[Federal Register Volume 77, Number 7 (Wednesday, January 11, 2012)]
[Proposed Rules]
[Pages 1642-1649]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-391]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

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

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Federal Register / Vol. 77, No. 7 / Wednesday, January 11, 2012 / 
Proposed Rules

[[Page 1642]]



DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 253

[FNS-2011-0036]
RIN 0584-AE05


Food Distribution Program on Indian Reservations: Income 
Deductions and Resource Eligibility

AGENCY: Food and Nutrition Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: This rule proposes to amend regulations for the Food 
Distribution Program on Indian Reservations (FDPIR). The changes are 
intended to simplify and improve the administration of and expand 
access to FDPIR, and promote conformity with the Supplemental Nutrition 
Assistance Program (SNAP). First, the Department proposes an amendment 
that would eliminate household resources from consideration when 
determining FDPIR eligibility. Second, to more closely align FDPIR and 
SNAP regulations, the Department proposes to expand the current FDPIR 
income deduction for Medicare Part B Medical Insurance and Part D 
Prescription Drug Coverage premiums to include other monthly medical 
expenses in excess of $35 for households with elderly and/or disabled 
members. This rule also proposes to establish an income deduction for 
shelter and utility expenses. Finally, the Department proposes 
verification requirements related to the proposed income deductions and 
revisions to the household reporting requirements that will more 
closely align FDPIR and SNAP regulations.

DATES: To be assured of consideration, comments must be received on or 
before April 10, 2012.

ADDRESSES: The Food and Nutrition Service (FNS) invites interested 
persons to submit comments on this proposed rule. You may submit 
comments identified by Regulatory Identifier Number (RIN) 0584-AE05, by 
any of the following methods:
     Federal eRulemaking Portal: Go to http://www.regulations.gov. In the Enter Keyword or ID field insert ``FNS-
2011-0036'', and then click on Search. Click on Submit a Comment.
     Information on using Regulations.gov, including detailed 
instructions for accessing documents, making comments, and viewing 
submitted comments is available through the site's ``FAQs'' link.
     Fax: Submit comments by facsimile transmission to (703) 
305-2782.
     Disk or CD-ROM: Submit comments on disk to Laura Castro, 
Director, Food Distribution Division, Food and Nutrition Service, U.S. 
Department of Agriculture, 3101 Park Center Drive, Room 504, 
Alexandria, Virginia 22302-1594.
     Mail: Send comments to Laura Castro at the above address.
     Hand Delivery or Courier: Deliver comments to the above 
address.
    Comments submitted in response to this rule will be included in the 
record and will be made available to the public. Please be advised that 
the substance of the comments and the identity of the individuals or 
entities submitting the comments will be subject to public disclosure. 
The Department will make the comments publicly available on the 
Internet via http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Dana Rasmussen by telephone at (703) 
305-2662.

SUPPLEMENTARY INFORMATION:

I. Public Comment Procedures
II. Background and Discussion of the Proposed Rule
III. Procedural Matters

I. Public Comment Procedures

    Your written comments on the proposed rule should be specific, 
should be confined to issues pertinent to the proposed rule, and should 
explain the reason(s) for any change you recommend or proposal(s) you 
oppose. Where possible, you should reference the specific section or 
paragraph of the proposal you are addressing. Comments received after 
the close of the comment period (see DATES) will not be considered or 
included in the Administrative Record for the final rule.
    Executive Order 12866 requires each agency to write regulations 
that are simple and easy to understand. We invite your comments on how 
to make these proposed regulations easier to understand, including 
answers to questions such as the following:
    (1) Are the requirements in the proposed regulations clearly 
stated?
    (2) Does the rule contain technical language or jargon that 
interferes with its clarity?
    (3) Does the format of the rule (e.g., grouping and order of 
sections, use of heading, and paragraphing) make it clearer or less 
clear?
    (4) Would the rule be easier to understand if it was divided into 
more (but shorter) sections?
    (5) Is the description of the rule in the preamble section entitled 
``Background and Discussion of the Proposed Rule'' helpful in 
understanding the rule? How could this description be more helpful in 
making the rule easier to understand?

II. Background and Discussion of the Proposed Rule

    The Department proposes to amend the regulations for FDPIR at 7 CFR 
part 253. These changes are intended to improve the administration of 
FDPIR and service to program applicants and participants, and respond 
to a resolution passed by the membership of the National Association of 
Food Distribution Programs on Indian Reservations (NAFDPIR) in June 
2009. These proposed provisions would simplify program administration 
and promote conformity with SNAP. The Department proposes amendments 
that would: (1) Eliminate household resources from consideration when 
determining FDPIR eligibility; (2) expand the current income deduction 
for Medicare Part B Medical Insurance and Part D Prescription Drug 
Coverage premiums to include other monthly medical expenses in excess 
of $35 for households with elderly and/or disabled members, as defined 
at 7 CFR 253.2; (3) establish an income deduction for shelter and 
utility expenses; and (4) establish verification requirements related 
to the proposed income deductions and revise household reporting 
requirements. The amendments are discussed in more detail below.
    In the following discussion and regulatory text, the term ``State 
agency,'' as defined at 7 CFR 253.2, is used to include Indian Tribal 
Organizations (ITOs) authorized to operate FDPIR and

[[Page 1643]]

Food Distribution Program for Indian Households in Oklahoma (FDPIHO) in 
accordance with 7 CFR parts 253 and 254. The term ``FDPIR'' is used in 
this rulemaking to refer collectively to FDPIR and FDPIHO.

1. Eliminate the Eligibility Criterion Based on Household Resources--7 
CFR 253.6(d)

    Currently, the FDPIR household resource limits are $3,250 for 
households with at least one elderly/disabled member and $2,000 for all 
other households. In response to a separate rulemaking published in the 
Federal Register on April 27, 2010 (75 FR 22027), which proposed to 
amend FDPIR regulations by aligning provisions with changes to SNAP as 
a result of the Food, Conservation, and Energy Act of 2008, FNS 
received numerous comment letters regarding the FDPIR household 
resource eligibility criterion. Many of the comment letters supported 
elimination of the FDPIR resource test or alignment of FDPIR and SNAP 
policies. Based on the comments received, the Department proposes to 
eliminate the household resource eligibility criterion in FDPIR. In the 
regulatory impact analysis of this proposed rule, we estimate that 
eliminating the resource test would increase FDPIR participation by 
less than one percent. Removal of the resource test would streamline 
the certification process for new and currently participating 
households and simplify program administration, reducing the burden on 
State agency certification staff and improving service to those in need 
of nutrition assistance. To eliminate the resource standard from 
current regulations, the Department proposes to remove the regulatory 
provisions at 7 CFR 253.6(d). This proposal does not affect the 
requirement that households meet maximum FDPIR income limits and other 
eligibility criteria provided under current program regulations.
    The Department also proposes conforming amendments to remove 
reference to the resource test throughout the current FDPIR 
regulations. The proposed amendments to 7 CFR 253.6(c) on categorical 
eligibility remove reference to resource eligibility. This rule would 
also remove 7 CFR 253.7(f)(2)(i), which currently references resources 
of disqualified household members. The rule would redesignate the 
current paragraphs at 7 CFR 253.7(f)(2)(ii) and (f)2)(iii) as 
paragraphs (f)(2)(i) and (f)(2)(ii), respectively.
    The Department also proposes an amendment to 7 CFR 
253.6(e)(3)(viii) (to be redesignated as 7 CFR 253.6(d)(3)(viii)), 
which currently references non-recurring lump sum payments, such as 
security deposits on rental property or utilities, tax refunds, and 
retroactive Social Security payments. The amendment would remove the 
language that provides these payments are counted as resources in the 
month received. Therefore, non-recurring lump sum payments would not be 
considered in determining the eligibility of households for FDPIR.
    The Department proposes similar treatment of periodic per capita 
payments that are derived from the profits of Tribal enterprises and 
distributed to Tribal members less frequently than monthly. As with 
non-recurring lump sum payments, the amount and time of receipt of 
periodic per capita payments cannot always be anticipated by FDPIR 
participants in order to be considered during the household's income 
eligibility determination. Consequently, non-monthly per capita 
payments are reported upon receipt in accordance with the change 
reporting requirements at 7 CFR 253.7(c). In most instances, receipt of 
these payments does not impact household eligibility in the month of 
receipt because there is not sufficient time for the State agency to 
take action to terminate the household if the payment results in the 
household's ineligibility. In accordance with 7 CFR 253.7(c), 
households must report a change within 10 calendar days, and the State 
agency must act on the reported change and issue a notice of adverse 
action no later than 10 days after the change is reported. The notice 
of adverse action must provide a minimum of 10 days from the date of 
the notice to the date upon which the termination becomes effective. 
Under current regulations, funds from the per capita payment that 
remain available to the household in the month after receipt are 
considered a resource.
    In accordance with the proposal to remove consideration of 
household resources in determining eligibility for FDPIR, the 
Department proposes to amend 7 CFR 253.6(e)(3)(viii) (to be 
redesignated as 7 CFR 253.6(d)(3)(viii)) to specify that non-recurring 
lump sum payments and non-monthly per capita payments would no longer 
be considered in determining the eligibility of households for FDPIR. 
Furthermore, the Department proposes to amend 7 CFR 253.6(e)(2)(ii) (to 
be redesignated as 7 CFR 253.6(d)(2)(ii)) to clarify that per capita 
payments received monthly are considered unearned income in the month 
received. This is consistent with current program policy.

2. Medical Expense Deduction--7 CFR 253.6(f) (To Be Redesignated as 7 
CFR 253.6(e))

    The Department proposes a change that would revise the provisions 
at 7 CFR 253.6(f)(4) (to be redesignated as 7 CFR 253.6(e)(4)) to 
expand the current deduction for Medicare Part B Medical Insurance and 
Part D Prescription Drug Coverage premiums to include other monthly 
medical expenses in excess of $35 incurred by any household member who 
is elderly or disabled as defined in 7 CFR 253.2. This change would 
align FDPIR and SNAP regulations. Also, this change would respond to 
Resolution 2009-01 passed by the membership of NAFDPIR in June 2009. 
That resolution requested an income deduction for unreimbursed medical 
expenses for prescription drugs and other medical expenses, other than 
for plastic surgery. As provided above, in order to reflect the 
proposed elimination of 7 CFR 253.6(d), we are proposing to redesignate 
current 7 CFR 253.6(f) as proposed paragraph (e).
    The Department proposes to adopt SNAP policy at 7 CFR 273.9(d)(3) 
in regard to allowable medical costs. The proposed allowable medical 
costs are:
    (a) Medical and dental care, including psychotherapy and 
rehabilitation services, provided by a licensed practitioner authorized 
by State law or other qualified health professional;
    (b) Hospitalization or outpatient treatment, nursing care, and 
nursing home care, including payments by the household for an 
individual who was a household member immediately prior to entering a 
hospital or nursing home, provided by a facility recognized by the 
State;
    (c) Prescription drugs when prescribed by a licensed practitioner 
authorized under State law and other over-the-counter medication 
(including insulin) when approved by a licensed practitioner or other 
qualified health professional; in addition, costs of medical supplies, 
sick-room equipment (including rental) or other prescribed equipment 
are deductible;
    (d) Health and hospitalization insurance policy premiums. Costs 
that are not deductible include health and accident policies such as 
those payable in lump sum settlements for death or dismemberment, or 
income maintenance policies such as those that continue mortgage or 
loan payments while the beneficiary is disabled;
    (e) Medicare premiums related to coverage under Title XVIII of the 
Social Security Act; any cost-sharing or spend down expenses incurred 
by Medicaid recipients;

[[Page 1644]]

    (f) Dentures, hearing aids, and prosthetics;
    (g) Securing and maintaining a seeing eye or hearing dog including 
the cost of dog food and veterinarian bills;
    (h) Eye glasses prescribed by a physician skilled in eye disease or 
by an optometrist;
    (i) Reasonable cost of transportation and lodging to obtain medical 
treatment or services; and
    (j) Maintaining an attendant, homemaker, home health aide, child 
care services, or housekeeper, necessary due to age, infirmity, or 
illness.
    SNAP regulations at 7 CFR 273.9(d) include an income deduction for 
all Medicare premium expenses in excess of $35. Current FDPIR 
regulations at 7 CFR 253.6(f)(4) and program policy permit only a 
deduction for the full amounts of Medicare Part B Medical Insurance and 
Part D Prescription Drug Coverage premiums, respectively. In order to 
simplify program administration and in recognition of the significantly 
expanded range of deductible medical costs considered allowable under 
SNAP, the Department proposes to align the Medicare provision with SNAP 
by permitting deductions for all Medicare premiums in excess of $35.
    The SNAP regulations at 7 CFR 273.9(d)(3)(x) allow a deduction for 
an amount equal to the SNAP benefit for a one-person household if the 
household furnishes the majority of a home care attendant's meals. The 
Department proposes to adopt this same provision for FDPIR.
    Regarding the proposed meal-related deduction, the Department 
purchases the USDA foods provided under FDPIR at a reduced cost due to 
high volume purchases under long-term contracts with vendors. 
Consequently, the estimated average monthly per person FDPIR food 
package cost, which is adjusted annually, does not represent the retail 
value of the food package if identical foods were purchased by a family 
at a grocery store. The Department believes that it would be 
appropriate to adopt the SNAP policy of basing the meal-related 
deduction for the attendant on the maximum SNAP allotment for a one-
person household. The SNAP allotments are based on the Thrifty Food 
Plan (TFP), which reflects current dietary recommendations, food 
consumption patterns, food composition data, and food prices.
    The Department would provide the State agencies, on an annual 
basis, the updated amount of the maximum SNAP allotment for a one-
person household. The State agency would not be required to update the 
meal-related deduction amount until the household's next scheduled 
recertification, but may opt to do so earlier if that amount is 
available. If a household incurs attendant care costs that could 
qualify under both the medical deduction and dependent care deduction, 
the State agency would treat the cost as a medical expense.

3. Shelter and Utility Expense Deduction--7 CFR 253.6(f) (To Be 
Redesignated as 7 CFR 253.6(e))

    The Department proposes a change that would revise the provisions 
at 7 CFR 253.6(f) (to be redesignated as 7 CFR 253.6(e)) to establish 
region-specific standard income deductions for monthly shelter and 
utility expenses. This change would respond to Resolution 2009-01 
passed by the membership of NAFDPIR in June 2009. The resolution noted 
that shelter expenses such as home heating fuel and utilities may 
impact a household's ability to obtain food, and such factors are not 
currently factored into FDPIR eligibility determinations. SNAP 
regulations under 7 CFR Part 273 allow standard income deductions for 
shelter expenses in determining eligibility for that program.
    Under this proposal, an FDPIR applicant household would receive a 
standard deduction if it incurs the cost of at least one allowable 
shelter/utility expense. The Department proposes to indicate that 
allowable shelter and utility expenses would conform to those expenses 
allowable for SNAP under 7 CFR 273.9(d)(6)(ii). Such expenses include 
the following:
    (a) Continuing charges for the shelter occupied by the household, 
including rent, mortgage, condominium and association fees, or other 
continuing charges leading to the ownership of the shelter such as loan 
repayments for the purchase of a mobile home, including interest on 
such payments.
    (b) Property taxes, State and local assessments, and insurance on 
the structure itself, but not separate costs for insuring furniture or 
personal belongings.
    (c) The cost of fuel for heating or cooling (i.e., the operation of 
air conditioning systems or room air conditioners); electricity or fuel 
used for purposes other than heating or cooling; water; sewerage; well 
installation and maintenance; septic tank system installation and 
maintenance; garbage and trash collection; all service fees required to 
provide service for one telephone, including, but not limited to, basic 
service fees, wire maintenance fees, subscriber line charges, relay 
center surcharges, 911 fees, and taxes; and fees charged by the utility 
provider for initial installation of the utility. One-time deposits are 
not deductible.
    (d) The shelter costs for the home if temporarily not occupied by 
the household because of employment or training away from home, 
illness, or abandonment caused by a natural disaster or casualty loss. 
For costs of a home vacated by the household to be included in the 
household's shelter costs, the household must intend to return to the 
home; the current occupants of the home, if any, must not be claiming 
the shelter costs for program purposes; and the home must not be leased 
or rented during the absence of the household.
    (e) Charges for the repair of a home that was substantially damaged 
or destroyed due to a natural disaster such as a fire or flood. Shelter 
costs cannot include charges for repair of the home that have been or 
will be reimbursed by private or public relief agencies, insurance 
companies, or from any other source.
    The amount of the deduction would be regionally based. The 
Department proposes to implement shelter/utility expense standard 
deductions specific to four regions: (1) Northeast/Midwest, (2) 
Southeast/Southwest, (3) Mountain Plains, and (4) West. The Department 
would, on an annual basis, calculate the shelter/utility standard 
deductions for each region, starting from a region-specific baseline 
deduction. The proposed baseline for each FDPIR regional shelter/
utility standard deduction is provided below, which assumes 
implementation in Fiscal Year 2013.

             Projected FY 2013 FDPIR Standard Shelter/Utility Expense Deductions Baseline by Region
----------------------------------------------------------------------------------------------------------------
                                                                                                     Shelter/
                    Region                            States currently with FDPIR programs            utility
                                                                                                     deduction
----------------------------------------------------------------------------------------------------------------
Northeast/Midwest.............................  Michigan, Minnesota, New York, Wisconsin........            $350
Southeast/Southwest...........................  Mississippi, New Mexico, North Carolina,                     300
                                                 Oklahoma, Texas.
Mountain Plains...............................  Colorado, Kansas, Montana, Nebraska, North                   400
                                                 Dakota, South Dakota, Utah, Wyoming.

[[Page 1645]]

 
West..........................................  Alaska, Arizona, California, Idaho, Nevada,                  350
                                                 Oregon, Washington.
----------------------------------------------------------------------------------------------------------------

    In developing the regional groupings and baseline shelter/utility 
standard deductions, the Department considered data from a number of 
sources, including national surveys of shelter costs and data on SNAP 
participants' shelter deductions. The Department also considered where 
FDPIR programs currently operate. If new programs are approved to 
administer FDPIR in States not listed above, the Department would 
identify the appropriate regional grouping for each new State.
    The Department would, on an annual basis, calculate the shelter/
utility standard deductions for each region. As part of the annual 
calculation, the Department would adjust the previous year's regional 
shelter/utility expense standard deduction amounts to account for 
changes to SNAP Quality Control data, rounding to the nearest $50. The 
Department would issue the revised shelter/utility standard deductions 
prior to October 1 each year.
    Under the proposed provision, an applicant household that would 
qualify for a shelter/utility standard deduction would have the option 
to receive the appropriate deduction amount for the State in which the 
household resides or the State in which the State agency's central 
administrative office is located. These States could potentially be 
located in two different regions which have different shelter/utility 
expense standard deductions.
    The Department believes that the proposed shelter/utility 
provisions are easy to understand and promote simplicity and efficiency 
in program administration. Because the Department would issue the 
regional shelter/utility standard deductions annually, no undue burden 
would be placed on State agencies to determine such amounts. 
Furthermore, as proposed, FDPIR households would not be required to 
produce documentation for all shelter/utility expenses; households 
would need only to provide documentation for one allowable shelter/
utility expense. The State agency would apply the appropriate regional 
standard shelter deduction and would not be required to perform an 
additional calculation to determine the household's shelter deduction 
amount. This simplifies the application and certification processes, 
preventing an undue burden on applicants and State agency staff. 
Because the shelter/utility standard deductions would be region-
specific, such deductions would recognize the variability in shelter 
and utility costs across the nation.

4. Verification Requirements and Household Reporting--7 CFR 
253.7(a)(6)(i) and 7 CFR 253.7(c)(1)

    The Department proposes new household verification requirements 
related to the two proposed income deductions discussed above. 
Amendments are proposed to 7 CFR 253.7(a)(6)(i) to revise the current 
verification requirements for Medicare Part B and Part D premiums to 
reflect the proposed expanded medical expense deduction. Also, an 
amendment is proposed to add a verification requirement for shelter and 
utility expenses at 7 CFR 253.7(a)(6)(i). As indicated above, applicant 
households must show proof of at least one allowable shelter/utility 
expense to receive the FDPIR standard deduction for shelter/utility 
expenses.
    The Department also proposes amendments to the reporting 
requirements at 7 CFR 253.7(c)(1) to reorganize this section for better 
comprehension, and to improve the administration of FDPIR and service 
to program applicants and participants. First, the Department proposes 
a requirement for households to report a change in residence and when 
they no longer have shelter/utility expenses. Households that do not 
have shelter/utility expenses would not qualify for the standard 
deduction for shelter/utility expenses proposed in this rulemaking. 
Therefore, the Department believes it is reasonable to require 
households to report if they no longer have such expenses so the State 
agency can determine if the household continues to meet the FDPIR 
financial eligibility criteria. A change in residence often results in 
a change to shelter/utility expenses. In addition, a change in 
residence may also impact a household's eligibility if the household no 
longer meets the residency requirement under FDPIR. Eligible households 
must reside on a participating reservation or in approved FDPIR service 
areas outside of a reservation or in the state of Oklahoma. Therefore, 
a change in residence might result in a household becoming ineligible 
for FDPIR benefits.
    The Department also proposes a new requirement under 7 CFR 
253.7(c)(1) that households report changes in the legal obligation to 
pay child support. Households that do not have a legal obligation to 
pay child support do not qualify for the current child support 
deduction. Therefore, the Department believes it is reasonable to 
require the reporting of this change so that service providers can 
determine if households continue to meet the FDPIR financial 
eligibility criteria.
    Finally, the Department proposes a revision regarding the reporting 
of changes in income. The current provisions at 7 CFR 253.7(c)(1) 
require households to report changes in income that would necessitate a 
change in the eligibility determination. The State agencies are 
required to advise each household at the time of certification the 
maximum monthly income limit for its household size, so the household 
will know to report an increase in income above that limit. The 
Department does not believe that this methodology is practical. A 
household's monthly net income amount, which is compared to the monthly 
income limit, is calculated by subtracting allowable deductions from 
the household's gross income. Households cannot be expected to know how 
an increase in monthly gross income will impact its monthly net income 
amount, because such households are not knowledgeable about the net 
monthly income calculation. Therefore, the Department proposes an 
amendment to regulations at 7 CFR 253.7(c)(1) to require households to 
report an increase of more than $100 in gross monthly income. This 
change would provide a more effective guideline for households to 
determine when changes in income must be reported.

III. Procedural Matters

A. Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic,

[[Page 1646]]

environmental, public health and safety effects, distributive impacts, 
and equity). Executive Order 13563 emphasizes the importance of 
quantifying both costs and benefits, of reducing costs, of harmonizing 
rules, and of promoting flexibility.
    This proposed rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget.

B. Regulatory Impact Analysis

1. Need for Action
    This action is needed to ensure that regulations pertaining to 
income deductions are more consistent between FDPIR and SNAP. FDPIR was 
established by the Congress in 1977 as an alternative to SNAP for low-
income households living on or near Indian reservations; these 
households may not have easy access to SNAP offices and authorized 
grocery stores. Both programs offer a standard deduction, an earned 
income deduction, a child support deduction, and a dependent care 
deduction. SNAP also offers an excess medical expense deduction and an 
excess shelter expense deduction. Unlike SNAP, the medical deduction 
currently offered in FDPIR is limited to the amount households pay for 
Medicare Part B and Part D premiums. FDPIR does not offer an income 
deduction for shelter and utility expenses.
    This proposed rulemaking responds to a resolution passed by the 
membership of the NAFDPIR in June 2009 that requested income deductions 
for home heating expenses and other utilities, prescription 
medications, and other out-of-pocket medical expenses. The NAFDPIR 
resolution stated that the FDPIR income eligibility criteria unfairly 
penalizes households whose net monthly income is determined to be over 
the income standard by as little as one dollar, while many of these 
households have monthly shelter, utility, and/or medical expenses. 
NAFDPIR believes that some low-income households are forced to choose 
between paying for food and paying for heat and/or medicine.
    FNS received numerous comment letters in response to separate 
proposed rulemaking supporting elimination of the FDPIR resource test 
or alignment of FDPIR and SNAP policies. This proposed rule would 
eliminate the household resource eligibility criterion for FDPIR. 
Removal of the resource test would streamline the certification process 
for new and currently participating households and simplify program 
administration, reducing the burden on State agency certification staff 
and improving service to those in need of nutrition assistance.
2. Benefits
    This rule proposes to amend FDPIR regulations to improve the 
administration of and expand access to FDPIR. This rule also promotes 
parity with the eligibility requirements in SNAP. These regulatory 
changes are designed to help ensure that FDPIR benefits are provided to 
low-income households living on or near Indian reservations that are in 
need of nutrition assistance. The proposed changes to the FDPIR 
regulations could potentially increase participation, thus expanding 
access to FDPIR and increasing nutrition assistance for the targeted 
population.
    FNS projects the impact of the proposed changes on FDPIR 
participation, as follows:
    (a) Elimination of the Household Resource Limit. This provision is 
projected to increase participation ranging from approximately 189 
individuals in the first year of implementation to 568 individuals 3 
years later;
    (b) Medical Expense Deduction. This provision would potentially 
make some elderly and/or disabled individuals with sizeable monthly 
medical expenses newly eligible for FDPIR. The projected increase in 
participation ranges from approximately 67 individuals in the first 
year of implementation to 201 individuals three years later; and
    (c) Shelter/Utility Expense Deduction. This provision is projected 
to increase participation ranging from approximately 752 individuals in 
the first year of implementation to 2,257 individuals three years 
later.
    There is some uncertainly associated with the estimates above given 
the limitations on relevant data pertaining to FDPIR participants. 
Also, the impact of each provision on participation was evaluated 
independently from the other provisions, so the combined effect or 
overlap of these provisions is unknown. It is expected that some 
individuals might benefit from more than one provision. For example, an 
elderly household may qualify for both the medical expense deduction 
and the shelter/utility expense deduction.
3. Cost
    This action is not expected to significantly increase costs of 
State and local agencies, or their commercial contractors, though these 
costs cannot be determined with any accuracy. ITOs and State agencies 
that administer FDPIR are required to provide 25 percent of the funds 
necessary to operate the program. This requirement may be waived with 
FNS approval if compelling justification exists. Any increased ITO/
State agency costs resulting from this rulemaking would be related to 
an increase in the ITO/State agency share of administrative costs to 
serve additional households made eligible by this rule.
    FNS projects the impact of the proposed changes on federal costs 
(i.e., program benefits), which are attributable to potential increases 
in participation.
    (a) Elimination of the Household Resource Limit. FNS estimates that 
this provision would cost $1,857,000 over a 5-year period.
    (b) Medical Expense Deduction. FNS estimates that this provision 
would cost $656,000 over a five-year period.
    (c) Shelter/Utility Expense Deduction. FNS estimates that this 
provision would cost $7,375,000 over a five-year period.
    As with the estimates on the impact on participation, there is some 
uncertainty associated with the cost estimates above. Also, as 
indicated above, the impact of each provision on participation was 
evaluated independently from the other provisions, so the combined 
effect or overlap of these provisions is unknown. If individuals 
benefit from more than one provision, the estimated cost to the federal 
government would be less.

C. Regulatory Flexibility Act

    This proposed rule has been reviewed with regard to the 
requirements of the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-
612). It has been certified that this rule will not have a significant 
impact on a substantial number of small entities. While program 
participants and ITOs and State agencies that administer FDPIR and the 
Food Distribution Program for Indian Households in Oklahoma will be 
affected by this rulemaking, the economic effect will not be 
significant.

D. Public Law 104-4

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, the 
Department generally must prepare a written statement, including a 
cost/benefit analysis, for proposed and final rules with Federal 
mandates that may result in expenditures by State, local, or Tribal 
governments, in the aggregate, or

[[Page 1647]]

by the private sector, of $100 million or more in any one year. When 
such a statement is needed for a rule, section 205 of the UMRA 
generally requires the Department to identify and consider a reasonable 
number of regulatory alternatives and adopt the least costly, more 
cost-effective, or least burdensome alternative that achieves the 
objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) that impose on State, local, and 
Tribal governments or the private sector expenditures of $100 million 
or more in any one year. This rule is, therefore, not subject to the 
requirements of sections 202 and 205 of the UMRA.

E. Executive Order 12372

    The program addressed in this action is listed in the Catalog of 
Federal Domestic Assistance under No. 10.567. For the reasons set forth 
in the final rule in 7 CFR part 3015, Subpart V, and related Notice 
published at 48 FR 29114, June 24, 1983, the donation of foods in such 
programs is included in the scope of Executive Order 12372, which 
requires intergovernmental consultation with State and local officials.

F. Executive Order 13132

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13132.
1. Prior Consultation With Tribal/State Officials
    The programs affected by the regulatory proposals in this rule are 
all Tribal or State-administered federally funded programs. FNS' 
national and regional offices have formal and informal discussions with 
State agency officials and representatives on an ongoing basis 
regarding program issues relating to FDPIR. FNS meets annually with the 
NAFDPIR membership, a national group of Tribal and State-appointed 
FDPIR Program Directors, to discuss issues relating to FDPIR. FNS also 
meets with the NAFDPIR Board on a more frequent basis.
    The changes proposed in this rulemaking related to the deduction 
for shelter and utility expenses are based on a resolution passed by 
the NAFDPIR membership in June 2009, and were discussed with the 
NAFDPIR Board and its membership. This rulemaking was also the subject 
of formal consultation with Tribal officials held in seven locations in 
October 2010 through January 2011, as discussed below.
2. Nature of Concerns and the Need To Issue This Rule
    Eligible low-income households living in areas served by FDPIR may 
choose to participate in either FDPIR or SNAP. SNAP regulations offer 
an income deduction for excess shelter expenses and an income deduction 
for allowable monthly medical expenses in excess of $35 for households 
with elderly and/or disabled members. This proposed rulemaking would 
respond to a resolution passed by the membership of the NAFDPIR in June 
2009 that requested income deductions for home heating expenses and 
utilities, prescription medications, and other out-of-pocket medical 
expenses. The NAFDPIR resolution read that the FDPIR income eligibility 
criteria unfairly penalizes households whose net monthly income is 
determined to be over the income standard by as little as one dollar, 
while many of these households have monthly shelter, utility and/or 
medical expenses. NAFDPIR believes that some low-income households are 
forced to choose between paying for food and paying for heat and/or 
medicine.
    FNS also received numerous comment letters in response to separate 
proposed rulemaking supporting elimination of the FDPIR resource test 
or alignment of FDPIR and SNAP policies. This proposed rulemaking 
responds to the concerns raised by commenters.
3. Extent to Which We Meet Those Concerns
    The Department has considered the impact of this rule on ITOs and 
State agencies that administer FDPIR. The Department does not expect 
the provisions of this rule to conflict with any State or local law, 
regulations, or policies. The overall effect of this rule is to ensure 
that low-income households living on or near Indian reservations 
receive nutrition assistance.

G. Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
``Civil Justice Reform.'' Although the provisions of this rule are not 
expected to conflict with any State or local law, regulations, or 
policies, the rule is intended to have preemptive effect with respect 
to any State or local laws, regulations, or policies that conflict with 
its provisions or that would otherwise impede its full implementation. 
This rule is not intended to have retroactive effect. Prior to any 
judicial challenge to the provisions of this rule or the applications 
of its provisions, all applicable administrative procedures must be 
exhausted.

H. Civil Rights Impact Analysis

    The Department has reviewed this rule in accordance with the 
Department Regulation 4300-4, ``Civil Rights Impact Analysis,'' to 
identify and address any major civil rights impacts the rule might have 
on minorities, women, and persons with disabilities. Consistent with 
current SNAP regulations, the proposed provision to expand the current 
income deduction for Medicare Part B Medical Insurance and Part D 
Prescription Drug Coverage premiums to include other allowable monthly 
medical expenses in excess of $35 would apply only to households with 
elderly and/or disabled members, as defined at 7 CFR 253.2. However, 
after a careful review of the rule's intent and provisions, the 
Department has determined that this rule will not in any way limit or 
reduce the ability of participants to receive the benefits of donated 
foods in food distribution programs on the basis of an individual's or 
group's race, color, national origin, sex, age, political beliefs, 
religious creed, or disability. The Department found no factors that 
would negatively affect any group of individuals.

I. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35; see 5 
CFR part 1320) requires that OMB approve all collections of information 
by a Federal agency from the public before they can be implemented. 
Information collections related to the provisions in this proposed rule 
were previously approved under OMB No. 0584-0293.
    This rule would impact the reporting and recordkeeping burden for 
ITOs and State agencies under OMB No. 0584-0293 due to an expected 
change in number of households participating in FDPIR as a result of 
this rule and related changes to verification and household reporting 
requirements. Documentation supporting the eligibility of all 
participating households must be maintained by the ITOs and State 
agencies.
    The approved information collection estimates under OMB No. 0584-
0293 are as follows:
    Estimated total annual burden: 1,079,172.92.

[[Page 1648]]

    Estimated annual recordkeeping burden: 746,400.42.
    Estimated annual reporting burden: 332,772.49.
    Changes resulting from this proposed rule would result in the 
following changes to OMB No. 0584-0293:
    Estimated total annual burden: 1,081,071.76.
    Estimated annual recordkeeping burden: 746,428.44.
    Estimated annual reporting burden: 334,643.32.
    These information collection requirements will not become effective 
until approved by OMB. Once they have been approved, FNS will publish a 
separate action in the Federal Register announcing OMB's approval.

J. E-Government Act Compliance

    The Department is committed to complying with the E-Government Act 
2002 to promote the use of the Internet and other information 
technologies to provide increased opportunities for citizen access to 
Government information and services, and for other purposes.

K. Executive Order 13175

    Executive Order 13175 requires Federal agencies to consult and 
coordinate with Tribes on a government-to-government basis on policies 
that have Tribal implications, including regulations, legislative 
comments or proposed legislation, and other policy statements or 
actions that have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes. In late 2010 and early 2011, 
USDA engaged in a series of consultative sessions to obtain input by 
Tribal officials or their designees concerning the effect of this and 
other rules on Tribes or Indian Tribal governments, or whether this 
rule may preempt Tribal law. In regard to the provisions of this rule, 
a session attendee spoke in support of the provision that would 
eliminate the resource eligibility criteria. Another attendee spoke 
about Tribal per capita payments and how receipt of these payments 
negatively affects the eligibility of some households under current 
rules.
    Reports from the consultative sessions will be made part of the 
USDA annual reporting on Tribal Consultation and Collaboration. USDA 
will offer future opportunities, such as Webinars and teleconferences, 
for collaborative conversations with Tribal leaders and their 
representatives concerning ways to improve rules with regard to their 
affect on Indian country.
    We are unaware of any current Tribal laws that could be in conflict 
with the proposed rule. We request that commenters address any concerns 
in this regard in their responses.

List of Subjects in 7 CFR Part 253

    Administrative practice and procedure, Food assistance programs, 
Grant programs, Social programs, Indians, Reporting and recordkeeping 
requirements, Surplus agricultural commodities.

    Accordingly, 7 CFR part 253 is proposed to be amended as follows:

PART 253--ADMINISTRATION OF THE FOOD DISTRIBUTION PROGRAM FOR 
HOUSEHOLDS ON INDIAN RESERVATIONS

    1. The authority citation for 7 CFR part 253 continues to read as 
follows:


    Authority:  91 Stat. 958 (7 U.S.C. 2011-2036).

    2. In Sec.  253.6:
    a. Amend the heading of paragraph (c) by removing the words ``and 
resource'';
    b. Amend paragraph (c)(1) by removing the words ``and resources'';
    c. Amend paragraph (c)(2) by removing the words ``and resources'';
    d. Remove paragraph (d) and redesignate paragraphs (e) and (f) as 
paragraphs (d) and (e), respectively;
    e. In redesignated paragraph (d), redesignate paragraph 
(d)(2)(ii)(F) as paragraph (d)(2)(ii)(G), and add new paragraph 
(d)(2)(ii)(F);
    f. Amend redesignated paragraph (d)(3)(viii) by removing the second 
sentence;
    g. Add a new paragraph (d)(3)(xii);
    h. In redesignated paragraph (e), revise paragraph (e)(4), and, add 
a new paragraph (e)(5).
    The revision and additions read as follows:


Sec.  253.6  Eligibility of households.

* * * * *
    (d) * * *
    (2) * * *
    (ii) * * *
    (F) Per capita payments that are derived from the profits of Tribal 
enterprises and distributed to Tribal members on a monthly basis.
* * * * *
    (3) * * *
    (xii) Per capita payments that are derived from the profits of 
Tribal enterprises and distributed to Tribal members less frequently 
than monthly (e.g., quarterly, semiannually or annually) are excluded 
from consideration as income.
* * * * *
    (e) * * *
    (4) Households must receive a medical deduction for that portion of 
medical expenses in excess of $35 per month, excluding special diets, 
incurred by any household member who is elderly or disabled as defined 
in Sec.  253.2 of this chapter. Spouses or other persons receiving 
benefits as a dependent of a Supplemental Security Income (SSI), or 
disability and blindness recipient are not eligible to receive this 
deduction; however, persons receiving emergency SSI benefits based on 
presumptive eligibility are eligible for this deduction. The allowable 
medical costs are those permitted at 7 CFR 273.9(d)(3) for the 
Supplemental Nutrition Assistance Program (SNAP).
    (5) Households that incur monthly shelter and utility expenses will 
receive a shelter/utility standard deduction, subject to the provisions 
below.
    (i) The household must incur, on a monthly basis, at least one 
allowable shelter/utility expense. The allowable shelter/utility 
expenses are those permitted at 7 CFR 273.9(d)(6)(ii) for SNAP.
    (ii) The shelter/utility standard deduction amounts are set by FNS 
on a regional basis. The standard deductions are adjusted annually to 
reflect changes to SNAP Quality Control data. FNS will advise the State 
agencies of the updates prior to October 1 of each year.
    (iii) If eligible to receive a shelter/utility standard deduction, 
the applicant household may opt to receive the appropriate deduction 
amount for the State in which the household resides or the State in 
which the State agency's central administrative office is located.
* * * * *
    3. In Sec.  253.7:
    a. Revise paragraph (a)(6)(i)(C);
    b. Add new paragraph (a)(6)(i)(D);
    c. Revise paragraph (c)(1);
    d. Remove paragraph (f)(2)(i) and redesignate paragraphs (f)(2)(ii) 
and (f)(2)(iii) as paragraphs (f)(2)(i) and (f)(2)(ii), respectively.
    The revisions and addition read as follows:


Sec.  253.7  Certification of households.

    (a) * * *
    (6) * * *
    (i) * * *
    (C) Excess medical expense deduction. The State agency must obtain 
verification for those medical expenses that the household wishes to 
deduct in accordance with 7 CFR 253.6(e)(4). The allowability of 
services

[[Page 1649]]

provided (e.g., whether the billing health professional is a licensed 
practitioner authorized by State law or other qualified health 
professional) must be verified, if questionable. Only out-of-pocket 
expenses can be deducted. Expenses reimbursed to the household by an 
insurer are not deductible. The eligibility of the household to qualify 
for the deduction (i.e., the household includes a member who is elderly 
or disabled) must be verified, if questionable.
    (D) Standard shelter/utility deduction. A household must incur, on 
a monthly basis, at least one allowable shelter/utility expense in 
accordance with 7 CFR 253.6(e)(5)(i) to qualify for the standard 
shelter/utility deduction. The State agency must verify that the 
household incurs the expense.
* * * * *
    (c) * * *
    (1) The State agency must develop procedures for how changes in 
household circumstances are reported. Changes reported over the 
telephone or in person must be acted on in the same manner as those 
reported in writing. Participating households are required to report 
the following changes within 10 calendar days after the change becomes 
known to the household:
    (i) A change in household composition;
    (ii) An increase in gross monthly income of more than $100;
    (iii) A change in residence;
    (iv) When the household no longer incurs a shelter and utility 
expense; or
    (v) A change in the legal obligation to pay child support.
* * * * *

    Dated: December 29, 2011.
Janey Thornton,
Acting Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2012-391 Filed 1-10-12; 8:45 am]
BILLING CODE 3410-30-P