costs resulting from er or not they would have been allowable violations of or failure to comply with Fed- thereunder if incurred after such date, are eral, State and local laws and regulations allowable only when subsequently provided are unallowable. for in the plan or approved indirect cost pro- (7) Governor’s expenses. The salaries and ex- posal. penses of the Office of the Governor of a (7) Professional services. Cost of professional State or the chief executive of a political services rendered by individuals or organiza- subdivision are considered a cost of general

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State or local government and are unallow- AUTHORITY: 7 U.S.C. 2011–2036. able. However, for a federally-recognized In- EDITORIAL NOTE: OMB control numbers re- dian tribal government, only that portion of lating to this part 278 are contained in § 271.8. the salaries and expenses of the office of the chief executive that is a cost of general government is unallowable. The portion of sala- § 278.1 Approval of retail food stores ries and expenses directly attributable to and wholesale food concerns. managing and operating programs is allow- (a) Application. Any firm desiring to able. participate or continue to be author- (8) Indemnification. The cost of indem- ized in the program shall file an appli- nifying the State against liabilities to third cation as prescribed by FNS. Such an parties and other losses not compensated by insurance is unallowable. application shall contain information (9) Interest and other financial costs. Interest which will permit a determination to on borrowings, bond discounts, cost of fi- be made as to whether such an appli- nancing and refinancing operations, and cant qualifies, or continues to qualify, legal and professional fees paid in connection for authorization under the provisions therewith, are unallowable. of the program. FNS may require that (10) Legislative expenses. Salaries and other a retail food store or wholesale food expenses of the State legislature or similar concern be visited to confirm eligi- local governmental bodies are unallowable. (11) Losses. Losses which could have been bility for program participation prior covered by permissible insurance are unal- to such store or concern being author- lowable. ized or reauthorized in the program. (12) Underrecovery of cost under agreements. Required visits shall be conducted by Any excess of cost over Federal contribution an authorized employee of the Depart- under one agreement is unallowable under ment, a designee of the Secretary, or another agreement. an official of the State or local govern- (13) The acquisition of land or buildings is an unallowable cost. ment designated by the Secretary. FNS shall approve or deny the application [Amdt. 188, 45 FR 85702, Dec. 30, 1980, as within 45 days of receipt of a completed amended by Amdt. 207, 47 FR 52338, Nov. 19, application. A completed application 1982; Amdt. 298, 52 FR 36400, Sept. 29, 1987; Amdt. 316, 54 FR 24531, June 7, 1989; Amdt. means that all information (other than 319, 55 FR 4361, Feb. 7, 1990; Amdt. 342, 59 FR an on-site visit) that FNS deems nec- 2733, Jan. 19, 1994; Amdt. 385, 65 FR 33441, essary in order to make a determina- May 24, 2000] tion on the firm’s application has been received. This information includes, PART 278—PARTICIPATION OF RE- but is not limited to, a completed ap- TAIL FOOD STORES, WHOLESALE plication form, all information and FOOD CONCERNS AND INSURED documentation from the applicant, as well as any needed third-party FINANCIAL INSTITUTIONS verification and documentation. (b) Determination of authorization. An Sec. applicant shall provide sufficient data 278.1 Approval of retail food stores and wholesale food concerns. and information on the nature and 278.2 Participation of retail food stores. scope of the firm’s business for FNS to 278.3 Participation of wholesale food con- determine whether the applicant’s par- cerns. ticipation will further the purposes of 278.4 Procedure for redeeming coupons. the program. Upon request, an appli- 278.5 Participation of insured financial in- cant shall provide documentation to stitutions. FNS to verify information on the appli- 278.6 Disqualification of retail food stores and wholesale food concerns, and imposi- cation. Such information may include, tion of civil money penalties in lieu of but is not limited to, State and local disqualifications. business licenses, Social Security 278.7 Determination and disposition of cards, drivers’ licenses, photographic claims—retail food stores and wholesale identification cards, bills of sale, deeds, food concerns. leases, sales contracts, State certifi- 278.8 [Reserved] cates of incorporation, sales records, 278.9 Implementation of amendments relating to the participation of retail food invoice records and business-related stores, wholesale food concerns and in- tax records. Retail food stores and sured financial institutions. wholesale food concerns and other enti- 278.10 [Reserved] ties eligible for authorization also

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shall be required to sign a release form ferent varieties of food items in each of which will authorize FNS to verify all the four staple food categories. Docu- relevant business related tax filings mentation to determine if a firm with appropriate agencies. In addition, stocks a sufficient amount of required they must obtain corroborating docu- staple foods to offer them for sale on a mentation from other sources as continuous basis may be required in deemed necessary to ensure the legit- cases where it is not clear that the re- imacy of applicant firms, as well as the quirement has been met. Such docu- accuracy of information provided by mentation can be achieved through the stores and concerns. Failure to store visits and/or verifying informa- comply with any request for information when requested. Failure to provide tion or failure to sign a written release verifying information when requested form shall result in denial of the appli- or to cooperate with store visits shall cation for authorization or withdrawal result in the denial or withdrawal of of a firm or concern from the program. authorization. In determining whether a firm quali- (B) Offer for sale perishable staple fies for authorization, FNS shall con- food items in at least two staple food sider all of the following: categories. Perishable foods are items (1) The nature and extent of the food which are either frozen staple food business conducted by the applicant—(i) items or fresh, unrefrigerated or refrig- Retail food store. (A) An establishment erated staple food items that will spoil or house-to-house trade route shall or suffer significant deterioration in normally be considered to have food quality within 2–3 weeks; and business of a nature and extent that (C) Offer a variety of staple foods will effectuate the purposes of the program if it sells food for home prepara- which means different types of foods, tion and consumption and meets one of such as apples, cabbage, tomatoes, and the following criteria: Offer for sale, on squash in the fruit or vegetable staple a continuous basis, a variety of quali- food category, or milk, cheese, butter fying foods in each of the four cat- and yogurt in the dairy category. Vari- egories of staple foods as defined in ety of foods is not to be interpreted as § 271.2 of this chapter, including perish- different brands, different nutrient val- able foods in at least two of the cat- ues, different varieties of packaging, or egories (Criterion A); or have more different package sizes. Similar proc- than 50 percent of the total gross retail essed food items with varying ingredi- sales of the establishment or route in ents such as, but not limited to, sau- staple foods (Criterion B). sages, breakfast cereals, milk, sliced (B) A retail food store must meet eli- breads, and cheeses, and similar un- gibility determination factors which processed food items, such as, but not may be based on, but not limited to, limited to, different varieties of apples, visual inspection, sales records, pur- cabbage, tomatoes, or squash shall not chase records, counting of each be considered as more than one stockkeeping units, or other inventory staple food variety for the purpose of or accounting recordkeeping methods determining variety. Multiple ingre- that are customary or reasonable in dient food items intended for home the retail food industry. In deter- preparation and consumption, such as, mining eligibility, such information but not limited to, cold pizza, macaroni may be requested for verification pur- and cheese, soup, or frozen dinners, poses, and failure to provide such docu- shall only be counted as one staple food mentation may result in denial or variety each and will normally be in- withdrawal from the program. cluded in the staple food category of (ii) Application of Criterion A. In order the main ingredient as determined by to qualify under this criterion, firms the FNS. shall: (iii) Application of Criterion B. In (A) Offer for sale and normally disorder to qualify under this criterion, play in a public area, qualifying staple firms must have more than 50 percent food items on a continuous basis, evi- of their total gross retail sales in sta- denced by having, on any given day of ple food sales. Total gross retail sales operation, no fewer than three dif- must include all retail sales of a firm,

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including food and non-food merchan- less it meets the criteria applicable to dise, as well as services, such as rental all retail firms and: fees, professional fees, and entertain- (A) It is a legitimate retail food out- ment/sports/games income. However, a let. Indicators which may establish to fee directly connected to the proc- FNS that a firm is a legitimate retail essing of staple foods, such as raw food outlet include, but are not limited meat, poultry, or fish by the service to, the following: provider, may be calculated as staple (1) The firm’s marketing structure; food sales under Criterion B. as may be determined by factors such (iv) Ineligible firms. Firms that do not as, but not limited to: meet the eligibility requirements in (i) A retail business license; this section or that do not effectuate (ii) The existence of sales tax records the purpose of the Food Stamp Pro- documenting retail food sales; and/or gram shall not be eligible for program separate bookkeeping records; and participation. New applicant firms that (2) The way the firm holds itself out are found to be ineligible will be denied to the public as evidenced by factors authorization to participate in the pro- such as, but not limited to: gram, and authorized retail food stores (i) The layout of the retail sales found to be ineligible will be with- space; drawn from program participation. In- (ii) The use of retail advertisements; eligible firms under this paragraph in- (iii) The posting of retail prices; clude, but are not limited to, stores (iv) Offering specials to attract retail selling only accessory foods, including customers; spices, candy, soft drinks, tea, or cof- (v) Hours of operation for retail busi- fee; ice cream vendors selling solely ice ness; cream; and specialty doughnut shops or (vi) Parking area for retail cus- bakeries not selling bread. In addition, tomers; and firms that are considered to be res- (B) It has total annual retail food taurants, that is, firms that have more sales of at least $250,000; or than 50 percent of their total gross re- (C) It is a legitimate retail outlet but tail sales in hot and/or cold prepared fails to meet the requirements in para- foods not intended for home prepara- graph (b)(1)(iv)(B) of this section, and tion and consumption, shall not qualify not authorizing such a firm would for participation as retail food stores cause hardship to food stamp house- under Criterion A or B. This includes holds. Hardship would occur in any one firms that primarily sell prepared of the following circumstances: foods that are consumed on the prem- (1) Program recipients would have ises or sold for carryout. Such firms difficulty in finding authorized firms may qualify, however, under the spe- to accept their coupons for eligible cial restaurant programs that serve the food; elderly, disabled, and homeless popu- (2) Special ethnic foods would not lations, as set forth in paragraph (d) of otherwise be available to recipients; or this section. (3) Recipients would be deprived of an (v) Wholesale food concerns. Wholesale opportunity to take advantage of un- food concerns, the primary business of usually low prices offered by the firm if which is the sale of eligible food at no other authorized firm in the area of- wholesale, and which meet the staple fers the same types of food items at food requirements in paragraph (b) of comparable prices. this section, shall normally be consid- (2) The volume of coupon business ered to have adequate food business for which FNS may reasonably expect the the purposes of the program, provided firm to do. The FNS officer in charge such concerns meet the criteria speci- may consider such factors as the loca- fied in paragraph (c) of this section. tion of a store and previous food sales (vi) Co-located wholesale food concerns. volumes in evaluating the ability of an No co-located wholesale/retail food applicant firm to attract food stamp concern with 50 percent or less of its business. total sales in retail food sales may be (3) The business integrity and reputa- authorized to redeem food stamps un- tion of the applicant. FNS shall deny the

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authorization of any firm from partici- tions had not been previously imposed pation in the program for a period of and satisfied; or time as specified in paragraph (k) of (vi) Commission of any other offense this section based on consideration of indicating a lack of business integrity information regarding the business in- or business honesty of owners, officers tegrity and reputation of the firm as or managers of the firm that seriously follows: and directly affects the present respon- (i) Conviction of or civil judgment sibility of a person. against the owners, officers or man- (4) The submission of collateral bonds or agers of the firm for: irrevocable letters of credit for firms with (A) Commission of fraud or a crimi- previous sanctions. (i) If the applicant nal offense in connection with obtain- firm has been sanctioned for violations ing, attempting to obtain, or per- of this part, by withdrawal, or disquali- forming a public or private agreement fication for a period of more than six or transaction; months, or by a civil money penalty in (B) Commission of embezzlement, lieu of a disqualification period of more theft, forgery, bribery, falsification or than six months, or if the applicant destruction of records, making false firm has been previously sanctioned for statements, receiving stolen property, violations and incurs a subsequent making false claims, or obstruction of sanction, regardless of the disqualifica- justice; or tion period, FNS shall, as a condition (C) Violation of Federal, State and/or of future authorization, require the ap- local consumer protection laws or plicant to present a collateral bond or other laws relating to alcohol, tobacco, irrevocable letter of credit that meets firearms, controlled substances, and/or the following conditions: gaming licenses; (A) The collateral bond must be (ii) Administrative findings by Fed- issued by a bonding agent/company rec- eral, State or local officials that do not ognized under the law of the State in give rise to a conviction or civil judg- which the applicant is conducting busi- ment but for which a firm is removed ness and which is represented by a ne- from such a program, or the firm is not gotiable certificate only. The irrev- removed from the program but FNS de- ocable letter of credit must be issued termines a pattern exists (3 or more in- by a commercial bank; stances) evidencing a lack of business integrity on the part of the owners, of- (B) The collateral bond or irrevocable ficers or managers of the firm; letter of credit must be made payable to the Food and Nutrition Service, U.S. (iii) Evidence of an attempt by the Department of Agriculture; firm to circumvent a period of disqualification, a civil money penalty or fine (C) The collateral bond cannot be imposed for violations of the Food canceled by the bonding agent/com- Stamp Act and program regulations; pany for non-payment of the premium (iv) Previous Food Stamp Program by the applicant. The irrevocable letter violations administratively and/or ju- of credit cannot be canceled by the dicially established as having been commercial bank for non-payment by committed by owners, officers, or man- the applicant; agers of the firm for which a sanction (D) The collateral bond or irrev- had not been previously imposed and ocable letter of credit must have a face satisfied; value of $1,000 or an amount equal to (v) Evidence of prior Food Stamp ten percent of the average monthly Program violations personally com- food stamp benefit redemption volume mitted by the owner(s) or the officer(s) of the applicant for the immediate of the firm at one or more units of a twelve months prior to the effective multi-unit firm, or evidence of prior date of the most recent sanction which Food Stamp Program violations com- necessitated the collateral bond or ir- mitted by management at other units revocable letter of credit, whichever of multi-unit firms which would indi- amount is greater; cate a lack of business integrity on the (E) The applicant is required to subpart of ownership and for which sanc- mit a collateral bond or irrevocable

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letter of credit that is valid for a pe- poration is one which has shares or riod of five years when re-entering the stock that are not traded on a stock program; and exchange or available for purchase by (F) The collateral bond or irrevocable the general public.) letter of credit shall remain in the cus- (6) Other factors. Any other factors tody of FNS unless released to the ap- which the FNS officer in charge con- plicant as a result of the withdrawal of siders pertinent to the application the applicant’s authorization, without under consideration. a fiscal claim established against the (c) Wholesalers. A wholesale food con- applicant by FNS. cern may be authorized to accept cou- (ii) Furnishing a collateral bond or pons only from a specified customer or irrevocable letter of credit shall not customers if it meets the requirements eliminate or reduce a firm’s obligation of paragraphs (a) and (b) of this sec- to pay in full any civil money penalty tion, and FNS determines it is required or previously determined fiscal claim as a redemption outlet: which may have been assessed against (1) For one or more specified author- the firm by FNS prior to the time the ized drug addict or alcoholic treatment bond or letter of credit was required by programs, FNS, and furnished by the firm. A firm (2) For one or more specified author- which has been assessed a civil money ized group living arrangements, penalty shall pay FNS as required, any (3) For one or more specified author- subsequent fiscal claim asserted by ized shelters for battered women and FNS. In such cases a collateral bond or children, irrevocable letter of credit shall be fur- (4) For one or more specified author- nished to FNS with the payment, or a ized nonprofit cooperative food-pur- schedule of intended payments, of the chasing ventures, civil money penalty. A buyer or trans- (5) For one or more specified author- feree shall not, as result of the transfer ized public or private nonprofit home- or purchase of a disqualified firm, be less meal providers, or required to furnish a bond or letter of (6) For one or more specified author- credit prior to authorization. ized retail food stores which are with- (5) Taxpayer identification numbers. At out access to an insured financial insti- the time of an initial request for au- tution which will redeem their cou- thorization as well as reauthorization, pons. an applicant firm must provide its em- No firm may be authorized to accept ployer identification number and social and redeem coupons concurrently as security numbers as described below: both a retail food store and a wholesale (i) Employer Identification Number. food concern. Authorizations of whole- The firm must provide its employer sale food concerns granted prior to identification number (EIN) if one has January 28, 1982 shall expire on May 31, been assigned to the firm by the Inter- 1982. Wholesale food concerns desiring nal Revenue Service. The authority to to participate in the program after request EINs and the guidelines for re- that date must reapply for authoriza- questing EINs are set forth in section tion in accordance with the provisions 6109(f) of the Internal Revenue Code of of this paragraph. 1986 and Treas. Reg. § 301.6109–2 (26 CFR (d) Meal services. A meal delivery 301.6109–2). service or communal dining facility de- (ii) Social Security Number. In addition siring to prepare and serve meals to to the EIN, the firm must provide the households eligible to use coupons for social security numbers (SSNs) of the those meals in addition to meeting the following individuals: requirements of paragraphs (a) and (b) (A) The SSN of an owner of a sole of this section, must establish that: proprietorship. (1) It is recognized as a tax exempt (B) The SSNs of general partners of organization by the Internal Revenue firms which are partnerships. Service; or (C) The SSNs of up to five of the larg- (2) It is a senior citizens’ center or est shareholders (owners) of privately apartment building occupied primarily owned corporations. (For purposes of by elderly persons and SSI recipients, this section, a privately owned cor- and their spouses; or

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(3) It is a restaurant operating under tered women and children. Also re- a contract with a State or local agency quired is that the shelter be a residence to prepare and serve (or deliver) low- which serves meals or provides food to cost meals to homeless persons, elderly its residents. persons and SSI recipients (and in the (h) House-to-house trade routes. FNS case of meal delivery services, to elder- shall, in consultation with the Depart- ly persons or handicapped persons) and ment’s Office of Inspector General, de- their spouses. Such a facility must termine those locations where the op- have more than 50 percent of its total eration of trade routes damages the sales in food. The contracts of res- program’s integrity. FNS may limit taurants must specify the approximate the authorization of house-to-house prices which will be charged. trade routes to those trade routes (e) Treatment programs. Drug addict or whose services are required by partici- alcoholic treatment and rehabilitation pating households in such areas in programs wishing to redeem benefits order to obtain food. The FNS Officer shall in addition to meeting the rein Charge, in deciding whether house- quirements of paragraphs (a), (b) and holds in such areas require a trade (d)(1) of this section, be under Part B of route’s services, shall consider the vol- Title XIX of the Public Health Service ume of food business the trade route Act (42 U.S.C. 300x et seq.). Approval to does and the availability of alternate participate is automatically withdrawn sources of comparable food. An FNS of- once the treatment and rehabilitation ficial shall inspect any applicant trade program no longer meets the criteria route’s vehicle to ensure that the trade which would make it eligible for fund- route is a retail food store before au- ing under part B of Title XIX (in ac- thorizing it to accept coupons. An FNS cordance with the definition in Drug official may require, as a condition of addiction or alcoholic treatment and reha- continuing authorization, that the bilitation program in § 271.2). trade route vehicle be reinspected (f) Group living arrangements. FNS semiannually to ensure that it con- shall authorize as retail food stores tinues to be a retail food store. those group living arrangements wish- (i) Private homeless meal providers. ing to redeem benefits. The group liv- FNS may authorize as retail food ing arrangement must, in addition to stores those restaurants which con- meeting requirements of paragraphs tract with the appropriate State agen- (a), (b), and (d)(1) of this section, be cy to serve meals to homeless persons certified by the appropriate agency or at ‘‘concessional’’ (low or reduced) agencies of the State under regulations prices. Restaurants shall be responsible issued under section 1616(e) of the So- for obtaining contracts with the appro- cial Security Act or under standards priate State agency as defined in § 272.9 determined by the Secretary to be and for providing a copy of the con- comparable to standards implemented tract to FNS at the time it applies for by appropriate State agencies under authorization to accept food stamp section 1616(e) of the Social Security benefits. Contracts must specify the Act. Approval to participate is auto- approximate prices which will be matically cancelled at any time that a charged. Examples of reduced prices in- program loses its certification from clude, but are not limited to, a percent- the State agency or agencies. age reduction, a set dollar amount re- (g) Shelters for battered women and duction, a daily special meal, or an children. FNS shall authorize as retail offer of a free food item or beverage food stores those shelters for battered (excluding alcoholic beverages). women and children wishing to redeem (j) Authorization. Upon approval, FNS benefits. The shelter must be public or shall issue a nontransferable authoriza- private nonprofit, as defined in para- tion card to the firm. The authoriza- graph (d)(1) of this section, and meet tion card shall be valid only for the the requirements of paragraphs (a) and time period for which the firm is au- (b) of this section. Shelters which also thorized to accept and redeem food serve other groups of individuals must stamp benefits. The authorization card have a portion of the facility set aside shall be retained by the firm until such on a long-term basis to shelter bat- time as the authorization period has

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ended, authorization in the program is (iii) Firms for which evidence exists superseded, or the card is surrendered of an attempt to circumvent a period of or revoked as provided in this part. All disqualification, a civil money penalty, firms will be authorized in the program or fine imposed for violations of the for a period of 5 years. The specifica- Food Stamp Act of 1977, as amended, tion of an authorization period in no and program regulations shall be de- way precludes FNS from periodically nied for a period of three years from requesting information from a firm for the effective date of denial; purposes of reauthorization in the pro- (iv) Firms for which evidence exists gram or from withdrawing or termi- of prior Food Stamp Program viola- nating the authorization of a firm in tions by owners, officers, or managers accordance with this part. of the firm for which a sanction had (k) Denying authorization. FNS shall deny the application of any firm if it not been previously imposed and satis- determines that: fied shall be denied for a period of time (1) The firm does not qualify for par- equivalent to the appropriate disquali- ticipation in the program as specified fication period for such previous viola- in paragraph (b), (c), (d), (e), (f), (g), (h) tions, effective from the date of denial; or (i) of this section; or (v) Firms for which evidence exists of (2) The firm has failed to meet the prior Food Stamp Program violations eligibility requirements for authoriza- at other units of multi-unit firms as tion under Criterion A or Criterion B, specified in § 278.1(b)(3)(v) for which a as specified in paragraph (b)(1)(i) of sanction had not been previously im- this section; or, for co-located whole- posed and satisfied shall be denied for a sale/retail firms, the firm fails to meet period of time equivalent to the appro- the requirements of paragraph (b)(1)(vi) priate disqualification period for such of this section. Any firm that has been previous violations, effective from the denied authorization on these bases date of denial; shall not be eligible to submit a new (vi) Firms for which any other evi- application for authorization in the dence exists which reflects negatively program for a minimum period of six on the business integrity or business months from the effective date of the honesty of the owners, officers or man- denial; agers of the firm as specified in (3) The firm has been found to lack § 278.1(b)(3)(vi) shall be denied for a pe- the necessary business integrity and reputation to further the purposes of riod of one year from the effective date the program. Such firms shall be de- of denial; nied authorization in the program for (4) The firm has filed an application the following period of time: that contains false or misleading infor- (i) Firms for which records of crimi- mation about a substantive matter, as nal conviction or civil judgment exist specified in § 278.6(e). Such firms shall that reflect on the business integrity of be denied authorization for the periods owners, officers, or managers as stipu- specified in § 278.6(e)(1) or § 278.6(e)(3); lated in § 278.1(b)(3)(i) shall be denied (5) The firm’s participation in the authorization permanently; program will not further the purposes (ii) Firms which have been officially of the program; removed from other Federal, State or (6) The firm has been found to be cir- local government programs through cumventing a period of disqualification administrative action shall be denied or a civil money penalty through a pur- for a period equivalent to the period of ported transfer of ownership; removal from any such programs; or, if (7) The firm has failed to pay in full the firm is not removed from the pro- any fiscal claim assessed against the gram, but FNS determines a pattern (3 firm under § 278.7, any fines assessed or more instances) exists evidencing a lack of business integrity on the part under §§ 278.6(l) or 278.6(m), or a trans- of the owners, officers or managers of fer of ownership civil money penalty the firm, such firm shall be denied for assessed under § 278.6(f). The FNS offi- a one year period effective from the cer in charge shall issue a notice to the date of denial; firm (using any delivery method that

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provides evidence of delivery) to in- draw or deny the authorization of any form the firm of any authorization de- firm which: nial and advise the firm that it may re- (1) Refuses to accept correspondence quest review of that determination. from FNS; (l) Withdrawing authorization. (1) FNS (2) Fails to respond to inquiries from shall withdraw the authorization of FNS within a reasonable time; or any firm authorized to participate in (3) Cannot be located by FNS with the program for any of the following reasonable effort. reasons. (n) Periodic reauthorization. At the re- (i) The firm’s continued participation quest of FNS a retail food store or in the program will not further the wholesale food concern will be required purposes of the program; to undergo a periodic reauthorization (ii) The firm fails to meet the speci- determination by updating any or all fications of paragraph (b), (c), (d), (e), of the information on the firm’s appli- (f), (g), (h), or (i) of this section; cation form. Failure to cooperate in (iii) The firm fails to meet the re- the reauthorization process will result quirements for eligibility under Cri- in withdrawal of the firm’s approval to terion A or B, as specified in paragraph participate in the program. (b)(1)(i) of this section; or, for co-lo- (o) Applications containing false infor- cated wholesale/retail firms, the firm mation. The filing of any application fails to meet the requirements of para- containing false or misleading informa- graph (b)(1)(vi) of this section, for the tion may result in the denial of ap- time period specified in paragraph proval for participation in the pro- (k)(2) of this section; gram, as specified in paragraph (k) of (iv) The firm fails to maintain the this section, or disqualification of a necessary business integrity to further firm from participation in the pro- the purposes of the program, as speci- gram, as specified in § 278.6, and may fied in paragraph (b)(3) of this section. subject the firm and persons respon- Such firms shall be withdrawn for lack sible to civil or criminal action. of business integrity for periods of time (p) Administrative review. Any within accordance with those stipulated in drawal or denial of authorization to paragraph (k)(3) of this section for spe- participate in the program shall be cific business integrity findings; subject to administrative review under (v) The firm has failed to pay in full part 279. any fiscal claim assessed against the (q) Use and disclosure of information firm under § 278.7 or any fines assessed provided by firms. With the exception of under §§ 278.6(l) or 278.6(m) or a transfer EINs and SSNs, any information col- of ownership civil money penalty as- lected from retail food stores and sessed under § 278.6(f); or wholesale food concerns, such as own- (vi) The firm has failed to pay fines ership information and sales and re- assessed under § 278.6(l) or § 278.6(m); or demption data, may be disclosed for (vii) The firm is required under State purposes directly connected with the and/or local law to charge tax on eligi- administration and enforcement of the ble food purchased with coupons or to Food Stamp Act and these regulations, sequence or allocate purchases of eligi- and can be disclosed to and used by ble foods made with coupons and cash State agencies that administer the in a manner inconsistent with 272.1 of Special Supplemental Nutrition Pro- these regulations. gram for Women, Infants and Children (2) The FNS officer in charge shall (WIC). Such information may also be issue a notice to the firm by using any disclosed to and used by Federal and delivery method as long as the method State law enforcement and investiga- provides evidence of delivery to inform tive agencies for the purpose of admin- the firm of the determination and of istering or enforcing other Federal or the review procedure. FNS shall re- State law, and the regulations issued move the firm from the program if the under such other law. Such disclosure firm does not request review within the and use shall also include companies or period specified in part 279. individuals under contract for the oper- (m) Refusal to accept correspondence or ation by, or on behalf of FNS to accom- to respond to inquiries. FNS may with- plish an FNS function. Such purposes

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include the audit and examination of tered or enforced by access to re- such information by the Comptroller quested information, and the relevance General of the United States author- of the information to those purposes. If ized by any other provision of law. Any a formal agreement exists between person who publishes, divulges, dis- FNS and another agency or instrumen- closes, or makes known in any manner tality, individual written requests may or to any extent not authorized by Fed- be unnecessary. FNS may request addi- eral law or regulations any informational information if needed to clarify tion obtained under this paragraph a request; shall be fined not more than $1,000 or (iv) Disclosure by FNS is limited to: imprisoned not more than 1 year, or Information about applicant stores and both. Safeguards with respect to em- concerns with applications on file; in- ployee identification numbers (EINs) formation about authorized stores par- are contained in paragraph (q)(2) of ticipating in the FSP; and information this section. Safeguards with respect to about unauthorized entities or individ- Social Security numbers (SSNs) are uals illegally accepting or redeeming contained in paragraph (q)(3) of this food stamps; section. (v) Requests for information disclo- (1) Criteria for requesting information. sure by FNS may involve a specific FNS shall determine what information store or concern, or some or all stores can be disclosed and which government and concerns covered by paragraph agencies have access to that informa- (q)(1)(iv) of this section. In addition, tion based on the following criteria: FNS may sign agreements allowing (i) Federal and State law enforce- certain government entities direct ac- ment or investigative agencies or in- cess to appropriate FNS data, with ac- strumentalities administering or en- cess to EINs and SSNs limited only to forcing specified Federal and State other Federal agencies and instrumen- laws, or regulations issued under those talities that otherwise have access to laws, have access to certain informa- such numbers. tion maintained by FNS. Such agencies (2) Employer identification numbers. (i) or instrumentalities must have among The Department may have access to their responsibilities the enforcement the EINs obtained pursuant to para- of law or the investigation of suspected graph (b)(5) of this section for the pur- violations of law. However, only cer- pose of establishing and maintaining a tain Federal entities have access to in- list of the names and EINs of the stores formation involving SSNs and EINs in and concerns for use in determining accordance with paragraph (q)(1)(ii) of those applicants who previously have this section; been sanctioned or convicted under sec- (ii) Except for SSNs and EINs, infor- tions 12 and 15 of the Food Stamp Act mation provided to FNS by applicants of 1977, as amended, (7 U.S.C. 2021 or and authorized firms participating in 2024). The Department also may share the FSP may be disclosed and used by EINs with other Federal agencies and qualifying Federal and State entities instrumentalities that otherwise have in accordance with paragraph (q)(1)(i) access to EINs if the Department deter- of this section. The disclosure of SSNs mines that such sharing would assist in and EINs is limited only to qualifying verifying and matching such informa- Federal agencies or instrumentalities tion against information maintained which otherwise have access to SSNs by such other agency or instrumen- and EINs based on law and routine use. tality. Any such information shared Release of information under this para- pursuant to this paragraph may be graph shall be limited to information used by the Department or such other relevant to the administration or en- agency or instrumentality for the pur- forcement of the specified laws and pose of effective administration and regulations, as determined by FNS; enforcement of the Food Stamp Act of (iii) Requests for information must 1977, as amended, or for the purpose of be submitted in writing, including elec- investigating violations of other Fed- tronic communication, and must clear- eral laws or enforcing such laws. See ly indicate the specific provision of law Treas. Reg. § 301.6109–2 (b) and (c) (26 or regulations which would be adminis- CFR 301.6109–2 (b) and (c)).

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(ii) The only persons permitted ac- 7213(a)(4) applies with respect to offers cess to EINs obtained pursuant to para- (in exchange for any return or return graph (b) of this section are officers information) described in that section. and employees of the United States, See Treas. Reg. § 301.6109–2(f) (26 CFR who otherwise have access and whose 301.6109–2(f)). duties or responsibilities require access (3) Social Security numbers. (i) The De- to the EINs for the administration or partment may have access to SSNs ob- enforcement of the Food Stamp Act of tained pursuant to paragraph (b)(5) of 1977, as amended, or for the purpose of this section for the purpose of estab- investigating violations of other Fed- lishing and maintaining a list of names eral laws or enforcing such laws. See and SSNs of stores and concerns for use Treas. Reg. § 301.6109–2(d)(1) (26 CFR in determining those applicants who 301.6109–2(d)(1)). previously have been sanctioned or (iii) The Department or any agency convicted under section 12 or 15 of the or instrumentality of the United Food Stamp Act of 1977, as amended, (7 States shall provide for any additional U.S.C. 2021 or 2024). The Department safeguards that the Secretary of the may use this determination of sanc- Treasury determines to be necessary or tions and convictions in administering appropriate to protect the confiden- sections 12 and 15 of the Food Stamp tiality of the EINs. The Department Act of 1977, as amended, (7 U.S.C. 2018, may also provide for any additional 2021). The Department also may share safeguards to protect the confiden- SSNs with other Federal agencies and tiality of EINs so long as these safe- instrumentalities if the Department guards are consistent with any safe- determines that such sharing would as- guards determined by the Secretary of sist in verifying and matching such in- the Treasury to be necessary or appro- formation against information main- priate. See Treas. Reg. § 301.6109–2(d)(2) tained by the Department or such (26 CFR 301.6109–2(d)(2)). other agency or instrumentality. Any (iv) EINs maintained by the Depart- such information shared pursuant to ment or maintained by any agency or this paragraph shall be used for the instrumentality of the United States purpose of effective administration and pursuant to § 278.1(b)(5) are confiden- enforcement of the Food Stamp Act of tial. Except as provided in paragraph 1977, as amended, or for the purpose of (q)(2)(ii) of this section above, no offi- investigating violations of other Fed- cer or employee of the United States eral laws or enforcing such laws. who has or had access to any such EIN (ii) The only persons permitted ac- may disclose that number in any man- cess to SSNs obtained pursuant to ner. For purposes of paragraph paragraph (b) of this section are offi- (q)(2)(iv) of this section the term officer cers and employees of the United or employee includes a former officer or States, who otherwise have access, and employee. See Treas. Reg. § 301.6109–2(e) whose duties or responsibilities require (26 CFR 301.6109(e)). access to the SSNs for the administra- (v) Sections 7213(a) (1), (2) and (3) of tion or enforcement of the Food Stamp the Internal Revenue Code of 1986 apply Act of 1977, as amended, or for the pur- with respect to the unauthorized, will- pose of investigating violations of ful disclosure to any person of EINs ob- other Federal laws or enforcing such tained by the Department pursuant to laws. Such access shall also include § 278.1(b)(5) in the same manner and to companies or individuals under con- the same extent as sections 7213(a) (1), tract for the operation by, or on behalf (2) and (3) apply with respect to unau- of FNS to accomplish an FNS function. thorized disclosure of returns and re- (iii) The Department shall provide turn information described in those for all additional safeguards that the sections. Section 7213(a)(4) of the Inter- Commissioner of the Social Security nal Revenue Code of 1986 applies with Administration determines to be nec- respect to the willful offer of any item essary or appropriate to protect the of material value in exchange for any confidentiality of the SSNs. The De- EIN obtained by the Department pur- partment may also provide for any ad- suant to § 278.1(b)(5) in the same man- ditional safeguards to protect the con- ner and to the same extent as section fidentiality of SSNs so long as these

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safeguards are consistent with any thorization to accept food stamps from safeguards determined by the Commis- homless food stamp recipients. Such sioner of the Social Security Adminis- meal providers must be public or pri- tration to be necessary or appropriate. vate nonprofit organizations as defined (iv) The SSNs and related records by the Internal Revenue Service (I.R.C. that are obtained or maintained by au- 501(c)(3)), must serve meals that in- thorized persons are confidential, and clude food purchased by the provider, no officer or employee shall disclose must meet the requirements of para- any such SSN or related record except graphs (a) and (b) of this section, and as authorized. The term ‘‘related must be approved by an appropriate record’’ means any record, list, or com- State or local agency, pursuant to pilation that indicates, directly or in- § 272.9. Public and private nonprofit directly, the identity of any individual homeless meal providers shall be re- with respect to whom a request for a sponsible for obtaining approval from SSN is maintained. For purposes of an appropriate State or local agency paragraph (r)(3)(iv) of this section the and shall provide written documenta- term ‘‘officer or employee’’ includes a former officer or employee. tion of such approval to FNS prior to (v) The sanctions under sections approval of the meal provider’s appli- 7213(a) (1), (2) and (3) of the Internal cation for authorization. (If such ap- Revenue Code of 1986 will apply with proval is subsequently withdrawn, FNS respect to the unauthorized, willful dis- authorization shall be withdrawn). closure to any person of SSNs and re- Public and private nonprofit homeless lated records obtained or maintained in meal providers serving meals which the same manner and to the same ex- consist wholly of donated foods shall tent as sections 7213(a) (1), (2) and (3) not be eligible for authorization. In an apply with respect to unauthorized dis- area in which FNS, in consultation closures of returns and return informa- with the Department’s Office of Inspec- tion described in those sections. The tor General, finds evidence that the au- sanction under section 7213(a)(4) of the thorization of a public and private non- Internal Revenue Code of 1986 will profit homeless meal provider would apply with respect to the willful offer damage the Food Stamp Program’s in- of any item of material value in ex- tegrity, FNS shall limit the participa- change for any SSN or related record tion of that public and private non- in the same manner and to the same profit homeless meal provider, unless extent as section 7213(a)(4) applies with FNS determines that the establish- respect to offers (in exchange for any ment or shelter is the only one of its return or return information) described kind serving the area. in that section. (s) Each authorized retail food store (4) FNS initiated matches. Under the shall post in a suitable and conspicuous restrictions noted in paragraph (r) of location in the store a sign designed this section, FNS will periodically ini- and provided by FNS which provides tiate cross matches of retailer data information on how persons may report with other Federal and State agencies’ abuses they have observed in the oper- files for the purpose of verifying infor- ation of the program. Refusal or re- mation provided by applicant and par- peated failure to display such a sign by ticipating firms, and for the purposes of administering and enforcing other an authorized retail food store may re- Federal or State laws. Such matches sult in the withdrawal of the firm’s ap- could involve all firms participating proval to participate in the program. after implementation for the purpose (t) Periodic notification. The FNS will of verifying information such as, but issue periodic notification to partici- not limited to, SSNs and retail sales pating retail stores and wholesale food data. concerns to clarify program eligibility (r) Public and Private Nonprofit Home- criteria, including the definitions of less Meal Providers. FNS shall authorize ‘‘Retail food store’’, ‘‘Staple foods’’, as retail food stores, those public and ‘‘Eligible foods’’, and ‘‘Perishable private nonprofit homeless meal pro- foods’’. At a minimum, such informa- viders which apply and qualify for au- tion will be provided to stores at the

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time of authorization, reauthorization ice. For purposes of this section, ‘‘av- and upon request. erage cost’’ is determined by averaging [Amdt. 136, 43 FR 43274, Sept. 22, 1978] food costs over a period of up to one calendar month. Voluntary payments EDITORIAL NOTE: For FEDERAL REGISTER ci- by food stamp recipients in excess of tations affecting § 278.1, see the List of CFR such costs may be accepted by the Sections Affected, which appears in the Finding Aids section of the printed volume meal providers. The value of donated and on GPO Access. foods from any source shall not be considered in determining the amount to EFFECTIVE DATE NOTE: At 61 FR 53600, Oct. 15, 1996, in § 278.1, paragraph (i) was redesig- be requested from food stamp recipi- nated as paragraph (j) and a new paragraph ents. All indirect costs, such as those (i) was added. This paragraph contains infor- incurred in the acquisition, storage, or mation collection and recordkeeping require- preparation of the foods used in meals ments and will not become effective until ap- shall also be excluded. In addition, if proval has been given by the Office of Man- others have the option of eating free or agement and Budget. making a monetary donation, food § 278.2 Participation of retail food stamp recipients must be provided the stores. same option of eating free or making a (a) Use of coupons. Coupons may be donation in money or food stamps. No accepted by an authorized retail food retail food store may single out coupon store only from eligible households or users for special treatment in any way. the households’ authorized representa- (c) Accepting coupons. No authorized tive, and only in exchange for eligible retail food store may accept coupons food. Coupons may not be accepted in marked ‘‘paid,’’ ‘‘canceled,’’ or ‘‘speci- exchange for cash, except when cash is men.’’ Nor may a retail food store ac- returned as change in a transaction in cept coupons bearing any cancellation which coupons were accepted in pay- or endorsement, or coupons of other ment for eligible food under pargraph than the 1-dollar denomination which (d) of this section. Coupons may not be have been detached from the coupon accepted in payment of interest on books prior to the time of purchase or loans or for any other nonfood use. An delivery of eligible food unless the de- authorized retail food store may not tached coupons are accompanied by the accept coupons from another retail coupon books which bear the same se- food store, except that public or pri- rial numbers that appear on the de- vate nonprofit homeless meal providers tached coupons. However, in the case of may redeem coupons for eligible food public or private nonprofit homeless through authorized retail food stores. meal providers, retail food stores may (b) Equal treatment for coupon cus- accept detached coupons which have tomers. Coupons shall be accepted for been accepted by the homeless meal eligible foods at the same prices and on provider. It is the right of the house- the same terms and conditions applica- hold member or the authorized rep- ble to cash purchases of the same foods resentative to detach the coupons from at the same store except that tax shall the book. not be charged on eligible foods purchased with coupons. However, nothing (d) Making change. An authorized rein this part may be construed as au- tail food store shall use, for the pur- thorizing FNS to specify the prices at pose of making change, uncanceled and which retail food stores may sell food. unmarked 1-dollar coupons which were However, public or private nonprofit previously accepted for eligible foods. homeless meal providers may only re- If change in an amount of less than 1- quest voluntary use of food stamps from dollar is required, the eligible house- homeless food stamp recipients and hold shall receive the change in cash. may not request such household using However, in the case of public or pri- food stamps to pay more than the aver- vate nonprofit homeless meal pro- age cost of the food purchased by the viders, neither cash change nor credit public or private nonprofit homeless slips shall be provided under any cir- meal provider contained in a meal cumstances when food stamps are used served to the patrons of the meal serv- to purchase meals. At no time may

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cash change in excess of 99 cents be re- dren, and public or private nonprofit turned in a coupon transaction. An au- homeless meal providers for homeless thorized retail food store may not en- food stamp households shall not gage in a series of coupon transactions present coupons directly to an insured the purpose of which is to provide the financial institution for redemption. same food stamp customer an amount (2) Notwithstanding paragraph (g)(1) of cash change greater than the max- of this section, authorized drug addict imum 99 cents cash change allowed in and alcoholic treatment and rehabili- one transaction. tation programs, group living arrange- (e) Accepting coupons before delivery. ments, shelters for battered women and Food retailers may not accept coupons children, and public or private non- before delivering the food, retain cus- profit homeless meal providers for tody of any unspent coupons, or in any homeless food stamp households may way prevent an eligible household from be authorized to redeem EBT benefits using coupons in making purchases directly through an insured financial from other authorized firms. However, institution in areas where an Elec- a nonprofit cooperative food pur- tronic Benefit Transfer (EBT) system chasing venture may accept coupons has been implemented. from a member of the cooperative at (h) Identifying coupon users. Coupons the time the member places a food may not knowingly be accepted from order. The food ordered must be made persons who have no right to posses- available to the member within 14 days sion of coupons. If a food retailer has from the day the cooperative receives any cause to believe that a person pre- the member’s coupons. senting coupons has no right to use the (f) Paying credit accounts. Food stamp coupons, the food retailer should re- benefits shall not be accepted by an au- quest the person to show the ID card of thorized retail food store in payment the household to establish the right of for items sold to a household on credit. that person to use the coupons. Where A firm that commits such violations photo ID cards are in use, the person shall be disqualified from participation presenting the ID card need not be pic- in the Food Stamp Program for a pe- tured on the card. Public or private riod of one year. nonprofit homeless meal providers re- (g)(1) Redeeming coupons. Authorized retail food stores may exchange cou- deeming detached coupons through re- pons accepted in accordance with this tail food stores shall present their re- part for face value upon presentation tailer authorization card as proof of through the banking system or through their eligibility to redeem coupons a wholesale food concern authorized to through retail food stores. accept coupons from that retailer. Au- (i) Checking meal delivery service re- thorized drug addict or alcoholic treat- cipients. A nonprofit meal delivery ment and rehabilitation programs, service shall require the recipient of a group living arrangements, and shel- delivered meal to show the marked ID ters for battered women and children card establishing the recipient’s right may present coupons for redemption to use coupons for that service the first through authorized wholesale food con- time that the recipient offers coupons cerns. A drug addict or alcoholic treat- in payment for the service, and shall ment center, group living arrangement, request the marked ID card at any or shelter for battered women and chil- time the nonprofit meal delivery serv- dren may purchase food in authorized ice has cause to question the continued retail food stores as the authorized rep- eligibility of the recipient to use cou- resentative of its participating house- pons for delivered meals. holds. Public or private nonprofit (j) Checking hunting and fishing equip- homeless meal providers may purchase ment users. Authorized Alaskan retail- food in authorized retail food stores ers shall require coupon customers and through authorized wholesale food wanting to purchase hunting and fish- concerns. Authorized drug addict and ing equipment with coupons to show alcoholic treatment and rehabilitation their ID cards to determine that they programs, group living arrangements, live in an area designated by FNS as shelters for battered women and chil- one in which persons are dependent

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upon hunting and fishing for subsist- for battered women and children, or ence. from one or more public or private non- (k) Checking participants in res- profit homeless meal providers, only in taurants. A restaurant operating under exchange for food. a State contract shall require a house- (b) Accepting legally obtained coupons. hold purchasing meals to show the No authorized wholesale food concern marked ID card establishing the house- may accept coupons if the wholesaler hold’s right to purchase meals with knows or has reasonable cause to be- coupons unless the personnel of the lieve that the coupons were not legally restaurant know that the program par- obtained for eligible food. ticipant tendering coupons is eligible (c) Redeeming coupons. An authorized to use coupons to purchase meals. wholesale food concern may redeem (l) Checking public or private nonprofit coupons, properly accepted from retail- homeless meal provider recipients. Public ers, through the banking system, upon or private nonprofit homeless meal presentation of the coupons with: providers shall establish a food stamp patron’s right to purchase meals with (1) The authorized retail food store’s coupons. properly filled-out and signed redemption certificate for the coupons; and [Amdt. 136, 43 FR 43274, Sept. 22, 1978, as (2) The authorized wholesale food amended at Amdt. 191, 46 FR 50277, Oct. 9, concern’s properly filled-out and signed 1981; Amdt. 205, 46 FR 60167, Dec. 8, 1981; Amdt. 257, 49 FR 32538, Aug. 15, 1984; Amdt. redemption certificate. 286, 52 FR 7557, Mar. 11, 1987; 53 FR 31649, (d) Handling retailer redemption certifi- Aug. 19, 1988; Amdt. 344, 56 FR 54778, Oct. 23, cates. No authorized wholesale food 1991; Amdt. 356, 59 FR 29714, June 9, 1994; concern may alter, prepare, or com- Amdt. 343, 61 FR 53601, Oct. 15, 1996; Amdt. plete an authorized retail food store’s 397, 70 72354, Dec. 5, 2005; 73 FR 79595, Dec. 30, redemption certificate. 2008] [Amdt. 136, 43 FR 43274, Sept. 22, 1978, as § 278.3 Participation of wholesale food amended by Amdt. 173, 46 FR 62810, Dec. 29, concerns. 1981; Amdt. 286, 52 FR 7558, Mar. 11, 1987; (a) Accepting coupons. An authorized Amdt. 344, 56 FR 54778, Oct. 23, 1991; Amdt. wholesale food concern may accept en- 343, 61 FR 53601, Oct. 15, 1996] dorsed coupons from one or more speci- § 278.4 Procedure for redeeming cou- fied authorized retail food stores, from pons. one or more specified authorized nonprofit cooperative food-purchasing ven- (a) Coupons accepted without author- tures, from one or more specified au- ization. Coupons accepted by a retail thorized group living arrangements, food store or a wholesale food concern from one or more specified authorized before the receipt by the firm of an au- drug addict or alcoholic treatment pro- thorization card from FNS may not be grams, from one or more specified au- presented for redemption unless the thorized shelters for battered women FNS officer in charge has approved the and children, or, from one or more redemption under § 278.7(b). Burned or specified public or private nonprofit mutilated coupons shall be presented homeless meal providers if the coupons for redemption to the FNS officer in are accompanied by a properly filled- charge as provided in § 278.7(c). out and signed redemption certificate, (b) Endorsing coupons. Each author- and are not marked ‘‘paid,’’ ‘‘can- ized retail food store or authorized celed,’’ or ‘‘specimen.’’ A wholesaler wholesale food concern shall mark its authorized to accept coupons from an authorization number or name on each authorized drug addict or alcoholic coupon before it presents the coupons treatment program, or from an author- for redemption. ized group living arrangement, or from (c) Using redemption certificates. FNS an authorized shelter for battered will provide all authorized firms with women and children, or from one or redemption certificates. Wholesale food more public or private nonprofit home- concerns and retail food stores, except less meal providers may accept cou- for drug addict and alcoholic treatment pons from that treatment program, or and rehabilitation programs and public group living arrangement, or shelter or private nonprofit homeless meal

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providers, shall use the redemption cer- entered on the Food Coupon Deposit tificates to present coupons to insured Document must be equal to the actual financial institutions for credit or for value of coupons being deposited and to cash. All retail food stores which wish the total value of verified amounts en- to redeem coupons at wholesale food coded on the corresponding redemption concerns shall use the redemption cer- certificates. tificates for that purpose. An author- (2) An insured financial institution ized retail firm using redemption cer- shall verify the amount of the coupons tificates to redeem coupons shall fill being redeemed and record the amount out the redemption certificate to show in the designated space on the redemp- the value of the coupons redeemed, the tion certificate. In order to conform name of the insured financial institu- with Federal Reserve requirements, the tion or wholesaler, the date, and the verified amount shall be recorded in signature and title of the official of the the appropriate field on the redemption firm redeeming coupons. certificate using Magnetic Ink Char- [Amdt. 136, 43 FR 43274, Sept. 22, 1978, as acter Recognition (MICR) encoding. amended by Amdt. 286, 52 FR 7558, Mar. 11, Redemption certificates accepted by 1987; Amdt. 344, 56 FR 54778, Oct. 23, 1991; insured financial institutions shall be Amdt. 343, 61 FR 53601, Oct. 15, 1996] forwarded with the corresponding cou- § 278.5 Participation of insured finan- pon deposits to the Federal Reserve cial institutions. Bank along with the Food Coupon De- posit Document (Form FNS–521). (a) Accepting coupons. (1) Financial (3) Redeemed coupons must be indeli- institutions that are insured by the bly cancelled on the face of the coupon Federal Deposit Insurance Corporation (FDIC) or financial institutions which by the first insured financial institu- are insured under the Federal Credit tion receiving them. If the cancellation Union Act and which have retail food on the coupon face does not show the stores or wholesale food concerns in depositing institution’s name or its their field of membership may redeem routing symbol transit number, this coupons only from authorized retail identifying information must appear food stores, meal services, and whole- on the straps affixed to each bundle of sale food concerns in accordance with coupons of like denomination. Deposits the rules contained in this part and in- not meeting these cancellation require- structions of the Federal Reserve ments may be returned to the depos- Banks. No financial institution may iting institution for reprocessing. Re- impose on or collect from a retail food tail food stores may not be required to store a fee or other charge for redemp- cancel the coupons by the insured fi- tion of coupons that are submitted to nancial institution nor may the in- the financial institution in a manner sured financial institution charge the consistent with the requirements, ex- retail food stores a fee or other charge cept for coupon cancellation, for the for cancellation of coupons. A portion presentation of coupons by the finan- of a coupon consisting of less than cial institution to the Federal Reserve three-fifths of a whole coupon may not banks. Coupons submitted to insured be redeemed. financial institutions for credit or cash (4) Insured financial institutions must be properly endorsed in accord- which are members of the Federal Re- ance with § 278.4 of this part and shall serve System, insured nonmember be accompanied by a properly com- clearing institutions, and insured non- pleted and signed redemption certifi- member institutions which have ar- cate. All verified and encoded redemp- ranged with a Federal Reserve Bank to tion certificates accepted by insured fi- deposit coupons for credit to the ac- nancial institutions shall be forwarded count of a member institution on the with the corresponding coupon deposits books of a Federal Reserve Bank may to the Federal Reserve Bank along forward coupons directly to the Fed- with the accompanying Food Coupon eral Reserve Bank. Other insured fi- Deposit Document (Form FNS–521). In nancial institutions may forward can- accordance with Federal Reserve re- celled coupons through ordinary collec- quirements, the coupon deposit value tion channels.

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(b) Role of Federal Reserve Banks. Fed- of any coupons held by FNS on comple- eral Reserve Banks, acting as fiscal tion of the examination or inspection agents of the United States, will rein which the coupons were used. Claims ceive canceled coupons for collection or demands for unredeemed coupons as cash items from armed forces instal- surrendered to FNS may be mailed to lations, member insured financial in- the local FNS field office for the stitutions of the Federal Reserve Sys- project area involved. tem, nonmember clearing insured fi- (e) Selling coupons to stores for internal nancial institutions, and nonmember checks. FNS may sell coupons at face insured financial institutions which value to any authorized retail food have arranged with a Federal Reserve store which wishes to use coupons to Bank to deposit coupons for credit to conduct internal checks of coupon the account of a member insured finan- transactions. The retail food store cial institution on the books of the must submit a written request to FNS Federal Reserve Bank, and will charge which shall include a certification that those items to the general account of the store recognizes that its use of cou- the Treasurer of the United States. pons will not affect FNS action to en- (c) FNS liability for losses. FNS shall force program regulations and that the not be liable for the value of any cou- requested coupons will be used only for pons lost, stolen, or destroyed while in internal checks of the store’s employ- the custody of an insured financial in- ees and only to uncover sales of items stitution or for the value of coupons other than eligible foods. The request lost, stolen, or destroyed while in tran- shall also include the name of the city sit from an insured financial institu- or county in which the stores to be tion to a Federal Reserve Bank. checked through the use of the re- (d) FNS use of coupons to detect viola- quested coupons are located and the tions. Regardless of any other provision name and address of any outside agen- in these regulations, coupons may be cy with which the retail food store has issued to, purchased by, or redeemed by or will have a contract to conduct persons authorized by FNS to use those checks of the store’s employees using coupons in examining and inspecting coupons. The request shall be directed program operations, and for other pur- to the Benefit Redemption Division, poses determined by FNS to be re- FSP, FNS, U.S. Department of Agri- quired for proper administration of the culture, 3101 Park Center Drive, Alex- program. Coupons which have been so andria, VA 22302, and shall be accom- issued and used, as well as any coupons panied by a check or money order made which have been issued under para- payable to the Food and Nutrition graph (g) of this section, or which FNS Service to cover the face value cost of believes may have been issued, trans- the coupons requested. Coupons bought ferred, negotiated, used, or received in by retail food stores for use in internal violation of this subchapter or of any checks may be later redeemed for full applicable statute, shall at the request value in accordance with § 278.4, and in of FNS and on issuance of a receipt for redeeming those coupons, retail food them be turned over to FNS by the in- stores are authorized to make the cer- sured financial institution receiving tification required for redemption. the coupons, or by any other person to (f) Continued participation of house- whom the request is addressed, to- holds under investigation. Upon the writ- gether with any certificate(s) of reten request of Federal, State, or local demption accompanying the coupons. government agencies which have au- Any coupons so requested shall not be thority to investigate, and are inves- eligible for redemption through Fed- tigating, suspected violations of Fed- eral Reserve Banks or other collection eral or State statutes concerning the channels. However, FNS may redeem enforcement of the Food Stamp Act or coupons from any insured financial in- the regulations, the State agency may stitution or person by payment of the allow ineligible households to continue face amount of the coupons upon deter- program participation. The State agen- mination by FNS that this direct re- cy may allow the households to con- demption of coupons is warranted. FNS tinue participation in the program shall determine the proper disposition until the earlier of (1) expiration of the

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period of 90 days after the request is re- 10 days before the end of the period of ceived or any longer period which FNS, disqualification. FNS may, in lieu of a upon request of the State agency, may disqualification, subject a firm to a approve in a particular case, or (2) re- civil money penalty of up to an amount ceipt of notification from the inves- specified in § 3.91(b)(3)(i) of this title for tigative agency that participation may each violation if FNS determines that be terminated or that the investigation a disqualification would cause hardship has been completed. Regardless of any to participating households. FNS may other provision of these regulations, impose a civil money penalty of up to FNS may not hold the State agency an amount specified in § 3.91(b)(3)(ii) of liable for the value of any coupons this title for each violation in lieu of a issued to households under this para- permanent disqualification for traf- graph. ficking, as defined in § 271.2 of this [Amdt. 136, 43 FR 43274, Sept. 22, 1978, as chapter, in accordance with the provi- amended by Amdt. 257, 49 FR 32538, Aug. 15, sions of paragraphs (i) and (j) of this 1984; Amdt. 267, 51 FR 6514, Feb. 25, 1986; section. Amdt. 272, 51 FR 12498, Apr. 11, 1986; Amdt. (b) Charge letter—(1) General provi- 288, 52 FR 11815, Apr. 13, 1987; Amdt. 272, 52 sions. Any firm considered for disquali- FR 18198, May 14, 1987; Amdt. 356, 59 FR 29714, fication or imposition of a civil money June 9, 1994; Amdt. 331, 59 FR 60062, Nov. 22, penalty under paragraph (a) of this sec- 1994] tion or a fine as specified under para- § 278.6 Disqualification of retail food graph (l) or (m) of this section shall stores and wholesale food concerns, have full opportunity to submit to FNS and imposition of civil money pen- information, explanation, or evidence alties in lieu of disqualifications. concerning any instances of noncompli- (a) Authority to disqualify or subject to ance before FNS makes a final admin- a civil money penalty. FNS may dis- istrative determination. The FNS re- qualify any authorized retail food store gional office shall send the firm a let- or authorized wholesale food concern ter of charges before making such de- from further participation in the pro- termination. The letter shall specify gram if the firm fails to comply with the violations or actions which FNS the Food Stamp Act of 1977, as amend- believes constitute a basis for disquali- ed, or this part. Such disqualification fication or imposition of a civil money shall result from a finding of a viola- penalty or fine. The letter shall specify tion on the basis of evidence that may the violations or actions which FNS include facts established through on- believes constitute a basis for disquali- site investigations, inconsistent re- fication or imposition of a civil money demption data, evidence obtained penalty. The letter shall inform the through a transaction report under an firm that it may respond either orally electronic benefit transfer system, or or in writing to the charges contained the disqualification of a firm from the in the letter within 10 days of receiving Special Supplemental Nutrition Pro- the letter. The firm’s response shall set gram for Women, Infants and Children forth a statement of evidence, informa- (WIC), as specified in paragraph (e)(8) tion, or explanation concerning the of this section. Disqualification shall specified violations or acts. The firm be for a period of 6 months to 5 years shall make its response, if any, to the for the firm’s first sanction; for period officer in charge of the FNS field office of 12 months to 10 years for a firm’s which has responsibility for the project second sanction; and disqualification area in which the firm is located. In shall be permanent for a disqualifica- the case of a firm for which action is tion based on paragraph (e)(1) of this taken in accordance with paragraph section. Any firm which has been dis- (e)(8) of this section, the charge letter qualified and which wishes to be rein- shall inform such firm that the dis- stated at the end of the period of disqualification action is not subject to qualification, or at any later time, administrative or judicial review, as shall file a new application under § 278.1 specified in paragraph (e)(8) of this sec- so that FNS may determine whether tion. reauthorization is appropriate. The ap- (2) Charge letter for trafficking. (i) The plication may be filed no earlier than charge letter shall advise a firm being

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considered for permanent disqualifica- receipt of the notice of determination tion based on evidence of trafficking as from FNS, regardless of whether a re- defined in § 271.2 that the firm must no- quest for review is filed in accordance tify FNS if the firm desires FNS to with part 279 of this chapter. If the dis- consider the sanction of a civil money qualification is reversed through ad- penalty in lieu of permanent disquali- ministrative or judicial review, the fication. The charge letter shall also Secretary shall not be liable for the advise the firm that the permanent dis- value of any sales lost during the disqualification shall be effective imme- qualification period. Firms that re- diately upon the date of receipt of the quest and are determined eligible to a notice of determination, regardless of civil money penalty in lieu of perma- whether a request for review is filed in nent disqualification for trafficking accordance with part 279 of this chap- may continue to participate in the pro- ter. If the disqualification is reversed gram pending review and shall not be through administrative or judicial re- required to pay the civil money pen- view, the Secretary shall not be liable alty pending appeal of the trafficking for the value of any sales lost during determination action. In the case of a the disqualification period. Firms that firm for which action is taken in ac- request and are determined eligible for cordance with paragraph (e)(8) of this a civil money penalty in lieu of perma- section, the determination notice shall nent disqualification for trafficking inform such firm that the disqualifica- may continue to participate in the pro- tion action is not subject to adminis- gram pending review and shall not be trative or judicial review, as specified required to pay the civil money penin paragraph (e)(8) of this section. alty pending appeal of the trafficking (d) Basis for determination. The FNS determination action. regional office making a disqualifica- (ii) Firms that request consideration tion or penalty determination shall of a civil money penalty in lieu of a consider: (1) The nature and scope of permanent disqualification for traf- the violations committed by personnel ficking shall have the opportunity to of the firm, (2) any prior action taken submit to FNS information and evi- by FNS to warn the firm about the pos- dence as specified in § 278.6(i), that es- sibility that violations are occurring, tablishes the firm’s eligibility for a and (3) any other evidence that shows civil money penalty in lieu of a perma- the firm’s intent to violate the regula- nent disqualification in accordance tions. with the criteria included in § 278.6(i). (e) Penalties. FNS shall take action as This information and evidence shall be submitted within 10 days, as specified follows against any firm determined to in § 278.6(b)(1). have violated the Act or regulations. (iii) If a firm fails to request consid- For the purposes of assigning a period eration for a civil money penalty in of disqualification, a warning letter lieu of a permanent disqualification for shall not be considered to be a sanc- trafficking and submit documentation tion. A civil money penalty and a dis- and evidence of its eligibility within qualification shall be considered sanc- the 10 days specified in § 278.6(b)(1), the tions for such purposes. The FNS re- firm shall not be eligible for such a gional office shall: penalty. (1) Disqualify a firm permanently if: (c) Review of evidence. The letter of (i) Personnel of the firm have traf- charges, the response, and any other ficked as defined in § 271.2; or information available to FNS shall be (ii) Violations such as, but not lim- reviewed and considered by the appro- ited to, the sale of ineligible items oc- priate FNS regional office, which shall curred and the firm had twice before then issue the determination. In the been sanctioned. case of a firm subject to permanent dis- (iii) It is determined that personnel qualification under paragraph (e)(1) of of the firm knowingly submitted infor- this section, the determination shall mation on the application that con- inform such a firm that action to pertains false information of a substantive manently disqualify the firm shall be nature that could affect the eligibility effective immediately upon the date of of the firm for authorization in the

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program, such as, but not limited to, arrangement, drug addict and alcoholic information related to: treatment program, homeless meal (A) Eligibility requirements under providers, or shelters for battered § 278.1(b), (c), (d), (e), (f), (g) and (h); women and children exceeded the ac- (B) Staple food stock; tual amount of coupons which that (C) Annual gross sales for firms seek- firm or organization redeemed through ing to qualify for authorization under the wholesaler; or Criterion B as specified in the Food (v) Personnel of the firm knowingly Stamp Act of 1977, as amended; accepted coupons from an unauthorized (D) Annual staple food sales; firm or an individual known not to be (E) Total annual gross retail food legally entitled to possess coupons. sales for firms seeking authorization as (3) Disqualify the firm for 3 years if it co-located wholesale/retail firms; is to be the first sanction for the firm (F) Ownership of the firm; and the evidence shows that: (G) Employer Identification Numbers (i) It is the firm’s practice to commit and Social Security Numbers; violations such as the sale of common (H) Food Stamp Program history, nonfood items in amounts normally business practices, business ethics, WIC found in a shopping basket and the disqualification or authorization sta- firm was previously advised of the pos- tus, when the store did (or will) open sibility that violations were occurring for business under the current owner- and of the possible consequences of vio- ship, business, health or other licenses, lating the regulations; or and whether or not the firm is a retail (ii) Any of the situations described in and wholesale firm operating at the paragraph (e)(2) of this section oc- same location; or curred and FNS had not previously ad- (I) Any other information of a sub- vised the firm of the possibility that stantive nature that could affect the violations were occurring and of the eligibility of a firm. possible consequences of violating the (2) Disqualify the firm for 5 years if it regulations; or is to be the firm’s first sanction, the (iii) The firm is an authorized com- firm had been previously advised of the munal dining facility, drug addiction possibility that violations were occur- or alcoholic treatment and rehabilita- ring and of possible consequences of tion program, group living arrange- violating the regulations, and the evi- ment, homeless meal provider, meal dence shows that: delivery service, or shelter for battered (i) It is the firm’s practice to sell ex- women and children and it is the firm’s pensive or conspicuous nonfood items, practice to sell meals in exchange for cartons of cigarettes, or alcoholic bev- food coupons to persons not eligible to erages in exchange for food coupons; or purchase meals with food coupons and (ii) The firm’s coupon redemptions the firm has been previously advised of for a specified period of time exceed its the possibility that violations were oc- food sales for the same period of time; curring and of the possible con- or sequences of violating the regulations; (iii) A wholesale food concern’s re- or demptions of coupons for a specified (iv) A wholesale food concern accept- period of time exceed the redemptions ed coupons from an authorized firm of all the specified authorized retail which it was not authorized to serve food stores, nonprofit cooperative food- and the wholesale food concern had purchasing ventures, group living ar- been previously advised of the possi- rangements, drug addict and alcoholic bility that violations were occurring treatment programs, homeless meal and of possible consequences of vio- providers, and shelters for battered lating the regulations; or women and children which the whole- (v) The firm is an authorized retail sale food concern was authorized to food store and personnel of the firm serve during that time; or have engaged in food coupon trans- (iv) A wholesale food concern’s stated actions with other authorized retail redemptions of coupons for a particular stores, not including treatment pro- retail food store, nonprofit cooperative grams, group living arrangements, food-purchasing venture, group living homeless meal providers, or shelters

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for battered women and children, and shown to constitute a misdemeanor or the firm had been previously advised of felony violation of law, or for any of the possibility that violations were oc- the following specific program viola- curring and of the possible con- tions: sequences of violating the regulations. (A) A pattern of claiming reimburse- (vi) Personnel of the firm knowingly ment for the sale of an amount of a submitted information on the applica- specific food item which exceeds the tion that contained false information store’s documented inventory of that of a substantive nature related to the food item for a specified period of time; ability of FNS to monitor compliance (B) Exchanging WIC food instruments of the firm with FSP requirements, for cash, credit or consideration other such as, but not limited to, informa- than eligible food; or the exchange of tion related to: firearms, ammunition, explosives or (A) Annual eligible retail food sales; controlled substances, as defined in (B) Store location and store address section 802 of title 21 of the United and mailing address; States Code, for food instruments; (C) Financial institution informa- (C) A pattern of receiving, tion; or transacting and/or redeeming WIC food (D) Store name, type of ownership, instruments outside of authorized number of cash registers, and non-food channels; inventory and services. (D) A pattern of exchanging non-food (4) Disqualify the firm for 1 year if: items for a WIC food instrument; (i) It is to be the first sanction for (E) A pattern of charging WIC cus- the firm and the ownership or manage- tomers more for food than non-WIC ment personnel of the firm have com- customers or charging WIC customers mitted violations such as the sale of more than the current shelf price; or common nonfood items in amounts (F) A pattern of charging for food normally found in a shopping basket, items not received by the WIC cus- and FNS had not previously advised tomer or for foods provided in excess of the firm of the possibility that viola- those listed on the food instrument. tions were occurring and of the pos- (ii) FNS shall not disqualify a firm sible consequences of violating the reg- from the Food Stamp Program on the ulations; or basis of a WIC disqualification unless: (ii) The firm has accepted food stamp benefits in payment for items sold to a (A) Prior to the time prescribed for household on credit. securing administrative review of the (5) Disqualify the firm for 6 months if WIC disqualification action, the firm it is to be the first sanction for the was provided individual and specific firm and the evidence shows that per- notice that it could be disqualified sonnel of the firm have committed vio- from the Food Stamp Program based lations such as but not limited to the on the WIC violations committed by sale of common nonfood items due to the firm; carelessness or poor supervision by the (B) A signed and dated copy of such firm’s ownership or management. notice is provided to FNS by the WIC (6) Double the appropriate period of administering agency; and disqualification prescribed in para- (C) A determination is made in ac- graphs (e) (2) through (5) of this section cordance with paragraph (a) of this sec- as warranted by the evidence of violation that such action will not cause a tions if the same firm has once before hardship for participating Food Stamp been assigned a sanction. households. (7) Send the firm a warning letter if (iii) Such a Food Stamp disqualifica- violations are too limited to warrant a tion: disqualification. (A) Shall be for the same length of (8) FNS shall disqualify from the time as the WIC disqualification; Food Stamp Program any firm which is (B) May begin at a later date than disqualified from the WIC Program: the WIC disqualification; and (i) Based in whole or in part on any (C) Shall not be subject to adminis- act which constitutes a violation of trative or judicial review under the that program’s regulation and which is Food Stamp Program.

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(f) Criteria for civil money penalties for firm prior to its transfer. A buyer or hardship and transfer of ownership. (1) transferee (other than a bona fide FNS may impose a civil money penalty buyer or transferee) may not be au- as a sanction in lieu of disqualification thorized to accept or redeem coupons when the firm subject to a disqualifica- and may not accept or redeem coupons tion is selling a substantial variety of until the Secretary receives full pay- staple food items, and the firm’s dis- ment of any penalty imposed on such qualification would cause hardship to store or concern. food stamp households because there is (g) Amount of civil money penalties for no other authorized retail food store in hardship and transfer of ownership. FNS the area selling as large a variety of shall determine the amount of the civil staple food items at comparable prices. money penalty as follows: FNS may disqualify a store which (1) Determine the firm’s average meets the criteria for a civil money monthly redemptions of coupons for penalty if the store had previously the 12-month period ending with the been assigned a sanction. A civil month immediately preceding that money penalty for hardship to food month during which the firm was stamp households may not be imposed charged with violations. in lieu of a permanent disqualification. (2) Multiply the average monthly re- (2) In the event any retail food store demption figure by 10 percent. or wholesale food concern which has (3) Multiply the product arrived at in been disqualified is sold or the owner- paragraph (g)(2) by the number of ship thereof is otherwise transferred to months for which the firm would have a purchaser or transferee, the person or been disqualified under paragraph (e) of other legal entity who sells or other- this section. The civil money penalty wise transfers ownership of the retail may not exceed an amount specified in food store or wholesale food concern § 3.91(b)(3)(i) of this title for each viola- shall be subjected to and liable for a tion. civil money penalty in an amount to (h) Notifying the firm of civil money reflect that portion of the disqualifica- penalties for hardship and transfer of tion period that has not expired, to be ownership. A firm has 15 days from the calculated using the method found at date the FNS regional office notifies § 278.6(g). If the retail food store or the firm in writing in which to pay the wholesale food concern has been per- civil money penalty, or to notify the manently disqualified, the civil money regional office in writing of its intent penalty shall be double the penalty for to pay in installments as specified by a ten year disqualification period. The the regional office. The firm must disqualification shall continue in effect present to FNS a collateral bond as at the disqualified location for the per- specified in § 278.1(b)(4), within the son or other legal entity who transfers same 15-day period. The civil money ownership of the retail food store or penalty must be paid in full by the end wholesale food concern notwith- of the period for which the firm would standing the imposition of a civil have been disqualified. FNS shall: money penalty under this paragraph. (1) Disqualify the firm for the period (3) At any time after a civil money determined to be appropriate under penalty imposed under paragraph (f) (2) paragraph (e) of this section if the firm of this section has become final under refuses to pay any of the civil money the provisions of part 279, the Food and penalty; Consumer Service may request the At- (2) Disqualify the firm for a period torney General institute a civil action corresponding to the unpaid part of the to collect the penalty from the person civil money penalty if the firm does or persons subject to the penalty in a not pay the civil money penalty in full district court of the United States for or in installments as specified by the any district in which such person or FNS regional office; or persons are found, reside, or transact (3) Disqualify the firm for the pre- business. scribed period if the firm does not (4) A bona fide transferee of a retail present a collateral bond or irrevocable food store shall not be required to pay letter of credit within the required 15 a civil money penalty imposed on the days. Any payment on a civil money

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penalty which have been received by ment uncovered during a subsequent inves- FNS shall be returned to the firm. If tigation, a firm shall not be eligible for a the firm presents the required bond or civil money penalty in lieu of permanent dis- irrevocable letter of credit during the qualification. Notwithstanding the above provision, if trafficking violations consisted disqualification period, the civil money of the sale of firearms, ammunition, explo- penalty may be reinstated for the dura- sives or controlled substances, as defined in tion of the disqualification period. 21 U.S.C. § 802, and such trafficking was con- (i) Criteria for eligibility for a civil ducted by the ownership or management of money penalty in lieu of permanent dis- the firm, the firm shall not be eligible for a qualification for trafficking. FNS may civil money penalty in lieu of permanent dis- impose a civil money penalty in lieu of qualification. For purposes of this section, a a permanent disqualification for traf- person is considered to be part of firm man- ficking as defined in § 271.2 if the firm agement if that individual has substantial supervisory responsibilities with regard to timely submits to FNS substantial evi- directing the activities and work assign- dence which demonstrates that the ments of store employees. Such supervisory firm had established and implemented responsibilities shall include the authority an effective compliance policy and pro- to hire employees for the store or to termi- gram to prevent violations of the Pro- nate the employment of individuals working gram. Firms assessed a CMP under this for the store. paragraph shall be subject to the appli- (1) Compliance policy standards. As cable penalties included in § 278.6(e) (2) specified in Criterion 1 above, in deter- through (6) for the sale of ineligible mining whether a firm has established items. Only those firms for which a an effective policy to prevent viola- permanent disqualification for traf- tions, FNS shall consider written and ficking took effect on or after October dated statements of firm policy which 1, 1988, are eligible for a civil money reflect a commitment to ensure that penalty in lieu of permanent disquali- the firm is operated in a manner con- fication for trafficking, except that sistent with this part 278 of current firms that have been disqualified but FSP regulations and current FSP pol- are awaiting a judicial review decision are eligible for a civil money penalty icy on the proper acceptance and han- in lieu of a permanent disqualification. dling of food coupons. As required by In determining the minimum standards Criterion 2, such policy statements of eligibility of a firm for a civil money shall be considered only if documenta- penalty in lieu of a permanent dis- tion is supplied which establishes that qualification for trafficking, the firm the policy statements were provided to shall, at a minimum, establish by sub- the violating employee(s) prior to the stantial evidence its fulfillment of each commission of the violation. In addi- of the following criteria: tion, in evaluating the effectiveness of the firm’s policy and program to en- Criterion 1. The firm shall have developed sure FSP compliance and to prevent an effective compliance policy as specified in FSP violations, FNS may consider the § 278.6(i)(1); and Criterion 2. The firm shall establish that following: both its compliance policy and program were (i) Documentation reflecting the de- in operation at the location where the viola- velopment and/or operation of a policy tion(s) occurred prior to the occurrence of to terminate the employment of any violations cited in the charge letter sent to firm employee found violating FSP the firm; and regulations; Criterion 3. The firm had developed and instituted an effective personnel training pro- (ii) Documentation of the develop- gram as specified in § 278.6(i)(2); and ment and/or continued operation of Criterion 4. Firm ownership was not aware firm policy and procedures resulting in of, did not approve, did not benefit from, or appropriate corrective action following was not in any way involved in the conduct complaints of FSP violations or irreg- or approval of trafficking violations; or it is ularities committed by firm personnel; only the first occasion in which a member of (iii) Documentation of the develop- firm management was aware of, approved, benefited from, or was involved in the con- ment and/or continued operation of duct of any trafficking violations by the procedures for internal review of firm firm. Upon the second occasion of trafficking employees’ compliance with FSP regu- involvement by any member of firm manage- lations;

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(iv) The nature and scope of the vio- the term is defined in section 802 of lations charged against the firm; title 21, United States Code. (v) Any record of previous firm viola- (j) Amount of civil money penalty in tions under the same ownership; and lieu of permanent disqualification for (vi) Any other information the firm trafficking. A civil money penalty as- may present to FNS for consideration. sessed in accordance with § 278.6(i) shall (2) Compliance training program stand- not exceed the amount specified in ards. As prescribed in Criterion 3 above, § 3.91(b)(3)(ii) of this title for each vio- the firm shall have developed and im- lation and shall not exceed the amount plemented an effective training pro- specified in § 3.91(b)(3)(ii) of this title gram for all managers and employees for all violations occurring during a on the acceptance and handling of food single investigation. FNS shall deter- coupons in accordance with this part mine the amount of the civil money 278. A firm which seeks a civil money penalty as follows: penalty in lieu of a permanent dis- (1) Determine the firm’s average qualification shall document its train- monthly redemptions for the 12-month ing activity by submitting to FNS its period ending with the month imme- dated training curricula and records of diately preceding the month during dates training sessions were conducted; which the firm was charged with viola- a record of dates of employment of tions; (2) Multiply the average monthly re- firm personnel; and contemporaneous demption figure by 10 percent; documentation of the participation of (3) For the first trafficking offense by the violating employee(s) in initial and a firm, multiply the product obtained any follow-up training held prior to the in § 278.6(j)(2) by 60 if the largest violation(s). FNS shall consider a amount of food coupons, ATP cards, or training program effective if it meets other benefit instruments involved in a or is otherwise equivalent to the fol- single trafficking transaction had a lowing standards: face value of $99 or less. If the face (i) Training for all managers and em- value of coupons, ATP cards or other ployees whose work brings them into benefit instruments involved in the contact with food stamps or who are largest single trafficking transaction assigned to a location where food was $100 or more, the amount of the stamps are accepted, handled or proc- product obtained in this paragraph essed shall be conducted within one shall be doubled; month of the institution of the compli- (4) For a second trafficking offense ance policy under Criterion 1 above. by a firm, multiply the product ob- Employees hired subsequent to the in- tained in § 278.6(j)(2) by 120 if the larg- stitution of the compliance policy shall est amount of food coupons, ATP cards, be trained within one month of em- or other benefit instruments involved ployment. All employees shall be in a single trafficking transaction had trained periodically thereafter; a face value of $99 or less and the same (ii) Training shall be designed to es- firm has once before been sanctioned tablish a level of competence that for trafficking in food coupons, ATP assures compliance with Program re- cards, or other benefit instruments. If quirements as included in this part 278; the face value of food coupons, ATP (iii) Written materials, which may cards, or other benefit instruments in- include FNS publications and program volved in the largest single trafficking regulations that are available to all au- transaction was $100 or more, the thorized firms, are used in the training amount of the product obtained in this program. Training materials shall paragraph shall be doubled; and clearly state that the following acts (5) If a third trafficking offense is are prohibited and are in violation of committed by the firm, the firm shall the Food Stamp Act and regulations: not be eligible for a civil money pen- the exchange of food coupons, ATP alty in lieu of disqualification. cards or other program access devices (k) Payment of civil money penalty in for cash; and, in exchange for coupons, lieu of a permanent disqualification for the sale of firearms, ammunition, ex- trafficking. Payment of the full amount plosives or controlled substances, as of the civil money penalty in lieu of

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permanent disqualification for traf- tute judicial action in any court of ficking shall be made within 30 days of competent jurisdiction against the per- the date the final determination was son to collect the fine. FNS may with- received by the firm. If payment is not draw the authorization of any firm made within the prescribed period, the that is under the same ownership as an right to the civil money penalty in lieu unauthorized firm that has failed to of a permanent disqualification is for- pay such a fine, as specified under feited and disqualification shall be- § 278.1(k). FNS may deny authorization come effective immediately. to any firm that has failed to pay such (l) Fines for the acceptance of loose a fine, as specified under § 278.1(j). coupons. FNS may impose a fine (n) Review of determination. The deter- against any retail food store or whole- mination of FNS shall be final and not sale food concern that accepts coupons subject to further administrative or ju- that are not accompanied by the cor- dicial review unless a written request responding book cover, other than the for review is filed within the period denomination of coupons used for mak- stated in part 279 of this chapter. ing change as specified in § 278.2(d) or Notwithstanding the above, any FNS coupons accepted from homeless meal determination made on the basis of providers as specified in § 278.2(c). The paragraph (e)(8) of this section shall fine to be assessed against a firm found not be subject to further administra- to be accepting loose coupons shall be tive or judicial review. $500 per investigation plus an amount (o) Delivery of notice. The delivery by equal to double the face value of each any method that provides evidence of loose coupon accepted, and may be as- delivery of any notice required of FNS sessed and collected in addition to any by this part will constitute notice to fiscal claim established by FNS. The the addressee of its contents. fine shall be paid in full within 30 days [Amdt. 136, 43 FR 43274, Sept. 22, 1978] of the firm’s receipt of FNS’ notification to pay the fine. The Attorney Gen- EDITORIAL NOTE: For FEDERAL REGISTER citations affecting § 278.6, see the List of CFR eral of the United States may institute Sections Affected, which appears in the judicial action in any court of com- Finding Aids section of the printed volume petent jurisdiction against the store or and on GPO Access. concern to collect the fine. FNS may withdraw the authorization of the § 278.7 Determination and disposition store, as well as other authorized loca- of claims—retail food stores and tions of a multi-unit firm which are wholesale food concerns. under the same ownership, for failure (a) Claims against violators. FNS may to pay such a fine as specified under establish and pursue claims against § 278.1(k). FNS may deny the authoriza- firms or other entities which have action of any firm that has failed to pay cepted or redeemed coupons in viola- such fines as specified under § 278.1(j). tion of the Food Stamp Act or this part (m) Fines for unauthorized third parties regardless of whether the firms or enti- that accept food stamps. FNS may im- ties are authorized to accept food pose a fine against any individual, sole stamps. If a firm fails to pay a claim, proprietorship, partnership, corpora- FNS may collect the claim by offset- tion or other legal entity not approved ting against amounts due the firm on by FNS to accept and redeem food cou- redemption of other coupons or by de- pons for any violation of the provisions ducting the amounts due from bonds of the Food Stamp Act or the program posted by firms in compliance with the regulations, including violations in- provisions of § 278.1(b)(4). FNS shall volving the acceptance of coupons. The deny an application for authorization fine shall be $1,000 for each violation or reauthorization by a firm which has plus an amount equal to three times failed to pay a claim. the face value of the illegally accepted (b) Forfeiture of a collateral bond or food coupons. The fine shall be paid in draw down on an irrevocable letter of full within 30 days of the individual’s credit. If FNS establishes a claim or legal entity’s receipt of FNS’ notifi- against an authorized firm which has cation to pay the fine. The Attorney previously been sanctioned, collection General of the United States may insti- of the claim may be through total or

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partial forfeiture of the collateral bond card from FNS if the following condi- or draw down of the irrevocable letter tions exist: of credit. If FNS determines that for- (i) The coupons were received in ac- feiture or a draw down is required for cordance with the requirements of this collection of the claim, FNS shall take part governing acceptance of coupons one or more of the following actions, as except the requirement that the firm appropriate. be authorized before acceptance; (1) Determine the amount of the bond (ii) The coupons were accepted by the to be forfeited or irrevocable letter of firm in good faith, and without intent credit drawn down on the basis of the to circumvent this part; and loss to the Government through viola- (iii) The firm receives authorization tions of the Act, and this Part, as de- to participate in the program. tailed in a letter of charges to the firm; (2) Firms seeking approval to redeem (2) Send written notification by coupons accepted without authoriza- method of proof of delivery to the firm tion shall present a written application and the bonding agent or commercial for approval to the local FNS field of- bank of FNS’ determination regarding fice. This application shall be accom- forfeiture or draw down of all or speci- panied by a written statement signed fied part of the collateral bond or ir- by the firm of all the facts about the revocable letter of credit and the rea- acceptance of the coupons. The state- sons for the forfeiture or draw down ac- ment shall also include a certification tion; that the coupons were accepted in good faith, and without any intent to cir- (3) Advise the firm and the bonding cumvent this part. agent or commercial bank of the firm’s (d) Burned or mutilated coupons. FNS right to administrative review of the may redeem burned or mutilated cou- claim determination; pons only to the extent that the Bu- (4) Advise the firm and the bonding reau of Engraving and Printing of the agent or commercial bank that if pay- United States Treasury Department ment of the current claim is not re- can determine the value of the cou- ceived directly from the firm, FNS pons. The firm presenting burned or shall obtain full payment through for- mutilated coupons for redemption shall feiture of the bond or draw down of the submit the coupons to the local FNS irrevocable letter of credit; field office with a properly filled-out (5) Proceed with collection of the redemption certificate. In the section bond or irrevocable letter of credit in of the redemption certificate for enter- the amount forfeited or drawn down if ing the amount of coupons to be re- a request for review is not filed by the deemed, an estimate of the value of the firm within the period established in burned or mutilated coupons submitted § 279.5 of this chapter, or if such review for redemption shall be entered if the is unsuccessful; and exact value of the coupons is unknown. (6) Upon the expiration of time per- The phrase ‘‘Deputy Administrator for mitted for the filing of a request for ad- Fiscal Management, FNS, USDA,’’ ministrative and/or judicial review, de- should be entered in the section of the posit the bond or irrevocable letter of redemption certificate for entering the credit in a Federal Reserve Bank ac- name and address of the insured finan- count or in the Treasury Account, Gen- cial institution or wholesaler. eral. If FNS requires only a portion of (e) Old series coupons. FNS may re- the face value of the bond or irrev- deem the old series food coupons issued ocable letter of credit to satisfy a in 50-cent, 2-dollar, and 5-dollar de- claim, the entire bond or irrevocable nominations when they are presented letter of credit will be negotiated, and for redemption. Firms presenting the the remaining amount returned to the coupons for redemption shall submit firm. the coupons to the local FNS field of- (c) Coupons accepted without author- fice with a properly completed redemp- ization. (1) The FNS officer in charge tion certificate and a written state- may approve the redemption under ment, signed by a representative of the § 278.4 of coupons accepted by firms be- firm, detailing the circumstances of fore the receipt of an authorization the acceptance of the coupons.

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(f) Denials of claims brought by author- for redemption not later than March ized firms against FNS. If a claim 27, 1986. brought by a firm against FNS under (d) The program changes of Amend- this section is denied in whole or in ment 272 at § 278.5(a) (1) and (3) are ef- part, notification of this action shall fective upon publication of the amend- be sent to the firm by using any deliv- ment. Financial institutions must im- ery method as long as the method pro- plement the provisions no later than vides evidence of delivery. If the firm is April 21, 1986. aggrieved by this action, it may seek (e) Amendment No. 286. The provisions administrative review as provided in for part 278 of Amendment No. 286 were part 279. effective March 11, 1987 for purposes of (g) Lost or stolen coupons. FNS may submitting applications for authoriza- not be held liable for claims from retail tion to accept food stamps. For all food stores, meal services, or wholesale other purposes, the effective date was food concerns for lost or stolen cou- April 1, 1987. pons. (f) Amendment No. 280. The provisions [Amdt. 136, 43 FR 43274, Sept. 22, 1978, as for part 271 and §§ 278.1(r) and 278.6(f) of amended by Amdt. 258, 49 FR 28393, July 12, No. 280 are effective retroactively to 1984; Amdt. 257, 49 FR 32538, Aug. 15, 1984; April 1, 1987. The provision for § 278.1(o) Amdt. 262, 49 FR 50598, Dec. 31, 1984; 68 FR is effective May 22, 1987. 41052, July 10, 2003; Amdt. 397, 70 FR 72354, (g) Amendment No. 304. The technical Dec. 5, 2005; 73 FR 79595, Dec. 30, 2008] amendment for part 278 of Amendment No. 304 was effective August 1, 1988. § 278.8 [Reserved] (h) Amendment No. 323. The program § 278.9 Implementation of amendments changes made to § 278.6 by this amend- relating to the participation of re- ment are retroactively effective Octo- tail food stores, wholesale food con- ber 1, 1988. cerns and insured financial institu- (i) Amendment No. 334. The program tions. changes made to §§ 278.1 and 278.6 by (a) Amendment 224. Retail food stores this amendment are effective February shall have signs posted as required by 1, 1992. The program changes made to this amendment no later than 30 days § 271.2 and § 271.5 by this amendment are after distribution of the signs by FNS. retroactively effective to November 28, (b) Amendment 257. With the excep- 1990, as specified in Pub. L. No. 101–624. tion of the provisions in § 278.5 requir- (j) Amendment No. 354. The program ing redeeming financial institutions to changes made to §§ 271.2 and 278.6 by verify that coupons are supported by this amendment are effective October redemption certificates, the revisions 1, 1993. to part 278 shall be effective September (k) Amendment No. 331. The program 14, 1984. Redeeming financial institu- changes made to §§ 271.2 and 278.5 by tions shall begin verifying coupon de- this amendment are effective Decem- posits as required by § 278.5 in accord- ber 22, 1994. ance with the schedule determined by (l) Amendment No. 335. Expanded au- the Federal Reserve Board. Insured fi- thority to use and disclose information nancial institutions shall adhere to about firms participating in the FSP preexisting requirements for handling under CFR 278.1(r) for currently au- redemption certificates (at 7 CFR thorized firms is effective and will be 278.5(a)) until their Federal Reserve implemented beginning February 25, District implements the procedures 1997 but not before 60-days after the contained in this final rule. FNS shall date of notices to such firms, notifying not be liable for any losses of coupons them of the changes. The only excep- in transit to Federal Reserve Banks or tion to the above is that such disclo- as a result of a burglary or robbery of sure of information shall not apply to an insured financial institution which firms that are withdrawn or are dis- occur after September 14, 1984. qualified from FSP participation prior (c) Amendment 267. The federally in- to implementation, unless such firms sured credit unions authorized to re- participate in the FSP at a future date deem food stamps under this amend- subsequent to the implementation ment may begin accepting food stamps date.

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(m) Amendment No. 383. The program cerns aggrieved by any of the following changes made to § 278.1 by this amend- actions: ment are effective September 29, 2000. (1) Denial of an application or withdrawal of authorization to participate [Amdt. 136, 43 FR 43274, Sept. 22, 1978] in the program under § 278.1 of this EDITORIAL NOTE: For FEDERAL REGISTER ci- chapter; tations affecting § 278.9, see the List of CFR (2) Disqualification under § 278.6 of Sections Affected, which appears in the Finding Aids section of the printed volume this chapter, except that a disqualifica- and on GPO Access. tion for failure to pay a civil money penalty shall not be subject to admin- § 278.10 [Reserved] istrative review and a disqualification imposed under § 278.6(e)(8) of this chap- PART 279—ADMINISTRATIVE AND ter shall not be subject to administra- JUDICIAL REVIEW—FOOD RETAIL- tive or judicial review; (3) Imposition of a fine under § 278.6 of ERS AND FOOD WHOLESALERS this chapter; (4) Denial of all or part of any claim Subpart A—Administrative Review asserted by a firm against FNS under Sec. § 278.7(c), (d), or (e) of this chapter; 279.1 Jurisdiction and authority. (5) Assertion of a claim under 279.2 Manner of filing requests for review. § 278.7(a) of this chapter; or 279.3 Content of request for review. (6) Forfeiture of part or all of a col- 279.4 Action upon receipt of a request for re- lateral bond or a draw down of part or view. all of a letter of credit under § 278.1 of 279.5 Determination of the designated reviewer. this chapter, if the request for review 279.6 Legal advice and extensions of time. is made by the authorized firm. FNS shall not accept requests for review Subpart B—Judicial Review made by a bonding company or agent or commercial bank. 279.7 Judicial review. (b) Authority. The determination of 279.8 Implementation of amendments relating to administrative and judicial re- the designated reviewer shall be the view. final administrative determination of the Department, subject, however, to AUTHORITY: 7 U.S.C. 2011–2036. judicial review under section 14 of the SOURCE: Amdt. 136, 43 FR 43279, Sept. 22, Food Stamp Act and subpart B of this 1978, unless otherwise noted. part. EDITORIAL NOTE: Nomenclature changes to [68 FR 41052, July 10, 2003, as amended at 73 part 279 appear at 68 FR 41052, July 10, 2003. FR 79595, Dec. 30, 2008] Subpart A—Administrative Review § 279.2 Manner of filing requests for review. § 279.1 Jurisdiction and authority. (a) Submitting requests for review. Re- A food retailer or wholesale food con- quests for review submitted by firms cern aggrieved by administrative ac- shall be mailed to or filed with Direc- tion under § 278.1, § 278.6 or § 278.7 of this tor, Administrative Review Division, chapter may, within a period stated in U.S. Department of Agriculture, Food this Part, file a written request for re- and Nutrition Service, 3101 Park Cen- view of the administrative action with ter Drive, Alexandria, Virginia 22302. FNS. On receipt of the request for re- (b) Content of requests. Requests for view, the questioned administrative ac- review shall be in writing and shall tion shall be stayed pending disposition state the name and business address of of the request for review, except in the the firm involved, and the name, ad- case of a permanent disqualification as dress and position with the firm of the specified in § 278.6(e)(1) of this chapter. person who signed the request. The re- (a) Jurisdiction. Reviewers designated quest shall be signed by the owner of by the Secretary shall act for the De- the firm, an officer or partner of the partment on requests for review filed firm, or by counsel, and need not be by food retailers or wholesale food con- under oath.

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(c) Time limit for requesting review. A shall notify the firm of the date by request for review shall be filed within which the information must be filed. 10 days of the date of delivery of the [Amdt. 136, 43 FR 43279, Sept. 22, 1978, as notice of the action for which review is amended by Amdt. 236, 49 FR 22058, May 25, requested. For purposes of determining 1984; Amdt. 334, 57 FR 3913, Feb. 3, 1992. Re- whether a filing date is timely: designated and amended at 68 FR 41053, July (1) The filing date shall be the post- 10, 2003] mark date of the request, or equivalent § 279.4 Action upon receipt of a re- if the written request is filed by a quest for review. means other than mail; (a) Upon receipt of a (2) In computing the 10 day period, Holding action. request for review of administrative the day of delivery of the notice of the action, the administrative action shall action for which review is requested be held in abeyance until the des- may not be included. The last day of ignated reviewer has made a deter- the period so computed shall be in- mination. However, permanent dis- cluded, unless it is a Saturday, a Sun- qualifications for trafficking shall not day, or a legal holiday. In that case, be held in abeyance and shall be effec- the period runs until the end of the tive immediately as specified in next day which is not a Saturday, a 278.6(b)(2) of this chapter. If the dis- Sunday, or a legal holiday. As used in qualification is reversed through ad- this paragraph, ‘‘legal holiday’’ in- ministrative or judicial review, the cludes New Year’s Day, Washington’s Secretary shall not be held liable for Birthday, Memorial Day, Independence the value of any sales lost during the Day, Labor Day, Columbus Day, Vet- disqualification period. If the adminis- erans Day, Thanksgiving Day, Christ- trative action in question involves the mas Day, and any other day designated denial of a claim brought by a firm as a holiday by the President or the against FNS, or the forfeiture of a col- Congress of the United States. lateral bond or the draw down on an irrevocable letter of credit, the des- [Amdt. 136, 43 FR 43279, Sept. 22, 1978, as amended by Amdt. 236, 49 FR 22058, May 25, ignated reviewer shall direct the firm 1984. Redesignated and amended at 68 FR not be approved for participation, not 41053, July 10, 2003] be paid any part of the disputed claim, or not be reimbursed for any bond for- § 279.3 Content of request for review. feiture or irrevocable letter of credit withdrawal, as appropriate until the (a) Identifying the request. Requests designated reviewer has made a deter- for review shall clearly identify the ad- mination. ministrative action from which the re- (b) Filing supporting information. If view is requested. This identification the request filed by the firm includes a shall include the date of the letter or request for an opportunity to file writ- other written communication notifying ten information in support of its posi- the firm of the administrative action, tion at a later date, the designated re- the name and title of the person who viewer shall promptly notify the firm signed the letter or other communica- of the date by which the information tion, and whether the action under ap- shall be filed. If the firm fails to file peal concerns a denial of an application any information in support of its posi- or a withdrawal of authorization to tion by the designated date, the infor- participate, a disqualification from fur- mation submitted with the original re- ther participation, a civil money pen- quest shall be considered to be the only alty, or a denial of all or any part of a information submitted by the firm. In claim or a fine. that case, if no information in support (b) Supporting the request. The request of the firm’s position was submitted shall include information in support of with the original request, the action of the request showing the grounds on the appropriate FNS office shall be which review is being sought, or shall final. state that supporting information will (c) Extensions of time. Upon timely be filed in writing at a later date. In written request to FNS by the firm re- the latter case, the designated reviewer questing the review, FNS may grant

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extensions of time if, in FNS’ discre- viewer, working with the appropriate tion, additional time is required for the FNS office, shall determine if cir- firm to fully present information in cumstances warrant a civil money pen- support of its position. However, no ex- alty in accordance with § 278.6 of this tension may be made in the time al- chapter. lowed for the filing of a request for re- (d) Review of denial of claim. In the view. case of a request for review of a denial of all or part of a claim of a firm, the [Amdt. 136, 43 FR 43279, Sept. 22, 1978, as determination of the designated re- amended by Amdt. 236, 49 FR 22059, May 25, 1984; Amdt. 258, 49 FR 28393, July 12, 1984; 49 viewer shall sustain the action under FR 29769, July 24, 1984; Amdt. 356, 59 FR review or shall specify the amount of 29714, June 9, 1994; 64 FR 23174, Apr. 30, 1999. the claim to be paid by FNS. Redesignated and amended at 68 FR 41053, (e) Determination notifications. FNS July 10, 2003; 73 FR 79595, Dec. 30, 2008] shall notify the firm of the determination. Such notification will be sent to § 279.5 Determination of the des- the representative of the firm who filed ignated reviewer. the request for review. (a) Basis for designated reviewer deter- (f) Effective date. The determination mination. The designated reviewer shall of the designated reviewer shall take make a determination based upon: effect 30 days after the date of delivery (1) The information submitted by the of the determination to the firm. appropriate FNS office; [Amdt. 136, 43 FR 43279, Sept. 22, 1978, as (2) Information submitted by the amended by Amdt. 334, 57 FR 3913, Feb. 3, firm in support of its position; and 1992; Amdt. 356, 59 FR 29714, June 9, 1994. Re- (3) Any additional information, in designated and amended at 68 FR 41053, July writing, obtained by the designated re- 10, 2003] viewer from any other person having relevant information. § 279.6 Legal advice and extensions of time. (b) Review of denial or withdrawal of authorization. When the action under (a) Advice from Office of the General review is the denial of an application Counsel. If any request for review infor authorization or the withdrawal of volves any doubtful questions of law, an existing authorization, the des- the Benefit Redemption Division shall ignated reviewer shall sustain the ac- obtain the advice of the Department’s tion under review; sustain the action Office of the General Counsel. under review, but specify a shorter pe- (b) Extensions of time. Upon timely riod of time the action will remain in written request to the designated re- effect; or direct that the action under viewer by the firm requesting the rereview be reversed. view, the designated reviewer may (c) Review of disqualification or civil grant extensions of time if, in the des- money penalty or fine. When the action ignated reviewer’s discretion, addi- under review is disqualifying a firm tional time is required for the firm to from program participation or assess- fully present information in support of ing a civil money penalty or fine its position. However, no extensions against a firm, the designated reviewer may be made in the time allowed for shall: Sustain the action under review; the filing of a request for review. specify a shorter period of disqualifica- [Amdt. 136, 43 FR 43279, Sept. 22, 1978, as tion; specify a reduced money penalty amended by Amdt. 356, 59 FR 29714, June 9, or fine; direct that an official warning 1994. Redesignated and amended at 68 FR letter be issued to the firm in lieu of a 41053, July 10, 2003] disqualification, civil money penalty or fine; or, direct that the action under Subpart B—Judicial Review review be reversed. The designated reviewer may change a disqualification § 279.7 Judicial review. of a firm to a civil money penalty if (a) Filing for judicial review. Except the disqualification would cause a for firms disqualified from the program hardship to participating households in accordance with § 278.6(e)(8) of this (except in the case of a permanent dis- chapter, a firm aggrieved by the deter- qualification). The designated re- mination of the designated reviewer

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may obtain judicial review of the de- for the value of any sales lost during termination by filing a complaint the disqualification period. against the United States in the U.S. [Amdt. 136, 43 FR 43279, Sept. 22, 1978, as district court for the district in which amended by Amdt. 274, 51 FR 18752, May 21, the owner resides or is engaged in busi- 1986; Amdt. 356, 59 FR 29714, June 9, 1994; 64 ness, or in any court of record of the FR 23174, Apr. 30, 1999. Redesignated and State having competent jurisdiction. amended at 68 FR 41053, July 10, 2003; Amdt. The complaint must be filed within 30 397, 70 FR 72354, Dec. 5, 2005] days after the date of delivery or serv- § 279.8 Implementation of amendments ice upon the firm of the notice of deter- relating to administrative and judi- mination of the designated reviewer in cial review. accordance with § 279.5(e); otherwise (a) Amendment No. 257. The program the determination shall be final. change to § 279.3(a)(4) shall be effective (b) Service of Summons and complaint. September 14, 1984. the summons and complaint in any (b) Amendment No. 274. The program such action shall be made in accord- change of Amendment No. 274 at ance with the rules of civil procedure § 279.10(d) is effective retroactively to for the U.S. district courts. The copy of December 23, 1985. the summons and complaint required (c) Amendment No. 334. The program by the rules to be served on the agency changes made to part 279 by this whose order is being attacked shall be amendment are effective February 1, sent by using any delivery method as 1992. long as the method provides evidence of delivery to the person in charge of [Amdt. 257, 49 FR 32539, Aug. 15, 1984; Amdt. the applicable regional office of FNS. 262, 49 FR 50598, Dec. 31, 1984, as amended by Amdt. 274, 51 FR 18752, May 21, 1986; Amdt. (c) Trial de novo. The suit in the U.S. 334, 57 FR 3913, Feb. 3, 1992. Redesignated at district court or in the State court, as 68 FR 41053, July 10, 2003] the case may be, shall be a trial de novo by the court in which the court PART 280—EMERGENCY FOOD AS- shall determine the validity of the SISTANCE FOR VICTIMS OF DIS- questioned administrative action. If ASTERS the court determines that the administrative action is invalid, it shall enter a judgment or order which it deter- AUTHORITY: 7 U.S.C. 2011–2036. mines is in accordance with the law EDITORIAL NOTE: OMB control numbers re- and the evidence. lating to this part 280 are contained in § 271.8. (d) Stay of action. During the pend- ency of any judicial review, or any ap- § 280.1 Interim disaster procedures. peal therefrom, the administrative ac- The Secretary shall, after consultation under review shall remain in force tion with the official empowered to ex- unless the firm makes a timely appli- ercise the authority provided for by cation to the court and after hearing section 302(a) of the Disaster Relief Act thereon, the court stays the adminis- of 1974, establish temporary emergency trative action after a showing that ir- standards of eligibility for the duration reparable injury will occur absent a of the emergency for households who stay and that the firm is likely to pre- are victims of a disaster which disrupts vail on the merits of the case. However, commercial channels of food distribu- permanent disqualification actions tion, if such households are in need of taken in accordance with § 278.6(e)(1) of temporary food assistance and if com- this chapter shall not be subject to mercial channels of food distribution such a stay of administrative action. If have again become available to meet the disqualification action is reversed the temporary food needs of such through administrative or judicial re- households. Such standards as are prescribed for individual emergencies may view, the Secretary shall not be liable be promulgated without regard to section 4(c) of this Act or the procedures set forth in section 553 of Title 5 of the

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United States Code. In addition to es- to be necessary for the effective oper- tablishing temporary emergency stand- ation of the Food Stamp Program on ards of eligibility, the Secretary shall Indian reservations. provide for emergency allotments to (b) The operation of the Food Stamp eligible households to replace food de- Program on Indian reservations is gov- stroyed in a disaster. Such emergency erned by all of the terms and condi- allotments would be equal to the value tions set forth in the Food Stamp Act of the food actually lost in such dis- of 1977 as amended and the regulations aster but not greater than the applica- of this chapter. ble maximum monthly allotment for (c) Additionally, under no cir- the household size. The Secretary may cumstances shall any household par- also approve alternate methods for ticipate simultaneously in the Food issuing food stamp benefits during a Stamp Program and the Food Distribu- disaster when reliance on Electronic tion Program. Policy governing this Benefits Transfer (EBT) systems is im- prohibition is found in § 283.7(e). practicable. § 281.2 Administration. [Amdt. 192, 46 FR 8922, Jan. 27, 1981, as amended by Amdt. 338, 56 FR 63617, Dec. 4, (a) Qualification. (1) The appropriate 1991; Amdt. 397, 70 FR 72354, Dec. 5, 2005] ITO of an established Indian reservation will qualify for participation PART 281—ADMINISTRATION OF under the provisions of this part, when that ITO files an application which THE FOOD STAMP PROGRAM ON demonstrates the status of an area as INDIAN RESERVATIONS an established reservation, unless FNS determines that such area(s) does not Sec. qualify as a reservation, as that term 281.1 General purpose and scope. 281.2 Administration. is defined in these regulations. For pur- 281.3 Determination of failure. poses of this part, established reserva- 281.4 Determining Indian tribal organization means the geographically defined tion capability. area(s) currently recognized and estab- 281.5 Responsibilities of an Indian tribal or- lished by Federal or State treaty or by ganization designated as State agency. Federal statute whereby such geo- 281.6 Liabilities and sanctions. graphically defined area(s) is set aside 281.7 Indian tribal organization failure. for the use of Indians. Where such es- 281.8 Transfer of program administration. 281.9 Funding. tablished areas exist, the appropriate 281.10 Appeals. ITO is presumed to exercise governmental jurisdiction, unless otherwise AUTHORITY: 7 U.S.C. 2011–2036. determined by FNS: SOURCE: 44 FR 35925, June 19, 1979, unless (2) The appropriate ITO for other otherwise noted. areas, in order to qualify as reservations for the provisions of this part, § 281.1 General purpose and scope. must show to FNS: (a) These regulations govern the op- (i) That the ITO exercises govern- eration of the Food Stamp Program on mental jurisdiction over a geographic Indian reservations either separately area(s) which enjoys legal recognition or concurrently with the Food distribu- from the Federal or a State govern- tion program. In order to assure that ment and is set aside for the use of In- the Food Stamp Program is responsive dians. to the needs of Indians on reservations, (ii) A clear and precise description of State agencies are required to consult the boundaries of such geographic with Indian tribal organizations about area(s). the implementation and operation of (3) Otherwise qualified areas for the Food Stamp Program on reserva- which the responsible ITO has re- tions. Also, under certain specified con- quested operation of the Food Distribu- ditions Indian tribal organizations on tion Program alone in accordance with reservations can administer the Food § 283.4, rather than concurrent oper- Stamp Program. The Act authorizes ation with the Food Stamp Program, the Secretary to pay such amounts for shall be exempt from the requirements administrative costs as are determined of this part, and shall not be considered

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food stamp areas for any other pur- of program services to Indians on the poses of this subchapter. Indian tribal reservation unless: households (households in which at (i) The State agency demonstrates to least one adult member is recognized FNS that the size or population of the by the appropriate ITO as a tribal reservation does not warrant such des- member) resident in these areas shall ignation; be ineligible for food stamp benefits. (ii) The State agency demonstrates However, non-Indian tribal households to FNS that the tribe can be ade- resident in these areas may apply and quately served by the existing or a be certified for food stamps at the planned project area because of the lo- State agency’s certification office cation of certification and issuance of- which would otherwise service the area. Otherwise qualified areas for fices; which the responsible ITO has re- (iii) The State agency demonstrates quested operation of the food distribu- to FNS that such designation would re- tion Program concurrently with the duce the availability of certification Food Stamp Program or areas within and issuance offices; or the reservation where FNS has deter- (iv) The State agency otherwise dem- mined that concurrent operation is onstrates to FNS that such designation necessary in accordance with would impair its Statewide administra- § 283.3(b)(2) shall be subject to all re- tion of the Program. quirements of this part and subchapter. (2) In the case where the Indian res- (b) State plan. In addition to the pub- ervation boundaries cross State lines, lic comment requirements in § 272.2, the ITO and the appropriate State the State agency shall submit for com- agencies may jointly request FNS ap- ment its service plans, and all other proval that a single State agency ad- portions of the State plan that directly minister the Food Stamp Program on pertains to the operation of the Pro- all or part of the Indian reservation. A gram for residents on the reservation single agency of the State government to the responsible ITO for reservations would have to administer the Program that qualify under paragraph (a) of this under the same terms and conditions section. The ITO shall have 30 days to applied to all other political subdivi- provide comments in writing to the State agency. The State agency shall, sions within its jurisdiction. An ITO if appropriate and to the extent prac- designated as a State agency pursuant ticable, incorporate into its plans any to § 281.4(d) would have to administer suggestions made by the ITO. Addition- the Program under the same terms and ally, the State agency shall administer conditions on all areas of the reserva- the Food Stamp Program in a manner tion. that is responsive to the needs of the (d) Contracts with an Indian tribal or- Indians on the reservation, as deter- ganization. The State agency may con- mined by ongoing consultation with tract program functions to an ITO. the ITO and by other means, regarding These functions include, but are not such areas of program operation as limited to, outreach, preparation of bi- project area designation, operating lingual materials on issuance. The procedures, locations and hours of cer- State agency may also use the ITO in tification and issuance, staffing and prescreening, translations, interpretive corrective action plans. The State services and other noncertification agency shall maintain records of con- functions. The State agency shall not sultations on State plans and ongoing contract responsibility for certifi- consultations held with ITO’s for re- cation activities such as interviews or view by FNS. FNS shall study these eligibility determinations. In all cases, records as part of reviews in accord the State agency shall retain full re- with § 281.3 and Management Evalua- sponsibility for program administration Reviews of the State agency. (c) Project area designation. (1) An In- tion. dian reservation shall be designated as [44 FR 35925, June 19, 1979, as amended by a separate project area or areas for the Amdt. 207, 47 FR 52338, Nov. 19, 1982] purpose of improving the accessibility

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§ 281.3 Determination of failure. (viii) Compliance with other signifi- (a) Request for determination of State cant program requirements; government agency failure. FNS shall ex- (ix) Comparison with services pro- amine State agency adminstration of vided in all other areas of the State; the Food Stamp Program on all or part and of a reservation when requested by the (x) Any other relevant information ITO, the State agency or at FNS’ dis- that becomes available during the cretion. When FNS determines that a course of reviews including informa- deficiency in a State agency operation tion received through contacts with of the Food Stamp Program on all or the Indian tribe. part of an Indian reservation may be (2) Finding of no or of minor defi- serious enough to warrant a review, ciencies. If after the review FNS deter- FNS shall advise the State agency and mines either that deficiencies do not the ITO in writing of the alleged defi- exist or that only minor deficiencies ciencies and of its plans to conduct the exist, FNS shall issue a report docu- review and document deficiencies, if menting its findings to both the State any are found. Subsequent to October agency and the ITO and shall work 1, 1979 FNS shall complete these re- closely with the State agency to views within 90 days from receipt of an achieve corrective action. ITO’s or State agency’s request except (c) Formal warning. After the review under unusual circumstances such as is completed, if FNS determines that the receipt of a large number of simul- major deficiencies exist, a formal taneous requests. warning shall be issued to the State, (b) Review—(1) Content of the review with a copy to the ITO. At a minimum, for State agency performance. The review such warning shall indicate the State shall be designed to determine whether agency deficiencies and shall detail the or not the State agency is properly ad- basis upon which deficiencies were de- ministering the Food Stamp Program termined. The State shall have 30 days on a specific reservation. When an to respond with evidence that it is in agency of State government is admin- compliance or to submit a corrective istering the Program on a reservation, action proposal under part 276. If satis- FNS shall as a part of the review con- factory compliance is achieved by the sult with the ITO about the operation State agency on deficiencies cited in a of the Program on the reservation. The formal warning, FNS shall notify the review should, depending on the nature State, with a copy to the ITO, that the of the complaint, include but not be warning for those deficiences is satis- limited to, an analysis of some or all of fied. the following data: (d) Determination of failure and sanc- (i) The records of State agency con- tions. If at any time after the formal sultation with the ITO required under warning period, or during or after the § 281.2(a); corrective action period, FNS deter- (ii) The estimated percentage of all mines that major deficiencies still eligible Indians on the reservation who exist which the State agency has not are participating the Program; satisfactorily addressed or is not satis- (iii) The nature and extent of viola- factorily addressing, FNS shall deter- tions, if any, of the 30-day and other mine State failure and may impose ap- processing standards for Indians; propriate Federal sanctions on the (iv) The percentage of errors made in State agency as specified in part 276. determining eligibility and/or the (e) ITO operations. If FNS has deter- amount of benefits overissued or mined State failure and FNS has also underissued; determined that the ITO is capable of (v) Compliance with standards for lo- administering a Food Stamp Program cation and hours of certification and in accordance with the terms and re- issuance offices as required in § 272.5; quirements for participating State (vi) Compliance with bilingual re- agencies as established in the Act and quirements of this regulation, where regulations, then the ITO shall assume appropriate; adminstration of the Food Stamp Pro- (vii) Compliance with nondiscrimina- gram on the reservation. The State tion requirements of this regulation; agency shall continue to administer

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the Food Stamp Program on the res- other government programs that the ervation until an effective termination ITO administers. and transition arrangement has been (iii) Projected certification and issuance completed in accordance with § 281.8. facilities. The ITO shall provide FNS with a description of the location of § 281.4 Determining Indian tribal orga- projected certification and issuance fa- nization capability. cilities. (a) Determining capability of ITO. If (iv) Fraud hearings and claims. The the ITO wishes to administer its own ITO shall provide FNS with a descrip- Food Stamp Program on the reservation of how it will pursue fraud hear- tion FNS shall determine the ITO’s po- ings and claims against Indian and tential capability for administering non-Indian participants. the Food Stamp Program in accord- (v) Staffing. The ITO shall provide ance with the criteria listed in FNS with sufficient information to de- § 281.4(b). FNS shall begin to evaluate termine that personnel who will be the ITO’s capability for all aspects of used in the certification process will be Food Stamp Program administration, employed under standards equivalent allowing for fulfillment of that poten- to current standards for a Merit Sys- tial through necessary training and tem of Personnel Administration or technical assistance, not later than the any standards later prescribed by the date of the issuance of the formal Office of Personnel Management under warning to the State agency. section 208 of the Intergovernmental (b) ITO responsibility. (1) The ITO Personnel Act of 1970. must satisfy FNS that it is capable (if (vi) Civil rights assurance. The ITO provided with any needed training and shall provide FNS an assurance that technical assistance) of administering the ITO shall comply with Title VI of the Food Stamp Program effectively the Civil Rights Act of 1964 (Pub. L. 88– and efficiently, and of complying with 352), the Age Discrimination Act of 1975 all provisions of the Food Stamp Act of (Pub. L. 94–135), the Rehabilitation Act 1977, as amended, and the regulations of 1973 (Pub. L. 99–112), section 504), and of this chapter, including provisions section 11(c) of the Food Stamp Act of governing quality control procedures, 1977 and all pertinent regulations or di- fraud determinations, and establish- rectives to the effect that no person in ment and collection of claims for both the United States shall, on the grounds Indian and any non-Indian partici- of sex, race, color, age, political belief, pants. The ITO shall provide FNS with religion, handicap, or national origin, the following information: be denied benefits or otherwise be sub- (i) Operation of government programs. ject to discrimination under the Food The ITO shall provide FNS a list of all Stamp Program. Where appropriate, government programs that the ITO ad- FNS shall consider the adequacy of ministers and has recently adminis- measures taken by the ITO to ensure tered. FNS may ask the ITO to provide that there shall be no discrimination. the names of appropriate officials of (2) Prior to the determination of ITO the government organizations having capability, FNS shall consult with jurisdiction over these programs so other sources such as the Bureau of In- FNS can obtain all relevant audits, dian Affairs (BIA) to obtain any infor- GAO reports, program evaluations and mation relevant to the capability de- any other documents pertaining to the termination. effectiveness and efficiency of tribal (3) If it is determined by FNS, after administration of these programs. The consultation with other sources such ITO shall also provide FNS a list of its as the BIA, that the ITO is not capable recent contractual responsibilities, if of operating an efficient and effective any, for the Food Stamp Program Food Stamp Program, the agency of under § 281.2(b). the State government shall continue to (ii) Fiscal capabilities. The ITO shall operate the Program on the reserva- provide FNS documentation of its tion in accordance with § 281.3. bookeeping and accounting procedures, (c) Training and technical assistance. including procedures in use for fiscal Upon determining that the State agen- accountability under part 277 and for cy has failed to properly administer

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the Food Stamp Program and that the bility determinations. The ITO shall ITO is potentially capable of operating retain full responsibility for program an effective and efficient Food Stamp administration. Program, FNS shall determine, based on information provided by the ITO § 281.6 Liabilities and sanctions. and other sources such as BIA, the An ITO administering the Food training and technical assistance Stamp Program on a reservation is which is necessary to assure efficient subject to the same liabilities and Fed- and effective program administration. eral sanctions as is any other State FNS will assure that appropriate train- agency. FNS shall monitor administra- ing and technical assistance is provided tion of the Program and conduct re- as expeditiously as possible prior to the views through the Performance Report- ITO’s assumption of the administration ing System described in part 275. When of the Food Stamp Program. necessary, warning procedures and (d) Assumption of duties. When FNS is other Federal sanctions prescribed in satisfied that the ITO has successfully part 276 will be implemented. completed (c) of this section, FNS shall designate the ITO as a State agency, § 281.7 Indian tribal organization fail- contingent on the following: ure. (1) State plans. The ITO shall prepare and submit to FNS a Plan of Operation When Performance Reporting System as provided in § 272.2. In completing the reviews indicate that continuing defi- Plan of Operation the ITO shall affirm ciencies exist and corrective action that it will comply with the Civil proposals (including training and tech- Rights assurances detailed in (b)(1)(vi) nical assistance to overcome these de- of this section. ficiencies), and/or appropriate sanc- (2) Proposed budget. As part of the tions have not, in the opinion of FNS, Plan of Operation, the ITO shall annu- resulted in a sufficient degree of im- ally submit to FNS a proposed state- provement, FNS will conduct a review ment which shall provide a summary of to determine if the ITO has failed to program information and amounts properly administer the Food Stamp budgeted to carry out the various pro- Program. FNS shall examine the rel- gram functions. This information shall evant factors specified in § 281.3(b)(1) be submitted to FNS for approval prior and shall follow the notification and to the commitment of any Federal determination procedures set forth in funds for administrative costs for that § 281.3 (c) and (d). If ITO failure is deter- year. FNS shall provide the ITO any mined, FNS shall require the appro- technical assistance which is necessary priate agency of the State government to prepare this information. to resume administration of the Pro- (3) Termination and transition arrange- gram on the reservation in accordance ment. An effective termination and with an approved termination and transition arrangement shall be estab- transition arrangement. lished as required in § 281.8. § 281.8 Transfer of program adminis- § 281.5 Responsibilities of an Indian tration. tribal organization designated as The transfer of program administra- State agency. tion from an agency of the State gov- An ITO administering the Food ernment to an ITO pursuant to a deter- Stamp Program on a reservation shall mination of failure as provided for in adhere to the Food Stamp Act of 1977, § 281.3, or from an ITO to an agency of all subsequent amendments, and all the State government pursuant to regulations issued pursuant to that law § 281.7, shall be contingent on the estab- in the same manner as any other State lishment of an effective termination agency. The ITO may contract certain and transition arrangement and an ap- administrative functions to private or- proved Plan of Operation from the ganizations as provided in parts 274 and State agency assuming program ad- 277. The ITO may not, however, con- ministration. Grant closeout proce- tract responsibility for certification dures shall be followed in accordance activities such as interviews or eligi- with part 277. FNS shall approve the

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transition plan, monitor its implemen- (ii) The failure or absence of failure tation and resolve any issues which of an agency of State government to may arise during the transition and properly administer the Food Stamp after the transfer of program adminis- Program; tration. (iii) The capability or incapability of an ITO to administer the Food Stamp § 281.9 Funding. Program; (a) Agency of State government. From (iv) The failure of an ITO to properly the funds available to carry out this administer the Food Stamp Program; provision beginning July 1, 1979, FNS (v) The Federal matching percentage may pay to each agency of State gov- level of administrative funding made ernment administering a Food Stamp available by FNS. To prevail the State Program on a reservation, 75 percent of agency must show a compelling jus- all approved administrative costs, such tification that additional funding is as: Certification, issuance, outreach, needed for the effective administration fair hearings and quality control, in- of the Program on the reservation. curred on the reservation for residents (2) At the time FNS advises the State of the reservation and approved by agency or ITO of its determination, FNS to meet standards set by the 1977 FNS shall also advise the State agency Food Stamp Act. FNS may pay each or ITO of its right to appeal and, ex- agency of State government admin- cept for appeals of funding determina- istering a Food Stamp Program on a tions, shall advise the State agency or reservation 75 percent of all approved ITO of its right to request either a administrative costs incurred off the meeting to present its position in per- reservation for activities begun after son or a review of the record. On ap- the effective date of these regulations peals of funding determinations, FNS that are primarily directed at pro- shall advise the State agency or ITO viding better services for Indians on that it may indicate if it wishes a the reservation, such as hiring an in- meeting, however, FNS need schedule a terpreter or an Indian outreach work- meeting only if FNS determines a er, or moving a certification or meeting is warranted to reach a proper issuance center closer to a reservation. adjudication of the matter. Otherwise, The provisions of part 277 apply to any FNS shall review supportive informa- funds received under this section. tion submitted by the State agency or (b) Indian tribal organization acting as ITO in paragraph (b)(2) of this section. State agency. From the funds available (b) Procedures—(1) Time limit. Any to carry out the provisions of this part State agency or ITO which wants to beginning October 1, 1979, FNS is au- appeal an initial FNS determination thorized to pay to each ITO acting as a under paragraph (a) of this section State agency and administering a Food must notify the Administrator of FNS, Stamp Program on a reservation 75 in writing within 15 days from the date percent of all administrative costs ap- of the determination and must advise proved by FNS as needed for operation FNS if it wishes a meeting or a review of a Food Stamp Program on a reserva- of the record. tion. Any approval for payment of (2) Acknowledgment. Within five days funds in excess of 75 percent must be of receipt by the Administrator of FNS based on compelling justification that of a request for review, FNS shall pro- such additional amounts are necessary vide the State agency or ITO by cer- for the effective operation of the Food tified mail, return receipt requested, Stamp Program on the reservation. with a written acknowledgement of the The provisions of part 277 apply to any request. The acknowledgment shall in- funds received under this section. clude the name and address of the official designated by the Administrator § 281.10 Appeals. to review the appeal. The acknowledg- (a) Failure/capability. (1) Any State ment shall also notify the State agency agency or ITO may appeal the deter- or ITO that within ten day of receipt of mination made by FNS on: the acknowledgment, the State agency (i) Whether or not the reservation or ITO shall submit written informa- definition is met; tion in support of its position.

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(3) Scheduling a meeting. If the Admin- value of allotments by household size istrator, FNS, grants a meeting FNS in the form of cash to eligible house- shall advise the State agency or ITO by holds or a project conducted to test im- certified mail, return receipt re- proved consistency or coordination be- quested, of the time, date and location tween the food stamp employment and of the meeting at least ten days in ad- training program and the Job Opportu- vance of the meeting. FNS shall sched- nities and Basic Skills program under ule and conduct the meeting and make Title IV of the Social Security Act, a decision within 60 days of the receipt may be undertaken which would lower of the information submitted in re- or further restrict the established in- sponse to paragraph (b)(2) of this sec- come and resource standards or benefit tion. levels. (4) Review. If no meeting is con- (b) Notices. At least 30 days prior to ducted, the official designated by the the initiation of a demonstration Administrator, FNS, shall review infor- project, FNS shall publish a General mation presented by a State agency or Notice in the FEDERAL REGISTER if the ITO which requests a review, and shall demonstration project will likely have make a final determination in writing a significant impact on the public. The within 45 days of the receipt of the notice shall set forth the specific oper- State agency’s or ITO’s information ational procedures and shall explain submitted in response to paragraph the basis and purpose of the dem- (b)(2) of this section setting forth in onstration project. If significant com- full the reasons for the determination. ments are received in response to this (5) Final decision. The official’s deci- General Notice, the Department will sion after a meeting or a review shall take such action as may be appropriate be final. prior to implementing the project. If (c) Funding and other sanctions. Any the operational procedures contained State agency or ITO that wishes to ap- in the General Notice described above peal a funding determination made by are significantly changed because of FNS other than under (a)(5) of this sec- comments, an amended General Notice tion, or the application of a Federal will be published in the FEDERAL REG- sanction, shall follow the Administra- ISTER at least 30 days prior to the initi- tive Review Procedures set forth in ation of the demonstration project, ex- part 276. cept where good cause exists supporting a shorter effective date. The PART 282—DEMONSTRATION, RE- explanation for the determination of SEARCH, AND EVALUATION good cause will be published with the PROJECTS amended General Notice. The amended General Notice will also explain the Sec. basis and purpose of the change. 282.1 Legislative authority and notice requirements. [Amdt. 371, 61 FR 60012, Nov. 26, 1996] 282.2 Funding. § 282.2 Funding. AUTHORITY: 7 U.S.C. 2011–2036. Federal financial participation may SOURCE: Amdt. 134, 43 FR 54215, Nov. 21, be made available to demonstration, 1978, unless otherwise noted. research, and evaluation projects § 282.1 Legislative authority and no- awarded by FNS through grants and tice requirements. contracts. Funds may not be transferred from one project to another. (a) Legislative authority. Section 17 of FNS will pay all costs incurred during the Act authorizes the Secretary to the project, up to the level established conduct demonstration, research, and evaluation projects. In conducting such in the grant, or in the terms and condi- projects, the Secretary may waive all tions of the contract. FNS may grant or part of the requirements of the Act time extensions of the project upon ap- and implementing regulations nec- proval. Funding for additional costs is essary to conduct such projects, except subject to existing Federal grant and that no project, other than a project contract procedures. involving the payment of the average [Amdt. 371, 61 FR 60012, Nov. 26, 1996]

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PART 283—APPEALS OF QUALITY Subpart A—General CONTROL (‘‘QC’’) CLAIMS § 283.1 Meaning of words. Subpart A—General As used in this part, words in the singular form shall be deemed to import Sec. the plural, and vice versa, as the case 283.1 Meaning of words. may require. 283.2 Scope and applicability. 283.3 Definitions. § 283.2 Scope and applicability. The rules of practice in this part, Subpart B—Appeals of QC Claims of shall be applicable to appeals by State $50,000 or More agencies of Food and Nutrition Service 283.4 Filing appeals for QC claims of $50,000 quality control (QC) claims for Fiscal or more. Year (‘‘FY’’) 1986 and subsequent fiscal 283.5 Motion to dismiss. years pursuant to sections 14(a) and 283.6 Answer. 16(c) of the Food Stamp Act of 1977, as 283.7 Procedures upon failure to file an an- amended, 7 U.S.C. 2023(a) and 2025(c). swer. 283.8 Rebuttal or amendment of appeal or § 283.3 Definitions. answer. As used in this part, the terms as de- 283.9 Withdrawal of appeal. fined in the Food Stamp Act of 1977, as 283.10 Consent decision. amended, 7 U.S.C. 2011–2032 (‘‘Act’’), 283.11 Prehearing conference and procedure. and in the regulations, standards, in- 283.12 Discovery. structions or orders issued thereunder, 283.13 Subpoenas. shall apply with equal force and effect. 283.14 Fees of witnesses. In addition, and except as may be pro- 283.15 Procedure for hearing. vided otherwise in this section: 283.16 Consolidation of issues. Administrator means the Adminis- 283.17 Post-hearing procedure. trator, Food and Nutrition Service, 283.18 Motions and requests. U.S. Department of Agriculture 283.19 ALJs. (‘‘USDA’’). 283.20 Review by the Judicial Officer. ALJ means any Administrative Law 283.21 Ex parte communications. Judge in USDA appointed pursuant to 5 283.22 Form; filing; service; proof of service; U.S.C. 3105 or detailed to the USDA computation of time; and extensions of pursuant to 5 U.S.C. 3344 and assigned time. to the appeal. 283.23 Procedural matters. Appeal means the appeal to the ALJ. Ex parte communication means an oral Subpart C—Summary Procedure for or written communication not on the Appeals of QC Claims of Less Than $50,000 public record with respect to which 283.24 Incorporation of procedures by ref- reasonable prior notice to all parties is erence. not given, but it shall not include pro- 283.25 Filing appeals for QC claims of less cedural matters. than $50,000. Filing. A pleading or other document 283.26 Request that appeals be handled allowed or required to be filed in ac- under procedures in subpart B for appeals cordance with this part shall be consid- of QC claims of $50,000 or more. ered filed when postmarked, if mailed, 283.27 Procedures upon failure to file an an- or when received, if hand delivered. swer. FNS means the Food and Nutrition 283.28 Discovery. Service, USDA. 283.29 Scheduling conference. Hearing means that part of the appeal 283.30 Cross motions for summary judg- which involves the submission of evi- ment. dence before the ALJ for the record in 283.31 Review of the record. the appeal. 283.32 ALJ’s initial decision. Hearing Clerk means the Hearing AUTHORITY: 7 U.S.C. 2011–2036. Clerk, USDA, Washington, DC 20250. Judicial Officer means an official of SOURCE: Amdt. 348, 59 FR 34561, July 6, 1994, the USDA delegated authority by the unless otherwise noted. Secretary of Agriculture, pursuant to

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the Act of April 4, 1940 (7 U.S.C. 450c– fore filing suit in the Federal District 459g) and Reorganization Plan No. 2 of Courts. 1953 (5 U.S.C. 1970 ed., Appendix, P. 550), (c) Filing. The notice of appeal shall as amended by Public Law 97–35, title I, be filed with the Hearing Clerk in ac- sec. 125, 95 Stat. 357, 369 (1981) (7 U.S.C. cordance with § 283.22(b). 2201 note), to perform the adjudicating (d) Content of the notice. (1) A notice function involved (7 CFR 2.35(a)), or the of appeal, in order to be considered ac- Secretary of Agriculture if the author- ceptable, must contain the following ity so delegated is exercised by the information: Secretary. (i) A brief and clear statement that it OC claim means a claim made pursu- is an appeal from a QC claim of $50,000 ant to 7 U.S.C. 2025(c). or more identifying the period the Secretary means the Secretary of the claim covers, the date and amount of USDA. the bill for collection, and the date of State agency means: receipt of the bill for collection; (1) The agency of State government, (ii) Identification of the State agency including the local offices thereof, as the appellant and FNS as the appel- which is responsible for the adminis- lee; tration of the federally aided public as- (iii) A statement that the notice of sistance programs within the State, appeal is filed pursuant to section 14(a) and in those States where such assist- of the Food Stamp Act; ance programs are operated on a decen- (iv) A copy of the bill for collection tralized basis, it includes the counter- which constitutes the basis for the fil- part local agencies which administer ing of the notice of appeal shall be at- such assistance programs for the State tached to the notice. agency; and (2) Failure to file an acceptable no- (2) The Indian tribal organization of tice of appeal may result in a challenge any Indian tribe determined by the by FNS to the notice, dismissal of the Secretary to be capable of effectively notice by the ALJ and a waiver of the administering a Food Stamp Program opportunity for further appeal or rein accordance with the Food Stamp view by the Judicial Officer unless the Act of 1977, as amended, 7 U.S.C. 2011– State agency pursues the options as 2032. discussed in §§ 283.17(d) and 283.20. (e) Receipt of notice of appeal and as- Subpart B—Appeals of QC Claims signment of docket number. Upon receipt of $50,000 or More of a notice of appeal, the Hearing Clerk shall assign the appeal a docket num- § 283.4 Filing appeals for QC claims of ber. The Hearing Clerk shall: $50,000 or more. (1) Send the State agency a letter (a) Time. A State agency may appeal which shall include the following infor- the bill for collection from FNS for a mation: QC claim of $50,000 or more for a food (i) Advice that the notice of appeal stamp QC error rate in excess of the has been received and the date of re- tolerance level. A State agency shall ceipt; file a written notice of appeal, in ac- (ii) The docket number assigned to cordance with this subpart, within 10 the appeal and instructions that all fu- days of receipt of the bill for collection ture communications related to the ap- from FNS for a QC claim of $50,000 or peal shall reference the docket number, more. The State agency may request and; an extension to the 10-day filing re- (iii) Advice that the State agency quirement in accordance with must file and serve its appeal petition, § 283.22(f). FNS shall issue the bill for as set forth in § 283.22, not later than 60 collection by certified mail or personal days after receiving a notice of the service. claim. Failure to file a timely appeal (b) Exhaustion of administrative rem- petition may result in a waiver of fur- edies. The State agency must appeal ther appeal rights. the bill for collection to the ALJ, pur- (2) Send FNS a copy of the notice of suant to this subpart, and exhaust the appeal and a copy of the letter to the available administrative remedies be- State agency.

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(f) Stay of collection. The filing of a vincing proof of any of these factors al- timely notice of appeal shall automati- leged as grounds for dismissal. cally stay the action of FNS to collect (b) Service of motion to dismiss. FNS the QC claim asserted against the shall serve the State agency with a State agency until a decision is copy of the motion to dismiss. The reached on the acceptability of the ap- State agency will have 10 days from peal, and in the case of an acceptable date of service to submit objections to appeal, until a final administrative de- the motion. termination has been issued. However, (c) Ruling on a motion to dismiss. The interest will accrue on the outstanding ALJ will rule on the motion to dismiss claim amount during the stay as pro- before any further action proceeds on vided in section 13(a)(1) of the Food the basis of the merits of the appeal. Stamp Act of 1977, as amended (7 U.S.C. The basis of the ruling will be clearly 2022(a)(1)). documented and will become part of (g) Content of the appeal petition. The the official record. If the ALJ denies appeal petition shall include: the motion, FNS shall file its answer in (1) A brief statement of the allega- accordance with § 283.6 within 60 days tions of fact and provisions of law that of service of the ALJ’s ruling, unless constitute the basis for the appeal in- there is a motion for reconsideration cluding a statement as to whether a filed pursuant to § 283.17(d) or review by factual basis for good cause relief ex- the Judicial Officer is sought pursuant ists; to § 283.20. (2) The nature of the relief sought, (d) Dismissal of appeal. If the ALJ and; finds the basis for the motion to have (3) A request for an oral hearing, if merit, the appeal may be dismissed. desired by the State agency. Failure to The initial decision of the ALJ shall request an oral hearing will result in a become final and effective 30 days after forfeiture of the opportunity for such a service in accordance with § 283.17(c)(2) hearing, except as provided in unless either party pursues the options § 283.15(a). as discussed in §§ 283.17(d) and 283.20. (h) FNS answer. Upon service of the (e) Waiver. Failure to file for dis- State agency appeal petition, FNS missal of the appeal by the time the shall: answer is required to be filed will re- (1) File an answer, in accordance sult in waiver of the right to request with § 283.6, not later than 60 days after dismissal. the State agency submits its appeal petition and; § 283.6 Answer. (2) Advise the Hearing Clerk if FNS (a) Filing and service. Not later than wishes to have an oral hearing. 60 days after the State agency submits (i) Oral hearing not requested. If no its appeal petition, or within 60 days oral hearing has been requested, the following service of a ruling in accord- appeal shall proceed in accordance ance with § 283.5, FNS shall file an an- with the procedures set forth under swer signed by the FNS Administrator subpart C of this part. or authorized representative or the attorney of record in the appeal. The at- § 283.5 Motion to dismiss. torney may file an appearance of (a) Filing of motion to dismiss. Prior to record prior to or simultaneously with or at the same time as filing the an- the filing of the answer. swer, FNS may file a motion to dis- (b) Contents. The answer shall clearly miss. The appeal may be challenged on admit, deny, or explain each of the al- the basis that the notice of appeal was legations of the appeal petition and not filed within 10 days or as that time shall: may have been extended by the ALJ, (1) Clearly set forth any defense as- the appeal petition was not filed in ac- serted by FNS; or cordance with § 283.4, or that the appeal (2) State that FNS admits all the petition is substantially incomplete facts alleged in the appeal petition; or and could not be quickly and easily (3) State that FNS admits the juris- cured by amendment. The motion must dictional allegations of the appeal peti- be accompanied by clear and con- tion and neither admits nor denies the

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remaining allegations and consents to as authorized by the ALJ upon a show- the issuance of an order without fur- ing of cause. ther procedure. (c) Default. Failure to file a timely § 283.9 Withdrawal of appeal. answer shall be deemed, for purposes of At any time before the ALJ files an the appeal, an admission of the allega- initial decision, the State agency may tions in the appeal petition and failure withdraw its appeal and agree to pay to deny or otherwise respond to an al- the full amount of the claim. By with- legation of the appeal petition shall be drawing an appeal, the State agency deemed for purposes of the appeal, an waives all opportunity to appeal or admission of said allegation, unless seek further administrative or judicial FNS and the State agency have agreed review on the claim or related matters. to a consent decision pursuant to § 283.10. § 283.10 Consent decision. § 283.7 Procedures upon failure to file At any time before the ALJ files an an answer. initial decision, FNS and the State The failure by FNS to file an answer agency may agree to entry of a consent shall constitute a waiver of hearing. decision. Such decision shall be filed in Upon such failure to file, the State the form of a decision signed by the agency shall file a proposed decision, parties with appropriate space for sig- along with a motion for adoption nature by the ALJ and shall contain an thereof, both of which shall be served admission of at least the jurisdictional upon FNS by the State agency. Within facts, consent to the issuance of the 10 days after service of such motion agreed decision without further proce- and proposed decision, FNS may file dure and such other admissions or objections thereto. If the ALJ finds statements as may be agreed between that meritorious objections have been the parties. The ALJ shall enter such filed, the State agency’s motion shall decision without further procedures, be denied with supporting reasons. If unless an error is apparent on the face meritorious objections are not filed, of the document. Such decision shall be the ALJ shall issue an initial decision final and shall take effect 30 days after without further procedures or hearing. the date of the delivery or service of Copies of the initial decision or denial such decision and is not subject to fur- of the State agency’s motion shall be ther administrative or judicial. served on each of the parties and shall be included as part of the official § 283.11 Prehearing conference and record. Where the decision as proposed procedure. by the State agency is adopted as the (a) Time and place. The ALJ shall di- ALJ’s initial decision, such decision of rect the parties or their counsel to par- the ALJ shall become final and effec- ticipate in a prehearing conference at tive 30 days after service in accordance any reasonable time prior to the hear- with § 283.17(c)(2) unless reconsider- ing. The prehearing conference shall be ation or review by the Judicial Officer held at the U.S. Department of Agri- is sought as discussed in §§ 283.17(d) and 283.20. culture, Washington, DC. Reasonable notice of the time, place of the pre- § 283.8 Rebuttal or amendment of ap- hearing conference and if personal at- peal or answer. tendance will be necessary shall be (a) Not later than 30 days after FNS given. Prehearing conferences may be submits an answer in accordance with conducted telephonically. The ALJ § 283.6, the State agency may submit shall order each of the parties to fur- rebuttal evidence. nish at the prehearing conference or at (b) At any time prior to the filing of another time prior to the hearing the a motion for a hearing pursuant to following: § 283.15(b), the appeal petition or the (1) An outline of the appeal or de- answer may be amended without prior fense; authorization by the ALJ. Thereafter, (2) The legal theories upon which the such an amendment may only be made party will rely;

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(3) Copies of or a list of documents propriate written order, unless the ALJ that the party anticipates relying upon concludes that a stenographic report, if at the hearing; and available, shall suffice, or, in the event (4) A list of witnesses who will testify the conference takes place within 7 on behalf of the party. At the discre- days of the beginning of the hearing, tion of the party furnishing such list of the ALJ elects to make a statement on witnesses, the names of the witnesses the record at the hearing summarizing need not be furnished if they are other- the actions taken. wise identified in some meaningful way, such as a short statement of the § 283.12 Discovery. type of evidence they will offer. (a) Dispositions—(1) Motion for taking (b) Procedures. The ALJ shall not deposition. Only upon a finding by the order any of the foregoing procedures ALJ that a deposition is necessary to that a party can show are inappro- preserve testimony as provided in this priate or unwarranted under the cir- subparagraph, upon the motion of a cumstances of the particular appeal. party to the appeal, the ALJ may, at (c) Matters to be considered. At the any time after the filing of the answer, prehearing conference, the following order the taking of testimony by depo- matters shall be considered: sition. The motion shall set forth: (1) The simplification of issues; (i) The name and address of the pro- (2) The necessity of amendments to posed deponent; pleadings; (ii) The name and address of the per- (3) The possibility of obtaining stipu- son (referred to hereafter in this sec- lations of facts and of the authenticity, tion as the ‘‘officer’’) qualified under accuracy, and admissibility of docu- the regulations in this part to take ments, which will avoid unnecessary depositions, before whom the proposed proof; examination is to be made; (4) The limitation of the number of (iii) The proposed time and place of expert or other witnesses; the examination, which shall be at (5) Negotiation, compromise, or set- least 15 days after the date of service of tlement of issues; the motion; and (6) The exchange of copies of proposed exhibits; (iv) The reasons why such deposition (7) The nature of and the date by should be taken, which shall be solely which discovery, as provided in § 283.12, for the purpose of eliciting testimony must be completed; which otherwise might not be available (8) The identification of documents at the time of the hearing, for use as or matters of which official notice may provided in accordance with paragraph be requested; (a)(7) of this section. (9) A schedule to be followed by the (2) ALJ’s order for taking depositions. If parties for the completion of the ac- the ALJ finds that the testimony may tions decided at the conference; and not otherwise be available at the hear- (10) Such other matters as may expe- ing, the taking of the deposition may dite and aid in the disposition of the be ordered. The order shall be served appeal. upon the parties, and shall state: (d) Reporting. (1) A prehearing con- (i) The time and place of the exam- ference will not be stenographically re- ination; ported unless so directed by the ALJ. (ii) The name of the officer before (2) Any party to the appeal may, whom the examination is to be made; upon motion, request the ALJ to allow and for a stenographic transcript of a pre- (iii) The name of the deponent. The hearing conference. The party request- officer and the time and place need not ing the transcript shall bear the tran- be the same as those suggested in the scription cost of producing the tran- motion. script and the duplication cost for one (3) Qualifications of officer. The depo- transcript provided to the ALJ and to sition shall be made before an officer the other parties to the appeal. authorized by the law of the United (e) Order. Actions taken as a result of States or by the law of the place of the a conference shall be reduced to an ap- examination to administer oaths, or

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before an officer authorized by the Sec- another copy for each additional retary to administer oaths. party), in an envelope and mail the (4) Procedure on examination. (i) The same by registered or certified mail to deponent shall be examined under oath the Hearing Clerk. or affirmation and shall be subject to (6) Corrections to the transcript. (i) At cross-examination. Objections to ques- any time prior to the hearing, any tions or documents shall be in the party may file a motion proposing cor- short form, stating the grounds of ob- rections to the transcript of the deposi- jections relied upon. The questions pro- tion. pounded, together with all objections (ii) Unless a party files such a motion made (but not including argument or in the manner prescribed, the tran- debate), shall be recorded verbatim. In script shall be presumed to be a true, lieu of oral examination, parties may correct, and complete transcript of the transmit written questions to the offi- testimony given in the deposition pro- cer prior to the examination and the ceeding and to contain an accurate de- officer shall propound such questions scription or reference to all exhibits in to the deponent. connection therewith, and shall be (ii) The party taking the deposition deemed to be certified correct without shall arrange for the examination of further procedure. the witness either by oral examination, (iii) At any time prior to the use of or by written questions upon agree- the deposition in accordance with para- ment of the parties or as directed by graph (a)(7) of this section and after the ALJ. If the examination is con- consideration of any objections filed ducted by means of written questions, thereto, the ALJ may issue an order copies of the questions shall be served making any corrections in the tran- upon the other party to the appeal and script which the ALJ finds are war- filed with the officer at least 10 days ranted, and these corrections shall be prior to the date set for the examina- entered onto the original transcript by tion unless otherwise agreed, and the the Hearing Clerk (without obscuring other party may serve cross questions the original text). and file them with the officer at any (7) Use of depositions. A deposition or- time prior to the time of the examina- dered and taken in accordance with the tion. provisions of this section may be used (iii) The parties may stipulate in in an appeal under these rules if the writing or the ALJ may upon motion ALJ finds that the evidence is other- order that a deposition be taken by wise admissible and telephone. A deposition taken by tele- (i) That the witness is deceased; phone is to be taken at the place where (ii) That the witness is unable to at- the deponent is to answer questions tend or testify because of age, sickness, propounded to the deponent. infirmity, or imprisonment; (iv) The parties may stipulate in (iii) That the party offering the depo- writing or the ALJ may upon motion sition has endeavored to procure the order that a deposition be recorded by attendance of the witness by subpoena, other than stenographic means. The but has been unable to do so; or stipulation or the order shall designate (iv) That such exceptional cir- the manner of recording, preserving cumstances exist as to make it desir- and filing of the deposition, and may able, in the interests of justice, to include other provisions to assure that allow the deposition to be used. If the the recorded testimony is accurate and party upon whose motion the deposi- trustworthy. tion was taken refuses to offer it in (5) Certification by the officer. The offi- evidence, any other party may offer cer shall certify on the deposition that the deposition or any part thereof in the deponent was duly sworn and that evidence. If only part of a deposition is the deposition is a true record of the offered in evidence by a party, any deponent’s testimony. The officer shall other party may require the introduc- then securely seal the deposition, to- tion of any other part which is relevant gether with one copy thereof (unless be considered with the part introduced, there are more than two parties in the and any party may introduce any other appeal, in which case there should be parts.

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(b) Interrogatories, requests for admis- enable the party to admit or deny. A sions and requests for production of docu- party who considers that a matter for ments—(1) Interrogatories. A party may which an admission has been requested submit written interrogatories to any presents a genuine issue for hearing other party to an appeal. The time for may not, on that ground alone, object submitting and responding to written to the request; the party may deny the interrogatories shall be set by the ALJ matter or set forth reasons why the at the pre-hearing conference, but in matter cannot be admitted or denied. no event shall the time for response be (3) Request for production of docu- less than 20 days from the date of serv- ments. (i) Any party may serve upon ice or within such time as determined any other party to the appeal a request upon motion to the ALJ. The number for production of documents which are of interrogatories submitted by each in the possession or control of the party shall not exceed twenty-five party upon whom the request is served. questions including subparts, unless The time for service and response to additional interrogatories are author- such a request shall be set by the ALJ ized by the ALJ. Each interrogatory at the pre-hearing conference. Upon should be answered separately and payment of fees for search and duplica- fully in writing, unless it is objected tion of documents, any party to the ap- to, in which event the reasons for ob- peal may obtain copies of such docu- jection should be stated in lieu of an ments. answer. The answers are to be signed (ii) Parties may request production under penalty of perjury by the person of any documents regarding any mat- making them. Objections shall be ter, not privileged, which is relevant to signed by the attorney of record in the the subject matter involved in the appeal or by the responding party’s au- pending action. Grounds for objection thorized representative. will not exist if the information sought (2) Request for admissions. A party appears reasonably calculated to lead may submit a written request for ad- to the discovery of admissible evi- mission of the truth of any matters rel- dence. evant to the appeal to any other party to the appeal. The time for submitting (iii) If such documents include privi- a written request for admission shall leged information or information the be set by the ALJ at the pre-hearing disclosure of which is proscribed by the conference. The number of admissions Food Stamp Act of 1977, as amended, contained in a request submitted by a such documents need not be produced. party shall not exceed twenty-five un- (c) Supplementation of response. A less additional admissions are author- party who knows or later learns that a ized by the ALJ. The matter is admit- response is incorrect is under a duty to ted unless, within 20 days after service correct such response as soon as pos- thereof, or within such time as deter- sible. A party who has responded to a mined upon motion to the ALJ, the request for discovery with a response party to whom the request is directed that was complete when made is under serves upon the party requesting the a duty to supplement the response to admission a written answer or objec- include information thereafter action addressed to the matter signed by quired. A party is under a duty to sup- the party, counsel or designated rep- plement responses with respect to any resentative. If objection is made, the question directly addressed to: reasons therefor should be stated. The (1) The identity and location of per- answer should specifically deny the sons having knowledge of discoverable matter or set forth in detail why the matters, and answering party cannot truthfully (2) The identity of each person ex- admit or deny the matter. An answer- pected to be called as an expert witness ing party may not give lack of infor- at the hearing, the subject matter on mation or knowledge as a reason for which such expert(s) is expected to tes- the failure to admit or deny unless it is tify, and the substance of the testi- stated that reasonable inquiry has been mony. made and that the information known (d) Frequency and use of discovery. The or readily obtainable is insufficient to ALJ shall limit, upon motion of a

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party, the frequency or extent of dis- and serving a motion on all parties and covery if the ALJ determines that: deponents. (1) The discovery sought is unreason- (2) Filing motion to compel. (i) Such ably cumulative or duplicative, or is motion must be filed within 20 days fol- obtainable from some other source that lowing the service of the unresponsive is more convenient, less burdensome, answer upon deposition or within 20 or less expensive; days after expiration of the period al- (2) The party seeking discovery has lowed for answers to interrogatories or had ample opportunity by discovery in production of documents. the action to obtain the information (ii) On matters related to an oral ex- sought; or amination, the proponent of the ques- (3) The discovery is unduly burden- tion may complete or adjourn the ex- some or expensive, taking into account amination before he applies for an the needs of the case, the amount in order. controversy, limitations on the parties’ (3) Responding to motion to compel. A resources, and the importance of the response to the motion may be filed in issues at stake in the litigation. accordance with § 283.18(d). (e) Protective orders—(1) Request for (g) Decision of the ALJ. (1) The ALJ protective order. A party served with may grant a motion to compel produc- such a request may file a motion for a tion or deny a motion for a protective protective order before the date on order only if the ALJ finds that the which a response to the discovery re- discovery sought is necessary for the quest is due, stating why discovery expeditious, fair, and reasonable con- should be limited or should not be re- sideration of the issues; it is not un- quired. duly costly or burdensome; it will not (2) Issuance of protective order. In unduly delay the proceeding; and the issuing a protective order, the ALJ information sought is not privileged. may make any order which justice re- (2) The initial decision of the ALJ requires to protect a party or person garding the motion to compel the pro- from annoyance, embarrassment, op- duction of privileged documents or the pression or undue burden or expense, motion for a protective order shall be- including one or more of the following: come final and effective 10 days after (i) That discovery not be had; service unless either party pursues the (ii) That the discovery may be had options as discussed in §§ 283.17(d) and only through a method of discovery 283.20. other than that requested; (h) Failure to comply with an order. (1) (iii) That certain matters not be in- If a party or other witness refuses to be quired into, or that the scope of dis- sworn or refuses to answer any ques- covery be limited to certain matters; tion after being directed to do so by (iv) That discovery be conducted with order of the ALJ, such refusal may sub- no one present except persons des- ject the refusing party to proceedings ignated by the ALJ; and to compel compliance with the ALJ’s (v) That the contents of discovery or order in the appropriate United States evidence be sealed. district court. (f) Failure to respond to discovery—(1) (2) If any party or other person re- Motions to compel. If a deponent fails to fuses to obey an order made under this respond or gives an evasive or incom- section requiring an answer to des- plete answer to a question propounded ignated questions or production of doc- at a deposition pursuant to paragraph uments, the ALJ may order that the (a) of this section or a party fails to re- matters regarding which questions spond or gives evasive or incomplete were asked or the contents of the docu- answers to written interrogatories or ment or documents or any other des- admissions, or fails to respond, in full ignated facts should be taken to be es- or in part, to a request for production tablished for the purposes of the proof documents served pursuant to para- ceeding in accordance with the claim graph (b) of this section, the party of the party obtaining the order. seeking discovery may apply for an (i) Postponements or delays. No hear- order compelling an answer by filing ing, proceeding or other matter under

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this part shall be postponed or other- return receipt without an affidavit or wise delayed pending the response or certificate of mailing shall be suffi- resolution of issues pertaining to a re- cient proof of service. quest for information pursuant to the (4) In making personal service, the Freedom of Information Act, 5 U.S.C. person making service shall leave a 552. copy of the subpoena with the person subpoenaed, or, if such person is not § 283.13 Subpoenas. immediately available, with any other (a) Issuance of subpoenas. The attend- responsible person authorized to accept ance and testimony of witnesses and service residing or employed at the the production of documentary evi- place of residence or business of the dence from any place in the United person subpoenaed. States on behalf of any party to the ap- (5) The original of the subpoena, peal may be required by subpoena at bearing or accompanied by the required the designated place of hearing. Except proof of service, shall be returned to for cause shown, requests for subpoenas the official who issued the same. The shall be filed at least 15 days prior to party at whose request the subpoena is the date of the hearing. Subpoenas issued shall be responsible for the serv- shall be issued by the ALJ, over the ice thereof. facsimile signature of the Secretary, upon a reasonable showing by the ap- § 283.14 Fees of witnesses. plicant of the grounds, necessity and Witnesses summoned under these reasonable scope thereof. rules shall be paid the same fees and (b) Service of subpoenas. (1) When the expenses that are paid witnesses in the ALJ issues a subpoena under this sec- courts of the United States. Fees shall tion, the party who requested such sub- be paid by the party at whose request poena shall serve all other parties with the witness appears. Current Federal, a copy of the subpoena, notice of the State, or local government employees names and addresses of the individuals shall not be eligible to receive witness subpoenaed and specify any documents fees. required to be produced. (2) Subpoenas may be served: § 283.15 Procedure for hearing. (i) By a U.S. Marshal or deputy marshal, (a) Request for hearing. A party may (ii) By any other person who is not request a hearing on the facts by in- less than 18 years of age, or cluding such request in its Appeal Peti- (iii) By registering and mailing a tion or Answer, whichever is appro- copy of the subpoena addressed to the priate. Failure to request a hearing person to be served at the last known within the time specified shall con- principal place of business or residence. stitute a waiver of the opportunity for (3) Proof of service may be made: such a hearing, except as provided for (i) By the return of service on the under § 283.4(i). In the event FNS denies subpoena by the U.S. Marshal or dep- any material facts and fails to request uty marshal, a hearing, the matter may be set down (ii) If served by an employee of the for hearing on motion of the State Department, by a certificate stating agency or upon the ALJ’s own motion. that he personally served the subpoena (b) Time and place. If any material upon the person named therein, issue of fact is joined by the pleadings, (iii) If served by another person, by the ALJ, upon motion of any party, an affidavit of such person stating that stating that the matter is ready for he personally served the subpoena upon hearing, shall set a time for the hear- the person named therein, or ing, as soon as feasible thereafter, with (iv) If service was by registered mail, due regard for the public interest and by an affidavit made by the person the convenience and necessity of the mailing the subpoena that it was State agency and FNS. The hearing mailed as provided herein and by the shall be held at the U.S. Department of signed return post-office receipt. Where Agriculture, Washington, DC. Upon a the subpoena is issued on behalf of the showing of unusual or extraordinary Secretary and service is by mail, the circumstances, the ALJ may order that

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the hearing be held at another loca- obtain another attorney or representation. The ALJ shall file a notice stat- tive. ing the time and place of the hearing. (2) Whenever it is found, after notice If any change in the time of the hear- and opportunity for hearing, that a ing is made, the ALJ shall file a notice person who is acting or who has acted of such change, which notice shall be as attorney or representative for an- served upon the parties, unless it is other person in any proceeding before made during the course of an oral hear- the U.S. Department of Agriculture, is ing and made a part of the transcript unfit to act as such counsel because of or actual notice given to the parties. such unethical or contumacious con- (c) Appearances. The parties may ap- duct, such person will be precluded pear in person or by attorney of record from acting as the attorney or rep- in the appeal or by any other des- resentative in any or all proceedings ignated representative. Any person before the Department as found to be who appears as attorney or as a party’s appropriate. designated representative must con- (f) Failure to appear. (1) If FNS or the form to the standards of ethical con- State agency, after being duly notified, duct required by practitioners before fails to appear at the hearing without the courts of the United States. cause, that party shall be deemed to (d) Exchange of witness and rebuttal have waived the opportunity for an witness lists, statements and exhibits. (1) oral hearing and to have admitted any Witness and rebuttal witness lists, cop- facts which may be presented at the ies of prior statements of proposed wit- hearing. Such failure by either party nesses, and copies of proposed hearing shall also constitute an admission of exhibits, including copies of any writ- all the material allegations of fact con- ten statements or depositions that a tained in any pleadings submitted by party intends to offer in lieu of live the other party. The party who appears testimony in accordance with shall have the option of whether to fol- § 283.12(a)(7), shall be exchanged at low the procedure under § 283.7 or to least 15 days in advance of the hearing present evidence, in whole or in part, or at such other time as may be set by in the form of declarations or by oral the ALJ. testimony before the ALJ. (2) A witness whose name does not (2) Failure to appear at a hearing appear on the witness list shall not be shall not be deemed to be a waiver of permitted to testify and exhibits which the right to be served with a copy of were not provided to the opposing the ALJ’s initial decision, to file a mo- party as provided above shall not be tion for reconsideration pursuant to admitted into evidence at the hearing § 283.17(d) or to seek review by the Judi- absent a showing of cause and as au- cial Officer in accordance with § 283.20. thorized by the ALJ. (g) Order of proceeding. Except as may (e) Deparment of attorney or represent- be decided otherwise by the ALJ, FNS ative. (1) Whenever an ALJ finds that a shall proceed first at the hearing. FNS person acting as attorney or designated has the burden of proving, by a prepon- representative for any party to the ap- derance of the evidence, the QC claim peal is guilty of unethical or contuma- against the State agency for a QC error cious conduct in, or in connection with rate in excess of the tolerance level. an appeal, the ALJ may order that The State agency will proceed second such person be precluded from further and must prove, by a preponderance of acting as attorney or representative in the evidence, the facts upon which it the appeal. Review by the Judicial Offi- bases its appeal. cer may be taken on any such order, (h) Evidence. (1) The testimony of but no appeal of the QC claim shall be witnesses at a hearing shall be on oath delayed or suspended pending disposi- or affirmation and subject to cross-ex- tion of the debarment review by the amination. Judicial Officer. Provided, however, (2) Upon a finding of cause, the ALJ that the ALJ shall suspend the appeal may order that any witness be exam- of the QC claim for a reasonable time ined separately and apart from all for the purpose of enabling the party to other witnesses except those who may

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be parties to the appeal or whose pres- (2) Only objections made before the ence is shown by a party to be essential ALJ may be subsequently relied upon to the presentation of the party’s on review by the Judicial Officer. cause. (k) Exhibits. Four copies of each ex- (3) After a witness called by either hibit shall be filed with the ALJ. How- party has testified on direct examina- ever, where there are more than two tion, any other party may request and parties in the appeal, an additional obtain the production of any state- copy shall be filed for each additional ment, or part thereof, of such witness party. A true copy of an exhibit may be in the possession of the opposing party substituted for the original. which relates to the subject matter as (l) Official records or documents. An of- to which the witness has testified. ficial government record or document Such production shall be made accord- or entry therein, if admissible for any ing to the procedures and subject to purpose, shall be admissible in evi- the definitions and limitations pre- dence without the production of the scribed in the Jencks Act (18 U.S.C. person who made or prepared the same, 3500). and shall be prima facie evidence of the (4) Evidence which is immaterial, ir- relevant facts stated therein. Such relevant, or unduly repetitious, or record or document shall be evidenced which is not of the sort upon which re- by an official publication thereof or by sponsible persons are accustomed to a copy certified by a person having rely, shall be excluded by order of the legal authority to make such certification. ALJ insofar as practicable. (m) Official notice. Official notice (i) Inclusion in the record. At the oral shall be taken of such matters as are hearing or as ordered by the ALJ, depo- judicially noticed by the courts of the sitions to the extent deemed admis- United States and of any other matter sible, written interrogatories, written of technical, scientific, or commercial requests for admission and respective fact of established character. Provided, responses may be offered in evidence that the parties shall be given ade- by the party at whose instance they quate opportunity to show that such were taken. If not offered by such facts are erroneously noticed. party, they may be offered in whole or (n) Offer of proof. Whenever evidence in part by any other party. If only part is excluded by the ALJ, the party offer- of a deposition, written interrogatory, ing such evidence may make an offer of written request for admission or re- proof, which shall be included in the sponse thereto is offered in evidence by transcript. The offer of proof shall con- a party, any other party may require sist of a brief statement describing the that all of it, which is relevant to the evidence excluded. If the evidence con- part introduced, be offered, and any sists of a brief oral statement, it shall party may introduce any other parts. be included in the transcript in toto. If Such depositions, written interrog- the evidence consists of a document or atories, written requests for admission other exhibit, it shall be marked for and respective responses thereto shall identification and inserted in the hear- be admissible in evidence subject to ing record. In either event, if the Judi- such objections as to relevancy, mate- cial Officer, upon review, determines riality or competency of the testimony that the ALJ’s ruling excluding the as were noted at the time of their tak- evidence was erroneous and prejudicial, ing or are made at the time they are the evidence shall be considered a part offered in evidence. of the transcript and hearing record. If (j) Objections. (1) If a party objects to the Judicial Officer determines that the admission of any evidence or to the the ALJ’s ruling excluding the evi- limitation of the scope of any examina- dence was erroneous and prejudicial, tion or cross examination or to any and that it would inappropriate to have other ruling by the ALJ, the party such evidence considered a part of the shall state briefly the grounds of such hearing record without reopening the objection, whereupon an automatic ex- hearing, the Judicial Officer may di- ception will follow if the objection is rect that the hearing be reopened to overruled by the ALJ. permit the taking of such evidence or

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for any other purpose in connection erence to all exhibits received in evi- with the excluded evidence. dence and made part of the hearing (o) Transcript. Hearings shall be re- record. The transcript shall be deemed corded and transcribed verbatim. The to be certified without further action party requesting the hearing shall bear by the ALJ. the transcription cost of producing the (3) At any time prior to the filing of transcript and the duplication cost for the ALJ’s initial decision and after one transcript provided to the ALJ and consideration of any objections filed as to the other parties to the appeal. to the transcript, the ALJ may issue an order making any corrections in the § 283.16 Consolidation of issues. transcript that the ALJ finds are war- Similar issues involved in appeals by ranted. Such corrections shall be en- two or more State agencies may be tered into the original transcript by consolidated upon motion by the State the Hearing Clerk (without obscuring agencies, FNS, or at the discretion of the original text). the ALJ if it is decided that consolida- (b) Proposed findings of fact, conclu- tion would help to promote administra- sions of law, order, and briefs. The par- tive efficiency. ties may file proposed findings of fact, (a) Disposition of consolidated issues. If conclusions of law and orders based the ALJ orders consolidation, the solely upon the record and on officially issues consolidated will be considered noticed matters, and briefs in support first. If a hearing has been requested by thereof. briefs may be filed at the dis- any of the parties that have had issues cretion of the ALJ. The ALJ shall an- consolidated, arguments on the con- nounce at the hearing the time within solidated issues will be heard before ar- which these documents may be filed. guments on dissimilar issues. The ALJ (c) ALJ’s initial decision. (1) The ALJ will take the information into consid- shall decide the appeal not later than eration along with arguments on other 60 days after receipt of rebuttal evi- issues in preparing initial decisions for dence submitted by the State agency QC appeals in which some issues have been consolidated. or, if the State agency does not submit (b) Initial decision. (1) If the ALJ de- rebuttal evidence, not later than 90 cides the evidence and arguments by days after the State agency submits the State agencies on the consolidated the notice of appeal and evidence in issues cannot be overcome by the evi- support of the appeal. In accordance dence presented by FNS and are suffi- with § 283.22(f), the ALJ may, upon mo- cient to grant the relief requested by a tion or sua sponte, extend this deadline State agency or all State agencies in for cause shown. which the issue is involved, the ALJ (2) The ALJ shall prepare, upon the shall prepare an initial decision as pro- basis of the record and officially no- vided in § 283.17(c). ticed matters, and shall file, an initial (2) FNS may file a motion for recon- decision which shall include a decision sideration pursuant to § 283.17(d) or on a request for good cause relief, a seek review by the Judicial Officer in copy of which shall be served upon each accordance with § 283.20. of the parties. (3) Such initial decision shall be con- § 283.17 Post-hearing procedure. sidered final for purposes of judicial re- (a) Corrections to transcript. (1) At any view without further proceedings, un- time, but not later than the time fixed less there is a motion for reconsider- for filing proposed findings of fact, con- ation filed pursuant to § 283.17(d) or re- clusions of law, order and briefs, any view by the Judicial Officer is sought party may file a motion proposing cor- pursuant to § 283.20. rections to the transcript. (4) If no motion for reconsideration (2) Unless a party files such a motion or review by the Judicial Officer is in the matter prescribed, the transcript filed, the initial decision shall con- shall be presumed to be a true, correct, stitute the final notice of determina- and complete transcript of the testi- tion for purposes of judicial review and mony given at the hearing and to con- shall become effective 30 day after tain an accurate description or ref- service.

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(d) Motion for reconsideration. (1) Ex- (1) Motions to dismiss pursuant to cept as provided in paragraph (d)(4) of § 283.5 must be filed within the time al- this section, any party may file a mo- lowed for filing an answer; and tion for reconsideration of the initial (2) Motions for reconsideration must decision within 30 days of service of the be filed within 30 days of service of the initial decision. If served by mail, the ALJ’s initial decision pursuant to time for filing a motion for reconsider- § 283.17(d). ation will be 5 days longer in accord- (c) Contents. All written motions and ance with § 283.22. requests shall state the particular (2) Every such motion must set forth order, ruling, or action desired and the the mattes claimed to have been erro- grounds therefor. neously decided and the basis of the al- (d) Response to motions and requests. leged errors. Such motion shall be ac- Within 10 days after service of any companied by a supporting brief. written motion or request or within (3) Responses to such motions shall such shorter or longer period as may be be filed in accordance with § 283.18(d). fixed by the ALJ or Judicial Officer, an (4) No party may file a motion for re- opposing party may file a response to consideration of an initial decision the motion or request. The moving that has been revised in response to a party shall have no right to reply to previous motion for reconsideration. the response; however, the ALJ or Ju- (5) The ALJ may dispose of a motion dicial Officer may order that a reply be for reconsideration by denying it or by filed. issuing a revised initial decision. (e) Certification to the Judicial Officer. (6) If the ALJ denies a motion for re- The submission or certification of any consideration, the initial decision shall motion, request, objection, or other constitute the final notice of deter- question to the Judicial Officer prior to mination for purposes of judicial re- the seeking of review pursuant to view and shall become effective 30 days § 283.20 shall be made by and in the dis- after service unless review by the Judi- cretion of the ALJ. The ALJ may ei- cial Officer is sought in accordance ther rule upon or certify the motion, with § 283.20. request, objection, or other question to (7) If the ALJ issues a revised initial the Judicial Officer, but not both. decision, that decision shall constitute the final notice of determination for § 283.19 ALJs. purposes of judicial review and shall (a) Assignment. No ALJ shall be as- become effective 30 days after service signed to serve in any appeal who: unless review by the Judicial Officer is (1) Has any pecuniary interest in any sought in accordance with § 283.20. matter or business involved in the appeal, § 283.18 Motions and requests. (2) Is related by blood or marriage to (a) Filing. All motions and requests any party in the appeal, or shall be filed with the Hearing Clerk, (3) Has any conflict of interest which and served upon all the parties by the might impair the ALJ’s objectivity in moving or requesting party, except mo- the appeal. tions and requests made on the record (b) Disqualification of ALJ. (1) Any during the oral hearing. The ALJ as- party to the appeal may, by motion, re- signed to the appeal or the Chief Judge quest that the ALJ withdraw from the shall rule upon all motions and re- appeal on one or more of the grounds quests filed or made prior to seeking set out in paragraph (a) of this section. review of the ALJ’s initial decision Such motion shall set forth with par- pursuant to § 283.20, except motions di- ticularity the alleged grounds for dis- rectly relating to such review. There- qualification. The ALJ may then either after, the Judicial Officer shall rule on rule upon or certify the motion to the any motions and requests as well as Judicial Officer, but not both. the motions directly relating to the re- (2) The ALJ may withdraw from any view of the ALJ’s initial decision. appeal for any reason deemed by the (b) Time for filing. Any motion or re- ALJ to be disqualifying. quest may be filed at any time, except (c) Powers. (1) Subject to review as that: provided elsewhere in this part, the

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ALJ, in any assigned appeal, shall have if another party files a motion for re- the power to: consideration under § 283.17(d), consid- (i) Rule upon motions and requests; eration of the review petition shall be (ii) Set the time and place of a pre- stayed automatically pending resolu- hearing conference and the time of the tion of the motion for reconsideration. hearing, adjourn the hearing from time If a motion for reconsideration is time- to time, and change the time of the ly filed, a review petition may be filed hearing; within 30 days after the ALJ denies the (iii) Administer oaths and affirma- motion or issues a revised initial deci- tions; sion, whichever applies. (iv) Regulate the scope and timing of (2) As provided in § 283.15(h), objec- discovery; tions made before the ALJ regarding (v) Issue and enforce subpoenas as au- evidence or regarding a limitation on thorized under 7 U.S.C. 2023(a) and examination or cross-examination or these rules; other ruling may be relied upon in a (vi) Summon and examine witnesses Judicial Officer review. and receive evidence at the hearing; (3) Each issue set forth in the review (vii) Appoint expert witnesses in ac- petition, and the arguments thereon, cordance with the provisions of Rule shall be plainly and concisely stated; 706 of the Federal Rules of Evidence; and shall contain detailed citations to (viii) Admit or exclude evidence; the record, statutes, regulations or au- (ix) Hear oral argument on facts or thorities being relied upon in support law; thereof. A brief in support may be filed (x) Upon motion of a party, decide simultaneously with the review peti- cases, in whole or in part, by non-oral tion. hearing procedures under subpart C of (b) Response to review petition. Within this part where there is no disputed 30 days after service of a copy of a re- material issue of fact; view petition and any brief in support (xi) Perform all acts and take all thereof, any other party to the pro- measures necessary for the mainte- ceedings may file a response in support nance of order, including the exclusion of or in opposition to the review peti- of contumacious counsel or other per- tion and in such response any relevant sons; issue, not presented in the review peti- (xii) Take all other actions author- tion, may be raised. ized under the Act and these rules, in- (c) Transmittal of the record. (1) When- cluding the extension of time upon mo- ever a review petition of an ALJ’s inition of a party or sua sponte for cause tial decision is filed and a response shown. thereto has been filed or time for filing (2) The ALJ may not rule upon the a response has expired, the Hearing validity of Federal statutes or regula- Clerk shall transmit to the Judicial Of- tions. ficer the record of the appeal. (d) Who may act in the absence of the (2) Such record shall include: The ALJ. In case of the absence of the ALJ pleadings; motions and requests filed or the ALJ’s inability to act, the pow- and rulings thereon; the transcript of ers and duties to be performed by the the testimony taken at the hearing, to- ALJ under these rules of practice in gether with the exhibits filed in con- connection with any assigned appeal nection therewith; any documents or may, without abatement of the appeal, papers filed in connection with a pre- unless otherwise directed by the Chief hearing conference; such proposed find- Judge, be assigned to any other ALJ. ings of fact, conclusions of law, orders, and briefs in support thereof, as may § 283.20 Review by the Judicial Offi- have been filed in connection with the cer. appeal; the ALJ’s initial decision; the (a) Filing of review petition. (1) Within motion for reconsideration of the 30 days after service of the ALJ’s ini- ALJ’s initial decision; the ALJ’s initial tial decision, or any part thereof, any decision on the motion for reconsider- party may seek Judicial Officer review ation and the review petition, and such of such decision by filing a review peti- briefs in support thereof and responses tion with the Hearing Clerk. However, thereto as may have been filed.

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(d) Oral argument. A party filing a re- (j) Decision of the Judicial Officer on view petition may request, within the review. (1) As soon as practicable after prescribed time for filing such review the receipt of the record from the Hear- petition, an opportunity for oral argu- ing Clerk, or, in case oral argument ment before the Judicial Officer. With- was had, as soon as practicable therein the time allowed for filing a re- after, the Judicial Officer, upon the sponse, the responding party may file a basis of the record and any matter of request for such oral argument. Failure which official notice is taken, shall to make such request to appear before rule on the review. the Judicial Officer, within the pre- (2) The Judicial Officer may adopt, scribed time period, shall be deemed a reduce, reverse, compromise, remand waiver of the opportunity for oral ar- or approve settlement of any claim ini- gument. There is no right to appear tially decided by the ALJ under this personally before the Judicial Officer. part. The Judicial Officer may grant, refuse, (3) The Judicial Officer shall prompt- or limit any request for oral argument. ly serve each party to the appeal with Oral argument shall not be transcribed a copy of the ruling of the Judicial Of- unless so ordered in advance by the Ju- ficer which shall be considered the dicial Officer for cause shown upon re- final determination and contain a quest of a party or upon the Judicial statement describing the right to seek Officer’s own motion. judicial review. (e) Argument to be Scope of argument. (4) Judicial review must be sought heard by the Judicial Officer on review, within 30 days of service of the final whether oral or on brief, shall be lim- notice of determination by the Judicial ited to the issues raised in the review Officer pursuant to 7 U.S.C. 2023(a). petition to the Judicial Officer or in the response to such petition, except § 283.21 Ex parte communications. that if the Judicial Officer determines that additional issues should be ar- (a) ALJ; Judicial Officer. At no time gued, the parties shall be given reason- prior to the issuance of the final deci- able notice of such determination, so sion shall the ALJ or Judicial Officer as to permit adequate preparation on discuss ex parte the merits of the ap- all issues to be argued. peal or review with any person who is (f) Notice of argument; postponement. connected with the appeal or review in The Hearing Clerk shall advise all par- an advocative or in an investigative ca- ties of the time and place at which oral pacity, or with any representative of argument will be heard. A request for such person. However, procedural mat- postponement of the argument must be ters shall not be included within this made by motion filed within a reason- limitation; and furthermore, the ALJ able time in advance of the date fixed or Judicial Officer may discuss the for argument. merits of the case with such a person if (g) Order of argument. The appellant all parties to the appeal or review, or is entitled to commence and conclude their attorneys have been given notice the argument. and an opportunity to participate. A (h) Submission of briefs. By agreement memorandum of such discussion shall of the parties, a review may be sub- be included in the record. mitted for decision on the briefs, but (b) Parties; interested persons. No the Judicial Officer may direct that party or other interested person shall the review be argued orally. make or knowingly cause to be made (i) Additional evidence. If any party to the ALJ or Judicial Officer an ex demonstrates to the satisfaction of the parte communication relevant to the Judicial Officer that additional evi- merits of the appeal or review. dence not presented to the ALJ is ma- (c) Procedure. If the ALJ or Judicial terial, not cumulative, and that there Officer receives an ex parte commu- were reasonable grounds for the failure nication in violation of this section, to present such evidence to the ALJ, the one who receives the communica- the Judicial Officer shall remand the tion shall place in the public record of matter to the ALJ for consideration of the appeal or review: such additional evidence. (1) All such written communications;

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(2) Memoranda stating the substance designated representative, service shall of all such oral communications; and be made upon such attorney or rep- (3) Copies of all written responses, resentative in lieu of the actual party. and memoranda stating the substance (d) Proof of service. A certificate of of all oral responses thereto. the person serving the document by (4) Upon receipt of a communication personal delivery or by mail, setting knowingly made or knowingly caused forth the date, time and manner of to be made by a party in violation of service, shall be proof of service. this section, the ALJ or Judicial Offi- (e) Computation of time. (1) In com- cer may, to the extent consistent with puting any period of time under this the interests of justice and the policy part or in an order issued thereunder, of the underlying statute, require the the time begins with the day following party to show cause why its claim or interest in the appeal or review should the act, event, or default, and includes not be dismissed, denied, disregarded or the last day of the period, unless it is otherwise adversely affected on ac- a Saturday, Sunday or legal holiday count of such violation. observed by the Federal Government, (d) Decision. To the extent consistent in which event it includes the next with the interests of justice and the business day. policy of the underlying statute, a vio- (2) When a document has been served lation of this section shall be sufficient by mail, an additional five days will be grounds for a decision adverse to the added to the time permitted for any re- party who knowingly commits a viola- sponse. tion of this section or who knowingly (f) Extensions of time. Requests for ex- causes such a violation to occur. tensions of time shall be submitted to the ALJ, Chief Judge or the Judicial § 283.22 Form; filing; service; proof of Officer prior to the expiration of the service; computation of time; and extensions of time. original due date. The time for the filing of any document or paper required (a) Form. (1) The original and two or authorized under the rules in this copies of all papers in a proceeding part may be extended by the ALJ, conducted under this subpart shall be Chief Judge or the Judicial Officer, if, filed with the Hearing Clerk. (2) Every pleading and paper filed in in the judgment of the ALJ, Chief the proceeding shall contain a caption Judge or the Judicial Officer, there is setting forth the title of the action, the cause for the extension. In instances docket number assigned by the Hearing where the time permits notice of the Clerk, and a descriptive title (e.g., Mo- request for extension, time shall be tion for Extension of Time). given to the other party to submit (3) Every pleading and paper shall be views concerning the request. signed by and contain the address and telephone number of the representative § 283.23 Procedural matters. for the party on whose behalf the paper (a) Communications from Hearing was filed. Clerk. In order to expedite the appeal (b) Filing. Papers are considered filed process, the Hearing Clerk may develop when they are postmarked, or, re- form letters and transmittal forms to ceived, if hand delivered. Date of mail- be used for notices, service of papers, ing may be established by a certificate requests for information, and all other from the party or representative or by communications between the Hearing proof that the document was sent by Clerk’s Office and the parties. certified or registered mail. (b) Representation. All parties may be (c) Service. A party filing a document represented by attorneys or by des- with the ALJ shall, at the time of filing, serve a copy of such document on ignated representatives. Attorneys or every other party. Service upon any designated representatives appearing party of any document shall be made for the parties shall file formal notices by delivering or mailing a copy to the of appearances and withdrawals with party’s last known address. When a the Hearing Clerk. party is represented by an attorney or

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Subpart C—Summary Procedure (iii) A statement that the notice of for Appeals of QC Claims of appeal is filed pursuant to section 14(a) Less Than $50,000 of the Food Stamp Act; (iv) A true copy of the bill for collec- § 283.24 Incorporation of procedures tion which constitutes the basis for the by reference. filing of the notice of appeal shall be Except as otherwise provided, the fol- attached to the notice. lowing procedures detailed in subpart B (2) Failure to file an acceptable no- of this part shall apply to appeals of QC tice of appeal may result in a challenge claims of less than $50,000: §§ 283.5 Mo- by FNS to the notice and dismissal of tion to Dismiss; 283.6 Answer; 283.8 Rebut- the notice by the ALJ and a waiver of tal or Amendment of Appeal or Answer; the opportunity for further appeal or 283.9 Withdrawal of Appeal; 283.10 Con- review by the Judicial Officer unless sent Decision; 283.18 Motions and Re- the State agency pursues the options quests; 283.19 ALJ’s; 283.20 Review by the as discussed in §§ 283.17(d) and 283.20. Judicial Officer; 283.21 Ex Parte Commu- (e) Receipt of notice of appeal and as- nications; 283.22 Filings; Service; Exten- signment of docket number. Upon receipt sions of Time; and Computations of Time; of a notice of appeal, the Hearing Clerk and 283.23 Procedural Matters. shall assign the appeal a docket number. The Hearing Clerk shall: § 283.25 Filing appeals for QC claims (1) Send the State agency a letter of less than $50,000. which shall include the following infor- (a) Time. A State agency may appeal mation: the bill for collection from FNS for a (i) Advise that the notice of appeal QC claim of less than $50,000 for a food has been received and the date of re- stamp QC error rate in excess of the ceipt; tolerance level. A State agency must (ii) The docket number assigned to file a written notice of appeal, in ac- the appeal and instructions that all fu- cordance with this section, within 10 ture communications related to the ap- days of receipt of the bill for collection peal shall reference the docket number, from FNS for a QC claim of less than and; $50,000. The State agency may request (iii) That the State agency must file an extension to the 10-day filing re- and serve its appeal petition, as set quirement in accordance with forth in § 283.22 not later than 60 days § 283.22(f). FNS shall issue the bill for after receiving a notice of the claim. collection by certified mail or personal Failure to file a timely appeal petition service. may result in a waiver of further ap- (b) Exhaustion of administrative rem- peal rights. edies. The State agency must appeal (2) Send FNS a copy of the notice of the bill for collection to the ALJ, pur- appeal and a copy of the letter to the suant to this subpart, and exhaust the State agency. available administrative remedies be- (f) Stay of collection. The filing of a fore filing suit in the Federal District timely notice of appeal shall automati- Courts. cally stay the action of FNS to collect (c) Filing. The notice of appeal shall the QC claim asserted against the be filed with the Hearing Clerk. State agency until a decision is (d) Content of the notice of appeal. (1) reached on the acceptability of the ap- A notice of appeal, in order to be con- peal, and in the case of an acceptable sidered acceptable must contain the appeal, until a final administrative de- following information: termination has been issued. However, (i) A brief and clear statement that it interest will accrue on the outstanding is an appeal from a QC claim of less claim amount during the stay as pro- than $50,000 identifying the period the vided in section 13(a)(1) of the Food claim covers, the date and amount of Stamp Act of 1977, as amended (7 U.S.C. the bill for collection, and the date of 2022(a)(1)). receipt of the bill for collection; (g) Content of appeal petition. The ap- (ii) Identification of the State agency peal petition shall include: as the appellant and FNS as the appel- (1) A brief statement of the allega- lee; tions of fact and provisions of law that

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constitute the basis for the appeal in- with supporting reasons. If meritorious cluding a statement as to whether a objections are not filed, the ALJ shall factual basis for good cause relief ex- issue an initial decision without fur- ists, and ther procedures. Copies of the decision (2) The nature of the relief sought. or denial of State agency’s motion (h) FNS answer. Upon service of the shall be served on each of the parties State agency appeal petition, FNS and shall be included as part of the of- shall file an answer, pursuant to § 283.6, ficial record. Where the decision as not later than 60 days after the State proposed by the State agency is adopt- agency submits its appeal petition. ed as the ALJ’s initial decision, such decision of the ALJ shall become final § 283.26 Request that appeals be han- and effective 30 days after service un- dled under procedures in subpart B less reconsideration or review by the for appeals of QC claims of $50,000 Judicial Officer is sought as discussed or more. in §§ 283.17(d) and 283.20. (a) If, after the filing of its appeal petition, the State agency does not be- § 283.28 Discovery. lieve that the summary procedure pro- Upon motion and as ordered by the vided in this subpart is adequate for ALJ, written interrogatories, written handling the appeal and that an oral requests for admissions and written re- hearing is necessary, the State agency quests for the production of docu- may file, no later than the date estab- ments, may be served by any party to lished for the conclusion of any dis- the appeal upon any other party and covery pursuant to § 283.29, a motion used in accordance with § 283.12(b). that its appeal be handled under the procedures in subpart B of this part. § 283.29 Scheduling conference. (b) The motion shall specify why the (a) Time and place. The ALJ shall di- State agency believes that the sum- rect the parties or their counsel to at- mary procedure is inadequate and what tend a scheduling conference following harm will result if an oral hearing is the filing of a notice of appeal pursuant not held. to § 283.25. The scheduling conference (c) FNS will have 10 days from serv- shall be held at the U.S. Department of ice of the State agency’s motion that Agriculture, Washington, DC. Reason- the appeal be handled under subpart B able notice of the time and place of the of this part to submit arguments either scheduling conference shall be given. in support of or against the State agen- The ALJ may order each of the parties cy’s position. to furnish at the scheduling conference (d) The ALJ will review the State the following: agency’s motion and the information (1) An outline of the appeal or de- submitted by FNS and decide which fense; procedures shall be used in the appeal. (2) The legal theories upon which the party will rely; § 283.27 Procedures upon failure to file (3) Copies of or a list of documents an answer. that the party anticipates relying The failure by FNS to file an answer upon; shall constitute a waiver of the oppor- (b) Procedures. The ALJ shall not tunity to file a cross motion for sum- order any of the foregoing procedures mary judgment pursuant to § 283.30. that a party can show are inappro- Upon such failure to file, the State priate or unwarranted under the cir- agency shall file a proposed decision, cumstances of the particular appeal. along with a motion for adoption (c) Scheduling conference. At the thereof, both of which shall be served scheduling conference, the following upon FNS by the State agency. Within matters shall be considered: 10 days after service of such motion (1) The simplification of issues; and proposed decision, FNS may file (2) The necessity of amendments to with the Hearing Clerk objections pleadings; thereto. If the ALJ finds that meri- (3) Stipulations of facts and of the torious objections have been filed, the authenticity, accuracy, and admissi- State agency’s motion shall be denied bility of documents;

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(4) Negotiation, compromise, or set- briefs may not exceed 15 pages in tlement of issues; length, excluding exhibits. (5) The exchange of copies of proposed exhibits; § 283.31 Review of the record. (6) The nature of and the date by (a) The ALJ shall review the cross which discovery, as provided in § 283.28, motions for summary judgment, briefs, must be completed; reply briefs and supporting materials (7) The identification of documents submitted by both FNS and the State or matters of which official notice may agency. be requested; (b) If the ALJ decides that additional (8) A schedule to be followed by the information or briefing is required parties for the filing of cross-motions from a party, a request for such infor- for summary judgment and completion mation or briefing shall be submitted of other actions decided at the con- to such party with a copy to the other ference; and party. The request shall identify the (9) Such other matters as may expe- additional information or specific dite and aid in the disposition of the issues to be addressed and shall specify appeal. the date(s) by which such information (d) Reporting. A scheduling con- or briefing must be provided. Upon reference will not be stenographically receipt of such additional information or ported unless so directed by the ALJ. briefing, the ALJ shall provide the (e) Attendance at scheduling con- other party an opportunity to submit ference. In the event the ALJ concludes responsive information or briefing. that personal attendance by the ALJ (c) If the party to whom a request for and the parties or counsel at a sched- additional information or briefing is uling conference is unwarranted or im- made fails to submit the information practical, but decides that a conference or brief the issue(s) as requested, the would expedite the appeal, the ALJ ALJ may decide the appeal based on may conduct such conference by tele- the existing record. phone. (d) If the ALJ decides that oral argu- (f) Order. Actions taken as a result of ment is necessary on legal issues, the a conference shall be reduced to an appropriate written order, unless the ALJ ALJ shall set a time for the oral argu- concludes that a stenographic report ments as soon as feasible thereafter, shall suffice. with due regard for the public interest and the convenience and necessity of § 283.30 Cross motions for summary the State agency and FNS. The oral ar- judgment. guments shall be held at the U.S. De- partment of Agriculture, Washington, Appeals filed pursuant to this sub- DC. Upon a showing of unusual or ex- part shall be determined upon cross motions for summary judgment unless traordinary circumstances, the ALJ the matter is heard under subpart B of may order that the argument be held this part in accordance with § 283.26. at another location. The ALJ shall file Cross motions for summary judgment a notice stating the time and place of shall be filed by the parties along with the oral arguments. If any change in the appeal petition and answer or in the time of the oral arguments is accordance with the schedule estab- made, the ALJ shall file a notice of lished by the ALJ pursuant to § 283.29. such change, which notice shall be Motions for summary judgment shall served upon the parties, unless it is address the issues raised by the plead- made during the course of the oral ar- ings and may be supported by declara- guments and made a part of the tran- tions. Motions and accompanying script or actual notice given to the par- briefs in support of summary judgment ties. shall not exceed 35 pages excluding ex- (e) Oral argument shall not be tran- hibits unless otherwise authorized by scribed unless so ordered in advance by the ALJ. Reply briefs may be filed by the ALJ for cause shown upon request the parties in accordance with the of a party or upon the ALJ’s own mo- schedule established by the ALJ. Reply tion.

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§ 283.32 ALJ’s initial decision. establish eligibility and benefit levels for the nutrition assistance program. (a) The ALJ shall decide the appeal In addition, with FNS approval, the not later than 60 days after receipt of Commonwealth of Puerto Rico may rebuttal evidence submitted by the employ a small proportion of the grant State agency pursuant to § 283.8 or, if funds to finance projects that the Com- the State agency does not submit re- monwealth of Puerto Rico believes buttal evidence, not later than 90 days likely to improve or stimulate agri- after the State agency submits the no- culture, food production, and food dis- tice of appeal and evidence in support tribution. of the appeal. The ALJ may extend this deadline for cause shown. § 285.2 Funding. (b) The ALJ shall prepare, upon the basis of the record, and shall file an (a) FNS shall, consistent with the initial decision which shall include a plan of operation required by § 285.3 of decision on a request for good cause re- this part, and subject to availability of lief, a copy of which shall be served funds, provide nutrition assistance upon each of the parties. grant funds to the Commonwealth of Puerto Rico to cover 100 percent of the (c) Such initial decision shall con- expenditures related to food assistance stitute the final notice of determina- provided to needy persons and 50 per- tion for purposes of judicial review cent of the administrative expenses re- without further proceedings, unless lated to the food assistance. The there is a motion for reconsideration amount of the grant funds provided to filed pursuant to § 283.17(d) or review by the Commonwealth of Puerto Rico the Judicial Officer is sought pursuant shall not exceed amounts appropriated to § 283.20. for this purpose for each fiscal year. (b) FNS shall, subject to the provi- PART 284—PROVISION OF A NUTRI- sions in §§ 285.3 and 285.5 in this part, TION ASSISTANCE PROGRAM and limited by the provisions of para- FOR THE COMMONWEALTH OF graph (a) of this section, pay to the THE NORTHERN MARIANA IS- Commonwealth of Puerto Rico for the LANDS (CNMI) [RESERVED] applicable fiscal year, the amount estimated by the Commonwealth of Puerto PART 285—PROVISION OF A NUTRI- Rico pursuant to § 285.3(b)(4). Payments shall be made no less frequently than TION ASSISTANCE GRANT FOR on a monthly basis prior to the begin- THE COMMONWEALTH OF PUER- ning of each month consistent with the TO RICO Treasury Fiscal Requirement Manual, Volume I, part 6, section 2030; these Sec. letters of credit shall be drawn on an 285.1 General purpose and scope. as-needed basis. The amount shall be 285.2 Funding. reduced or increased to the extent of 285.3 Plan of operation. 285.4 Audits. any prior overpayment or under- 285.5 Failure to comply. payment which FNS determines has been made and which has not been AUTHORITY: 7 U.S.C. 2011–2036. previoulsy adjusted. The payment(s) SOURCE: Amdt. 209, 47 FR 32409, July 27, received by the Commonwealth of 1982, unless otherwise noted. Puerto Rico for a fiscal year shall not exceed the total authorized for the § 285.1 General purpose and scope. grant, or the total cost for the nutri- This part describes the general terms tion assistance program eligible for and conditions under which grant funds funding, whichever is less, for that fis- shall be provided by the Food and Nu- cal year. trition Service (FNS) to the govern- (c) FNS may recover from the Com- ment of the Commonwealth of Puerto monwealth of Puerto Rico, through off- Rico for the purpose of designing and sets to funding during any fiscal year, conducting a nutrition assistance pro- funds previously paid to the Common- gram for needy persons. The Common- wealth of Puerto Rico and later deter- wealth of Puerto Rico is authorized to mined by the Secretary to have been

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overpayments. Funds which may be re- (ii) To the extent grant funds are not covered include, but are not limited to: used for direct nutrition assistance (1) Costs not included in the approved payments to needy persons, the plan of plan of operation; operation must demonstrate that the (2) Unallowable costs discovered in grants funds will provide nutrition as- audit or investigation findings; sistance benefiting needy persons in (3) Funds allocated to the Common- the Commonwealth of Puerto Rico. wealth of Puerto Rico which exceeded (4) A budget and an estimate of the expenditures during the fiscal year for monthly amounts of expenditures nec- which the funds were authorized; or essary for the provision of the nutri- (4) Amounts owed to FNS as a result tion assistance and related administra- of the nutrition assistance grant which tive expenses up to the monthly have been billed to the Commonwealth amounts provided for payment in of Puerto Rico and which the Common- § 285.2. wealth of Puerto Rico has failed to pay (5) Other reasonably related informa- without cause acceptable to FNS. tion which FNS may request. (d) Funds for payment of any prior (6) An agreement signed by the gov- fiscal year expenditures shall be ernor or other appropriate official to claimed from the funding for that prior conduct the nutrition assistance pro- year. The payment of funds shall not gram in accordance with the FNS-ap- exceed the authorization for that prior proved plan of operation and in compli- fiscal year. ance with all pertinent Federal rules [Amdt. 209, 47 FR 32409, July 27, 1982, as and regulations. The Commonwealth of amended by Amdt. 243, 49 FR 49585, Dec. 21, Puerto Rico shall also agree to comply 1984; Amdt. 274, 51 FR 18752, May 21, 1986; with any changes in Federal law and Amdt. 371, 61 FR 60012, Nov. 26, 1996] regulations. (c) Any amendments to those provi- § 285.3 Plan of operation. sions of the plan of operation specified (a) To receive payments for any fiscal in paragraph (b) of this section, must year the Commonwealth of Puerto Rico be submitted to FNS for approval. shall have a plan of operation for that (d) FNS shall approve or disapprove fiscal year approved by FNS. Each plan any plan of operation no later than Au- of operation shall be sumitted for FNS gust 1 of the year of its submission. approval by the July 1 preceding the FNS approval of the plan of operation fiscal year for which the plan of oper- shall be based on an assessment that ation is to be effective. the nutrition assistance program, as (b) The plan of operation shall in- defined in the plan of operation, is: clude the following information: (1) Sufficient to permit analysis and (1) Designation of the agency or review; agencies directly responsible for ad- (2) Reasonably targeted to the most ministration, or supervision of the ad- needy persons as defined in the plan of ministration, of the nutrition assist- operation; ance program. (3) Supported by an assessment of the (2) A description of the needy persons food and nutrition needs of needy per- residing in the Commonwealth of Puer- sons; to Rico and an assessment of the food (4) Reasonable in terms of the funds and nutrition needs of these persons. requested; The description and assessment shall (5) Structured to include safeguards demonstrate that the nutrition assist- to prevent fraud, waste, and abuse in ance program is directed toward the the use of grant funds; and most needy persons in the Common- (6) Consistent with all applicable wealth of Puerto Rico. Federal laws. (3) A description of the program for (e) FNS shall approve or disapprove nutrition assistance including: any amendments to those provisions of (i) A general description of the nutri- the plan of operation specified in para- tion assistance to be provided the graph (b) of this section. If FNS fails needy persons who will receive assist- either to approve or deny the amend- ance, and any agencies designated to ment, or to request additional informa- provide such assistance; and tion within 30 days, the amendment to

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the plan of operation is approved. If ad- each fiscal year in which the audit is ditional information is requested, the made. Commonwealth of Puerto Rico shall (b) Within 120 days of the end of each provide this as soon as possible, and fiscal year, the Commonwealth of FNS shall approve or deny the amend- Puerto Rico shall provide FNS with a ment to the plan of operation. Pay- statement of: (1) Whether the grant ment schedules and other program op- funds received for that fiscal year ex- erations may not be altered until an ceeded the valid obligations made that amendment to the plan of operation is year for which payment is authorized, approved. The Commonwealth of Puer- and if so, by how much, and (2) such ad- to Rico shall, for informational pur- ditional related information as FNS poses, submit to FNS any amendments may require. to those provisions of the plan of operation not specified in paragraph (b) of [Amdt. 209, 47 FR 32409, July 27, 1982. Redes- this section. Such submittal shall be ignated by Amdt. 371, 61 FR 60013, Nov. 26, made at least 30 days prior to the effec- 1996] tive date of the amendment. If circumstances warrant a waiver of the 30- § 285.5 Failure to comply. day requirement, the Commonwealth (a) Grant funds may be withheld in of Puerto Rico shall submit a waiver whole or in part, or denied if there is a request to FNS for consideration. substantial failure by the Common- Should FNS determine that such an wealth of Puerto Rico to comply with amendment relates to the provisions of the requirements of § 285.4, or to bring paragraph (b) of this section, FNS ap- into compliance a plan of operation proval as established above will be nec- disapproved by FNS, or to comply with essary for the amendment to be imple- program requirements detailed in the mented. (f) FNS may approve part of any plan plan of operation approved for that fis- of operation or amendment submitted cal year. (For example, funds shall be by the Commonwealth of Puerto Rico paid to the Commonwealth of Puerto contingent on appropriate action by Rico to cover only the costs of the part the Commonwealth of Puerto Rico or parts of the plan of operation receiv- with respect to the problem areas in ing FNS approval. Withheld payments the plan of operation. shall be paid when the unapproved (g) If all or part of the plan of oper- part(s) of the plan are modified and ap- ation is disapproved, FNS shall notify proved.) FNS shall notify the Common- the appropriate agency in the Com- wealth of Puerto Rico that further pay- monwealth of Puerto Rico of the prob- ments shall not be made until FNS is lem area(s) in the plan of operation and satisfied that there will no longer be the actions necessary to secure ap- any such failure to comply. proval. (b) Upon a finding of a substantial (h) In accordance with the provisions failure to comply with the require- of § 285.5, funds may be withheld or de- ments of § 285.4 or the plan of oper- nied when all or part of a plan of operation, FNS may, in addition to or in ation is disapproved. lieu of actions taken in accordance [Amdt. 209, 47 FR 32409, July 27, 1982, as with paragraph (a) of this section, refer amended by Amdt. 239, 48 FR 23805, May 27, the matter to the Attorney General 1983; Amdt. 243, 49 FR 49585, Dec. 21, 1984; with a request that injunctive relief be Amdt. 274, 51 FR 18752, May 21, 1986; Amdt. 371, 61 FR 60012, Nov. 26, 1996] sought from the appropriate district court of the United States to require § 285.4 Audits. compliance with these regulations by (a) The Commonwealth of Puerto the Commonwealth of Puerto Rico. Rico shall provide an audit of expendi- [Amdt. 209, 47 FR 32409, July 27, 1982. Redes- tures in compliance with the require- ignated by Amdt. 371, 61 FR 60013, Nov. 26, ments in part 3015 of this title at least 1996] once every two years. The findings of such audit shall be reported to FNS no later than 120 days from the end of

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