Senior Farmers' Market Nutrition Program Regulations, 30558-30589 [05-10388]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 70, Number 101 (Thursday, May 26, 2005)]
[Proposed Rules]
[Pages 30558-30589]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-10388]



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Part III





Department of Agriculture





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Food and Nutrition Service



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7 CFR Part 249



Senior Farmers' Market Nutrition Program Regulations; Proposed Rule

Federal Register / Vol. 70, No. 101 / Thursday, May 26, 2005 / 
Proposed Rules

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 249

RIN 0584-AD35


Senior Farmers' Market Nutrition Program Regulations

AGENCY: Food and Nutrition Service (FNS), USDA.

ACTION: Proposed rule.

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SUMMARY: This proposed rule implements the provision of the Farm 
Security and Rural Investment Act of 2002 that gives the Department of 
Agriculture the authority to promulgate regulations for the operation 
and administration of the Senior Farmers' Market Nutrition Program 
(SFMNP). The purposes of the SFMNP are to provide resources in the form 
of fresh, nutritious, unprepared, locally grown fruits, vegetables, and 
herbs from farmers' markets, roadside stands, and community supported 
agriculture programs to low-income seniors; to increase the domestic 
consumption of agricultural commodities by expanding or aiding in the 
expansion of domestic farmers' markets, roadside stands, and community 
supported agriculture programs; and to develop or aid in the 
development of new and additional farmers' markets, roadside stands, 
and community supported agriculture programs.

DATES: To be assured of consideration, comments on this proposed rule 
must be received by the Food and Nutrition Service on or before July 
25, 2005.

ADDRESSES: The Food and Nutrition Service invites interested persons to 
submit comments on this proposed rule. Comments may be submitted by any 
of the following methods:
     Mail: Send comments to Patricia N. Daniels, Director, 
Supplemental Food Programs Division, Food and Nutrition Service, USDA, 
3101 Park Center Drive, Room 528, Alexandria, Virginia 22302, (703) 
305-2746.
     Web site: Go to https://www.fns.usda.gov/wic. Follow the 
online instructions for submitting comments through the link at the 
Supplemental Food Programs Division Web site.
     E-Mail: Send comments to WICHQ-SFPD@fns.usda.gov. Include 
``Docket ID Number 0584-AD35, SFMNP Proposed Rule,'' in the subject 
line of the message.
     Federal eRulemaking Portal: Go to https://
www.regulations.gov. Follow the online instructions for submitting 
comments.
    All comments submitted in response to this proposed 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 identities of the 
individuals or entities submitting the comments will be subject to 
public disclosure. All written submissions will be available for public 
inspection at the address above during regular business hours (8:30 
a.m. to 5 p.m.) Monday through Friday.
    FNS may also make the comments publicly available by posting a copy 
of all comments on the FNS Web site at https://www.fns.usda.gov/wic.

FOR FURTHER INFORMATION CONTACT: Debra Whitford or Donna Hines, 
Supplemental Food Programs Division, Food and Nutrition Service, USDA, 
3101 Park Center Drive, Room 528, Alexandria, Virginia, 22302, (703) 
305-2746, OR Debbie.Whitford@fns.usda.gov, or Donna.Hines@fns.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This rule has been determined to be Significant and was reviewed by 
the Office of Management and Budget under Executive Order 12866.

Regulatory Impact Analysis

    As required for all rules that have been designated as Significant 
by the Office of Management and Budget, a Regulatory Economic Impact 
Analysis was developed for the SFMNP Proposed Rule. A complete copy of 
the Impact Analysis is available by contacting FNS as indicated in the 
ADDRESSES section of this Preamble.
    In summary, this analysis concludes that the proposed rule to 
establish the SFMNP is not likely to have a significant impact on the 
nutritional health of seniors, nor is it likely to have a substantial 
impact on the market for agricultural commodities, farmers, farmers' 
markets, community supported agriculture programs (CSAs), or roadside 
stands without additional program funding. While some alternatives to 
the proposed rule (set forth in the complete Regulatory Economic Impact 
Analysis) may increase the number of eligible seniors served or the 
number of SFMNP recipients, the SFMNP at its authorized funding level 
will still have minimal impact on the constituencies the program 
intends to serve. The current fiscal situation of the States further 
impedes possible program growth, as States may be unable to contribute 
their own funds for expansion. However, analysis undertaken by FNS 
indicates that the pilot program has been beneficial in areas where the 
SFMNP now operates. The proposed rule does allow for future growth, 
should additional funding be made available.

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act (5 U.S.C. 601-612). Eric Bost, Under 
Secretary of Agriculture for Food, Nutrition, and Consumer Services, 
has certified that this rule will not have a significant economic 
impact on a substantial number of small entities. The provisions of 
this proposed rulemaking are applicable to all State and local 
agencies, farmers, farmers' markets, roadside stands, and community 
supported agriculture programs, regardless of their size or of the 
volume of SFMNP business they conduct.

Public Law 104-4, Unfunded Mandate Reform Act of 1995 (UMRA)

    Title II of the UMRA establishes requirements for Federal agencies 
to assess the effects of their regulatory actions on State, local, and 
tribal governments and the private sector. Under Section 202 of the 
UMRA, FNS 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 to 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 FNS 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 proposed rule contains no Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local, or 
tribal governments or the private sector of $100 million or more in any 
one year. Thus, the rule is not subject to the requirements of Sections 
202 and 205 of the UMRA.

Executive Order 12372

    The Senior Farmers' Market Nutrition Program (SFMNP) is listed in 
the Catalog of Federal Domestic Assistance under No. 10.576. For the 
reasons set forth in the final rule in 7 CFR part 3015, Subpart V and 
related Notice (48 FR 29115), this program is included in the scope of 
Executive Order 12372 that requires intergovernmental consultation with 
State and local officials.

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Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule is intended to have preemptive effect with 
respect to any State or local laws, regulations, or policies that 
conflict with its provisions or that would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the Dates paragraph of the preamble of the final 
rule, which will be promulgated once the comment period for this 
proposed rule has closed. Prior to any judicial challenge to the 
application of the provisions of this rule, all applicable 
administrative procedures must be exhausted. In the Senior Farmers' 
Market Nutrition Program, the administrative procedures are as follows: 
(1) Local agencies, farmers, farmers' markets, roadside stands, and 
community supported agriculture programs--State agency hearing 
procedures issued pursuant to 7 CFR 249.16; (2) Applicants and 
recipients--State agency hearing procedures pursuant to 7 CFR 249.16; 
(3) sanctions against State agencies (but not claims for repayment 
assessed against a State agency) pursuant to 7 CFR 249.17--
administrative appeal in accordance with 7 CFR 249.16, and (4) 
procurement by State or local agencies--administrative appeal to the 
extent required by 7 CFR 3016.36.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under Section 6(b)(2)(B) of Executive Order 13132. FNS has 
considered the impact of this rule on State and local governments and 
has determined that this rule does not have federalism implications. 
Therefore, under Section 6(b) of the Executive Order, a federalism 
summary impact statement is not required.

Civil Rights Impact Analysis

    FNS 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. After a careful 
review of the rule's intent and provisions, and the characteristics of 
SFMNP recipients, FNS has determined that none of the provisions in 
this rule have a discernible impact on minorities, women, or persons 
with disabilities that are likely to result in inequitable treatment. 
FNS specifically prohibits the State agencies, and their cooperators, 
that administer the SFMNP from engaging in actions that discriminate 
against any individual in any of the protected classes (see proposed 
Sec.  249.7 for the nondiscrimination policy in the SFMNP). Where State 
agencies have options, and they choose to implement a certain 
provision, they must implement it in such a way that it complies with 
the SFMNP regulations as proposed at 7 CFR 249.7.

Paperwork Reduction Act (60-Day Notice)

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35; see 5 CFR 
part 1320) requires that the Office of Management and Budget (OMB) 
approve all collections of information by a Federal agency from the 
public before they can be implemented. Respondents are not required to 
respond to any collection of information unless it displays a current 
valid OMB control number. This proposed rule contains information 
collections that are subject to review and approval by OMB; therefore, 
FNS is submitting for public comment the new information collection 
burden that would result from adoption of the proposals in the rule.
    Comments on this proposed rule must be received by July 25, 2005.
    Send comments to Office of Information and Regulatory Affairs, OMB, 
Attention: Desk Officer for FNS, Washington, DC 20503. Please also send 
a copy of your comments to Patricia N. Daniels, Director, Supplemental 
Food Programs Division, Food and Nutrition Service, U.S. Department of 
Agriculture, 3101 Park Center Drive, Alexandria, VA 22302. For further 
information, or for copies of the information collection, please 
contact Debra R. Whitford at the above address.
    Comments are invited on: (a) Whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (b) the 
accuracy of the agency's estimate of the burden of the proposed 
collection of information, including the validity of the methodology 
and assumptions used; (c) ways to enhance the quality, utility, and 
clarity of the information to be collected; and (d) ways to minimize 
the burden of the collection of information on those who are to 
respond, including use of appropriate automated, electronic, 
mechanical, or other technological collection techniques or other forms 
of information technology.
    All responses to this request for comments will be summarized and 
included in the request for OMB approval. All comments will also become 
a matter of public record.
    Title: Senior Farmers' Market Nutrition Program.
    OMB Number: To be assigned.
    Expiration Date: Not applicable.
    Type of Request: New information collection (new program).
    Abstract: This proposed rule implements Section 4402 of the Farm 
Security and Rural Investment Act of 2002 that gives the Department of 
Agriculture the authority to promulgate regulations for the operation 
and administration of the Senior Farmers' Market Nutrition Program 
(SFMNP). The purposes of the SFMNP are to provide fresh, nutritious, 
unprepared, locally grown fruits, vegetables, and herbs from farmers' 
markets, roadside stands, and community supported agriculture programs 
to low-income seniors; to increase the consumption of agricultural 
commodities by expanding or aiding in the expansion of domestic 
farmers' markets, roadside stands, and community supported agriculture 
programs, and to develop or aid in the development of new and 
additional farmers' markets, roadside stands, and community supported 
agriculture programs.

1. Reporting

    Estimated Number of Respondents: 904,088.
    Respondents include State agencies, local agencies, recipients, and 
authorized SFMNP outlets (farmers, farmers' markets, roadside stands, 
and community supported agriculture (CSA) programs).
    Estimated Average Number of Responses per Respondent: 1.
    Estimated Time per Response: .26 hours.
    Estimated Total Annual Burden on Respondents: 235,153 hours.

2. Recordkeeping

    Estimated Number of Recordkeepings: 282.
    Respondents include State agencies, local agencies, SFMNP 
recipients, and authorized SFMNP outlets (farmers, farmers' markets, 
roadside stands, and community supported agriculture (CSA) programs).
    Estimated Average Number of Recordkeepings per Respondent: 1.
    Estimated Time Per Recordkeeping: 8 hours.

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    Estimated Total Annual Burden on Respondents: 2,256 hours.

3. Total Annual Reporting/Recordkeeping Requirements

    237,409 hours.

Government Paperwork Elimination Act Compliance

    FNS is committed to compliance with the Government Paperwork 
Elimination Act, which requires Government agencies to provide the 
public the option of submitting information or transacting business 
electronically to the maximum extent possible.

Background

SFMNP--FY 2001

    USDA's Commodity Credit Corporation (CCC) established the Senior 
Farmers' Market Nutrition Program (SFMNP) in November 2000 as a pilot 
program (65 FR 65825, Nov. 2, 2000). Under the program, CCC made grants 
to State agencies and Indian tribal governments on a competitive basis. 
The grants were to be used to provide low-income seniors with coupons 
they could exchange for eligible foods at farmers' markets, roadside 
stands, and community supported agriculture programs. Eligible foods 
were defined as fresh, nutritious, unprepared, locally grown fruits, 
vegetables, and herbs. Grant funds could be used only to support the 
costs of the foods provided under the program; no administrative 
funding was available. Because of its prior experience and expertise in 
the administration of the WIC Farmers' Market Nutrition Program (a 
similar program that provides farmers' market coupons to participants 
in the Special Supplemental Nutrition Program for Women, Infants and 
Children (WIC)), the Food and Nutrition Service evaluated the grant 
applications and administered the SFMNP on behalf of CCC in its pilot 
year.
    From the inception of the program, the purposes of the SFMNP have 
been to: (1) Provide resources in the form of fresh, nutritious, 
unprepared, locally grown fruits, vegetables, and herbs from farmers' 
markets, roadside stands, and community supported agriculture programs 
to low-income seniors; (2) increase the domestic consumption of 
agricultural commodities by expanding or aiding in the expansion of 
domestic farmers' markets, roadside stands, and community supported 
agriculture programs; and (3) develop or aid in the development of new 
and additional farmers' markets, roadside stands, and community 
supported agriculture programs.
    A total of $15 million was made available for the pilot SFMNP 
grants for a one-year period ending December 31, 2001. The opportunity 
to submit grant applications for the SFMNP pilot was announced as a 
Federal Register Notice on November 2, 2000 (65 FR 65825). This Notice 
set out the basic requirements for the grant application as well as the 
evaluation criteria against which each application would be reviewed 
and scored. An evaluation panel made up of staff from both CCC and FNS 
reviewed the applications that were received. The initial competitive 
grant process resulted in awards to 30 States, 5 Indian tribal 
governments, and the District of Columbia. These grants ranged in 
amounts from $9,000 to $1.2 million.
    Funds for the pilot program in Fiscal Year (FY) 2001 were made 
available pursuant to the CCC Charter Act (``the Act''). Section 5(e) 
of the Act (15 U.S.C. 714c(e)) authorizes CCC to use its resources to 
``[i]ncrease the domestic consumption of agricultural commodities by 
expanding or aiding in the expansion of domestic markets or by 
developing or aiding in the development of new and additional markets, 
marketing facilities, and uses for such commodities.''
    During the 2001 market/harvest season, nearly 420,000 low-income 
seniors received coupons that were accepted by 8,500 farmers through 
1,200 farmers' markets, nearly 900 roadside stands, and 49 community 
supported agriculture programs. For the pilot year, individual coupon 
allotments ranged from $10 to $540, with a median value of $40 per 
recipient per season. Close to 85 percent of the total grant funds 
awarded were expended for the purchase of eligible fruits, vegetables, 
and herbs.

SFMNP--FY 2002 Through 2004

    The Agriculture, Rural Development, Food and Drug Administration 
and Related Agencies Appropriations Act, 2002 (Pub. L. 107-76) provided 
$10 million from the Department's Commodity Assistance Program account 
to continue the SFMNP for a second year. An additional $5 million was 
provided from CCC funds by Section 4402 of the Farm Security and Rural 
Investment Act of 2002 (the Farm Bill), Pub. L. 107-171 (7 U.S.C. 
3007). The Farm Bill also authorized the SFMNP for FY 2003 through FY 
2007, and provided funding at $15 million for each of those years (7 
U.S.C. 3007(a)). Section 4402 of the Farm Bill also gave the Department 
the authority to develop regulations deemed necessary for the SFMNP (7 
U.S.C. 3007(c)).
    FNS announced the opportunity to apply for SFMNP funding during FY 
2002 on December 13, 2001. A competitive process was once again used to 
review and evaluate applications that were received, and 32 States, 3 
Indian tribal governments, and the District of Columbia were awarded 
SFMNP grants. As in FY 2001, State agencies were responsible for all 
administrative expenses associated with the operation and 
administration of the SFMNP; the grant awards could only be used for 
food costs. In FY 2002, just over 500,000 individuals received SFMNP 
coupons for produce made available from approximately 10,000 farmers at 
1,500 farmers' markets, 1,000 roadside stands, and 200 community 
supported agriculture programs. Just over 89 percent of the SFMNP funds 
awarded were expended during the FY 2002 grant period, which ended on 
December 31, 2002.
    While still administered as a competitive grant for FY 2003, the 
SFMNP grant application process was modified slightly. State agencies 
that received SFMNP grants in FY 2002 (``current grantees'') were not 
required to compete against ``new'' State agencies, i.e., State 
agencies that had not previously received an SFMNP grant. Current 
grantees were guaranteed funding in FY 2003 equal to the amount of 
SFMNP funds they spent in FY 2002; proposals for funds over and above 
that level were reviewed against a specific set of evaluation criteria, 
separately from the criteria addressed in grant applications from new 
State agencies. Once FNS had met its commitment to the FY 2002 SFMNP 
grantees at the level of their prior-year expenditures, remaining funds 
were made available for allocation to new SFMNP State agencies and to 
current State agencies to support expansion or growth in their present 
program models. FNS was able to award grants to 4 new State agencies, 
as well as to 14 current grantees for expansion of their existing 
programs. Participation in the SFMNP for FY 2003 exceeded the FY 2002 
totals by a factor of more than 30 percent, serving over 800,000 senior 
recipients, with a redemption rate (percentage of coupons actually used 
to purchase eligible foods based on the total number of coupons issued 
to eligible recipients) of approximately 90 percent.
    The process used to award SFMNP grants in FY 2004 was the same as 
that used in FY 2003: Grant applications were solicited from State 
agencies who wished to receive funds above their FY 2003 expenditure 
levels and from State agencies who were interested in initiating the 
SFMNP. Again, two

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separate panels reviewed and scored the applications. Once FNS had met 
its commitment to the FY 2003 SFMNP grantees at the level of their 
prior-year expenditures, remaining funds were made available for 
allocation to new SFMNP State agencies and to current State agencies to 
support expansion or growth in their present program models. In FY 
2004, FNS was able to award grants to 7 new State agencies, as well as 
to 15 current grantees for expansion of their existing programs. 
Consistent with the pattern that is developing as the SFMNP matures, 
participation is expected to increase slightly over the FY 2003 level, 
and the redemption rate is expected to remain at between 85 and 90 
percent.

Consistency With the WIC Farmers' Market Nutrition Program (FMNP)

    USDA's Food and Nutrition Service has administered the FMNP since 
its inception as a pilot program in 1988, through its transition to an 
authorized independent program when the WIC Farmers' Market Nutrition 
Act of 1992 (Pub. L. 102-314) amended Section 17(m) of the Child 
Nutrition Act of 1966 (42 U.S.C. 1786(m)). The FMNP provides coupons to 
eligible WIC participants (or to individuals on WIC waiting lists) for 
the purchase of fresh, nutritious, unprepared fruits, vegetables and 
herbs at farmers' markets and, at the State agency's option, at 
roadside stands or farmstands. Many of the State agencies that have 
received SFMNP grant awards since FY 2001 were already established as 
administering agencies for the FMNP in that State. Based on the similar 
natures of the FMNP and the SFMNP, and in an effort to create 
consistency between the two programs, this proposed rule is constructed 
on the framework of the FMNP regulations, for which the final rule was 
published in the Federal Register on September 27, 1995 (60 FR 49739).

Difference Between SFMNP Competitive Grants and the SFMNP as an 
Established Nutrition Assistance Program

    As proposed, the SFMNP is very similar to the programs that have 
been operated by State agency grantees through the competitive grant 
program since the program's inception in FY 2001. For example, State 
agencies will continue to have some flexibility in the basic design of 
their programs. However, several significant modifications have been 
made to the SFMNP that must be implemented by all participating State 
agencies in order to receive future SFMNP grants. These modifications 
have been designed to achieve greater consistency within the SFMNP on a 
nationwide basis, and fall into 5 major categories:

1. State agency eligibility;
2. Recipient eligibility;
3. Benefit level;
4. Funding; and
5. Community supported agriculture programs.

    Following is a discussion of each section of the proposed rule, in 
the order presented; the major provisions set forth in each section, 
including the specific issues noted above; and the Department's 
rationale for each provision.

1. General Purpose and Scope (Sec.  249.1)

    While the essential purpose of the SFMNP is very similar to that of 
the FMNP, it differs from the FMNP purpose in one significant aspect: 
it includes community supported agriculture (CSA) programs as allowable 
outlets for accepting SFMNP coupons or funds. CSA programs, while 
fairly familiar to the small farmer and sustainable agriculture 
communities, have not previously been associated with FNS programs. 
Thus, the purposes and scope of the SFMNP are retained in regulation as 
directed by the provisions of Pub. L. 107-171 (7 U.S.C. 3007); i.e., to 
improve/enhance the diets of low-income seniors by enabling them to 
obtain fresh fruits and vegetables from farmers' markets, roadside 
stands, and CSA programs, and to develop or expand these outlets by 
broadening their customer bases.

2. Definitions (Sec.  249.2)

    Most of the definitions used in this rulemaking for the SFMNP are 
either the same as those used in the FMNP or are definitions used in 
the SFMNP competitive grant program. Some of the definitions used in 
this proposed rule warrant additional explanation, whereas others are 
more straightforward and self-explanatory.
    ``Administrative costs.'' The proposed rule defines 
``administrative costs'' as allowable SFMNP costs as defined in Sec.  
249.12(b). Further discussion of the Department's intention to provide 
administrative funding for the SFMNP can be found below in Section 12 
of this preamble. Allowable administrative costs, which have not 
previously been permitted in the SFMNP, are specifically listed at 
Sec.  249.12(b) of this proposed rulemaking, and generally include any 
expense associated with the operation of the SFMNP except the actual 
value of the coupons or CSA shares provided to eligible recipients.
    ``Community supported agriculture programs.'' CSA programs are 
discussed in greater detail in Section 10(i) of this preamble. In the 
proposed rule, ``community supported agriculture program'' refers to a 
less traditional program model under which one or more farmer(s) grows 
food for a group of shareholders (or subscribers) who pledge to buy a 
portion of the farmer's crop for that season. State agencies may 
purchase shares or subscribe to a CSA program on behalf of individual 
SFMNP recipients.
    ``Compliance buy.'' State agencies may conduct compliance buys as 
part of their monitoring efforts. Compliance buys are generally covert, 
on-site investigations in which a SFMNP representative poses as a SFMNP 
recipient or authorized representative and transacts one or more 
coupons and/or in the case of a CSA program, attempts to obtain produce 
purchased with SFMNP funds at a distribution site. Because the busy, 
informal atmosphere of a farmers' market and/or CSA program 
distribution site may make it difficult to detect program violations, 
compliance buys can provide an objective measure of whether farmers are 
violating SFMNP rules by providing change for SFMNP coupons, collecting 
sales tax on purchases made with SFMNP coupons, or providing ineligible 
foods to SFMNP recipients.
    ``Coupon.'' In the SFMNP proposed rule, the term ``coupon'' is used 
to refer to a check or to some other negotiable financial instrument by 
which benefits under the program are transferred to program recipients. 
While many State agencies issue checks (to eligible recipients) that 
can be endorsed and deposited directly into the farmer's checking 
account for immediate payment, others issue an actual coupon that must 
be submitted to the State agency, or to its agent, for review and 
payment. For the purposes of this rule, the term ``coupon'' is used 
generically to refer to either type of instrument.
    ``Distribution site.'' It is not always possible in the CSA program 
model for SFMNP recipients to travel to the farm where the fruits and 
vegetables are actually grown. Nor is it always cost-efficient for the 
State agency to include in its CSA contract a provision for the farmer 
to assemble and deliver the food packages to individual SFMNP 
recipients. Therefore, many State agencies work with their CSA program 
farmers to identify one or more locations where recipients or local 
agency staff can go on a predetermined schedule to obtain their SFMNP 
foods. This rule includes a definition of

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``distribution site'' to refer to such locations.
    ``Eligible foods.'' One of the stated purposes of the SFMNP is to 
provide eligible recipients with ``fresh, nutritious, unprepared foods 
(such as fruits and vegetables).'' The Department realizes that a broad 
variety of foods are available at farmers' markets and roadside stands, 
and through CSA programs, that are not fresh and unprepared, including 
jams and jellies, baked goods, maple syrup, cider and fruit juices, and 
cheese. Such foods are not eligible foods for the SFMNP.
    Among the remaining food choices that meet the fresh, nutritious 
and unprepared criteria, the Department decided to limit eligible foods 
to fresh fruits, vegetables, and herbs. As a result, although some 
foods in addition to fruits, vegetables, and herbs may be considered 
``fresh, nutritious, and unprepared,'' they are excluded as eligible 
foods. These include honey, as well as protein foods such as eggs, raw 
seeds and nuts, meats, fish and seafood. Honey is neither a fruit nor a 
vegetable; it is further excluded from consideration as an eligible 
food in the interest of consistency with the FMNP, which does not allow 
the purchase of honey with program benefits.
    The definition of ``eligible foods'' in the SFMNP regulation is 
consistent with the one that has been used consistently in the SFMNP 
grant solicitations since the inception of the program, and is the one 
with which participating SFMNP State agencies are most familiar. This 
definition, which specifically addresses questions regarding the 
eligibility of certain specific food items, as well as certain types of 
foods, is in the Department's opinion more responsive to the issues 
that have arisen or are likely to arise in the operation of the SFMNP. 
For example, the proposed definition at Sec.  249.2 states that dried 
fruits and vegetables, such as prunes, raisins, sun-dried tomatoes, or 
dried chili peppers are ineligible for purchase with SFMNP benefits. 
Potted fruit, vegetable, or herb plants, dried herbs, wild rice, and 
nuts of any kind are likewise ineligible.
    ``Farmer.'' The term ``farmer'' in this rulemaking refers to 
someone who has been authorized by the SFMNP State agency to sell 
produce at participating farmers' markets and/or roadside stands, and/
or through CSA programs. Individuals who exclusively sell produce grown 
by someone else, such as wholesale distributors, cannot be authorized 
to participate in the SFMNP. This is consistent with the definition of 
farmer under the FMNP and the Department's belief that the SFMNP should 
benefit smaller, local farmers. The SFMNP State agency may authorize 
individual farmers or farmers' markets, roadside stands, and/or CSA 
programs, at its discretion.
    ``Farmers' market.'' Pursuant to 7 U.S.C. 3007, two of the three 
stated purposes of the SFMNP are to increase the domestic consumption 
of agricultural commodities by expanding or aiding in the expansion of 
domestic farmers' markets, roadside stands, and CSA programs, and to 
develop or aid in the development of new and additional farmers' 
markets, roadside stands, and CSA programs. Because the stated purpose 
of the SFMNP is virtually identical to that of the FMNP, as proposed in 
Sec.  249.2, the definition of ``farmers' market'' is the same as the 
definition used for the FMNP.
    ``Federally recognized Indian tribal government.'' Federally 
recognized Indian tribal governments are defined at 7 CFR 3016.3, the 
Department's Uniform Administrative Requirements for Grants and 
Cooperative Agreements to State and local governments. Federally 
recognized Indian tribal governments are recognized as independent 
entities, and as such are eligible to apply for and receive SFMNP 
grants under the same terms and conditions as geographic State 
agencies. These entities may also participate in the SFMNP as local 
agencies under the auspices and jurisdiction of the SFMNP-administering 
State agency in the geographic State where the tribe or tribal 
organization is located.
    ``Fiscal year.'' As with all Federal grant programs, ``fiscal 
year'' refers to the Federal fiscal year which begins on October 1.
    ``Food costs'' refers only to the cost of eligible foods purchased 
at authorized farmers' markets, roadside stands, and/or through CSA 
programs. Such costs may not include expenses associated with printing 
or issuing SFMNP coupons or benefits in any form.
    ``Household.'' The definition of ``household'' for the SFMNP is the 
same as that used in the FMNP, i.e., a group of related or nonrelated 
individuals who are living together as one economic unit (7 CFR 248.2).
    ``Local agency.'' FNS proposes that ``local agency'' mean a 
nonprofit entity or local government agency that is responsible for one 
or more administrative functions of the SFMNP's program operation. Such 
functions include certifying eligible recipients, issuing SFMNP 
coupons, arranging for the distribution of produce through CSA 
programs, and/or providing nutrition education or information on the 
operational aspects of the Program to SFMNP recipients.
    ``Locally grown.'' Under the SFMNP, ``locally grown'' refers to 
eligible foods (fruits, vegetables, and herbs) grown within the borders 
of the administering State and at State option, areas in counties 
adjacent to that State. Consistent with the WIC Program, the FMNP, and 
other food assistance programs administered by the Department, the 
SFMNP values its partnership with American agriculture and therefore 
promotes the use of SFMNP coupons to purchase domestically grown 
products at participating outlets. Many States already prohibit the use 
of SFMNP coupons to purchase foods grown outside of that State. 
However, some States define ``locally grown'' as including the counties 
outside but adjacent to the State boundary. Therefore, this proposed 
rulemaking provides State agencies the option to define ``locally 
grown'' to include produce grown in areas of States adjacent to that 
State, as long as such areas are part of the United States. State 
agencies may want to consider the advantages of establishing ``locally 
grown'' guidelines for the purpose of improving marketing opportunities 
for local farmers. State agencies other than State Departments of 
Agriculture that are administering the SFMNP should work closely with 
their Agriculture counterparts to establish a definition of locally 
grown that is satisfactory to both entities, i.e., that offers SFMNP 
recipients a broad choice of eligible foods while serving to benefit 
that State's small or mid-size farmers.
    ``Nonprofit agency.'' Consistent with other FNS programs, 
``nonprofit agency'' refers to a private agency that is exempt from 
Federal income tax under the Internal Revenue Code of 1986, as amended 
(26 U.S.C. 1, et seq.). While a nonprofit agency may participate as a 
local agency in the operation and administration of the SFMNP, it may 
not serve as the lead State agency for the Program.
    ``Nutrition education.'' Nutrition education is an integral 
component of all FNS nutrition assistance programs, including the 
SFMNP. The Department does not prescribe specific requirements as to 
how nutrition education must be provided for the SFMNP. Instead, this 
proposed rule offers a definition that addresses the principal elements 
of nutrition education. That definition includes individual or group 
sessions that encourage SFMNP recipients to build healthful eating 
patterns and take action for good health, and the provision of 
materials that emphasize

[[Page 30563]]

relationships between nutrition and health. All nutrition education 
models, whether they involve individual counseling, group 
demonstrations, or written materials such as recipes and pamphlets 
about food safety, must be designed to take into consideration the 
individual's personal, cultural, and socioeconomic preferences and the 
current Dietary Guidelines for Americans.
    ``Proxy.'' Many seniors are eligible to receive SFMNP benefits but 
are unable to participate in the Program for a variety of reasons. Some 
of these obstacles include frail health or other physical limitations, 
and lack of transportation to and from the farmers' market, roadside 
stand, or CSA program distribution site. Several State agencies have 
addressed these problems by allowing an eligible senior to designate 
another individual as his/her authorized representative, or ``proxy'', 
to conduct the SFMNP transactions. Proxies may perform a number of 
functions, including applying for the SFMNP on behalf of the eligible 
senior, accepting and signing for SFMNP coupons or CSA program shares 
when they are issued, shopping for eligible foods at the market or 
roadside stand, and/or picking up and delivering eligible foods from a 
CSA program distribution site. Therefore, ``proxy'' is defined in this 
proposed rule to mean an individual authorized by an eligible senior to 
perform any and all of these functions, as long as the eligible senior 
ultimately receives the SFMNP benefits. State agencies generally 
require a proxy to present documentation, signed by the eligible 
senior, of his/her authorization to represent the senior in any SFMNP 
activity or transaction, and to be equally responsible for any program 
abuse or violation. The terms ``proxy'' and ``authorized 
representative'' may be used interchangeably for purposes of this 
program.
    ``Recipient.'' ``Recipient'' is defined for the SFMNP in this 
proposed rule as someone whose SFMNP eligibility has been determined 
based on the eligibility requirements of the program (described in 
detail in Section 6 of this preamble), and to whom coupons or 
equivalent benefits have been issued. A recipient may, at State agency 
option, be either an individual or a household. This distinction is 
discussed in greater detail later in this preamble.
    ``Roadside stand.'' Also known as a farmstand, ``roadside stand'' 
in the SFMNP refers to an outlet through which an individual farmer 
sells his/her produce directly to consumers. This is in contrast to a 
group or association of farmers selling their produce at a farmers' 
market or through a CSA program.
    ``Senior.'' For the SFMNP, ``senior'' generally refers to an 
individual not less than 60 years of age. However, State agencies have 
the option to establish the minimum age at older than 60. Some SFMNP 
State agencies currently use 62 or 65 as the minimum age for SFMNP 
eligibility. On the other hand, as discussed in proposed Sec.  
249.6(a)(1), State agencies may exercise the option to deem Native 
Americans who are 55 years of age or older as categorically eligible 
for SFMNP benefits. State agencies may also, at their discretion, deem 
disabled individuals under 60 years of age who are currently living in 
housing facilities occupied primarily by older individuals (60 years or 
older) where congregate nutrition services are provided, as 
categorically eligible to receive SFMNP benefits.
    ``Shareholder.'' Sometimes called a subscriber, a shareholder means 
a SFMNP recipient who does not receive his/her program benefits in the 
form of checks or coupons that can be used at established farmers' 
markets or roadside stands. Instead, the SFMNP State agency may elect 
to purchase a full or partial share in a community supported 
agriculture program, and to provide the eligible senior with SFMNP 
benefits in the form of actual eligible foods.
    ``State.'' Consistent with Section 15(i) of the Child Nutrition Act 
of 1966 (42 U.S.C. 1784(i)), ``State'' for the purposes of the SFMNP 
means any of the 50 States, the District of Columbia, the Commonwealth 
of Puerto Rico, the Virgin Islands, Guam, and as applicable, American 
Samoa or the Commonwealth of the Northern Marianas.
    ``State agency.'' ``State agency'' means the organizational unit 
within the State, U.S. Territory, or federally recognized Indian tribal 
government that has administrative responsibility for the SFMNP. This 
includes a State Department of Agriculture, Health, Social Services, a 
State Agency on Aging, or any other agency approved by the chief 
executive officer of the State (generally the Governor or Tribal 
Chief). A nonprofit agency may not be designated as a State agency for 
the SFMNP, but may operate as a local agency under the oversight of the 
State agency.
    ``SFPD.'' ``SFPD,'' the entity within FNS that oversees the 
administration of the SFMNP on a national basis, refers in this 
proposed rule to the Supplemental Food Programs Division of the Food 
and Nutrition Service (FNS) of the U.S. Department of Agriculture.
    ``State Plan.'' ``State Plan'' means a plan of SFMNP operation and 
administration that must be submitted annually to FNS. The State Plan 
describes the manner in which the State agency intends to implement, 
operate, and administer all aspects of the SFMNP within its 
jurisdiction. Specific requirements of the SFMNP State Plan are set out 
in Sec.  249.4 of this proposed rule.
    ``WIC Farmers' Market Nutrition Program'' or ``FMNP.'' The WIC 
Farmers' Market Nutrition Program (FMNP) refers to an existing program, 
originally authorized by the Farmers' Market Nutrition Act of 1992 
(Pub. L. 102-314), that was designed to provide resources to women, 
infants, and children who are nutritionally at risk (i.e., WIC 
participants), in the form of fresh, nutritious, unprepared foods (such 
as fruits and vegetables) that can be purchased at farmers' markets; to 
expand the awareness and use of farmers' markets; and to increase sales 
at such markets. Legislative language pertaining to the FMNP is found 
at Section 17(m) of the Child Nutrition Act of 1966 (42 U.S.C. 
1786(m)).

3. Administration (Sec.  249.3)

    FNS is responsible for the administration of the SFMNP within the 
Department, and will provide assistance to State agencies and evaluate 
all levels of Program operations to ensure that the goals of the 
Program are effectively and efficiently achieved. The Supplemental Food 
Programs Division and the FNS Regional offices are responsible for 
administration within FNS. Each State agency is responsible for the 
effective and efficient administration of the SFMNP within that State, 
and must provide guidance to cooperating State and local agencies on 
all aspects of SFMNP operations. State SFMNP coordinators/program 
managers are expected to communicate with the designated SFMNP contacts 
in the appropriate FNS Regional offices, as set forth in Sec.  249.26 
of this proposed rule, regarding SFMNP operations.
    SFMNP grant funds will be provided to the administering State 
agency or agencies designated by the Chief Executive Officer of the 
State or Indian tribal organization. A State agency may be the 
agriculture department, the health department, the State agency on 
aging, or other comparable agency within State government; an Indian 
tribe, band, or group recognized by the Department of the Interior; an 
intertribal council or group that is an authorized representative of 
Indian tribes, bands, or groups recognized by the Department of the 
Interior and that has an ongoing relationship with such tribes, bands, 
or groups for other purposes and has

[[Page 30564]]

contracted with them to administer the Program; or the appropriate area 
office of the Indian Health Service of the Department of Health and 
Human Services.
    As set forth in this proposed rule, the Chief Executive Officer of 
the State would be responsible for coordination between the agency 
designated to administer the SFMNP and any other State, local or 
nonprofit agency, as necessary, by requiring written agreements between 
the agencies. In order to guarantee further successful operation, State 
agencies will need to ensure that sufficient staff is available to 
administer an efficient and effective Program, and to provide an 
outline of administrative staff and job descriptions for staff whose 
salaries will be provided in any part from SFMNP funds. Also as set 
forth in this proposed rulemaking, the availability of up to 8 percent 
of the Federal SFMNP grant for administrative funding for SFMNP 
operations (which was not available when the SFMNP was administered as 
a competitive grant program) is expected to aid the staffing and 
administrative requirements of the Program.
    In the absence of Federal administrative funds for the SFMNP under 
the pilot program and the competitive grant program, State agencies 
operating the program have established effective and often creative 
networks and collaborations with other State, local, and private 
nonprofit agencies and organizations in order to accomplish their goals 
and objectives for the SFMNP. The Department encourages all 
participating SFMNP State agencies to continue not only working within 
the networks that have already been established, but also to broaden 
and enhance these collaborations within the framework of the SFMNP as a 
permanent program. Although some administrative costs may now be 
covered by the Federal SFMNP grant (see section 14-c of this preamble), 
State agencies should keep in mind that SFMNP funds used to defray an 
administrative expense may also represent a reduction in the number of 
eligible recipients to whom SFMNP benefits can be provided. The 
Department does not intend to impose a stringent maintenance of effort 
provision that would require SFMNP State agencies to sustain the 
current level of non-Federal administrative support (cash as well as 
in-kind contributions) that has been available for the operation and 
administration of the SFMNP when it was a competitive grant program. 
The Department believes that in addition to protecting State agencies 
from the potential of significantly reducing their recipient base, 
there are many other benefits to maintaining these coordinated 
relationships wherever possible--streamlined service delivery, 
effective cross-program referrals, and better-targeted nutrition 
education modules, to name a few.

4. State Plan Provisions (Sec. 249.4)

    In establishing the SFMNP as a permanent program, Congress gave the 
Department the authority to set out basic standards and requirements 
for its operation. Consistent with other FNS nutrition assistance 
programs, each State agency that desires to receive a SFMNP grant, 
including State agencies currently participating in the SFMNP, will 
need to submit a State Plan of Operation for approval by the 
Department. These State Plans will be due by November 15 of each year.
    The State plan process replaces the grant application process that 
was used for the SFMNP since its inception in FY 2001. This proposed 
rule sets out at Sec.  249.4(a) the specific elements that are 
necessary to the approval of each State Plan submitted to the 
Secretary. A complete list of the proposed State Plan requirements is 
contained in proposed Sec.  249.4.
    The Department recognizes that many State agencies administering 
the SFMNP also administer the FMNP. Furthermore, many of the 
administrative provisions required for the SFMNP and FMNP State plans 
are identical. In an effort to minimize the administrative burden for 
these State agencies, the Department will allow them to submit one 
consolidated State Plan of Operation for both programs in accordance 
with guidance provided annually by FNS. This option will be available 
only to those State agencies that serve as the lead State agency for 
both programs. If the FMNP is administered by the WIC State agency and 
the SFMNP in that same State is administered by the State Department of 
Agriculture, then two separate State Plans of Operation must be 
submitted to FNS. Similarly, if the State Department of Agriculture 
administers the FMNP but the State Agency on Aging is the lead agency 
for the SFMNP, both of these State agencies must submit separate State 
Plans to the appropriate FNS Regional Office. In instances such as 
these, the individual State agencies will be responsible for 
coordinating any joint or overlapping functions, and for ensuring that 
all areas of overlapping functions are fully described in both State 
Plans. Examples of overlapping functions may include authorization, 
training, and monitoring of farmers, farmers' markets, and/or roadside 
stands; nutrition education classes and food demonstrations; and 
certification of and issuance to SFMNP recipients.
    Some of the issues related to the CSA program models used to 
deliver SFMNP benefits are addressed separately in this preamble. 
However, because CSA programs differ so significantly from the 
traditional coupon model, specific provisions pertaining to CSA 
programs will also be required as part of the SFMNP State Plan, as 
proposed at Sec.  249.4(a)(12).
    As noted above, State Plans of Operation are due to FNS by November 
15 of each year. Substantive changes in SFMNP operations that are 
anticipated for the coming year or market season, such as the addition 
of new service delivery areas or new procedures for certifying eligible 
recipients should be included, and fully described in the regular 
November 15 submission, whenever possible. The Department understands 
that alterations and modifications are sometimes necessary for the 
current year's program operation after the State Plan has already been 
submitted and approved. In the event that a State agency significantly 
modifies any aspect of its program operation or administration, e.g., 
the addition of a new partner agency or a change in its procedure for 
issuing coupons to eligible recipients during the course of the market 
season, a State Plan amendment must be submitted to FNS for approval. 
The State agency may not implement the requested modification until 
formal (written) approval has been received from FNS. These 
clarifications are described in proposed Sec.  249.4(b) of this rule. 
In addition, FNS plans to issue detailed guidance regarding the 
required content of the State Plan of Operation to all currently 
participating SFMNP State agencies, as well as to other interested 
State agencies, in advance of the November 15, 2005 deadline.

5. Selection of State Agencies (Sec.  249.5)

    Two major questions arose out of the Department's consideration of 
this issue:
    a. What entities should be eligible to serve as SFMNP State 
agencies, and
    b. Should current SFMNP grantees be grandfathered into the 
permanent program as participating State agencies?
    In regard to the first question (What entities should be eligible 
to serve as SFMNP State agencies?), the Department wishes to recognize 
and express its appreciation to those nonprofit organizations and local 
agencies, such as the Area Agencies on Aging, for their support and 
assistance in assuring the smooth operation of the

[[Page 30565]]

SFMNP at the local level. However, the nutrition assistance programs 
administered by FNS are generally structured so that Federal program 
grants are allocated to designated State agencies. All States, United 
States Territories, and federally recognized Indian tribal governments 
were eligible to receive SFMNP grants through a competitive process. As 
defined in the SFMNP grant solicitations used in the past, SFMNP State 
agency eligibility was limited to State Departments of Agriculture, 
Aging, Health, or any other agency approved by the chief executive 
officer of the State. The FMNP regulations at 7 CFR 248.2 provide a 
broader definition of State agency to include an intertribal council or 
group that is an authorized representative of Indian tribes, bands, or 
groups recognized by the Department of the Interior and that has an 
ongoing relationship with such tribes, bands, or groups for other 
purposes, and has contracted with them to administer the Program; or 
the appropriate area office of the Indian Health Service. Because of 
the FMNP, many of these entities--including all six of the Indian 
tribal organizations currently participating in the SFMNP--already have 
structures in place to administer the program.
    Therefore, at proposed Sec.  249.2, the Department sets out a 
specific definition of ``State agency'' for the SFMNP. We believe that 
the entities included in this definition are the most appropriate 
entities to administer the SFMNP. As appropriate, these entities may 
subcontract with nonprofit or local level organizations to perform 
specific functions, such as recipient outreach and certification, 
nutrition education, coupon issuance, market management, and/or coupon 
reconciliation.
    The implications of the second question (Should current SFMNP 
grantees be grandfathered into the permanent program as participating 
State agencies?) are significant with respect to the future growth and/
or expansion of the SFMNP. Since the inception of the pilot program in 
FY 2001, SFMNP grants have been awarded through a competitive grant 
process. In FY 2002, funds were not sufficient to award grants to all 
State agencies that operated the program in FY 2001 and applied in FY 
2002. Therefore, State agencies that operated the program in FY 2001 
and wanted to continue had to compete with new State agencies for 
available program funds. Initially, given limited funds, some State 
agencies that operated the program in FY 2001 were not chosen to 
operate the SFMNP in FY 2002. However, through Section 4402 of the Farm 
Bill (Pub. L. 107-171), Congress authorized the use of additional 
Commodity Credit Corporation funds for the SFMNP. During a Senate floor 
colloquy between Senators Kohl and Harkin on the day that the Farm Bill 
was passed by the Senate (May 8, 2002), and later confirmed in a letter 
to the Secretary of Agriculture, FNS was directed to provide funding to 
State agencies that were not selected during the FY 2002 grant review 
process, but who operated the SFMNP in FY 2001. For FY 2003 and FY 
2004, current grantees were guaranteed a base level of funding. 
Therefore, based on Congress' intent in FY 2002, the Department has set 
a precedent of guaranteeing funding to State agencies that have 
participated in the SFMNP in the prior year and who wish to continue 
operating during the next year. The Department, therefore, will 
grandfather all current SFMNP grantees into the permanent program as 
participating SFMNP State agencies. This means that any State agency 
that received an SFMNP grant award in FY 2005 will be guaranteed an 
SFMNP grant in FY 2006. As proposed at Sec.  249.14, the actual amount 
of each State agency's base grant would be equal to the total Federal 
funds received in FY 2005, contingent upon the availability of 
sufficient funds for the SFMNP and an approved State Plan. The National 
Association of Farmers' Market Nutrition Programs (NAFMNP) supports 
this provision.
    New State agencies wishing to participate in the SFMNP will have 
their State plans approved and ranked based on objective criteria 
established by FNS. Such criteria may include: the amount of funding 
requested (in proportion to the amount of funding available), the 
number of recipients projected to be served, and the projected benefit 
level.

6. Recipient Eligibility (Sec.  249.6)

a. Categorical Eligibility
    Based primarily on other FNS programs that serve low-income elderly 
persons, categorical eligibility was established for the SFMNP pilot 
program in FY 2001 to refer to individuals 60 years of age and older, 
unless grantees applying to operate the SFMNP could provide 
justification to FNS for a lower age limit. Most State agencies have 
used the age of 60 as the minimum age for SFMNP recipients, with a few 
notable exceptions. FNS is proposing that all SFMNP State agencies 
would have the option to establish a higher age limit, such as 62 or 65 
years of age, at their discretion, based on the particular needs of the 
elderly populations in their States.
    Both the Food Stamp Program (7 CFR 271.2) and the Commodity 
Supplemental Food Program (CSFP) (7 CFR 247.2) define ``elderly'' to 
mean at least 60 years old. However, the Bureau of Indian Affairs 
defines ``elders'' and ``elderly'' for the Native American population 
as 55 years of age or older. Therefore, federally recognized Indian 
tribal governments that receive SFMNP grants, and other State agencies 
that serve Native American seniors, generally use 55 or older as the 
minimum age for Native Americans and 60 years of age for all other 
SFMNP recipients.
    In Sec. Sec.  249.2 and 249.6(a)(1) of this proposal, the 
Department defines a person categorically eligible for the SFMNP (a 
``senior'') as an individual 60 years of age or older. Indian tribal 
organizations administering the SFMNP are afforded the option to deem 
Native Americans who are 55 years of age or older as categorically 
eligible for SFMNP benefits. This position is consistent with existing 
legislation, policy and practice in other FNS and Department of Health 
and Human Services (HHS) programs serving elderly individuals, such as 
congregate meals provided under the Older Americans Act, 42 U.S.C. 
3001, et seq. Under Section 339 of the Older Americans Act, Pub. L. 86-
73, as amended by Section 313 of the Older Americans Act Amendments of 
2000, Pub. L. 106-501, (42 U.S.C. 3030g.21(2)(h)), FNS has also 
approved requests from some SFMNP grantees to provide benefits to 
disabled individuals who live in senior housing facilities but have not 
yet reached the age of 60. It is permissible, but not required, to 
provide services to disabled individuals who reside in housing 
facilities occupied primarily by older individuals where congregate 
nutrition services are provided. HHS' Administration on Aging has 
advised us that most States require service to disabled individuals in 
these circumstances.
    Therefore, in proposed Sec.  249.6(a)(1), the Department allows 
State agencies the option to deem disabled individuals under 60 years 
of age, who live in housing facilities occupied primarily by older 
individuals where congregate nutrition services are provided, as 
categorically eligible for SFMNP benefits. SFMNP State agencies opting 
to serve such disabled individuals would be responsible for weighing 
the relative benefits of serving those persons in certain housing 
facilities against serving additional elderly recipients who are 60 
years of age and older in the

[[Page 30566]]

same, or possibly another, service delivery area.
b. Residency Requirement
    In this proposed rulemaking, the Department allows State agencies 
to establish a residency requirement for SFMNP applicants, in Sec.  
249.6(a)(2). Further, the Department allows State agencies the option 
to determine a service area for any local agency, and may require an 
applicant to reside within the service area at the time of application. 
However, State agencies are not permitted to impose any durational or 
fixed residency requirement. A ``fixed residency requirement'' is one 
that would require an applicant to have a permanent domicile in order 
to be eligible to receive SFMNP benefits.
c. Income Eligibility
    In developing this proposed rulemaking, FNS identified and 
considered three major aspects to the determination of income 
eligibility for the SFMNP, as follows:
    1. What should be the maximum allowable household income?
    2. Should FNS allow automatic income eligibility based on an 
individual's participation in other programs? If so, which programs 
should be included?
    3. How much documentation or verification of income eligibility 
should be required for SFMNP applicants?
    Income eligibility guidelines. Since the inception of the SFMNP, 
the maximum household income has been 185 percent of the annual poverty 
income guidelines, consistent with the WIC Program (Section 17(d)(A)(i) 
of the Child Nutrition Act of 1966, 42 U.S.C. 1786(d)(A)(i)), unless 
the grant applicant could provide justification to FNS for a higher 
limit. In FY 2004, 36 of the 47 participating SFMNP State agencies used 
a maximum income level of 185 percent of the poverty guidelines to 
determine income eligibility for the program. Seven State agencies 
linked SFMNP income eligibility to the maximum income limit used in the 
Commodity Supplemental Food Program (CSFP), i.e., 130 percent (7 CFR 
247.7(a)(3)). Other variations existed, such as between 150 and 200 
percent of the poverty income guidelines.
    In Sec.  249.6(a)(3), the Department proposes to retain the maximum 
income limit of 185 percent level for the SFMNP in this proposed 
rulemaking. The NAFMNP supports this proposal.
    Automatic income eligibility based on participation in other 
programs. Many SFMNP grantees use participation in other means-tested 
programs to determine eligibility for the SFMNP. The programs most 
frequently used to establish automatic SFMNP income eligibility are, as 
might be expected, the Food Stamp Program, the CSFP, and the Food 
Distribution Program on Indian Reservations (FDPIR). As indicated 
above, all of these programs use an income eligibility limit that is at 
or below 130 percent of poverty. Allowing eligibility for the SFMNP to 
be based on participation in another program for which income 
eligibility has already been established enables SFMNP State agencies 
to reduce their administrative burden significantly in terms of cost as 
well as staffing resources. It also facilitates the certification 
process for elderly recipients by minimizing the burden and amount of 
time involved in establishing eligibility for the SFMNP.
    Under this proposal, the Department will continue to allow State 
agencies the option to deem applicants automatically eligible for the 
SFMNP based on participation/certified eligibility to receive benefits 
in another means-tested assistance program, as determined by the State 
agency, as long as (1) income eligibility is set at or below the SFMNP 
maximum income, i.e., 185 percent of the annual poverty income 
guidelines, and (2) some form of documentation is required to establish 
income eligibility for that program.
    Documentation of income eligibility. Currently, most SFMNP grantees 
deem applicants automatically income eligible for the program based on 
participation in (or certified eligibility to receive benefits in) 
another means-tested program, such as the Food Stamp Program, CSFP, or 
FDPIR. In general, the remaining grantees have applicants either 
provide proof of participation in such a program, or sign an affidavit 
affirming that their household income does not exceed the State 
agency's maximum income limit for their individual household size.
    While the burden on participants is significantly lessened by 
allowing State agencies to deem seniors eligible for the SFMNP based on 
a signed affidavit, the Department is concerned that such convenience 
may be achieved at the expense of program integrity.
    Therefore, proposed Sec.  249.6(b) requires SFMNP applicants who 
are not automatically income eligible for the program based on 
participation in or certified eligibility for another means-tested 
program to provide documentation of family income at certification. 
State and local agencies have the option to verify reported income 
further, in order to confirm an applicant's income eligibility for the 
SFMNP.
d. Certification Periods
    The Department proposes to establish in Sec.  249.6(c) a 
certification period for SFMNP recipients. This is consistent with the 
establishment of certification periods for other FNS programs. 
Recipients may be certified only for the current fiscal year's SFMNP 
period of operation. Prior fiscal year certifications may not be 
carried ov