[Federal Register Volume 60, Number 161 (Monday, August 21, 1995)]
[Rules and Regulations]
[Pages 43347-43350]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20591]
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Rules and Regulations
Federal Register
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Federal Register / Vol. 60, No. 161 / Monday, August 21, 1995 / Rules
and Regulations
[[Page 43347]]
DEPARTMENT OF AGRICULTURE
Food and Consumer Service
7 CFR Parts 272 and 273
[Amdt. No. 360]
RIN 0584-AB40
Food Stamp Program: Resource Provision From the Mickey Leland
Memorial Domestic Hunger Relief Act of 1990
AGENCY: Food and Consumer Service, USDA.
ACTION: Final rule.
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SUMMARY: This rule amends Food Stamp Program regulations to implement
provisions contained in the Mickey Leland Memorial Domestic Hunger
Relief Act of 1990 (the Leland Act) and the Food, Agriculture,
Conservation, and Trade Act Amendments of 1991 that expand the criteria
by which a resource can be considered inaccessible. It finalizes
provisions in a proposed rule published in the Federal Register on
October 20, 1994.
DATES: This rule is effective September 20, 1995, and must be
implemented no later than the first day of the first month beginning
after December 19, 1995.
FOR FURTHER INFORMATION CONTACT: Supervisor, Eligibility and
Certification Regulations Section, Certification Policy Branch, Program
Development Division, Food Stamp Program, Food and Consumer Service,
USDA, 3101 Park Center Drive, Alexandria, Virginia, 22302, or by
telephone at (703) 305-2496.
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be significant and was
reviewed by the Office of Management and Budget in conformance with
Executive Order 12866.
Executive Order 12372
The Food Stamp Program (``Program'') is listed in the Catalog of
Federal Domestic Assistance under No. 10.551. For the reasons set forth
in the final rule and related Notice(s) to 7 CFR part 3105, subpart V
(48 FR 29115, June 24, 1983; or 48 FR 54317, December 1, 1983, as
appropriate), this Program is excluded from the scope of Executive
Order 12372 which requires intergovernmental consultation with State
and local officials.
Executive Order 12778
This final rule has been reviewed under Executive Order 12778,
Civil Justice Reform. This rule is intended to have preemptive effect
with respect to any state or local laws, regulations, or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This rule is not intended to have retroactive effect
unless so specified in the ``Effective Date'' paragraph of this
preamble. Prior to any judicial challenge to the provisions of this
rule or the application of its provisions all applicable administrative
procedures must be exhausted. In the Food Stamp Program the
administrative procedures are as follows: 1) for program benefit
recipients--state administrative procedures issued pursuant to 7 U.S.C.
2020(e)(10) and 7 CFR 273.15; 2) for State agencies--administrative
procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for
rules related to non-quality control (QC) liabilities) or Part 283 (for
rules related to QC liabilities); 3) for retailers and wholesalers--
administrative procedures issued pursuant to 7 U.S.C. 2023 set out at 7
CFR 278.8.
Regulatory Flexibility Act
This final rule has also been reviewed with respect to the
requirements of the Regulatory Flexibility Act of 1980 (Pub. L. 96-354,
94 Stat. 1164, September 19, 1980). The Administrator of the Food and
Consumer Service (FCS) has certified that this proposal would not have
a significant economic impact on a substantial number of small
entities. State and local agencies that administer the Program will be
the most affected. Food stamp applicants and recipients will be
affected due to changes in excludable resources for purposes of the
Food Stamp Program.
Paperwork Reduction Act
This action does not contain reporting or record keeping
requirements subject to approval by the Office of Management and Budget
(OMB) under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).
Background
The Mickey Leland Memorial Domestic Hunger Relief Act (Food,
Agriculture, Conservation, and Trade Act of 1990, Title XVII, Pub. L.
101-624, 104 Stat. 3783); (hereinafter referred to as the Leland Act)
made several changes to the Food Stamp Act of 1977, as amended (7
U.S.C. 2011, et seq.) (the Act). This rulemaking pertains to section
1719 of the Leland Act which amended section 5(g) of the Act, 7 U.S.C.
2014(g)(5), to expand the criteria by which property can be considered
inaccessible to households in the calculation of their resources for
purposes of food stamp eligibility. The Department originally published
a proposed rule on August 13, 1991 at 56 FR 40164 regarding, in part,
this Leland Act provision. The Department received twenty comments on
the proposal to amend 7 CFR 273.8(e) to incorporate this provision. On
December 13, 1991, section 904 of the Food, Agriculture, Conservation,
and Trade Act Amendments of 1991 (Pub. L. 102-237, 105 Stat. 1818)
(hereinafter referred to as the 1991 Technical Amendments) further
amended section 5(g)(5) of the Act. The Department re-proposed the rule
on the inaccessible resources provision on October 20, 1994 at 59 FR
52928 and provided the public with 90 days to comment on the proposed
provision. For additional information on the provisions of this rule,
the reader should refer to the preamble of the proposed rule, 59 FR
52928-31.
The Department received 12 comments on this proposed rule, 7 from
State agencies and 5 from public interest groups. Three commenters
supported the proposed rule as written. One commenter opposed the rule
as written. The other commenters opposed or suggested modifications to
one or more provisions of the proposed rule. These comments are
discussed below.
Currently, regulations at 7 CFR 273.8(c) describe both liquid and
non-liquid resources that are counted when determining a household's
eligibility for food stamps. Non-liquid resources such
[[Page 43348]]
as land, buildings, and licensed and unlicensed vehicles, with some
exceptions, are included as resources because they can be converted to
cash. However, not all property can be easily sold, and this has posed
significant problems for both State agencies administering the Food
Stamp Program and households applying for benefits. Except for the
provisions regarding vehicles, current regulations focus on the
accessibility/inaccessibility of resources. In establishing
inaccessibility, State agencies are compelled to require a household to
verify that the property it owns, which is not otherwise an exempt
resource, has little or no fair market value; cannot be sold because it
is jointly owned with non-household members who are unwilling to sell;
or is otherwise inaccessible. In many instances, households have found
it difficult to provide this verification. Further, in establishing
accessibility/inaccessibility, State agencies may be faced with
questions of state property law and probate law. The situation was
particularly difficult with heir property, i.e., an undivided
fractional interest in a decedent's property. It is apparent that the
treatment of heir property was the primary problem Congress was
addressing when it passed section 1719 of the Leland Act, as the
legislative history contained in House Report No. 101-569, 101st
Congress, 2nd Session, Part 1, at 429-30, specifically refers to the
problems of heir property encountered by food stamp applicants and
State agencies.
Section 1719 of the Leland Act required the Department to
promulgate regulations requiring State agencies to develop standards
for identifying kinds of resources that, as a practical matter, a
household is unlikely to be able to sell for any significant return
because the household's interest is relatively slight or because the
cost of selling the household's interest would be relatively great.
Resources so identified were to be excluded as inaccessible resources
for food stamp purposes.
In December 1991, section 904 of the 1991 Technical Amendments
amended section 5(g)(5) of the Food Stamp Act by adding to the end of
this paragraph the following new sentences: ``A resource shall be so
identified (as inaccessible) if its sale or other disposition is
unlikely to produce any significant amount of funds for the support of
the household. The Secretary shall not require the State agency to
require verification of the value of a resource to be excluded under
this paragraph unless the State agency determines that the information
provided by the household is questionable.''
The regulations at 7 CFR 273.8(d) already exclude jointly-owned
resources that can be shown to be inaccessible. An example is a bank
account that is jointly-owned by food stamp applicant household and
non-household members which, by State law, is determined to be
inaccessible wholly or in part to the food stamp household. Also,
certain types of property are excluded from consideration as a resource
including property that the household is making a good faith effort to
sell (7 CFR 273.8(e)(8)). The Department believes that the amendments
to section 5(g)(5) of the Act were not intended to supplant the
existing regulations on inaccessible resources. Rather, these
amendments were intended to provide an additional exclusion for
resources such as heir property or other property which is unlikely to
produce a significant return or significant funds for the support of
the household.
One commenter, a State agency, opposed the rule as written, citing
administrative complexity, inconsistency with AFDC, and inequities
among food stamp recipients. The Department understands the State
agency's concerns; however, it disagrees with the commenter about the
rule. Given the legislative parameters, the Department believes it has
crafted a regulation that gives States maximum flexibility to establish
standards identifying a resource, not readily determined inaccessible
under existing regulations, as inaccessible with a minimum amount of
verification, without endangering program integrity.
Definition of ``Significant Return'' and ``Any Significant Amount
of Funds''
The Department proposed to define ``any significant return'' and
``any significant amount of funds'' as being one half the resource
limit for the household. The Department received 5 comments addressing
these definitions. Three commenters supported the definitions. Two
commenters suggested that the definitions be modified to define ``any
significant return'' and ``any significant amount of funds'' as being
the appropriate resource limit for the household.
The Department has decided to keep the definitions as proposed. For
food stamp purposes, households are permitted to have up to $2,000 in
resources ($3,000 for households if at least one member is aged 60 or
older). (For categorically-resource-eligible households, the issue of
accessibility is irrelevant.) As was pointed out in the proposed rule,
current data show that the average value of countable resources for all
food stamp households is less than $100. Ninety-five percent of all
food stamp households have $1,000 or less in countable resources. As
very few households participating in the food stamp program have
resources exceeding $1,000, the Department continues to believe that a
resource that would yield a return of $1,000 (or $1,500, as
appropriate) would be a significant return or a significant amount of
funds for a household that is otherwise eligible for food stamps.
Accordingly, the Department is adopting as proposed the definition of
``any significant return'' and ``any significant amount of funds'' at 7
CFR 273.8(e)(18) (i) and (ii).
Aggregation of Assets
Two commenters, both State agencies, recommended that all assets
being considered for a determination as inaccessible be added together
prior to the determination of inaccessibility and that the sum of those
assets be used in the determination. The Department is not adopting
this suggestion because the legislation is concerned with determining
the inaccessibility of a specific resource, not the aggregate resources
of a household. The Department understands the State agencies'
concerns, specifically those concerns dealing with attempts by
applicants to have resources declared inaccessible by sub-dividing one
resource into multiple units, each of which has a net value of less
than $1,000. In developing their standards, State agencies should make
it clear that a single resource cannot be sub-divided solely to apply
to obtain an exclusion as inaccessible. Also, the Department would like
to emphasize that this standard does not invalidate any other provision
regarding jointly-owned resources and inaccessible resources, as
described in 7 CFR 273.8(d). The Department expects that State agencies
will continue to apply all the provisions in 7 CFR 273.8 concerning
jointly-owned and inaccessible resources. The provisions of this rule
are intended to apply only to those resources that do not readily meet
the requirements in the other paragraphs of 7 CFR 273.8 for exclusion,
but would not provide a significant return to the household if sold.
Negotiable Financial Instruments
The Department proposed in 7 CFR 273.8(e) to prohibit applying this
provision to negotiable financial instruments. In the preamble, the
Department indicated that financial instruments such as stocks and
bonds
[[Page 43349]]
were to be considered for this purpose as negotiable financial
instruments. One comment was received on this provision. That commenter
pointed out that in that State, a ``negotiable financial instrument''
has a specific legal meaning and does not include financial resources
such as stocks. The Department has revised the language of the
provision to provide that financial resources such as stocks, bonds,
and negotiable financial instruments are excluded from being considered
an inaccessible resource under this provision. Thus, in the State in
question, as in all other States, stocks and bonds are ineligible for
designation as inaccessible resources.
Application of this Rule to Vehicles
Three commenters on the August 13, 1991 proposed rulemaking
discussed whether or not vehicles could be identified as inaccessible
resources under this provision. As discussed in the October 20, 1994
proposed rule, the Department believes that it is very clear from the
statutory language and the legislative history of the inaccessible
resource provision that it was not the intent of Congress to include
vehicles. Five commenters, all public interest groups, disagreed with
the Department's position. The Department continues to believe, for the
reasons cited at length in the October 20, 1994 proposed rule, that its
interpretation that this legislative provision does not apply to
vehicles is the correct interpretation. Accordingly, the Department is
adopting as final the prohibition against applying the provision to
vehicles.
Quality Control
One commenter noted that the proposed rule did not address how
quality control review would affect a situation in which a State agency
had excluded a resource as unlikely for the household to sell for any
significant return, and the eligibility worker had not required the
household to provide any verification. The commenter has recommended
that the resource should be excluded from the error determination if
the resource is an appropriately excludable resource and the State
agency did not deem the significant return questionable. The Department
has considered this comment and agrees, in part. The Department agrees
that any resource which meets the standards developed by the State
agency to be considered unlikely to generate a significant return for
the household must be excluded from the error determination process.
However, the Department does not agree that the status of the resource,
as either included or excluded by quality control, should be based
strictly on the information provided by the household, and on the
eligibility worker's determination that this information is not
questionable. One of the key aspects of the quality control review
process is to determine a household's actual living circumstances for
the period of time under review, regardless of the information reported
by the household, or any determinations made by the eligibility worker.
The Department has determined that any resources discovered in the
course of the quality control review process which may be excluded
because their sale would not generate a significant return to the
household must be treated in the same manner as any other resource
discovered by quality control. The resource must be examined by the
quality control reviewer to determine whether or not the resource meets
the standards developed by the State agency to be considered unlikely
to generate a significant return for the household. Specific quality
control guidance regarding the review of these resources shall be
developed upon publication of this rule.
Implementation
The Department proposed that this rule be effective upon
implementation by State agencies but in no event later than the first
day of the first month beginning 120 days after publication of the
final rule. The Department did not receive any comments on the
implementation schedule as proposed. Accordingly, this action amends 7
CFR 272.1(g) to add a new paragraph to address implementation
requirements for this final action.
Quality control variances resulting from implementation of the
remaining provisions of this final rule will be excluded for 120 days
from the required implementation date, in accordance with 7 CFR
275.12(d)(12), as modified by 7 U.S.C. 2025(c)(3)(A).
List of Subjects
7 CFR Part 272
Alaska, Civil rights, Food stamps, Grant programs-social programs,
Reporting and recordkeeping requirements.
7 CFR Part 273
Administrative practice and procedures, Aliens, Claims, Food
stamps, Grant programs-social programs, Penalties, Reporting and
recordkeeping requirements, Social security, Students.
Accordingly, 7 CFR parts 272 and 273 are amended as follows:
1. The authority citation of Parts 272 and 273 continues to read as
follows:
Authority: 7 U.S.C. 2011-2032.
PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES
2. In Sec. 272.1, a new paragraph (g)(141) is added to read as
follows:
Sec. 272.1 General terms and conditions.
* * * * *
(g) Implementation. * * *
(141) Amendment No. 360. This provision is effective September 20,
1995, and must be implemented no later than the first day of the first
month beginning December 19, 1995.
PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS
3. In Sec. 273.8, a new paragraph (e)(18) is added to read as
follows:
Sec. 273.8 Resource eligibility standards.
* * * * *
(e) Exclusions from resources. * * *
(18) State agencies shall develop clear and uniform standards for
identifying kinds of resources that, as a practical matter, the
household is unable to sell for any significant return because the
household's interest is relatively slight or because the costs of
selling the household's interest would be relatively great. A resource
shall be so identified if its sale or other disposition is unlikely to
produce any significant amount of funds for the support of the
household. This provision does not apply to financial instruments such
as stocks, bonds, and negotiable financial instruments, or to vehicles.
The determination of whether any part of the value of a vehicle is
included as a resource shall be handled using the provisions of
paragraph (h) of this section. The State agency may require
verification of the value of a resource to be excluded if the
information provided by the household is questionable. The following
definitions shall be used in developing these standards:
(i) ``Significant return'' shall be any return, after estimated
costs of sale or disposition, and taking into account the ownership
interest of the household, that is estimated to be one half or more of
the applicable resource limit for the household; and
(ii) ``Any significant amount of funds'' shall be funds amounting
to one half or more of the applicable resource limit for the household.
* * * * *
[[Page 43350]]
Dated: August 10, 1995.
Ellen Haas,
Under Secretary for Food, Nutrition, and Consumer Services.
[FR Doc. 95-20591 Filed 8-18-95; 8:45 am]
BILLING CODE 3410-30-U