Supplemental Nutrition Assistance Program: Review of Major Changes in Program Design and Management Evaluation Systems, 24820-24831 [2011-10541]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 76, Number 85 (Tuesday, May 3, 2011)]
[Proposed Rules]
[Pages 24820-24831]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-10541]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 271, 272, and 275

RIN 0584-AD86


Supplemental Nutrition Assistance Program: Review of Major 
Changes in Program Design and Management Evaluation Systems

AGENCY: Food and Nutrition Service, USDA.

ACTION: Notice of Proposed Rulemaking.

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

SUMMARY: This Notice of Proposed Rulemaking (NPRM) proposes to amend 
the Supplemental Nutrition Assistance Program (SNAP) (formerly the Food 
Stamp Program) regulations to implement Section 4116 of the Food, 
Conservation, and Energy Act of 2008 (the Farm Bill). Section 4116 of 
the Farm Bill, Review of Major Changes in Program Design, requires the 
United States Department of Agriculture (the Department) to identify 
standards for major changes in operations of State agencies' 
administration of SNAP. The provision also requires State agencies to 
notify the Department if they implement a major change in operations 
and to collect data that can be used to identify and correct problems 
relating to integrity and access, particularly by certain vulnerable 
households.
    This NPRM proposes criteria for changes that would be considered 
``major changes'' in program operations and identifies the types of 
data State agencies must collect in order to identify problems relating 
to integrity and access. It also proposes when and how State agencies 
must report on implementation of a major change.
    This NPRM proposes to amend the Management Evaluation (ME) Review 
regulations by modifying the requirements for Federal and State reviews 
of State agency operations. It also proposes to revise the definitions 
of large, medium and small project areas. Finally, it proposes to 
remove sections of the regulations pertaining to coupons and coupon 
storage since they are obsolete.

DATES: Comments must be received on or before July 5, 2011.

ADDRESSES: The Food and Nutrition Service (FNS) invites interested 
persons to submit comments on this proposed rule. Comments may be 
submitted by any of the following methods:
    Federal eRulemaking Portal: Preferred method. Go to https://www.regulations.gov gov; follow the online instructions for submitting 
comments on Docket FNS-2011-0035.
    Fax: Submit comments by facsimile transmission to (703) 305-2486, 
attention: Moira Johnston.
    Mail: Send comments to Moira Johnston, Branch Chief, Program Design 
Branch, Program Development Division, Supplemental Nutrition Assistance 
Program, Food and Nutrition Service, 3101 Park Center Drive, Room 810, 
Alexandria, Virginia 22302, (703) 305-2501.
    Hand Delivery or Courier: Deliver comments to Ms. Johnston at the 
above address. All comments on 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 identity of the individuals 
or entities submitting the comments will be subject to public 
disclosure. FNS will make the comments publicly available on the 
Internet via https://www.regulations.gov.
    All submissions will be available for public inspection at the 
office of FNS during regular business hours (8:30 a.m. to 5 p.m., 
Monday through Friday) at 3101 Park Center Drive, Room 810, Alexandria, 
Virginia 22302-1594.

FOR FURTHER INFORMATION CONTACT: For further information concerning 
this NPRM you may contact Moira Johnston, Branch Chief, Program 
Development Division, Supplemental Nutrition Assistance Program, 3101 
Park Center Drive, Room 800, Alexandria, Virginia 22302, (703) 305-
2501, or by e-mail at Moira.Johnston@fns.usda.gov.

SUPPLEMENTARY INFORMATION:

Executive Order 12866 and Executive Order 13563

    Executive Orders 12866 and 13563 direct agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility.
    This proposed rule has been designated a ``significant regulatory 
action,'' although not economically significant, under section 3(f) of 
Executive Order 12866. Accordingly, the rule has been reviewed by the 
Office of Management and Budget.

Regulatory Impact Analysis Summary

Need for Action

    This action is needed to implement section 4116 of the Farm Bill 
(Pub. L. 110-234). Section 4116, Review of Major Changes in Program 
Design, amends Section 11 of the Food and Nutrition Act of 2008 (the 
Act) (7 U.S.C. 2020). It requires the Department to develop standards 
for identifying major changes in the operations of State agencies that 
administer SNAP; State agencies to notify the Department upon 
implementing a major change in operations; and State agencies to 
collect any information required by the Department to identify and 
correct any adverse effects on program integrity or access, including 
access by vulnerable households. The provision identifies four major 
changes in operations: (1) Large or substantially-increased numbers of 
low-income households that do not live in reasonable proximity to a 
SNAP office; (2) substantial increases in reliance on automated systems 
for the performance of responsibilities previously performed by merit 
pay personnel; (3) changes that potentially increase the households' 
difficulty in reporting information to the State; and (4) changes that 
may disproportionately increase the burdens on specific vulnerable 
households. In addition, the provision gives the Department the 
discretion to identify other major changes that a State agency would be 
required to report as well as to identify the types of data the State 
agencies would have to collect to identify and correct adverse effects 
on integrity and access.
    In addition, the Department proposes to modify the requirements for 
Federal and State reviews of State agency operations, which will result 
in the more efficient use of staff and resources. This rule proposes 
several changes to the ME review regulations: (1) Remove the 
requirements that FNS conduct an annual review of a State agency's 
operation of SNAP and a biennial review of a State agency's ME system; 
(2) modify the regulations to reflect the elimination of the use of 
paper coupons and the nationwide implementation of the Electronic 
Benefit Transfer System (EBT); (3) redefine the terms, large project 
area, medium project area, and small project area.

[[Page 24821]]

Benefits

    This rule will require State agencies to report on the impacts of 
implementing major changes in State agency operations and to identify 
and correct problems caused by implementing these changes. This rule 
will benefit State agencies by requiring them to identify and correct 
problems before they cause hardships for applicants or recipients or 
the integrity of the program is compromised. This rule will benefit 
applicants, recipients or individuals otherwise eligible for SNAP by 
requiring State agencies to identify and correct adverse impacts.
    This rule will modify the requirements for Federal and State 
reviews of State agency operations. It will allow FNS the flexibility 
to put resources where the risks are greatest and to conduct more 
effective reviews. It will benefit State agencies by allowing them more 
time to conduct higher quality reviews.

Costs

    The proposed rule will have a minimal cost in FY 2011 and over the 
5 years FY 2011 through FY 2015. To estimate the cost impact, we 
multiplied the total burden hours by the average hourly wage of the 
staff likely to fulfill the reporting requirements. We assumed 70 
percent of the work would be completed by a GS-11 employee, 20 percent 
by a GS-12 employee, and 10 percent by a GS-13 employee. We used the 
Step 5 hourly wages in the Rest of U.S. locality pay area. Seventy 
percent of the 7,696 burden hours are completed by a GS-11 employee 
with an hourly wage of $31.17 at a cost of $167,919. Twenty percent are 
completed by a GS-12 employee with an hourly wage of $37.37 at a cost 
of $57,520, and ten percent are completed by a GS-13 employee with an 
hour wage of $44.43 at a cost of $34,193. The annual cost is estimated 
at $259,632 ($167,919 + $57,520 + $34,193) or approximately $1.3 
million over the 5 years FY 2011 through FY 2015.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies 
to analyze the impact of rulemaking on small entities and consider 
alternatives that would minimize any significant impacts on small 
entities. Pursuant to that review, it is certified that this proposed 
rule would not have a significant impact on small entities. State 
agencies that administer SNAP will be affected to the extent they 
implement major changes in program operations. State agencies will also 
be affected to the extent they perform ME reviews of large, medium and 
small project areas.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under Section 202 of the UMRA, the 
Department generally must prepare a written statement, including a 
cost/benefit analysis, for proposed and final rules with Federal 
mandates that may result in expenditures to 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 the Department to 
identify and consider a reasonable number of regulatory alternatives 
and adopt the least costly, more cost-effective or least burdensome 
alternative that achieves the objectives of the rule.
    This rule contains no Federal mandates (under the regulatory 
provisions of Title II of the UMRA) that impose costs on State, local, 
or tribal governments or to the private sector of $100 million or more 
in any one year. This rule is, therefore, not subject to the 
requirements of sections 202 and 205 of the UMRA.

Executive Order 12372

    SNAP is listed in the Catalog of Federal Domestic Assistance under 
No. 10.551. 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 
excluded from the scope of Executive Order 12372, which requires 
intergovernmental consultation with State and local officials.

Federalism 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. 
This rule does not impose substantial or direct compliance costs on 
State and local governments. Therefore, under Section 6(b) of the 
Executive Order, a federalism summary impact statement is not required.

Prior Consultation With State Officials

    After the Farm Bill was enacted on June 18, 2008, FNS held a series 
of conference calls with State agencies and FNS regional offices to 
explain the SNAP provisions included in the law and to answer questions 
that State agencies had about implementing the changes to the program. 
On July 3, 2008, FNS issued an implementation memorandum that described 
each SNAP-related provision in the Farm Bill and provided basic 
information to assist State agencies in meeting statutorily mandated 
implementation timeframes. FNS responded to additional questions that 
State agencies submitted and posted the answers on the FNS Web site. 
Another forum for consultation with State officials on implementation 
of the Farm Bill provisions included various conferences hosted by FNS 
regional offices, State agency professional organizations, and program 
advocacy organizations. During these conferences, held in the latter 
part of 2008 and early months of 2009, FNS officials responded to a 
range of questions posed by State agency officials related to 
implementation of Farm Bill provisions.

Nature of Concerns and the Need To Issue This Rule

    Recently many State agencies have redesigned how they operate SNAP. 
Some of these changes have been small and have predominately impacted 
internal State agency operations. Some of the changes have included 
major overhauls of the State agency operations and how they interact 
with the public. As States face rising caseloads and shrinking budgets 
as well as the availability of new technologies that could help 
streamline State agency operations, the Department anticipates that 
more State agencies will implement major changes in their operations of 
SNAP. The provisions of this rule will require States to closely 
monitor the impact of the changes and to correct any problems before 
they have a negative effect on applicants and recipients or on the 
payment error rates of State agencies.
    In addition, the regulations concerning Federal monitoring of State 
agency operations are very prescriptive concerning the nature and 
frequency of Federal reviews, whereas the Act is not. As resources have 
become scarce, it has become clear that by regulating itself in this 
manner FNS is restricting its ability to adapt the nature of Federal 
reviews to changes in staffing and resource

[[Page 24822]]

levels. Therefore, the Department is proposing to remove the 
regulations concerning the frequency of Federal reviews of State agency 
operations. In addition, the regulations proscribe the frequency with 
which States are required to review large, medium and small project 
areas in relation to their caseload size. Large project areas are 
required to be reviewed more frequently. In response to rising 
caseloads and decreasing State budgets, the Department is proposing to 
modify the definition of large, medium and small project area. This 
will reduce the number of reviews State agencies are required to 
conduct on an annual basis and enable them to use their limited 
resources to conduct more targeted reviews. Finally, with statewide 
implementation of electronic benefit transfer (EBT) and the elimination 
of paper coupons, many of the provisions in this section have become 
obsolete. The Department is proposing to eliminate outdated and 
obsolete regulations pertaining to issuance and storage of paper 
coupons.

Extent to Which We Meet Those Concerns

    In drafting this NPRM, FNS considered the impact of the proposed 
rule on State and local agencies. In addition, the Department is 
seeking comments on those areas of discretion and will use those 
comments to inform its decision making before issuing final 
regulations. This NPRM is required to implement changes required by the 
Farm Bill, which were effective on June 18, 2008.

Executive Order 12988

    This rule has been reviewed under Executive Order 12988, Civil 
Justice Reform. This rule, when published final, is intended to have 
preemptive effect with respect to any State or local laws, regulations 
or policies which conflict with its provisions or which would otherwise 
impede its full implementation. This rule is not intended to have 
retroactive effect unless so specified in the ``Effective Date'' 
paragraph of the final rule. Prior to any judicial challenge to the 
provisions of this rule or the application of its provisions, all 
applicable administrative procedures must be exhausted. In SNAP, the 
administrative procedures are as follows: For program benefit 
recipients--State administrative procedures issued pursuant to 7 U.S.C. 
2020(e)(1) of the Act and regulations at Sec.  273.15; for State 
agencies--administrative procedures issued pursuant to 7 U.S.C. 2023 of 
the Act and regulations at Sec.  276.7 (for rules related to non-
Quality Control liabilities) or Part 283 (for rules related to Quality 
Control liabilities); for Program retailers and wholesalers--
administrative procedures issued pursuant to Section 14 of the Act (7 
U.S.C. 2023) and regulations at 7 CFR 279.

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 
SNAP households and individual participants, FNS has determined that an 
important impact of this rule will be to help identify and correct the 
adverse effects of changes in program operations on certain protected 
classes. All data available to FNS indicate that protected individuals 
have the same opportunity to participate in SNAP as non-protected 
individuals. FNS specifically prohibits the State and local government 
agencies that administer the Program from engaging in actions that 
discriminate based on race, color, national origin, gender, age, 
disability, marital or family status (SNAP's nondiscrimination policy 
can be found at 7 CFR 272.6 (a)). 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 regulations at 7 CFR 272.6.

Paperwork Reduction Act

    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 new requirements 
that are subject to review and approval by OMB; therefore, FNS is 
seeking public comment on the changes in the information collection 
burden that would result from adoption of the proposals in the rule, 
and will submit a request to OMB for approval of a new information 
collection package covering the requirements in Section 272.12. Once 
approved, FNS will publish a separate announcement in the Federal 
Register.
    Comments on the information collection pursuant to this proposed 
rule must be received by July 5, 2011.
    Send comments to Moira Johnston, Branch Chief, Program Design 
Branch, 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 package, please contact 
Moira Johnston at the above address or via e-mail at 
Moira.Johnston@fns.usda.gov.
    Comments are invited on: (a) Whether the proposed collection of 
information is necessary for the proper performance of the functions of 
the agency, including whether the information shall 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 notice will be summarized and included in the 
request for OMB approval. All comments will also become a matter of 
public record. For further information, or for copies of the 
information collection requirements, please contact Moira Johnston at 
the address indicated above.
    Title: Review of Major Changes in Program Design.
    OMB Number: [0584-NEW].
    Expiration Date: Not Yet Determined.
    Type of Request: NEW.
    Abstract: As required by the Paperwork Reduction Act of 1995 (44 
U.S.C. 3507(d)), the Food and Nutrition Service is submitting a copy of 
this section to the Office of Management and Budget (OMB) for its 
review. Section 4116, Review of Major Changes in Program Design, amends 
Section 11 of the Food and Nutrition Act of 2008 (the Act) (7 U.S.C. 
2020). It requires the United States Department of Agriculture (the 
Department) to develop standards for identifying major changes in the 
operations of State agencies that administer the Supplemental Nutrition 
Assistance Program (SNAP). Section 272.12 of this proposed rule 
requires State agencies to notify the Department when planning to 
implement a major change in operations; and State agencies to collect 
any information required by the Department to identify and correct any 
adverse effects on program integrity or access, including access by 
vulnerable households. Since decisions to make major changes to program 
operations rest with each individual

[[Page 24823]]

State agency, the frequency and timing of the changes can only be 
estimated. The proposed rule will require that State agencies provide 
descriptive information regarding the major change together with an 
analysis of its projected impacts on program operations. Based upon 
this information and analysis, FNS may require that the State collect 
and report additional information regarding the impact of implementing 
the major change. The reports would be monthly or quarterly depending 
upon the nature of the change and data availability. Reporting would 
continue for up to a year after the change is completely implemented. 
It is not uncommon for a State to pilot a change prior to statewide 
implementation. FNS could require information from the pilot and then 
after full implementation, similar information regarding the statewide 
impacts of the change.
    Respondents: The 53 State agencies that administer SNAP.
    Estimated Number of Responses per Respondent: Although by the time 
this rule is implemented in fiscal year 2012 the current budget crises 
facing many States may have abated, there is no reason to expect that 
the pressures and opportunities that contribute to States' decisions to 
modernize will change significantly. The rule proposes five categories 
of major changes: replacement of the States automated system, 
contracting for use of non-merit pay personnel, office closings, and 
significant reductions in State SNAP staff, and changes that may make 
it more difficult for households to report. Such changes in operations 
are made by States based upon a variety of interrelated factors, but 
there is no evidence that the States size (population), or regional 
location predict when or what type of changes States will make.
    In examining the first of the above criterion, it is reasonable to 
expect States may continue to replace automated systems at one or two 
per year, but with so many States running older systems and the delays 
required by their budget difficulties, we are more likely to see three 
per year beginning in fiscal year 2011. However, it is likely that we 
will see several more States look into using call centers and 
developing on-line applications that will be used by larger proportions 
of their applicants. Since it appears that as many as 30 States will 
have on-line applications in place and perhaps 20 States will be using 
phone centers by fiscal year 2012, the number of additional States that 
might implement these systems in a year is most likely no more than 
five. The estimate would then be eight States per year would report 
major changes under this criterion.
    With regard to the second criterion, to date only two States have 
implemented a process that uses non-merit personnel in the 
certification process. It is unlikely that many more States will pursue 
this course of action, and while one State exploring such a change 
every three years would be the most reasonable estimate, one per year 
will be used in estimating reporting burden to avoid underestimation.
    The third criterion, office closings, may become more common with 
the expanded use of call centers and on-line applications. A fair 
estimate would be three per year.
    The fourth criterion is staff reductions and this tends to 
fluctuate with States' budgetary situations, caseloads and other 
changes they make in their program design. We estimate that there would 
be three significant staff reductions per year.
    The fifth criteria would occur in conjunction with or as a result 
of changes in the States administration. This is the most difficult to 
predict, but as States continue to take advantage of new technology and 
streamlined processes, changes of this type may become more common. An 
estimate of five such changes per year would appear to be reasonable.

------------------------------------------------------------------------
                                                               Responses
                          Criterion                            per year
------------------------------------------------------------------------
Replacement of automated system.............................           8
Contracting for use of non-merit pay staff..................           1
Office closings.............................................           3
Significant reductions in SNAP staff........................           3
Changes that may make it more difficult for households to              5
 report.....................................................
                                                             -----------
    Total...................................................          20
------------------------------------------------------------------------

    The second step in the major change process is FNS determining 
what, if any, additional data the State will be required to collect and 
report. FNS believes that most often, the ongoing data collection tools 
it employs will be sufficient to provide the needed information on a 
major change. Additional data will sometimes need to be generated from 
States' automated eligibility systems. In more limited cases, FNS may 
require the State to gather data by conducting additional case review 
surveys.

Estimated Total Annual Burden on Respondents

    Section 272.12(3) requires that States provide both descriptive and 
analytic information regarding the major change. FNS believes that 
States will have completed the majority of the analysis in the normal 
course of their own planning and decisionmaking. The descriptive 
information should also be readily available and require minimal data 
gathering since it is the State's decision to make the major change. We 
estimate that it will take 8 hours to describe the change and 32 hours 
to repackage and complete the required analysis for a total of 40 hours 
per response. Thus, with 20 States reporting one major change per year, 
the initial reporting and analysis aspect of the rulemaking would be 20 
annual responses x 40 hours per State = an estimated 800 burden hours 
per year (20 States x 1 response per respondent = 20 annual responses x 
40 hours per respondent to respond = 800 annual burden hours).
    FNS believes that for 30 percent of the major changes States 
report, no additional reporting will be necessary. In another 35 
percent of the major changes some additional reporting of already 
available information will be necessary and that additional data 
collection will be required for the final 35 percent of the reported 
major changes. Therefore for six of the 20 major changes there would be 
no reporting burden.
    For the seven major changes requiring additional reporting without 
additional data collection, some automated system reprogramming to 
generate the data will be necessary. At 24 hours per reprogramming 
effort, this would be 168 hours per year (7 x 24). The reports 
themselves would be estimated to require 8 hours and that out of 53 
States (including Puerto Rico, the Virgin Islands, and Guam), four 
States would be required to report monthly and three States quarterly.

[[Page 24824]]



----------------------------------------------------------------------------------------------------------------
                                                     Estimated
                   Respondents                        annual       Responses per     Hours per      Total hours
                                                     responses         year          response        per year
----------------------------------------------------------------------------------------------------------------
4 States monthly................................              12              48               8             384
3 States quarterly..............................               4              12               8              96
                                                 ---------------------------------------------------------------
    7 States....................................              16              60               8             480
----------------------------------------------------------------------------------------------------------------

    The total for these seven States would be 168 + 480 hours = 648 
total hours for reporting divided by the seven states = (92.6 hours per 
State per year).
    For the last seven States the 648 hours from the above would be 
required in addition to the time needed to collect additional data. 
Such data will generally be collected through a sample of case reviews. 
While the required sample sizes may vary based on the type of major 
change and the proportion of the State's SNAP caseload it may affect, 
200 cases per quarter would likely be an upper limit on what FNS could 
ask of a State. At an estimated one hour to review and report on a 
case, this would require 800 hours per year per State. Seven States 
times 800 hours yields 5,600 hours. (7 State respondents x 1 response 
per respondent = 7 annual responses x 800 hours per respondent to 
respond = 5,600 annual burden hours). When the 648 hours is added for 
the non-sample information, the total for these seven States is 6,248 
(892.6 per State per year). With four States reporting monthly and 
three of the Sates reporting quarterly, there would be 60 responses. (4 
States x 12 = 48 annual responses) + (3 states x 4 response per 
respondent = 12 annual responses) = 60 annual responses. Twenty eight 
of the 60 reports would contain information from sample data since it 
would all be reported quarterly from all seven States).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                              States
                Section                            Requirement              responding     Responses per     Number of       Hours per     Total burden
                                                                             per year       respondent       responses       response          hours
--------------------------------------------------------------------------------------------------------------------------------------------------------
272.12(a)(3)..........................  Initial analysis of Major Change              20               1              20              40             800
272.12(b)(1)..........................  Reports required without                       7        \a\ 8.57              60            10.8             648
                                         additional data collection.
272.12(b)(1)..........................  Reports required with additional               7        \a\ 8.57              60             104           6,248
                                         data collection.
                                                                         -------------------------------------------------------------------------------
    Totals............................  ................................              20           \a\ 7             140            54.9           7,696
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ (Average).

    Note: Although this proposed rule contains amendments to section 
275.3, Federal Monitoring, there are no changes in the burden based 
on these changes. All required burden for this section is already 
approved under OMB No. 0584-0010, Performance Reporting System, 
Management Evaluation, expiration date 4/30/2013.

E-Government Act Compliance

    FNS is committed to complying with the E-Government Act of 2002 
(Pub. L. 107-347), in order to promote the use of the Internet and 
other information technologies to provide increased opportunities for 
citizen access to government information and services and for other 
purposes.

Background

    Section 4116 of the Farm Bill amended Section 11 of the Act to 
require the Department to define ``major changes'' in SNAP (or Program) 
operations, State agencies to notify the Department when they implement 
a major change in Program operations, and to collect data for use in 
identifying and correcting problems with Program integrity and access, 
particularly among vulnerable populations. Many State agencies have 
changed or are in the process of changing the way they operate SNAP. 
Some of these changes have been small and have predominately impacted 
internal State agency operations. Some of the changes have included 
major overhauls of the State agency operations and how the State 
interacts with applicants and participants. While the goal of such 
changes is to improve the efficiency and the effectiveness of the 
States' operations, some of these changes have adversely impacted the 
States' payment accuracy rates as well as access to the Program. With 
most States facing rising caseloads and restricted budgets, many are 
likely to make use of new technologies that could help streamline their 
SNAP operations. Section 4116 of the Farm Bill anticipates this and 
provides the Department the authority to better provide States with 
technical assistance and monitor implementation of major changes in 
their operation of SNAP.
    We are proposing to update the Management Evaluation (ME) 
regulations to allow FNS greater flexibility to target its monitoring 
resources to those States/situations that constitute the greatest risk. 
In addition we propose to update the States ME requirements to allow 
States more time to conduct more effective reviews. With limited 
resources the proposed changes will allow FNS and States to streamline 
operations while maintaining the integrity of the Program.

What acronyms or abbreviations are used in this supplementary 
discussion of the proposed provisions?

    In the discussion of the proposed provisions in this rule, we use 
the following acronyms or other abbreviations to stand in for certain 
words or phrases:

------------------------------------------------------------------------
                                           Acronym,  abbreviation,  or
                 Phrase                               symbol
------------------------------------------------------------------------
Code of Federal Regulations............   CFR.
Federal Register.......................   FR.
Federal Fiscal Year....................   FY.
Food and Nutrition Act of 2008.........   Act.
Food and Nutrition Service.............   FNS.
Food, Conservation, and Energy Act of     Farm Bill.
 2008.
Supplemental Nutrition Assistance         SNAP.
 Program.
U.S. Department of Agriculture.........   the Department.
------------------------------------------------------------------------

What is a major change in the operation of SNAP?

    The Farm Bill requires the Secretary to develop standards for 
identifying

[[Page 24825]]

major changes in the operation of a State agency's SNAP and provides 
general guidance on what changes are to be included in those standards. 
The four major changes that were identified by legislation are:
     Large or substantially-increased numbers of low-income 
households that do not live in reasonable proximity to an office 
performing the major functions described in Section 11(e) of the Act 
(Section 11(e) enumerates the procedural requirements States must 
adhere to in the certification of households and operation of the 
Program);
     Substantial increases in reliance on automated systems for 
the performance of responsibilities previously performed by personnel 
described in Section 11(e)(6)(B) of the Act (this subsection requires 
that State agency personnel utilized in the certification process shall 
be employed in accordance with the standards for a Merit System of 
Personnel Administration);
     Changes that potentially increase the difficulty of 
reporting information under Section 11(e) or Section 6(c) of the Act (7 
U.S.C. 2015(c)). Section (6)(c) specifies the options and requirements 
States must implement that govern a household's responsibility to 
report changes while Section 11(e) requires that each State identify 
the reporting requirements it has implemented in its plan of 
operation); and
     Changes that may disproportionately increase the burdens 
on any of the types of households described in Section 11(e)(2)(A) of 
the Act. (Section 11(e)(2)(A) of the Act includes elderly households, 
households living in rural areas, households containing a disabled 
member, homeless households, non-English speaking households, and 
households living on a reservation).
    The Department is proposing to include the first three types of 
changes described above as major changes (with additional specificity). 
The Department believes that the fourth criteria is a critical factor 
in considering the impact of any major changes and is consequently 
proposing that it be considered and analyzed in relation to all major 
changes. The Department proposes to add a fourth and fifth type of 
change to the definition. The Department includes these changes based 
upon past experience that demonstrates that they can have a significant 
impact on State operations:
     The use of non-merit pay staff to perform functions 
previously performed by merit personnel described in Section 
11(e)(6)(B) of the Act (again, this subsection requires that State 
agency personnel utilized in the certification process shall be 
employed in accordance with the standards for a Merit System of 
Personnel Administration); and
     Independent of any other change in operation, significant 
reductions in the number of State or local staff involved in the 
operation of SNAP.

The criteria for defining a major change are general rather than 
specific. How does the Department propose to clarify when States are to 
report major changes?

    To assist States in evaluating if they are making a major change, 
the Department proposes the following additional guidance for each of 
the six criteria that would better define when a major change would 
need to be reported:
    (1) Large or substantially-increased numbers of low-income 
households that do not live in reasonable proximity to an office 
performing the major functions described in Section 11(e) of the Act. 
States would report a major change under this criterion when an office 
is closed that serves 500 or more SNAP households and there is not 
another office available to the affected households within 25 miles, or 
that can be reached via public transportation. For the purposes of this 
section an ``office performing major functions'' would be defined as an 
office where people can file an application in person.
    (2) Substantial increases in reliance on automated systems for the 
performance of responsibilities previously performed by personnel 
described in Section 11(e)(6)(B) of the Act. Since any new system that 
States would build would add functionality to the certification 
process, States would report a major change whenever the primary 
automated systems used by caseworkers during the certification process 
to determine eligibility are replaced. Additions to the States existing 
systems that automate tasks previously performed by caseworkers in the 
certification of applicant households would also be reported as a major 
change. This would include the establishment of an online application 
process through the Internet or the use of call centers to accept 
applications if it is expected that these would account for 5 percent 
or more of the State's SNAP applications. States would report a major 
change if they projected that 5 percent or more of the applications 
would be submitted through the call center or on-line system during the 
year following full implementation. The use of document imaging would 
not be considered a major change if that were the only change the State 
is making. Reporting a major change as required under this authority 
does not relieve States of meeting the requirements for new system 
approvals in Sec.  277.18.
    (3) Changes that potentially increase the difficulty of reporting 
information under Section 11(e) or Section 6(c) of the Act. While call 
centers and other innovations are designed to make reporting changes 
more efficient, such changes can also make reporting more difficult for 
some households. Therefore, any change a State makes to the way 
households are allowed or required to report changes in their 
circumstances would be considered major and be evaluated as explained 
later in this preamble. This would include implementation of a call 
center for change reporting, a major modification to any forms that 
households use to report changes or the discontinuation of an existing 
avenue for reporting changes, e.g., households can no longer call the 
local office to report a change. Major changes would not include 
altering change reporting policy options, or the implementation of 
policy waivers.
    (4) The establishment of a contract to use non-merit pay staff to 
perform functions previously performed by merit personnel described in 
Section 11(e)(6)(B) of the Act. Section 11(e)(6) reads as follows: 
``(A) the State agency shall undertake the certification of applicant 
households in accordance with the general procedures prescribed by the 
Secretary in the regulations issued pursuant to this Act; and (B) the 
State agency personnel utilized in undertaking such certification shall 
be employed in accordance with the current standards for a Merit System 
of Personnel Administration * * * ''. Under this proposal, when a State 
contracts with a private entity to perform SNAP work that is currently 
being handled by State employees, a major change in operations would 
occur and would have to be reported to FNS. While the interview and the 
eligibility decision functions must be performed by merit personnel 
(unless FNS approves a waiver request under Section 17(b) of the Act 7 
U.S.C. 2025(b)), other functions can be performed by non-merit staff. 
These other functions could include obtaining verification of household 
circumstances, accepting reports of changes in household circumstances, 
accepting applications and screening households for expedited service. 
In each of these instances non-merit pay staff would be interacting 
directly with households which have the potential of increasing the 
burden on households applying for and

[[Page 24826]]

participating in SNAP. In addition, FNS has determined that use of non-
merit pay staff in these functions can have a detrimental impact on the 
efficient and effective operation of the program and, as a consequence, 
must approve States' use of such staff before sharing in the costs of 
non-merit pay staff in the performance of the above functions.
    Because functions such as data entry and document imaging do not 
involve interaction with households, the use of non-merit pay staff in 
activities of this type would not constitute a major change. If a State 
obtains a waiver from FNS under Section 17 of the Act to allow non-
merit pay Staff to conduct interviews or the eligibility decision 
functions reserved for merit pay staff in the Act and regulations, this 
would not be reported as a major change since the waiver approval would 
specify all necessary reporting and evaluation requirements.
    (5) Significant reductions in the number of State or local staff 
involved in the certification of SNAP households. While changes in 
States' staffing levels are not unusual, reductions can have a 
significant impact on SNAP operations and household participation. 
Since there are no staffing standards or baselines for determining what 
minimum level of staffing is necessary, and States are generally 
operating as efficiently as they can, almost any decrease has the 
potential of adversely affecting operations and pursuant to this 
proposed rulemaking would have to be reported as a major change. We 
propose that any decrease in staffing levels from one year to the next 
of more than five percent would have to be reported as a major change. 
This would include decreases resulting from State budget cuts or hiring 
freezes, but it would not include loss of staff through resignation, 
retirement or release when the State is seeking to replace the staff 
unless it were with non-merit pay personnel as discussed above. While 
the Department believes that the reduction in State staffing levels has 
as much potential to impact State operations as any other change, it 
recognizes that this is a difficult change to define and analyze. 
Therefore, the Department is particularly interested in comments on 
this proposal.
    The Department recognizes that Section 11(a)(4)(iv) of the Act also 
identifies ``changes that may disproportionately increase the burdens 
on any of the types of households described in Section (e)(2)(A) [7 
U.S.C. 2020 (e)(2)(A)] of the Act'', as a major change. The Department 
believes that this is such a critical consideration that any major 
change a State makes needs to be examined to determine if it would have 
such an effect. Therefore, rather than including this as a major change 
in and of itself, the Department is requiring that the analysis of the 
impact of any major change include a determination of whether the major 
change has such a disproportionate effect on vulnerable households, as 
defined in Section 11(e)(2)(a) of the Act.

When will States be required to report major changes in their operation 
of SNAP?

    The Department realizes that the specifics of many changes evolve 
over time and plans for changes are often modified. Many plans for 
change are never realized because of funding issues or a shift in State 
leadership and its priorities. Since any properly planned major change 
would be approved by State leadership well in advance of 
implementation, the Department proposes that States report any major 
change to FNS as soon as it is approved by State leadership, but no 
less than 120 days prior to implementation. If the plans for the major 
change are modified after the States initial report to FNS, the State 
would update its report to FNS. The Department is interested in hearing 
from States on whether some major changes are approved and 
implementation begun in less than 120 days.

What information must be included in States' initial reports to FNS 
regarding a major change?

    The Department proposes that the initial report to FNS include a 
description of the change and an analysis of its anticipated impacts on 
select measures of program performance. The description would explain 
the change the State is implementing, the schedule for implementation, 
if the change is State-wide or, if not, it will identify the 
jurisdictions it will encompass, and what the change is intended to 
accomplish. It would also include answers to the following questions as 
they apply to the type of change being implemented.
     How will the change affect recipients? How will they be 
informed?
     How will the change affect caseworkers? How will they be 
trained?
     How will the change be tested? Will it be piloted?
     How will impacts of the change be monitored?
     How will the change affect the State automated system?
     If the change in operations creates significant problems, 
what is the State's contingency plan?
    The Department proposes that the analysis portion of the report 
include the expected impact of the change on:
     Payment accuracy;
     Program access--impact on applicants in filing initial 
applications and reapplications;
     Negative error rates;
     Application timeliness, including both the households 
entitled to 7-day expedited service and 30-day processing standards;
     The types of households described in Section 11(e)(2)(A) 
of the Act (the determination of whether the major change 
disproportionally increases the burden on these households would 
include the difficulty these types of households would have: obtaining 
SNAP information, filing an initial application, providing 
verification, being interviewed, reporting changes and reapplying for 
benefits); and
     Customer service. The Department believes that States 
should measure the impact on customer service depending upon the nature 
of the major change, but at a minimum the time it takes for a household 
to contact the State, be interviewed and report changes would need to 
be evaluated.
    In addition, the analysis must include an evaluation of the impact 
of the change during implementation (pilot/rollout) versus its expected 
long term impact. The Department believes that it is important to 
understand States' plans for implementation because even changes that 
are meant to be beneficial to SNAP operations can often have unintended 
consequences during long term implementation that can be difficult for 
States to correct.
    The Department believes that much of the information and analysis 
it is requesting in this proposal will be readily available to most 
States since they will have thoroughly planned the change and evaluated 
its potential impacts prior to implementation. If this assumption is 
correct, the burden on States in developing reports should be minimal. 
To the extent that this proposal requires additional analysis of the 
potential impact of the change, this should generally be helpful to the 
State in its planning and implementation and, in the longer run, 
beneficial to its SNAP participants. The Department recognizes that, 
depending upon the nature of the major change, there may be minimal or 
no impact on one or more of the above areas.

What format should States use to report a major change?

    The Department is not proposing any standard format for the initial 
report required by this rule. The types of

[[Page 24827]]

changes can vary significantly and without prior experience, the 
Department has no preference on format. So long as the required 
information is clear and complete, FNS should be able to understand and 
evaluate the major change. Initial reports should be sent to FNS 
Regional Offices.

What data will FNS require States to report regarding the impact of its 
major change?

    Section 11(a)(4)(B)(ii) of the Act provides that States 
implementing major changes, ``collect such information as the Secretary 
shall require to identify and correct any adverse effects on program 
integrity or access, including access by any of the types of households 
described in Section (e)(2)(A).'' FNS will evaluate the initial report 
provided by a State to determine if it agrees that the change is in 
fact, ``major'' and if so will propose what additional information it 
will require from the State. While the Department reserves the right 
provided by the Act to require the information it needs to determine 
the impact of a major change on integrity and access in SNAP, as States 
make major changes the Department intends to work with States to 
determine what information is practicable and require only the data 
that is necessary and not otherwise available. SNAP standard reports 
provide a good deal of information, but depending on the nature of the 
major change and how it is implemented, more specific or timely data 
may be required. States also obtain performance data as part of Program 
management and monitoring and when possible the Department will meet 
its needs by obtaining already existing data.
    For any major change the Department needs some level of information 
on the effect of the change on one or more of the five areas States 
must include in their evaluation of the impact of the change. Within 
these areas, the Department will require additional, more specific or 
more timely data as explained below:
     Payment accuracy--The quality control (QC) system provides 
sound information on payment accuracy on a statewide basis, but the 
data is not as reliable at the county level. In addition, the data is 
not available for several months and would not be specific to the 
effects of the major change. FNS intends to use QC generated data as 
much as possible, but is likely to need data from focused case reviews 
with local reliability and/or more timely data.
     Negative error rates--The QC system provides sound 
information on negative error rates on a statewide basis, but the data 
is not as reliable at the county level. In addition, the data is not 
available for several months and would not be specific to the effects 
of the major change. FNS intends to use QC generated data as much as 
possible, but is likely to need data from focused case reviews with 
local reliability and/or more timely data. Where QC data is not 
sufficient, FNS may require a State to report on applications and 
reapplications filed and processed with a breakout of approvals and 
denials.
     Application timeliness--The QC system provides sound 
information on application processing timeliness on a statewide basis, 
but the data is not as reliable at the county level. In addition, the 
data is not available for several months and would not be specific to 
the effects of the major change. FNS intends to use QC generated data 
as much as possible, but is likely to need data from focused case 
reviews with local reliability and/or more timely data. In addition FNS 
may request information on the timeliness of processing re-
certifications. As noted below this information could be required to be 
reported by mode of intake: paper, on-line or call center.
     Impact on the types of households described in Section 
11(e)(2)(A) of the Act--For any major change that could 
disproportionately impact the vulnerable households with special needs 
as defined in Section 11(e)(2)(A), information on the number of 
applications received from such households and the number certified or 
recertified would be needed. It is likely that the nature of the change 
and its potential impact would dictate how this information would need 
to be reported, e.g., broken out between applications filed on-line and 
on paper.
     Customer service--In many instances, customer satisfaction 
can help determine if a change is having an adverse effect or simply 
provide information for improvements in process. States would define 
customer service as best addresses the major change with a focus of the 
change's effect on program access.

What are other data elements may the Department ask States to report 
depending on the type of major change?

    Following are examples of additional data that could be required 
depending upon the type of major change being implemented.
    If a State were to implement a change that allowed or required 
households to report changes in their individual circumstances through 
a change center, the following general data could be required:
     The number of changes received;
     The average time to process a change; and
     The number of changes processed.
    If a State were to implement a change that allows applicants to 
apply on-line the following data could be required:
     Number of applications submitted, approved, denied;
     Number of expedited versus regular 30-day processing 
cases;
     Number of applications abandoned/terminated before 
completion;
     Processing time for approved applications including those 
subject to the expedited time frames; and
     Demographic information on the households using on-line 
applications.
    FNS recognizes that States and their call center software are 
measuring performance using a variety of different definitions and 
statistics. If a State were to implement a major change that allows 
applicants to apply through the use of call centers, FNS would expect 
to negotiate the exact definitions and reporting requirements, but 
believes the following data elements would be central to understanding 
the call center's performance:
     Volume of calls to the center;
     Average hold time from the time the request is made to 
speak to an agent;
     Percentage of calls with excessive total waiting times to 
speak with a caseworker (e.g. 15 minutes combined time spent waiting 
for an initial response and holding after the initial response);
     Percentage of calls abandoned prior to and after the 
initial response; and
     Customer satisfaction based upon survey results.
    If a State were to implement a change that allows applicants to 
apply on-line and through the use of a call center, the following 
general data could also be required:
     The number of applications and recertifications submitted 
by paper including faxing; and mailing; online; and call center; and
     The number of applications and recertifications approved 
by paper including faxing; and mailing; online; and call center.

Under what circumstances would FNS require separate reports regarding 
the impact of the major change on the types of households described in 
Section 11(e)(2)(A) of the Act, particularly the elderly and disabled?

    Whenever FNS believes that the major change has the potential to 
have a disproportionate impact on these households, specific reports on 
these households would be required. The decision that such potential 
exists could

[[Page 24828]]

be based upon the State or FNS analysis of the major change.

How often will States be required to report?

    Depending on the type of major change and its implementation 
schedule, FNS would work with the State to establish either a monthly 
or quarterly reporting schedule.

How long after implementation would reports continue to be required?

    While dependent on the type of major change, FNS would need reports 
for a minimum of one year after the change had been fully implemented. 
Based upon FNS' assessment of the reports submitted by the State, it 
may find it necessary to extend the reporting timeframe beyond the one-
year minimum. The rule provides FNS with this discretion.

What is the process if FNS believes that a State is implementing a 
major change, but the State has not reported the change?

    If it came to FNS' attention that a State appeared to be 
implementing a major change that had not been formally reported, FNS 
would contact the State about the change, determine if it were major 
and proceed as specified above.

When will FNS notify the State of that data that must be reported?

    FNS will evaluate the State's analysis of the impact of its change, 
and determine if it is a major change that requires additional 
reporting and if so, what data is necessary to identify potential 
adverse effects on SNAP access and integrity. While the nature and 
extent of the change will impact the time necessary to complete its 
evaluation, FNS intends to respond within 90 days. During this 90-day 
period FNS will be in communication with appropriate State officials 
and, to the extent possible, negotiate with them regarding the most 
efficient way to obtain the needed information.

If the data a State submits regarding its major change indicates an 
adverse impact on SNAP access or integrity, what action will FNS take?

    As with any problem FNS identifies, FNS would work with the State 
to correct the cause of the problem and provide whatever technical 
assistance it can. Some problems can be addressed quickly through a 
simple adjustment to the State operations. In other instances, the 
cause and/or the solution is more difficult to determine and a formal 
corrective action plan would be needed. In either case FNS would intend 
to work in partnership with the State to resolve the issue(s).

Where does FNS propose revising the regulations to include Major 
Changes in Program Design?

    FNS proposes to codify these provisions in a new Sec.  272.12.

Why is the Department proposing to update the Management Evaluation 
(ME) Reviews regulations?

    The proposed regulation will amend the regulations at Sec. Sec.  
275.3 through 275.7. While the Act does not require Federal monitoring 
of SNAP in the form of annual or biennial reviews, current regulations 
are very proscriptive about the type and frequency of reviews. For 
example, the regulations at 7 CFR 275.3(a) and (b) require FNS to 
conduct an annual review of certain functions performed at the State 
agency level and a biennial review of each State agency's management 
evaluation system. However, since the regulations were published, FNS 
has experienced reductions in staff and resources. Consequently, over 
time FNS has adjusted its expectations concerning how often and the 
methods to be used to conduct reviews of the State agency operations of 
SNAP. In the course of developing program specific ME review guides and 
in light of the current reality of reduced resources, FNS has 
recognized the need to redefine what constitutes a Federal review of a 
State agency's operation of SNAP and change the frequency of reviews. 
Revising the regulations to modify how often FNS conducts reviews of 
State agency operations will allow FNS the flexibility to put resources 
where the risks are greatest and to conduct more effective reviews.

What changes to the regulations is the Department proposing that affect 
FNS?

    Current regulations at 7 CFR 275.3(a) provide that FNS shall 
conduct an annual review of State agency operations of SNAP. This 
review has been called informally a State Agency Operations Review or 
SAOR. The Department is proposing to remove the requirement that such a 
review be conducted on an annual basis. In addition, FNS is proposing 
to use one term to define any Federal review of State agency 
operations. The use of the term ``State Agency Operations Review'' will 
be discontinued and the term Management Evaluation or ME is proposed to 
cover all future reviews. Since these terms were so often interchanged 
we believe this change will improve communication across the Program. 
The Department proposes to revise the regulations at 7 CFR 275.3(a) to 
reflect these changes.
    The Department proposes to remove the regulations at 7 CFR 275.3(b) 
which requires FNS to review a State agency's ME system on a biennial 
basis. Removing this requirement will provide FNS the flexibility to 
conduct reviews of State agencies' ME systems on an at-risk basis 
resulting in more efficient allocation of staff and resources. In 
keeping with current practice, FNS will continue to identify national 
target areas that Regional Offices are required to review each year, 
which will generally include reviews of State agency ME systems, and 
will communicate what these areas are via memorandum. In accordance 
with Sec.  275.8, FNS will also continue to notify State agencies of 
the national target areas to be incorporated into their reviews of 
local agencies.

What changes is the Department proposing to make that affect State 
agencies?

    Current regulations at Sec.  275.7