Food Stamp Program: Eligibility and Certification Provisions of the Farm Security and Rural Investment Act of 2002, 4912-4962 [2010-815]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 75, Number 19 (Friday, January 29, 2010)]
[Rules and Regulations]
[Pages 4912-4962]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-815]



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Part II





Department of Agriculture





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Food and Nutrition Service



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7 CFR Parts 272 and 273



 Food Stamp Program: Eligibility and Certification Provisions of the 
Farm Security and Rural Investment Act of 2002; Final Rule

Federal Register / Vol. 75 , No. 19 / Friday, January 29, 2010 / 
Rules and Regulations

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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272 and 273

[FNS-2007-0006]
RIN 0584-AD30


Food Stamp Program: Eligibility and Certification Provisions of 
the Farm Security and Rural Investment Act of 2002

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule implements 11 provisions of the Farm Security 
and Rural Investment Act of 2002 (FSRIA) that establish new eligibility 
and certification requirements for the receipt of food stamps. The 
provisions of the final rule will simplify program administration, 
allow States greater flexibility, and provide enhanced access to 
eligible populations. This rule will allow States, at their option, to 
treat legally obligated child support payments to a non-household 
member as an income exclusion rather than a deduction; allow a State 
option to exclude certain types of income and resources that are not 
counted under the State's Temporary Assistance for Needy Families 
(TANF) cash assistance or Medicaid programs; replace the current, fixed 
standard deduction with a deduction that varies according to household 
size and is adjusted annually for cost-of-living increases; allow 
States to simplify the Standard Utility Allowance (SUA) if the State 
elects to use the SUA rather than actual utility costs for all 
households; allow States to use a standard deduction from income of 
$143 per month for homeless households with some shelter expenses; 
allow States to disregard reported changes in deductions during 
certification periods (except for changes associated with new residence 
or earned income) until the next recertification; increase the resource 
limit for households with a disabled member from $2,000 to $3,000 
consistent with the limit for households with an elderly member; allow 
States to extend simplified reporting of changes to all households; 
require State agencies that have a Web site to post applications on 
these sites in the same languages that the State uses for its written 
applications; allow States to extend from the current 3 months up to 5 
months the period of time households may receive transitional food 
stamp benefits when they cease to receive TANF cash assistance; and 
restore food stamp eligibility to qualified aliens who are otherwise 
eligible and who are receiving disability benefits regardless of date 
of entry, are under 18 years of age regardless of date of entry, or 
have lived in the United States for 5 years as qualified aliens 
beginning on the date of entry.

DATES: Effective Date: This final rule is effective April 1, 2010.
    Implementation Dates:
    1. Sections 273.4(a)(6)(ii)(H), 273.8(b), and 273.9(d)(1)--
amendments of this final rule were to be implemented October 1, 2002.
    2. Sections 273.4(a)(6)(ii)(B) through (a)(6)(ii)(F) and 
273.4(a)(6)(iii)--amendments of this rule were to be implemented April 
1, 2003.
    3. Sections 273.4(a)(6)(ii)(J) and 273.4(c)(3)(vi)--amendments of 
this rule were to be implemented October 1, 2003.
    4. State agencies must implement Sec. Sec.  273.4(c)(2)(v), 
273.4(c)(3)(iv), 273.4(c)(3)(vii), 273.9(b)(1)(vi), and 
273.9(c)(3)(ii)(A) amendments no later than August 1, 2010.
    5. State agencies may implement all other amendments on or after 
April 1, 2010.
    6. States that implemented discretionary provisions, either under 
existing regulations or policy guidance issued by the Department, prior 
to the publication of this final rule have until August 1, 2010 to 
amend their policies to conform to the final rule requirements.

FOR FURTHER INFORMATION CONTACT: Angela Kline, Branch Chief, 
Certification Policy Branch, Program Development Division, Food and 
Nutrition Service (FNS), USDA, 3101 Park Center Drive, Alexandria, 
Virginia 22302, (703) 305-2495. Her e-mail address is: 
Angela.Kline@FNS.USDA.Gov.

SUPPLEMENTARY INFORMATION:

Background

    The Farm Security and Rural Investment Act of 2002 (FSRIA), Public 
Law 107-171, enacted May 13, 2002, amended the Food Stamp Act of 1977, 
7 U.S.C. 2011, et seq. (the Act), by establishing new eligibility and 
certification requirements for the receipt of food stamps. On April 16, 
2004, we published a rule proposing to codify (published in the Code of 
Federal Regulations) the eligibility and certification requirements of 
the FSRIA. The period for comment on the proposed rule ended June 15, 
2004. We received comments from 19 State and local agencies, 90 
advocate groups, and 6 individuals. In this final rule, we will not 
discuss comments that supported our proposals. We will not discuss, in 
detail, comments that concerned merely technical corrections or 
inadvertent omissions; we have simply made the corrections. We will not 
discuss several provisions on which we received no comments. We will 
adopt these provisions as proposed. For a full understanding of the 
background of the provisions in this rule, see the proposed rulemaking 
which was published in the Federal Register on April 16, 2004 (69 FR 
20724). With the exceptions noted above, we will discuss each provision 
and the comments made.

Availability of Food Stamp Program Applications on the Internet--7 CFR 
273.2(c)

    Section 11(e)(2)(B)(ii) of the Food Stamp Act (7 U.S.C. 
2020(e)(2)(B)(ii)) requires State agencies to develop a Food Stamp 
Program application. Section 4114 of FSRIA amended Section 
11(e)(2)(b)(ii) to require State agencies that maintain a Web site to 
make their State food stamp application available on that Web site in 
each language in which the State agency makes a printed application 
available. This final rule amends current regulations at 7 CFR 
273.2(c)(3) to implement this provision. Section 4114 of FSRIA also 
required State agencies to provide the addresses and phone numbers of 
all State food stamp offices and a statement that the household should 
return the application form to its nearest local office.
    Commenters suggested other information that the Department should 
require State agencies to place on their Web site such as fax numbers 
and the service area of each local office or some other means to 
connect individuals to the correct local office. We note that many 
State agencies do provide detailed local office information on their 
Web sites. However, we decided that requiring specific information 
about each local office such as a fax number and the service area of 
each office can be unduly burdensome to the State agencies, and should 
be a state option rather than a Federal mandate. The purpose of the 
statutory provision is to allow households to obtain a food stamp 
application without having to visit the local office and provide 
applicants with information to assist them in the application process. 
We believe that the commenter's proposal is best handled at the State 
level.
    The Department proposed to include a reference to Section 504 of 
the Rehabilitation Act of 1973 (29 U.S.C. 794) in 7 CFR 273.2(c)(3) to 
ensure that documents on a State's Web site are

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accessible to persons with disabilities. Commenters suggested that the 
regulatory language specify examples of the kinds of services States 
must offer in order to make their applications accessible to people 
with disabilities. They also suggested that the Department reference 
helpful guidance written by the Architectural and Transportation 
Barriers Compliance Board on improving access to individuals with 
disabilities and how to comply with such guidance. Finally, they wanted 
the Department to provide information in the preamble of the final rule 
about various assessment tools available to determine whether or not a 
State meets accessibility standards.
    Although the Department appreciates these recommendations, it is 
impracticable to include such guidance in a regulation due to its 
extensive detail. As stated by the commenters, other agencies have 
already provided helpful guidance on improving access to individuals 
with disabilities. The Department encourages State agencies that 
administer the Food Stamp Program to consult information such as the 
guidance written by the Architectural and Transportation Barriers 
Compliance Board in the development of accessible systems.
    Commenters asked the Department to provide a report on State 
compliance with this provision in the preamble to the final rule. The 
Department will not provide such a report in the final rule because of 
the ever changing nature of State systems. Additionally, the Department 
does not provide reports in the Federal Register on State compliance 
with other regulatory provisions; therefore, it is not appropriate to 
provide a report on this provision.
    However, the Department has made it clear to all State agencies 
that the information provided on their Web site must be easily 
accessible. The Department also developed a page on its own Web site to 
assist participants in accessing program information for all 50 States 
and the District of Columbia. The Department's Web site contains a map 
and list of all 50 States and the District of Columbia. Participants 
can click on their State and obtain, at a minimum, an English language 
application form, acquire the food stamp hotline number for their 
State, and find the nearest food stamp office.

Partial Restoration of Benefits to Legal Immigrants--7 CFR 273.4

1. Expanded Eligibility for Certain Noncitizens

    Section 4401 of FSRIA substantially expanded eligibility for the 
Food Stamp Program for legal immigrants. Prior to the enactment of 
Section 4401, Section 402 of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996 (PRWORA), as amended, limited 
eligibility for food stamps to United States citizens, non-citizen 
nationals, and certain alien groups. The requirements of Section 402 of 
PRWORA, as well as the alien eligibility requirements contained in 
Section 6(f) of the Act (7 U.S.C. 2015(f)), were implemented through 
current regulations at 7 CFR 273.4(a). That section lists the groups 
eligible for food stamps which include qualified aliens, as defined 
under 7 CFR 273.4(a)(5)(i), who meet at least one of the criteria 
specified at 7 CFR 273.4(a)(5)(ii). Some of the criteria make a 
noncitizen eligible for only 7 years, while other criteria make the 
noncitizen permanently eligible for the program. The proposed rule 
contained a detailed discussion of these requirements; interested 
parties can refer to the current regulations and proposed rule for 
further discussion.
    Section 4401 of FSRIA amended Section 402 of PRWORA to expand food 
stamp eligibility for certain additional qualified aliens. First, 
Section 4401 extends eligibility for food stamps to any qualified alien 
who has resided in the United States for 5 years or more as a qualified 
alien. As written, Section 4401 could be read to require that the alien 
has been in a qualified status at the time he or she entered the United 
States in order to be eligible under this provision. However, in 
reviewing the legislative history behind FSRIA in the development of 
the proposed rule, the Department came to the conclusion that it was 
not the intent of Congress to deny the benefits of the provision to 
aliens who are not qualified when they enter the United States but 
later attain qualified status. Therefore, the Department proposed to 
amend current regulations at 7 CFR 273.4(a)(5)(ii) to extend 
eligibility for the Food Stamp Program to any alien who has resided in 
the United States in a qualified alien status as defined in PRWORA for 
5 years.
    While most commenters approved of the language in the proposed 
rule, they asked the Department to clarify the 5-year residency 
requirement to incorporate guidelines regarding the calculation of the 
5-year period. First, they asked us to clarify that the 5 years do not 
have to be consecutive. Second, they asked us to clarify that temporary 
absences of less than 6 months from the United States, with no 
intention of abandoning U.S. residency, do not terminate or interrupt 
the individual's period of U.S. residency. Third, they asked us to 
clarify that prior residence in any one or any combination of the 
immigrant statuses that confer eligibility counts toward the 5-year 
residency policy. Finally, to ensure that, when the U.S. Citizenship 
and Immigration Services grants qualified status retroactively, the 
retroactive time counts toward the 5-year requirement. The Department 
has considered these requests and the final rule reflects the 
recommended clarifications.
    The 5-year residency rule effectively eliminates the 7-year time 
limit on food stamp participation for qualified aliens who are eligible 
for the program because they meet the criteria (for example, refugee or 
asylee status) set out in PRWORA and at current regulations 7 CFR 
273.4(a)(5)(ii)(B) through (a)(5)(ii)(F). Because the 5-year residency 
rule effectively eliminates the 7-year time limit on food stamp 
eligibility, the Department proposed to amend current regulations at 7 
CFR 273.4(a)(5)(ii)(B) through (a)(5)(ii)(F) to remove the reference to 
the 7-year time limit. One commenter noted that while it is technically 
correct to strike the now irrelevant 7-year time limit language, they 
felt that the proposed regulations would have required a confusing, 
redundant two-pronged test. They suggested that the changes proposed by 
Section 4401 gave FNS an opportunity for a substantial reorganization 
of 7 CFR 273.4(a).
    The commenter suggested that the Department move the ``refugee'' 
group to its own unencumbered section under 7 CFR 273.4(a) and 
separately group the remaining qualified immigrants who must meet the 
two-pronged test. They felt that eligibility workers would have 
difficulty determining what rule is applicable to the household and 
become confused about how a member of a refugee group can be both 
``qualified'' and ``eligible'' under the same set of facts but other 
non-citizens must meet a two-pronged test involving age, duration of 
status, disability, work history or veteran status. The commenter also 
recommended that the Department insert an additional provision to 
resolve any confusion around situations where an individual presents 
proof of lawful permanent residence (LPR) such as a Permanent Resident 
Card, I-551, which may have a ``date of entry'' based on when LPR 
status was granted, but the

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immigrant may have previously entered in refugee or asylee status.
    FNS has considered these suggestions, but maintains that the two-
pronged test is a statutory requirement that must be addressed in the 
regulations. FNS finds that State agencies generally simplify their 
eligibility requirements for eligibility workers. We have attempted to 
simplify this provision by listing the requirements for eligibility for 
qualified aliens in one section at, 7 CFR 273.4(a)(6)(ii). In this 
section, we delete any reference to the 7-year time limit and delineate 
between those aliens that do not have to meet the 5-year residency 
requirement at 7 CFR 273.4(a)(6)(ii)(A)-273.4(a)(6)(ii)(J) and those 
that must meet the 5-year residency requirement at 7 CFR 
273.4(a)(6)(iii) in order to establish eligibility. We did not relocate 
the refugee group to a separate group as there are other exceptions to 
the 5-year residency requirement and we felt that all of the 
eligibility requirements for qualified aliens should be grouped 
together. We did not add a provision regarding the date of entry as 
current regulations at 7 CFR 273.4(a)(6)(iv) address aliens who change 
from one status to another.
    The 5-year residency rule also makes parolees and conditional 
entrants who retain qualified alien status for 5 years eligible for the 
program. Under the current rules, these two categories of qualified 
aliens have to meet one of the requirements under 7 CFR 273.4(a)(5)(ii) 
in addition to meeting the requirements for parolee or conditional 
entrant status. The Department proposed to amend the current 
regulations to accommodate this change in the law. These aliens are 
listed as qualified aliens in paragraph 273.4(a)(6)(i) of the final 
rule and are subject to the 5-year residency requirement listed at 
paragraph 273.4(a)(6)(iii) of the final rule. Section 4401 also 
effectively reduces the applicability of the 40 quarters of work 
requirement for aliens lawfully admitted for permanent residence under 
PRWORA and current regulation 7 CFR 273.4(a)(5)(ii)(A). Under the 
current rules, to be eligible to participate in the Food Stamp Program, 
an alien who is a qualified alien because he or she was admitted for 
permanent residence must have or be credited with 40 qualifying 
quarters of work to qualify for this exception. Thus, generally, a 
lawful permanent resident must work for 10 years before becoming 
eligible to participate in the Food Stamp Program. However, as a result 
of Section 4401, a lawful permanent resident will now become eligible 
for food stamps after residing in the United States for 5 years whether 
he or she has any qualifying quarters or not. The 40 quarters 
requirement is only applicable in cases of lawful permanent residents 
who have been in the United States less than 5 years but can still 
claim 40 qualifying quarters of work, such as in the case of an 
individual who claims quarters credited from the work of a parent 
earned before the applicant became 18.
    One commenter asked the Department to conform its regulations to 
those of the Supplemental Security Income (SSI) program and provide 
that quarters credited from a spouse are not lost if the couple 
divorces unless food stamp benefits actually terminate. The commenter 
believes that USDA should conform its policy to that of other programs, 
including SSI, to further simplify program administration. According to 
the commenter, individuals who meet the non-citizen requirements for 
SSI based on the quarters of a spouse retain SSI eligibility upon 
divorce but lose food stamp eligibility at their next recertification.
    Pursuant to 8 U.S.C. 1645, when determining the number of 
qualifying quarters of coverage under title II of the Social Security 
Act (SSA) (42 U.S.C. 401, et. seq.), an alien shall be credited with 
all of the qualifying quarters worked by a spouse of such alien during 
their marriage if the alien remains married to such spouse. Under the 
guidelines of the Social Security Administration, provided in Section 
SI 00502.135 of the Program Operations Manual (POMS), the qualifying 
quarters of a spouse cannot be credited if the marriage has ended, 
unless by death, before a determination of alien eligibility is made 
for aliens lawfully admitted for permanent residence. However, the POMS 
also states that qualifying quarters credited from a spouse are not 
lost if the marriage ends for any reason after a determination of 
eligibility is made unless the benefits terminate and a new claim is 
required.
    Unlike food stamp benefits which expire if there is no 
determination of eligibility for the new certification period, SSI 
benefits are provided on a continual basis with the Social Security 
Administration performing redeterminations on a schedule that is based 
on the likelihood that a recipient's situation may change. This 
difference has led the two agencies to apply different methodologies 
for crediting qualifying quarters worked by a spouse.
    In 2000, the Department received a similar comment to the proposed 
Noncitizen Eligibility and Certification Provisions (NECP) Rule. The 
analysis of this comment can be found in the final rule at 65 FR 70134 
on November 21, 2000. At that time, the Department rejected the 
proposal to conform their policies to mirror those of the SSI program. 
However, the Department did amend the regulation to allow the State 
agency to continue eligibility until the household's next 
recertification once they determine eligibility based on quarters of 
coverage of the spouse.
    The commenter asked for the Department to revisit this issue based 
on a belief that the Department unnecessarily relied on the 
technicality that food stamps are provided on a time-limited 
certification period. The commenter felt that this reliance on a 
technicality in 2000 was unnecessary because the statute only requires 
that the couple ``remain married'' at the time the quarters are 
credited, not that they continue to be married at the time of 
recertification.
    Although Congress intended to simplify program administration under 
the FSRIA, this was not an issue that they addressed. The FSRIA lists 
specific programs that the Department needs to work with to develop 
uniform policies. Congress did not include SSI in this list of specific 
programs. Additionally, the current regulations are consistent with the 
administration of the Food Stamp Program. As stated above, the 
certification period of the Food Stamp Program does not mirror that of 
the SSI program. Therefore, the Department developed a regulation that 
came as close to the SSI program policy as it could without violating 
the overall principles of the Food Stamp Program. All federal benefit 
programs are different in their administration of benefits because 
Congress implemented laws that fit the overall goals of each program. 
Therefore, the agencies governing these programs need to comply with 
Congressional intent and develop rules to achieve the specific goals of 
each program.
    Although the 40 qualifying quarters requirement has been minimized 
as an eligibility requirement, it continues to play a role in the area 
of deeming of the income of a sponsor to a sponsored alien. Except for 
aliens exempt from the deeming requirement in accordance with 7 CFR 
273.4(c)(3), the deeming requirement applies until the alien has worked 
or can receive credit for 40 qualifying quarters of work, gains United 
States citizenship, or his or her sponsor dies. Thus, even though a 
lawful permanent resident may be eligible for the Food Stamp Program 
after 5 years without any qualifying quarters of work, the deeming 
requirement may apply to the individual until he or she works or can 
receive credit for 40 qualifying quarters.

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The Department did receive comments regarding the deeming rules which 
will be discussed in detail below.
    In addition to extending eligibility to aliens who satisfy the 5-
year residency requirement, Section 4401 also extends eligibility to 
two other groups of qualified aliens. First, Section 4401 extends 
eligibility for the Food Stamp Program to all qualified aliens who meet 
the definition of disabled at Section 3(r) of the Act, regardless of 
the date they began residing in the United States. Second, Section 4401 
extends eligibility to all qualified aliens who are under the age of 
18. The Department proposed to amend current regulations at 7 CFR 
273.4(a)(5)(ii) to incorporate the revised eligibility requirements for 
certain qualified aliens.
    Under the Act, individuals are considered disabled if they receive 
certain federal or State disability benefits. Most of the benefits 
listed in the Act require an individual to provide proof of a 
disability. The Act also provides that persons receiving disability-
related Medicaid, State-funded medical assistance benefits, and State 
General Assistance (GA) benefits may be considered disabled for food 
stamp purposes if they are determined disabled using criteria as 
stringent as federal SSI criteria. One commenter noted that some States 
will provide disability-related general or medical assistance to 
residents based on age. They were concerned that although some of these 
individuals also meet the SSI definition of disabled, they may be 
denied food stamps because they did not have to provide proof of their 
disability to receive their State-funded assistance. To ensure that 
this does not happen, the commenter suggested that the final rule 
clarify that an individual may qualify as disabled for food stamp 
purposes if the individual has been determined by the State to have a 
disability that meets SSI standards, as long as the individual is 
receiving a State-funded, needs-based, benefit. Although these points 
are addressed in the preamble to the proposed rule and in program 
policies, the commenter wanted to have these policies codified to avoid 
the anomaly of denying food stamps to disabled elders while allowing 
food stamps to non-elderly disabled persons.
    The Department has considered these comments and has determined 
that the issue presented by the commenter is so limited that it is not 
necessary to codify. Additionally, the Act requires the individual to 
receive these benefits based on their disability. The fact that the 
State agency has elected to provide benefits to individuals based on 
their age and not their disability is not something that the Department 
can control. The Department must comply with the Act and maintain the 
provision that the individual receive benefits based on disability 
criteria. There is nothing in the Act that requires State agencies to 
accommodate disabled individuals and make a disability determination to 
qualify under this provision. Therefore, the Department cannot amend 
this provision of the proposed rule and finalizes it as proposed.
    One commenter discovered what they believed to be conflicting 
language in the proposed rule. They noted that the preamble states that 
Section 4401 extends eligibility to qualified aliens who meet the 
definition of disabled and further discussion states that they need to 
be qualified aliens legally residing in the United States.
    The language in the preamble to the proposed rule that refers to 
the term ``lawfully residing'' is in a discussion about the current 
regulations. The proposed rule clearly states that the requirement that 
an individual be ``lawfully residing'' as of a certain date would be 
amended. The proposed language for 7 CFR 273.4(a)(5)(ii)(H) and 7 CFR 
273.4(a)(5)(ii)(J) would have amended the current language for those 
sections by removing the words ``on August 22, 1996, was lawfully 
residing in the U.S. and is now'' and adding in their place the word 
``is''. Therefore, there is no conflict for the Department to correct 
in the final rule. Under the final rule, to be eligible under 7 CFR 
273.4(a)(6)(ii)(H), a qualified alien must be receiving benefits or 
assistance for blindness or disability. Under revised 7 CFR 
273.4(a)(6)(ii)(J), a qualified alien must be under 18.
    As a result of the change in program rules qualifying individuals 
under the age of 18, the Department received several comments on the 
issue of sponsor liability regarding this group of newly qualified 
immigrants. Under the current rules, sponsors who sign a binding 
affidavit of support are responsible for food stamp benefits received 
by the immigrants they sponsor if those benefits were received during 
the period of time the affidavit of support is in effect. The affidavit 
of support remains in effect until the sponsored immigrant becomes a 
naturalized citizen, can be credited with 40 qualifying quarters of 
work, is no longer a lawful permanent resident and leaves the U.S. 
permanently, or until the sponsor or the sponsored immigrant dies.
    The NCEP Rule clarified that a State agency cannot request 
reimbursement from the sponsor during any period of time that the 
sponsor receives food stamps. The Department decided not to regulate 
the issue of sponsor liability any further until the Department has 
completed a thorough policy development process in coordination with 
other Federal agencies. Several commenters suggested that the 
Department amend the regulations to clarify that sponsors are not 
required to reimburse agencies for benefits provided to immigrant 
children. They believed that this would ensure that immigrant children 
have access to food stamps, as intended by the recent legislation.
    Sponsors are normally shielded from liability in the first 5 years 
of residence because, under prior law, sponsored aliens were not 
eligible (with limited exceptions) for 5 years. In amending the Act to 
make legal immigrant children immediately eligible for benefits, 
Congress made sponsors of these children potentially immediately liable 
for benefits issued to them. The commenters believed that this was the 
result of a Congressional oversight. Therefore, they suggested that the 
Department consider the option of excluding benefits received by 
sponsored alien children from sponsor liability for the first 5 years 
that they are in residence.
    The Department has considered these comments and will maintain the 
current rule as proposed. This was not an issue that Congress felt was 
necessary to raise in the statutory language and the Department does 
not want to regulate the issue of sponsor liability any further until 
the Department has completed a thorough policy development process in 
coordination with other Federal agencies. Since Congress did not raise 
this issue in the statutory language, the Department is following the 
statutory language and does not believe that it is necessary or proper 
to regulate beyond these statutory provisions.
    Several commenters suggested that the Department amend the current 
regulations to clarify that human trafficking victims and certain 
family members are eligible for food stamps to ensure that victims and 
their families are not denied benefits. This was not addressed in the 
proposed rule. The Department included this issue among several it 
addressed in the ``Eligibility Determination Guidance: Noncitizen 
Requirements for the Food Stamp Program'' issued in January 2003 (and 
in further guidance issued in August 2004).
    The guidance reflects the requirements under the ``Trafficking 
Victims Protection Act of 2000'' (Pub. L. 106-386), as reauthorized by 
the

[[Page 4916]]

Trafficking Victims Protection Reauthorization Act of 2003 (Pub. L. 
108-193) that adult victims of trafficking who are certified by the 
U.S. Department of Health and Human Services (DHHS) are eligible for 
food stamp benefits to the same extent as refugees. Additionally, 
children who are under 18 years of age and have been subject to 
trafficking are also eligible on the same basis as refugees, but they 
do not need to be certified. The Department is making a technical 
amendment to reflect the eligibility status of victims of trafficking 
as required by statute, by adding these provisions to the final 
regulations. Therefore, the final rule includes a new 7 CFR 
273.4(a)(5). This new paragraph will clarify that trafficking victims 
and certain family members are eligible for food stamp benefits.

2. Elimination of the Deeming Requirement for Noncitizen Children

    In addition to expanding Food Stamp Program eligibility to certain 
noncitizens, Section 4401 of FSRIA also removed deeming requirements 
for immigrant children. Deeming is the process by which the State 
agency counts a portion of the income and resources of an alien's 
sponsor as income and resources belonging to the alien when determining 
the latter's eligibility for the Food Stamp Program and amount of 
benefits. Both Section 421(a) of PRWORA and Section 5(i) of the Act 
impose deeming requirements on the Food Stamp Program. As stated in the 
proposed rule, the requirements of the two laws are not fully 
consistent. However, the Department addressed and resolved the 
inconsistencies in the NCEP Rule.
    Current deeming requirements appear in food stamp regulations at 7 
CFR 273.4(c). A complete discussion of the current deeming rules is 
provided in the proposed rule. Section 4401 of FSRIA amends Section 421 
of PRWORA and Section 5(i) of the Act (7 U.S.C. 2014(i)) to add aliens 
under the age of 18 to the list of sponsored aliens excluded from 
deeming requirements. Therefore, as of October 1, 2003, the effective 
date of the provision, the State agency may not count the income and 
resources of the sponsor of an alien under the age of 18 when 
determining the eligibility or benefit level of the sponsored alien's 
household. The Department proposed to amend current regulations at 7 
CFR 273.4(c)(3) to add sponsored aliens under the age of 18 to the list 
of aliens exempt from deeming requirements.
    Under current rules at 7 CFR 273.4(c)(2)(v) if an alien's sponsor 
sponsors more than one alien, the State agency will divide the 
sponsor's deemable income and resources by the number of sponsored 
aliens and deem to each alien his or her portion. However, because 
sponsored aliens under the age of 18 will now be exempt from deeming 
requirements, following current rules, the State agency must deem only 
a portion of the sponsor's income to the household. Even though the 
sponsored child is exempt from deeming requirements, the sponsor is 
still sponsoring that child. Thus, if an individual sponsors two 
aliens, an adult and a child who reside in the same food stamp 
household, the State agency must divide the sponsor's deemable income 
and resources by two and deem one-half of such income and resources to 
the sponsored adult alien. The State agency would deem nothing to the 
child. The Department proposed to amend current regulations at 7 CFR 
273.4(c)(2)(v) to clarify this point.
    While most commenters supported this provision, several had issues 
with what they regarded inequitable treatment of households with U.S. 
citizen children versus those with immigrant children. In a case 
involving a sponsored immigrant adult and citizen child, the 
eligibility worker would deem all of the sponsor's income to the 
household. In a household with sponsored immigrant parents and 
immigrant children, the eligibility worker would deem only that portion 
of the sponsor's income attributable to the adult and disregard the 
portion attributed to the immigrant child. According to the commenters, 
this could result in the reduction or even the elimination of food 
stamp benefits for the citizen child with sponsored immigrant parents 
because all of the sponsor's countable income is added when determining 
a household's eligibility for the Food Stamp Program. Commenters noted 
that according to the Urban Institute, 85 percent of immigrant-headed 
households include at least one U.S. citizen, typically a child. They 
felt that Congress could not have intended to provide less assistance 
to households with U.S. citizen children.
    The commenters asked the Department to place all sponsored 
households on equal footing by applying deemed income to households 
with citizen children in the same manner as it is applied to households 
with immigrant children. The deemed income would be divided equally 
among any sponsored immigrants and children in the household with the 
child's amount excluded. They felt that this would prevent the 
inequitable distribution of benefits among sponsored households and 
decrease program complexity.
    One commenter suggested that the household be divided into 
different units. In a household with a sponsored parent and two 
children (either immigrant or citizen children), for example, the two 
children would be considered separately with only their parent's income 
counted in determining their eligibility. Then the sponsored parent's 
eligibility would be determined separately, with the sponsor's income 
considered. This same commenter suggested an alternative approach which 
would allow the sponsored immigrant to ``opt out'' of the household and 
be treated under the State's formula for ``PRWORA ineligible'' 
immigrants.
    The Department believes it was not the intent of Congress to create 
an inequity between citizen children and sponsored alien children that 
is fundamentally at odds with the overall goal of the program. 
Therefore, the final rule places all households on equal footing 
providing the same income deeming procedures to households with citizen 
children as those applied to households with immigrant children.

3. Attorney General Notification of Indigency

    Current rules require that the State agency notify the Attorney 
General any time a sponsored alien has been determined indigent, and 
include in the notification the names of the sponsor and sponsored 
aliens. Moreover, under Section 423(b) of PRWORA, upon notification 
that a sponsored alien has received any benefit under any means-tested 
public benefits program, the appropriate Federal or State agency (or an 
agency of a political subdivision of a State) must request 
reimbursement by the sponsor in the amount of such assistance. 
Commenters raised concerns that some eligible aliens may be deterred 
from applying for food stamps because of the Attorney General 
notification requirement and sponsor liability, which could lead to 
reprisals from their sponsors. The groups suggested that the Department 
allow alien applicants to opt out of the indigence determination and 
have their eligibility and benefit levels determined under regular 
deeming rules. The Department agreed with this concern over the 
mandatory notification requirement as a deterrent to participation and 
so proposed to amend current regulations at 7 CFR 273.4(c)(3)(iv) to 
allow a household to opt out of the indigence determination and be 
subject to regular sponsor deeming rules at 7 CFR 273.4(c)(2). Under 
the sponsor deeming rules,

[[Page 4917]]

failure to verify the sponsor's income and assets would result in the 
disqualification of the sponsored alien.
    The Department received one comment from a State agency that saw 
little benefit in this provision. The commenter stated that most 
sponsored alien applicants who are determined to be indigent have 
either little or no contact with their sponsor, or are receiving no 
monetary assistance from their sponsor. Therefore, it makes little 
sense for the alien applicant to try to request information from the 
sponsor for purposes of regular sponsor deeming. Additionally, the 
commenter noted that allowing the applicants to opt out will not 
necessarily increase participation because the aliens typically opt out 
completely or become ineligible if the sponsor's income is deemed to 
them. However, the Department believes that opting out may increase 
participation by other household members, particularly children. 
Accordingly, the Department will adopt the revisions as proposed.
    The Department also received a comment asking that the final rule 
contain a provision that will ensure that the sponsored alien is 
provided notice of the consequences of refusing an indigence 
determination. Namely, that if the household refuses the determination, 
the State agency will not complete the determination and will deem the 
sponsor's income and resources to the alien's household. The final rule 
contains language to ensure that participants are notified of these 
consequences.
    Prior to the publication of the proposed rule, the Department was 
asked to permit State agencies to develop an administrative process 
which requires an eligible sponsored alien to provide consent before 
release of information to the Attorney General or the sponsor. 
Commenters suggested that many sponsored aliens would learn of the 
Attorney General notification and sponsor liability requirements only 
after they have disclosed their immigration status and social security 
number. Fearing adverse consequences as a result of the notification 
requirements, the sponsored alien may withdraw the entire application, 
resulting in other household members, in many cases U.S. citizen 
children, losing the opportunity to receive benefits. The Department 
stated in the proposed rule that it is within the discretion of the 
State agency to utilize a process under which information about the 
sponsored alien is not shared with the Attorney General or the sponsor 
without consent so long as the sponsored alien is aware of the 
consequences of failure to grant consent or failure to provide any 
other information necessary for the purposes of deeming the sponsor's 
income to the alien. As stated previously, the consequence of failure 
to verify the sponsor's income and assets is the disqualification of 
the sponsored alien. The Department sees the new option as an 
administrative simplification, rather than a basic change in policy. 
The new provision allows the sponsored alien to opt out at the 
beginning of the application process. This results in an outcome that 
would have ensued under the existing regulations, but with much more 
time consuming administrative process. The Department received comments 
in favor of this provision. Therefore, we are incorporating this 
provision in this final rule.

4. Comments Related to Department Guidance on Immigration

    In addition to the comments that addressed provisions of the 
proposed rule that are discussed above, the Department received 
comments that address additional immigration issues. Most of these 
comments reflect primarily on the guidance issued by the Department in 
January 2003. Since these issues were not addressed in the proposed 
rule, the comments are beyond the scope of this rulemaking and should 
be addressed in a future rulemaking in order to have the force and 
effect of law.

Simplified Definition of Resources-- 7 CFR 273.8

    For the purposes of this final rule, the Department is defining 
cash assistance under a program funded under part A of title IV of the 
SSA as ``assistance'' as defined in the TANF regulations at 45 CFR 
260.31(a)(1) and (a)(2), except for programs grand-fathered under 
Section 404(a)(2) of the SSA. Under TANF, assistance includes cash and 
other forms of benefits designed to meet a family's ongoing basic needs 
including benefits conditioned on participation in work experience or 
community service. Programs grand-fathered under Section 404(a)(2) of 
the SSA include emergency foster care, the Job Opportunities and Basic 
Skills program and juvenile justice. We do not believe that these 
grand-fathered programs are what the Congress meant when it used the 
term ``cash assistance'' in the statute, even though they may involve a 
cash payment to a family.
    In the final rule, the Department is defining medical assistance 
under Section 1931 of the SSA as Medicaid for low-income families with 
children. This section, which was added by PRWORA, allows low-income 
families with children to qualify for Medicaid. It requires that States 
use the income and resource standards that were in effect in July 1996 
for the Aid to Families with Dependent Children (AFDC) program, but 
also provides options for States to use less restrictive income and 
resources tests for these families.
    This final rule adds a new paragraph at 7 CFR 273.8(e)(19) which 
provides State agencies the option to exclude from resource 
consideration for food stamp purposes any resources they exclude when 
determining eligibility for TANF cash assistance or medical assistance 
under Section 1931 of the SSA. However, the final rule prohibits State 
agencies from adopting resource exclusions, for food stamp purposes, of 
TANF cash assistance and Medicaid programs that do not evaluate the 
financial circumstances of adults in the household while determining 
eligibility and benefits.
    The requirement at 7 CFR 273.8(c)(3) to deem the resources of 
sponsors of aliens as resources of the alien applicants continues to be 
in effect. However, if a State agency has chosen in accordance with the 
provisions of 7 CFR 273.8(e)(19) in this final rule to exclude a type 
of resource excluded for TANF or Medicaid, and the alien's sponsor owns 
that resource, the State agency would not include that resource when 
determining which resources to deem to the sponsored alien's household.
    The final rule amends 7 CFR 273.8(b) to extend the $3,000 resource 
limit to households which contain a disabled member or members. (The 
food stamp definition of an elderly or disabled member is reflected at 
7 CFR 271.2).
    A State agency that selects the option to use its TANF cash 
assistance or Medicaid resource rules in lieu of food stamp resource 
rules may not exclude the following:
    1. Licensed vehicles not excluded under Section 5(g)(2)(C) or (D) 
of the Act (7 U.S.C. 2014(g)(2)(C) and (D)). (Section 5(g)(2)(D)) 
allows State agencies to substitute the vehicle rules they use in their 
TANF programs for the food stamp vehicle rules when doing so results in 
a lower attribution of resources to the household); and
    2. Cash on hand and amounts in any account in a financial 
institution that are readily available to the household, including 
money in checking or savings accounts, stocks, bonds, or savings 
certificates.
    The proposed rule would have required that the term ``readily 
available'' apply to resources, in financial institutions, that can be 
converted to cash in a single transaction without going to court to 
obtain access

[[Page 4918]]

or incurring a financial penalty other than loss of interest. While 
commenters found the proposed definition of ``readily available'' to be 
easy to understand and specific, they also found that it added 
complexity to program administration. Some suggested that making the 
term ``readily available'' apply to all financial instruments would be 
simpler than the proposed definition, which would be more restrictive 
than current policy. Others argued that we should allow State agencies 
to exclude stocks, bonds, and savings certificates if their TANF cash 
assistance or Section 1931 Medical assistance programs exclude them. We 
disagree. These financial instruments are generally easily converted to 
cash. In the rare instances where they are not easily cashed, current 
regulations would exclude them as inaccessible resources. As examples, 
a stock certificate without value, one whose value is not easily 
determined, or an inherited stock that has not yet cleared probate is 
considered inaccessible under current rules and would not be counted 
against a household's resource limit. For these reasons the final rule 
defines ``readily available resources'' as resources the owner can 
simply withdraw from a financial institution. For example, one can 
withdraw funds from a money market account, or convert foreign currency 
stored in a safety deposit box to U.S. dollars, by simply going to the 
financial institution and going through the required procedures.
    Under the proposed rule, State agencies would have been able to 
exclude deposits in individual development accounts (IDAs) made under 
written agreements that restrict the use of such deposits to home 
purchase, higher education, or starting a business. This provision drew 
over 100 comments reminding FNS that the intent of the legislation is 
to simplify food stamp resource rules and to conform them to other 
Federal assistance programs. Commenters argued that IDAs are intended 
to help break the poverty cycle and to encourage work. We agree. The 
final rule allows States to exclude any and all IDAs from resources, 
provided their TANF cash assistance or Section 1931 medical assistance 
programs exclude them.
    The proposed rule would have offered States the option to exclude 
deposits in individual retirement accountants (IRAs) the terms of which 
enforce a penalty, other than forfeiture of interest, for early 
withdrawal. The intent of this language was to limit the exclusion to 
situations where converting the IRA to cash would entail significant 
loss of resources. Title IV of the Food, Conservation and Energy Act of 
2008 (Pub. L. 110-246)(FCEA) provided for the exclusion of all IRAs. 
Accordingly, any discussion of IRAs is dropped from this rule and will 
be discussed in a future rulemaking.

Simplified Definition of Income--7 CFR 273.9(c)

    Current regulations at 7 CFR 273.9(c) specify the types of income 
that State agencies must exclude from a household's income when 
determining the household's eligibility for the Program and benefit 
levels. Provisions at 7 CFR 273.9(c)(1) through (c)(16) provide a long 
list of income exclusions that State and local agencies must apply when 
calculating a household's income.
    Section 4102 of FSRIA amends Section 5(d) of the Act (7 U.S.C. 
2014(d)) to add three new categories of income that, at the option of 
the State agency, may also be excluded from household income. Under the 
amendment, State agencies may, at their option, exclude the following 
types of income:
    1. Educational loans on which payment is deferred, grants, 
scholarships, fellowships, veteran's educational benefits and the like 
that are required to be excluded under a State's Medicaid rules;
    2. State complementary assistance program payments excluded for the 
purpose of determining eligibility for medical assistance under section 
1931 of the SSA; and
    3. Any type of income that the State agency does not consider when 
determining eligibility or benefits for TANF cash assistance or 
eligibility for medical assistance under section 1931. However, a State 
agency may not exclude the following:
     Wages or salaries;
     Benefits under Titles I (Grants to States for Old-Age 
Assistance for the Aged), II (Federal Old Age, Survivors, and 
Disability Insurance Benefits), IV (Grants to States for Aid and 
Services to Needy Families with Children and for Child-Welfare 
Services), X (Grants to States for Aid to the Blind), XIV (Grants to 
States for Aid to the Permanently and Totally Disabled) or XVI (Grants 
To States For Aid To The Aged, Blind, Or Disabled and Supplemental 
Security Income) of the SSA;
     Regular payments from a government source (such as 
unemployment benefits and general assistance);
     Worker's compensation;
     Legally obligated child support payments made to the 
household; or
     Other types of income that are determined by the Secretary 
through regulations to be essential to equitable determinations of 
eligibility and benefit levels.
    Current regulations at 7 CFR 273.9(c)(3) provide an exclusion for 
educational assistance including grants, scholarships, fellowships, 
work-study, educational loans which defer payment, veterans' 
educational benefits and the like. These exclusions (based on an 
exclusion provided at Section 5(d) of the Act) are limited to 
educational assistance provided to a household member who is enrolled 
at a recognized institution of post-secondary education and that are 
used or earmarked for tuition or other allowable expenses. State 
agencies have the option of excluding this assistance from income for 
food stamp purposes to the extent that their Medicaid rules require 
exclusion of additional educational assistance, i.e., educational 
assistance that would not be excludable under the current rules at 7 
CFR 273.9(c)(3).
    To implement section 4102 of FSRIA, the Department proposed to 
amend 7 CFR 273.9(c)(3) by adding a new 7 CFR 273.9(c)(3)(v) which 
grants State agencies the option to exclude any educational assistance 
required to be excluded under its State Medicaid rules that would not 
already be excluded under food stamp rules. State agencies that 
implement this option must include a statement in their State plan to 
that effect, including a statement of the types of educational 
assistance that are being excluded under the provision.
    One commenter recommended the Department take the opportunity in 
this final rule to clarify the interaction of the federal Higher 
Education Act (Pub. L. 99-498) with the Food Stamp Program. The Higher 
Education Act, as amended, provides that certain types of student 
financial assistance shall not be taken into account in determining the 
need, eligibility or benefit level of any person for benefits or 
assistance under any Federal, State or local program financed in whole 
or in part with Federal funds (20 U.S.C. 1087uu). Food stamp 
regulations at 7 CFR 273.9(c)(3) differ from 20 U.S.C. 1087uu by 
counting student aid as income when such aid is used for normal living 
expenses, as opposed to tuition and books. The commenter recommended 
that the Department amend food stamp regulations to conform to 20 
U.S.C. 1087uu.
    The Department reviewed the applicable language in the Higher 
Education Act and confirmed that current regulations at 7 CFR 
273.9(c)(3) are inconsistent with this law. The Food

[[Page 4919]]

Stamp Program is a federally funded program, thereby meeting the 
criteria of 20 U.S.C. 1087uu. Therefore, in addition to adopting 7 CFR 
273.9(c)(3)(v) as proposed, the Department is adding a new 7 CFR 
273.9(c)(3)(ii)(A) to exclude student financial assistance received 
under 20 U.S.C. 1087uu of the Higher Education Act. The Department 
notes that this section of the Higher Education Act funds work study 
programs. Therefore, any income received by an individual participating 
in a work study program funded under this section of the Higher 
Education Act shall not be counted when determining the individual's 
eligibility for food stamps. The final rule amends 7 CFR 
273.9(b)(1)(vi) to conform to this mandate.
    The Department proposed a new 7 CFR 273.9(c)(18) to provide for the 
exclusion, at State agency option, of any State complementary 
assistance program payments excluded for the purpose of determining 
eligibility for medical assistance under section 1931 of the SSA. 
Complementary assistance relates to certain types of assistance 
provided under the old AFDC program. In the proposed rule, we 
specifically asked State agencies to include, in their comments, 
examples of the types of payments that fall under the category of State 
complementary assistance program payments. We received only one example 
of such a program, the Supplemental Living Program in New Jersey. Due 
to the low response rate, the final rule does not include specific 
examples of these payments. This rule adopts as final the proposed 7 
CFR 273.9(c)(18).
    To incorporate the changes mandated by section 4102 of FSRIA, the 
Department proposed to add a new 7 CFR 273.9(c)(19), that would allow 
the State agency at its option to exclude from Food Stamp Program 
income the types of income that the State agency does not consider when 
determining eligibility or benefits for TANF cash assistance or 
eligibility for medical assistance under section 1931 of the SSA. 
However, this provision would not include programs that do not evaluate 
the financial circumstances of adults in the household and programs 
grand-fathered under Section 404(a)(2) of the SSA. Additionally, a 
State would not be able to exclude wages or salaries, benefits under 
Titles I, II, IV, XIV or XVI of the SSA, regular payments from a 
government source, worker's compensation, or legally obligated child 
support payments made to the household.
    The Department received several comments regarding proposed 7 CFR 
273.9(c)(19). Most of these comments focused on the specific incomes or 
payments listed in the paragraph. We will address comments concerning 
specific incomes and payments in the order they appear in proposed 7 
CFR 273.9(c)(19). Before we begin this detailed discussion, we wish to 
address two miscellaneous items. First, the Department is changing the 
format of the language in the proposed rule. The final rule lists each 
income or payment that section 4102 of FSRIA does not exclude as income 
in a list format, starting with 7 CFR 273.9(c)(19)(i) and ending with 
(c)(19)(x). We believe this revised format will make it easier for 
readers to understand what income or payments cannot be excluded.
    Second, the Department received a comment regarding child support 
arrearages and whether such sums should be included or excluded as 
income. The commenter pointed out that, in some cases, a large 
arrearage of child support may accrue while the non-custodial parent is 
unemployed or working off the books to evade a wage attachment. State 
Child Support Enforcement offices (``State IV-D agencies'') sometimes 
are able to attach a bank account, tax refund, lottery winnings or 
other property of the non-custodial parent and may remit several months 
of support at once to the custodial parent. These non-recurring lump 
sums of child support must be excluded from the custodial parent's 
household income in accordance with 7 CFR 273.9(c)(8). However, the 
commenter thought that this may confuse some eligibility workers 
accustomed to querying their State IV-D agencies for information on 
child support received. The commenter asked the Department to include 
lump sums of child support arrearages to the examples of lump sums in 7 
CFR 273.9(c)(8).
    The Department disagrees with the comment. Current 7 CFR 
273.9(c)(8) contains some, but not all, examples of non-recurring lump 
sum payments. The paragraph clearly indicates that the examples 
included in the text are not exclusive. The Department sees no need to 
add more specific examples of non-recurring lump sum payments to this 
paragraph.

1. Income Excluded by State Agencies When Determining TANF or Medical 
Assistance

    The Department proposed to amend the current regulations at 7 CFR 
273.9(c) to permit exclusion of new types of income at State agency 
option. In addition to permitting the exclusion, one commenter 
expressed the desire to see this regulation apply to the ``treatment'' 
of income as well. If the TANF or medical assistance program treats a 
certain income as earned income, the commenter would have the State 
agency also apply the same treatment for food stamps. For example, the 
regulations governing the TANF program treat workers' compensation as 
earned income if it is employer funded and if the recipient is still 
considered an employee of the company. However, current food stamp 
policy requires worker's compensation be counted as unearned income.
    The definition of earned and unearned income, as well as how much 
of a particular type of income to count is set by regulation, not 
statute (although Section 5(d) of the Food Stamp Act does say household 
income includes all income from whatever source except that which is 
specifically excluded). Thus, even though FSRIA speaks only to types of 
income to count or exclude for food stamp purposes, the Department 
agrees with the commenter that having consistency among TANF, medical 
assistance, and food stamps in how they ``treat'' income would simplify 
budgeting for State or local staff who administer multiple programs and 
would be another step toward simplifying the Program. Therefore, the 
Department is amending 7 CFR 273.9 to expand the list of allowable 
earned income to include certain income as earned income if the 
household is receiving TANF and/or State medical assistance and this 
income is treated as earned income by a State's TANF or medical 
assistance program.
    Even though a State may exclude income in its TANF or medical 
assistance program, section 4102 mandated that certain types of income 
cannot be excluded. Many commenters said these specific income 
exclusions disregarded the clearly expressed Congressional intent that 
the Department only supplements the list in the case of unforeseen 
gamesmanship by some States. Others claimed the additional mandatory 
income exclusions would increase the administrative burdens on 
caseworkers and paperwork burdens on households. For example, State 
agencies would be required to ask about these types of incomes on the 
application forms and certification interviews even if a State does not 
find them worth counting for TANF and Medicaid. Moreover, commenters 
noted that each type of income affects very few households and the 
Department does not collect data on them through its quality control 
database. Commenters stated that by supplementing the Congressional 
list of exclusions, the language in the

[[Page 4920]]

proposed rule largely eliminates the simplifying purpose of the 
provision.
    The Department gave serious consideration to these comments. While 
Congress supported simplifying program administration, it did give the 
Department the authority to add types of income to the list of 
mandatory inclusions viewed essential to the equitable determination of 
eligibility and benefit levels. The Department has determined that the 
additional types of income included in the proposed rule can be 
significant sources of income to households and should be counted in 
determining food stamp eligibility and benefits.

2. Exemption of Gross Income From a Self-employment Enterprise

    Three commenters argued that States are unlikely to want to bear 
the expenses of a blanket disregard of self-employment income in their 
TANF and medical assistance programs. They believe the Department 
should leave it to the States to determine which particular types of 
self-employment income are rare and erratic forms of income and not 
worth the trouble to ask about through application questions and/or 
verification requirements. Commenters also stated that if the 
Department is determined to regulate in the area of self-employment 
income, it should only require the counting of self-employment income 
that is the household's primary source of support. The amount of income 
received from some self-employment sources, such as garage sales and 
sale of blood plasma, is sometimes minimal and is not a regular source 
of net income to the household.
    The Department does not see a need to clarify this point in the 
final rule. In determining a household's income for the certification 
period, State agencies are instructed by current regulations at 7 CFR 
273.10(c)(1) to consider income already received by the household 
during the certification period and anticipate income that the 
household and State agency are reasonably certain will be received 
during the certification period. Thus, the Department contends that 
State agencies should only count self-employment income that at 
certification can be anticipated with reasonable certainty. Income from 
rare or erratic sources, like garage sales and the sale of blood 
plasma, does not meet the standard of reasonable anticipation.
    Another commenter stated that there is no need for a single uniform 
definition of self-employment income for food stamp purposes. Most 
States count self-employment income in their TANF programs but take a 
range of approaches in their TANF definitions. The commenter felt that 
there are very legitimate reasons why a State may wish to develop or 
test an alternative approach. The commenter stated that imposing the 
uniform definition has the effect of forcing States to either adopt 
that definition for TANF purposes or have inconsistent TANF and food 
stamp definitions. This could greatly increase the complexity of 
eligibility and benefit determinations for self-employed households. 
This commenter suggested that the final rule specify that while States 
must count self-employment income, a State may elect to use the 
methodology it uses in its TANF or medical assistance program for 
counting such income.
    The Department disagrees with this comment. The methodology a State 
uses to count self-employment income in its TANF or medical assistance 
program may not conform to the rules and regulations of the Food Stamp 
Program. Moreover, these methodologies, if applied to the Food Stamp 
Program, could allow a greater number of individuals to qualify for 
benefits than would be the case if States had used a specific food 
stamp methodology. Self-employed individuals must be found eligible for 
food stamp benefits through the use of a food stamp methodology. State 
agencies that believe there is an administrative and cost advantage for 
applying TANF or medical assistance program methodologies for counting 
self-employed income to the Food Stamp Program may present their case 
to FNS through the certification waiver process.
    A commenter asked if it was the Department's intent to say that no 
self-employment income can be excluded under this provision. Currently, 
7 CFR 273.9(b)(1) indica