Supplemental Nutrition Assistance Program: Disqualified Recipient Reporting and Computer Matching Requirements, 48045-48058 [2012-19768]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 77, Number 156 (Monday, August 13, 2012)]
[Rules and Regulations]
[Pages 48045-48058]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-19768]



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Federal Register / Vol. 77, No. 156 / Monday, August 13, 2012 / Rules 
and Regulations

[[Page 48045]]



DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Parts 272 and 273

RIN 0584-AB51


Supplemental Nutrition Assistance Program: Disqualified Recipient 
Reporting and Computer Matching Requirements

AGENCY: Food and Nutrition Service, USDA.

ACTION: Final rule.

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SUMMARY: This final rule codifies the provisions of a proposed rule 
published on December 8, 2006, regarding prisoner verification and 
death matching procedures mandated by legislation and previously 
implemented through agency directive. This rule also requires State 
agencies to use electronic disqualified recipient data to screen all 
program applicants prior to certification to assure they are not 
currently disqualified from program participation. Finally, this final 
rule implements procedures concerning State agencies', participation in 
a computer matching program using a system of records required by the 
Computer Matching and Privacy Protection Act of 1988, as amended.

DATES: October 12, 2012.

FOR FURTHER INFORMATION CONTACT: Jane Duffield, Chief, State 
Administration Branch, Program Accountability and Administration 
Division, Supplemental Nutrition Assistance Program, Room 857, 
Alexandria, Virginia 22302, 703-605-4385, Jane.Duffield@fns.usda.gov.

SUPPLEMENTARY INFORMATION:

Background

    On December 8, 2006, the Food and Nutrition Service (FNS) published 
a proposed rule in 71 FR 71075 to revise the SNAP regulations in 7 CFR 
parts 272 and 273 regarding computer matching requirements, the 
prisoner verification system (PVS), the deceased person matching system 
and electronic disqualified recipient system (eDRS) matching, as well 
as redefining data requirements and retention, and the process for 
application screening. Comments on these proposed revisions were 
solicited until February 6, 2007. A total of 26 sets of comments were 
received by the published deadline from 22 State SNAP agencies, 2 
governmental associations, and 2 recipient interest groups. This final 
rule addresses the concerns expressed in these comments. Readers are 
referred to the proposed rule for a more complete description of the 
rule's requirements and stipulations. The following is a discussion of 
the provisions of the proposed rule, the comments received, and the 
changes made in the final rule.

General Comments

    Of the 26 sets of comments received, most recommended that FNS 
withdraw the proposed regulation altogether. Of these, 15 comments 
offered alternative suggestions for FNS to consider. FNS categorized 
the comments in order to sum up their contents: Burdensome and 
Ineffective (20 comments); Impact on Application Timeliness (15 
comments); Impact on Simplified Reporting (12 comments); Impact on 
State Computer Systems (9 comments); Inaccurate Cost-Benefit Analysis 
(3 comments); and Cases Where Matches Cannot Be Verified (3 comments). 
All comments are addressed under the specific regulation citation they 
reference. Some comments received were general and did not pertain to 
specific regulation citations. Those comments are addressed first and 
are related to simplified reporting and computer systems.
    Simplified reporting was authorized by the Farm Security and Rural 
Investment Act of 2002 (the 2002 Farm Bill), subsequent to the 
implementation of prisoner and death matching requirements. Since 2002, 
51 State agencies have opted to implement simplified reporting. 
Generally, under simplified reporting, households are required to 
report changes in income between certification and scheduled reporting 
periods only when the total countable income rises above 130 percent of 
the poverty level. Prior to simplified reporting, most households were 
required to report most changes within 10 days, or monthly. State 
agencies implementing simplified reporting can set reporting intervals 
or certification periods at 4, 5, or 6 months. Generally, for 
households subject to simplified reporting, the death or imprisonment 
of a household member does not have to be reported until the 6-month 
report, or at the next recertification period for prisoner 
verification. Those electing 12-month certification spans must require 
an update of household circumstances at the 6-month interval, unless 
the household is made up of elderly or disabled members.
    In some circumstances, no overpayment can occur if the change was 
not required to be reported. Simplified reporting has provided multiple 
benefits for State administration and Program access. FNS concurs with 
the comments expressing that simplified reporting has been beneficial 
in making the Program more efficient and recipient-friendly and will 
make specific accommodations for simplified reporting options when 
warranted in the waiver process.
    In regard to the need to change computer systems, nine State 
agencies commented that the overall provisions in the proposed rule 
will require them to make expensive changes. There were three comments 
concerned with the steps States may need to take if the matches 
required by these provisions cannot be verified. In this instance, no 
adverse action is to be taken against the households for any matches 
described in this rule that cannot be verified.
    In general, the comments expressed recognition that these matches 
are required by law, and suggested alternatives that would allow State 
agencies the discretion to determine the frequency of the matches. 
While FNS carefully considered these comments, the matches are required 
by law and FNS considers the frequency of the matching requirements 
described herein to be an acceptable standard.

Prisoner Verification System (PVS)

    Section 1003 of the Balanced Budget Act of 1997 (Pub. L. 105-33) 
amended Section 11(e) of the Food Stamp Act of

[[Page 48046]]

1977 \1\ (7 U.S.C. 2020(e)) to require States to establish systems and 
take periodic action to ensure that an individual who is detained in a 
Federal, State, or local penal, correctional, or other detention 
facility for more than 30 days shall not be eligible to be counted as a 
household member participating in SNAP. The FNS final rule will codify 
this requirement and define taking periodic action as requiring States 
to conduct PVS checks at application and re-certification.
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    \1\ The Food Conservation and Energy Act of 2008 (FCEA) renamed 
the Food Stamp Act of 1977 to the Food and Nutrition Act of 2008.
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    FNS received several comments specifically addressing this 
provision. Thirteen comments stated that PVS data received from the 
Social Security Administration (SSA) is not reliable, shows only that 
individuals have been incarcerated in the past, and does not provide 
the admission and tentative release dates. One comment stated that 
State agencies cannot require correctional facilities to provide the 
necessary verification for taking action. Further, six comments 
indicated that including children and one-person households in the PVS 
matches provide little value.
    FNS carefully considered these comments in finalizing this 
provision and agrees that it is appropriate to exempt minor children, 
as that status is defined by each State, and one-person households 
where there is a face-to-face interview. Therefore, these exemptions 
are provided for in the revised Sec.  272.13. However, with regard to 
the frequency of the match, taking into account both simplified 
reporting and the need to prevent those incarcerated for more than 30 
days from participating, FNS determined that conducting the prisoner 
match at application and recertification provides the best opportunity 
for effective policy enforcement. Therefore, FNS retained in this final 
rule the requirement to perform a PVS match with household members at 
application and recertification. Going forward, FNS will make every 
effort to work with the SSA and other relevant agencies to improve the 
quality and timeliness of the data made available to State agencies for 
the purpose of conducting the prisoner match. FNS is also willing to 
consider any alternatives that State agencies may wish to propose for 
their own unique situation through its waiver process.

Deceased Matching System

    This rule also implements the deceased matching requirements 
enacted by Public Law 105-379 on November 12, 1998. Public Law 105-379, 
which amended Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020), 
required all State agencies to enter into a cooperative arrangement 
with the SSA to obtain information on individuals who are deceased, and 
use the information to verify and otherwise ensure that benefits are 
not issued to such individuals. The law went into effect on June 1, 
2000. The mandated requirements were implemented by FNS directive to 
all SNAP State agencies on February 14, 2000. State agencies are 
responsible for entering into a matching agreement with SSA in order to 
access information on deceased individuals. FNS proposed adding a new 
Sec.  272.14 to codify this requirement in regulation and included 
requirements for accessing the SSA death master file. These 
requirements included independently verifying the record prior to 
taking adverse action, and conducting matches for deceased individuals 
at application and re-certification.
    Several comments specifically addressed this provision. Eleven 
comments stated that experience has shown that it is very unusual for 
households to initially apply for benefits for a deceased household 
member. They state that, since starting to conduct death matches in 
1999, it is more common that the death of a household member during the 
certification period goes unreported by the remaining household 
members. With simplified periodic reporting, the change does not need 
to be reported until the interim report of the next recertification.
    Four comments received noted that the preamble to the proposed rule 
states that the SSA death master file be matched at the time of 
application and at recertification, but the actual wording in the 
regulation language says ``* * *at the time of application and 
periodically thereafter.'' FNS concurs that this is inconsistent and 
confusing; ``periodically thereafter'' may not be the same as 
recertification. FNS has, therefore, amended this provision in the 
final rule as indicated below.
    Two comments noted that fulfilling the volume of match requests at 
the frequency required by the proposed regulation would be burdensome 
for SSA. One commenter further noted that, in the past, FNS has 
instructed State agencies to reduce the frequency of matches because 
the previous frequency was burdensome for SSA. SSA did encounter 
certain burdens during the implementation phase of the prisoner and 
death matches, but has subsequently worked through those complications. 
Nevertheless, FNS does want to focus on implementing requirements that 
will improve Program integrity while not imposing unnecessary burdens 
on State agencies.
    Accordingly, after considering the comments, FNS is amending the 
final rule with respect to death matches. The revised final provision 
at Sec.  272.14(c)(1) provides the requirement that State agencies 
conduct the match of deceased individuals against household members at 
application and no less frequently than every 12 months. As a result, 
FNS believes this final rule maintains the intent of the statute for 
conducting this match while relieving States of requirements that do 
not effectively promote Program integrity. In addition, State agencies 
can design their matching systems to make them more consistent with 
their simplified reporting procedures.

Disqualified Recipient Reporting

    Existing regulations at Sec.  273.16(i)(4) require State agencies 
to use disqualified recipient data to ascertain the correct penalty, 
based on prior disqualifications, for an individual currently suspected 
of an intentional Program violation (IPV), and to determine the 
eligibility of Program applicants suspected of being in a disqualified 
status. The proposed rule further proposed:
     State agencies use disqualified recipient data to screen 
all Program recipients and applicants prior to certification. State 
agencies may also periodically match the entire database of 
disqualified individuals against its current caseload.
     State agencies not take an adverse action against a 
household based on information provided by a disqualified recipient 
match unless the match information has been independently verified.
     The State agency initiating the disqualified recipient 
search contact the State agency that originated the disqualification or 
the household for verification prior to taking adverse action against 
the household. The proposed rule proposed that the agency that 
originated the disqualification provide documentation to the requesting 
agency within 20 days of the postmarked date of request.
     The disqualified individual and, if applicable, the 
household, be informed of the effect of the existing disqualification 
on the eligibility and, if applicable, benefits of the remaining 
household members.
     Changes and updates to the format, methodology and fields 
State agencies use to report and access intentional

[[Page 48047]]

Program violation (IPV) disqualification information.
    Several comments specific to disqualified recipient matching were 
received. Regarding implementation, 13 comments noted that the 
provisions of the rule would be very difficult to implement because the 
nationwide eDRS database provided by FNS to perform this function is 
problematic. The comments further state that very few of the 
disqualifications in eDRS are relevant to the day-to-day operation of 
the Program because eDRS maintains disqualifications indefinitely, 
including those for individuals who are deceased or incarcerated for 
long periods of time. As the records age, the disqualifications become 
less and less useful because they have no impact on current 
eligibility. One comment noted that a very small percentage of SNAP 
households had the potential to be affected by an actively disqualified 
household member. Also, twelve comments noted that in order to meet the 
requirements of the rule, all eligibility workers would need access to 
eDRS via the eAuthentication process required by the Department of 
Agriculture, expressing concern that putting all eligibility workers 
through this process would be cumbersome and impractical.
    Regarding the need for the eDRS system, while one State agency 
commented that it queries eDRS for those who newly arrive to the State, 
five other State agencies noted that disqualified recipients who newly 
arrive in the State are already known to the incoming State agency. 
State and local eligibility workers regularly contact other State 
agencies when applicants newly arrive from other States to obtain 
information about the applicant's participation, disqualification and 
able-bodied adults without dependents (ABAWD) status. These State 
agencies asserted that there is no need to check current or former 
household members (when they apply) from within the State as those 
participants and their disqualification status are already known. 
Further, they believed there was no reason to re-screen applicants at 
recertification since the current State would have originated any 
disqualification action and would have already known about it.
    Regarding secondary verification, 11 comments noted that the 
timeframe of 20 days, specified under the computer matching 
requirements, for another State agency to respond for a request for 
information, does not leave enough time to gather all of the 
information and process the application in a timely manner. The 
comments indicated that if the person should not have been certified, 
it will be discovered when the State processes a periodic match and an 
overpayment can be completed at that time. They also indicated that it 
is unclear what a requesting State should do in instances of expedited 
service cases or if the other State agency does not respond within 20 
days. Finally, one comment supported the proposed rule's clarification 
that no adverse action be taken against a recipient or applicant based 
on a match unless the match information is independently verified.
    Regarding the eAuthentication process, FNS recognizes that this 
process may be difficult for some States to obtain the proper 
eAuthentication levels for their eligibility workers. The 
eAuthentication process is vital to protecting personally identifiable 
information of SNAP recipients, confidentiality and the integrity of 
the Program. This process, while difficult, is necessary to maintain 
the security standards set forth to protect client information. FNS 
will continue to explore possible ways to make the eAuthentication 
process less burdensome for States in the future.
    In addressing these comments, it is important to note that, as a 
Program with national eligibility standards, an individual disqualified 
in one State because of an IPV determination is also disqualified in 
every State. However, the Program is administered by State agencies 
that use and maintain their own systems and databases to perform the 
functions associated with certifying and supplying benefits to 
households. As such, there must be some mechanism in place so that a 
State agency can determine that an applicant has been disqualified by 
another State when they apply for SNAP benefits. Also, since the 
disqualification penalties are cumulative, the State agency must be 
aware of whether an individual has had any prior disqualifications by 
any other State in order to assign the appropriate disqualification 
penalty.
    The issue of how States become aware of an existing or previous 
disqualification to ensure that ineligible individuals are not 
participating or the proper disqualification is assigned is the crux of 
this portion of this rule. In the performance of this function, an 
individual's rights must be protected to ensure that only those 
individuals that should be ineligible to receive benefits due to an 
existing or previous disqualification are indeed determined ineligible. 
Further, States are expected to provide this information in a timely 
manner to the requesting State so that they can determine the 
eligibility of the applicant. States that fail to provide the requested 
information within the time frame set forth under the computer matching 
requirements are considered to be out of compliance with these 
regulations. Those States will be subject to corrective action upon 
review. In any case where the requesting State has not received the 
information timely, the State should certify the household for benefits 
in accordance with our regulations until it receives the requested 
documentation. If the State subsequently receives verification that the 
client or household is ineligible, they should disqualify them and 
establish a claim to collect any benefits that were issued in error. 
While FNS carefully considered all comments in determining the final 
provisions in this rule, the Agency wanted to ensure that individuals' 
rights are protected and that proper disqualifications are assigned. 
FNS believes this final rule meets these goals while adequately 
addressing the concerns of the comments.
    Many of the comments received regarding this provision focus on the 
operation and integrity of the data contained in eDRS. There were 
concerns that the data may be outdated, inaccurate or incomplete. While 
FNS is continuously trying to add appropriate edits and perform data 
integrity checks where possible, it is ultimately the responsibility of 
each State to enter timely, accurate and verifiable disqualification 
data into eDRS for use by other States. This is a nationwide 
partnership in which FNS and State agencies need to work together to 
ensure that ineligible individuals are not participating and that 
disqualified individuals receive the appropriate disqualification 
period. FNS is committed to continuing efforts to improve the system 
and the integrity of data to ensure accurate and timely 
disqualifications are imposed.
    FNS does not agree with the comment that very few of the 
disqualifications in eDRS are relevant to the day-to-day operation of 
the Program. Records with disqualification periods that have expired 
are necessary for making penalty determinations and those that remain 
active are useful for determining eligibility. Further, in addition to 
the complete database file containing all the records in the system, 
FNS has for some time made available a file containing only active 
records, specifically designed for the purpose of conducting 
eligibility matches. FNS has also modified its online database access 
system to search only active records when the user selects 
``Eligibility'' as the purpose for the inquiry.

[[Page 48048]]

    Nevertheless, FNS agrees with the comment that a very small 
percentage of SNAP households would be affected by a disqualified 
member. Data reported by States indicated that, in fiscal year 2010, 
36,859 individuals were disqualified out of a total of 40.3 million 
participants. In addition to these 37,000 disqualifications, there are 
also those still serving 2-year, 10-year or permanent disqualifications 
whose records remain active. While this number remains relatively low 
compared to the number of participants, it still represents a potential 
issuance risk in excess of nearly $2.0 million per month should these 
individuals not be prevented from participating, based on estimates for 
2013. The potential also exists for any of these individuals to cross 
into another jurisdiction to avoid serving their penalty. FNS believes 
that some form of applicant screening is therefore necessary to prevent 
those inclined to try to participate during a period of 
disqualification and to deter those that might otherwise make the 
attempt.
    In response to those comments suggesting that there was no need to 
check current or former recipients (when they apply) from within the 
State, or to re-screen applicants at recertification since the State 
would have originated the action and would have already known about it, 
FNS would point out that since applicant matching was not previously 
mandated one cannot be certain there are no disqualifications in an 
individual's past. For example, applicants that may have been in a 
disqualified status in one State may have moved to, and been determined 
eligible by, another State that did not conduct the match at the time 
of application. Therefore, it is possible that disqualified individuals 
are currently participating in a number of States. However, FNS does 
agree that there is probably no need to conduct matches at 
recertification once FNS is reasonably certain that currently 
disqualified individuals that may be receiving benefits are removed 
from the active rolls. Consequently, FNS will retain the requirement to 
match all applicants prior to initial certification but require matches 
at recertification only for the first year subsequent to implementation 
of this final rule. Within the first year of the implementation date of 
this rule, but no later than 180 days from publication, States will be 
required to match all applicants prior to initial certification, all 
newly added household members at the time they are added, and all 
participants in the household at recertification. In the second year, 
the requirement to match participants at recertification will be 
discontinued, and States will only be required to match applicants 
prior to initial certification and newly added household members as 
they are added. Further, since the purpose of a 1-year match at 
recertification is to remove currently participating disqualified 
individuals, States having the ability to conduct a one-time match of 
their entire active caseload against active cases from the disqualified 
recipient database may do so and be exempted from the requirement to 
conduct matches at recertification. The periodic match that would have 
been required by the proposed rule will not be required in this final 
rule, but may be conducted at the option of the State. Finally, States 
may exempt from the matching requirements those individuals that have 
not reached the age of majority as defined by State statute.

Computer Match Benefit Adjustments

    FNS proposed to add language to the existing regulations for when 
mass changes are made in Federal benefits that affect SNAP allotments. 
Specifically, in cases when the change in allotment was the result of a 
computer match, FNS proposed that the information would need to be 
independently verified, and the SNAP household would need to be 
provided notice and an opportunity to contest any adverse action, if 
the adjustment would change the level of benefits or eligibility status 
of the household.
    FNS received several comments specific to this provision. One 
comment stated that this alternative is not attractive as it 
constitutes much more effort than applying the existing procedure. In 
addition, two commenters were concerned about the additional burden 
placed upon State agencies if this information is not considered 
verified upon receipt.
    FNS carefully considered the comments in this area. A computer 
match, covered by the Computer Matching Act [5 U.S.C. 552a(o)], uses 
information provided by a Federal source and compares it to a State 
record, using a computer to perform the comparison; this match affects 
eligibility or the amount of benefits for a Federal benefit program. As 
such, FNS has no discretion in this area and the information must be 
independently verified. Moreover, the SNAP household must be provided 
notice and given an opportunity to contest the adverse action if the 
adjustment would change the level of benefits or eligibility status of 
the household. However, State agencies should be aware that the 
independent verification/notice of adverse action provisions apply only 
if there is an adverse effect on benefits (i.e., a denial, termination 
or reduction in benefits). The vast majority of mass changes in 
benefits are increases due to cost-of-living adjustments. As such, FNS 
expects this new requirement to have a minimal impact on State agency 
workload. In addition, State agencies can use the option found at Sec.  
273.12(e)(3)(A) to implement mass changes using percentages. Therefore, 
this provision remains unchanged in the final rule (see Sec.  
273.12(e)(3)(B)).

Implementation

    State agencies have been instructed through FNS directive to 
implement the provisions of the prisoner verification matches (Pub. L. 
105-33) and death file matches (Pub. L. 105-379) as required by law in 
the applicable legislation, and these matches should already be in 
place without waiting for formal regulations. Unless specified below, 
the remaining provisions of this rule are effective and must be 
implemented the first day of the month following 60 days from date of 
publication of this final rule.
    Since the inception of the disqualified recipient database in 1992, 
FNS has required that States query the database for the purpose of 
assigning the correct penalty to those being disqualified and whenever 
they believe an applicant may be in a disqualified status. To comply 
with these requirements, States should already have in place some 
capability for conducting matches against the disqualified recipient 
database. In recognition of this, the provisions of this rule dealing 
with the systematic matching of disqualification data in Sec.  
273.16(i) are effective and must be implemented no later than 180 days 
after the effective date of this final rule.

Procedural Matters

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.

[[Page 48049]]

    This final 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

    As required for all rules that have been designated as significant 
by the Office of Management and Budget, the following Regulatory Impact 
Analysis (RIA) was developed for this final rule.

Regulatory Impact Analysis

    1. Title: Supplemental Nutrition Assistance Program: Electronic 
Disqualified Recipient System Reporting and Computer Matching 
Requirements that Affect the Supplemental Nutrition Assistance Program
    2. Action:
    a. Nature: Final Rule
    b. Need for the Rule: This final rule codifies prisoner 
verification and death master file matching procedures mandated by 
legislation and previously implemented through agency directive. This 
rule also revises SNAP regulations affecting the way State agencies 
access and use client disqualification information to enforce penalties 
for Intentional Program Violations (IPV).
    c. Background: The Balanced Budget Act of 1997 (Pub. L. 105-33), 
enacted on August 5, 1997, requires States to establish systems and 
take periodic action to ensure that an individual who is detained in a 
Federal, State, or local penal, correctional, or other detention 
facility for more than 30 days shall not be eligible to participate in 
the Supplemental Nutrition Assistance Program. The law was effective 
August 5, 1998. This regulation will amend current rules to require 
States to conduct Prisoner Verification System (PVS) checks at 
application and re-certification. Public Law 105-379, enacted on 
November 12, 1998, requires all State agencies to enter into a 
cooperative arrangement with the Social Security Administration (SSA) 
to obtain information on deceased individuals and to use the 
information to verify and otherwise ensure that benefits are not issued 
to such individuals. The law was effective June 1, 2000. FNS is also 
requiring States to use the Electronic Disqualified Recipient System 
(eDRS) to screen all new applicants. States report all disqualified 
recipients to the eDRS database in order to prevent those individuals 
from participating in other States and to ensure that the proper 
penalties are assigned for intentional Program violations.
    3. Justification of Alternatives. The Department has no discretion 
regarding the portions of the regulation that are based on legislative 
mandate to implement prisoner verification and deceased persons' data 
match programs. The Department does have discretion on the portion of 
the regulation affecting matches to identify disqualified recipients. 
The law requires that matches be performed, but is silent on when in 
the certification process the match must occur. The regulation mandates 
that these matches be performed up front, prior to certification. This 
alternative was chosen over requiring matches at a later point in the 
certification process because of the expected result that earlier 
mandatory verification will save the most taxpayer dollars.
    4. Effects:
    Effects on Low-Income Families. This action would identify deceased 
individuals, prisoners, and other ineligibles to ensure that they are 
not included as members of SNAP households. These matches will assist 
State agencies in identifying who, due to extended certification 
periods or failure to notify a change of household status, should no 
longer receive SNAP benefits. The number of people we estimate being 
removed from the SNAP caseloads as a result of the matches is described 
in detail below.
    PVS Matches: FNS estimates that mandatory computer matches using 
the PVS will identify approximately 64,000 ineligible prisoners from 
the SNAP case rolls in 2013. Because this regulation is codifying 
legislation enacted some years ago, all States are currently performing 
data matches using the PVS for initial certifications and 
recertification, so the impacts on participation and costs for initial 
certifications are incorporated in current baseline budget estimates. 
There are no new savings.
    The estimate on the impact of the computer match using the PVS is 
based on a General Accounting Office \2\ (GAO) Study, Substantial 
Overpayments Result from Prisoners Being Counted as Household Members, 
issued in March 1997. GAO examined data from four States: California, 
Florida, New York, and Texas. GAO estimated that in 1995, $2.6 million 
in benefits were paid to 9,440 State prisoners, and $925,000 in 
benefits was paid to 2,698 county prisoners, with a total of 12,138 
prisoners receiving $3.5 million for an average of 3.85 months. If we 
assume that prisoners would have continued to receive benefits for one 
month before the data match identified them and they were removed from 
the caseload rolls, we estimate that a mandatory computer match with 
State and County prisoner databases at the time of certification could 
have saved $2.6 million in overpayments in those four States. The one 
month that the prisoners would continue to receive benefits reduces the 
savings from the match from $3.5 million to $2.6 million. The 12,138 
prisoners accounted for 0.13 percent of the 1995 SNAP caseload among 
those four States.
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    \2\ The General Accounting Office is now known as the Government 
Accountability Office.
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    Between 1989 and 2009, the average number of initial certifications 
was nearly identical to the number of households participating in an 
average month, and the average number of recertifications was close. In 
any given year, the two numbers tracked closely together--when 
caseloads rose, so did the number of initial certifications and 
recertifications. Since we project caseloads and not initial 
certifications and recertifications, we use projected participation 
estimates as a proxy for the number of certifications and 
recertifications.
    The effect on participation resulting from a mandatory computer 
match is taken by applying the 0.13 percent impact to the total 
projected FY 2013 caseload of 46.9 million. This yields an estimate of 
61,000 ineligible prisoners who would be taken off the SNAP rolls at 
initial certification. However, prior to the enactment of the 
legislation mandating matches, a number of States were already 
performing these matches--Connecticut, Massachusetts, New York, 
Maryland, Pennsylvania, Florida, Mississippi, North Carolina, 
Tennessee, Illinois, Texas, Kansas, and Missouri--accounting for 45 
percent of the FY 2011 caseload. We also adjusted to account for an 
increase in the number of prisons between 1995 and 2017 (actual numbers 
through 2010 and projected for 2017) and an expected false positive 
match rate of 10 percent. Making the match mandatory for the States who 
did not perform the match prior to the legislation will remove 44,000 
prisoners in 2013.
    Requiring biennial matches at the time of recertification would 
yield yet more ineligible prisoners. No States were performing matches 
at recertification when the law was enacted, but now all States are, so 
all of the savings are incorporated in the budget baseline and none are 
``new.'' There would be no savings from those prisoners who were 
identified in previous matches. According to the most recent SNAP 
characteristics report, the average certification period for SNAP 
households is 12 months.

[[Page 48050]]

However, the number of new prisoners who entered the system in 2010 is 
about half the total prison population as of June 30, 2011. Therefore, 
matches at recertification would yield only half as many hits as 
matches performed at initial certification. Therefore, we halved the 
original impact of 61,000. We also adjusted for an increase in the 
number of prisoners from 1995 to 2013 and assumed a 10 percent false 
positive match rate. Finally, we halved the impact yet again to adjust 
for biennial matches. The estimate of prisoners identified at 
recertification matches in 2013 is 20,000.
    To obtain the impact of performing the matches at initial 
certification and at recertification, we added the two totals together, 
getting 64,000 prisoners for 2013. The estimate assumes that these 
prisoners identified by the matches would then be removed from the SNAP 
caseloads.
    To obtain the impact of performing the matches at initial 
certification and at recertification, we added the two totals together, 
getting 60,000 prisoners for 2012. The estimate assumes that these 
prisoners identified by the matches would then be removed from the SNAP 
caseloads.
    Matches with Social Security Deceased Lists. Mandatory computer 
matches using Social Security Administration (SSA) lists of deceased 
individuals could identify an estimated 100,000 deceased individuals on 
SNAP case rolls in 2013 Because this regulation is codifying 
legislation enacted some years ago, all States are currently performing 
data matches using the SSA lists at initial certification and at 
recertification, so the impacts of matches at initial certification on 
participation and costs are incorporated in current baseline budget 
estimates. There are no new savings that are not incorporated in the 
current budget baseline estimates.
    In 2013, we estimate that 39,000 deceased individuals will be 
identified from matches performed at initial certification, and 61,000 
individuals will be identified through matches performed at 
recertification.
    The estimate on the impact of the computer match using SSA lists of 
deceased individuals is based on a GAO Study, Thousands of Deceased 
Individuals Are Being Counted as Household Members, issued in February 
1998. GAO examined data from four States: California, Florida, New 
York, and Texas, and estimated that in 1995 and 1996, $8.4 million in 
benefits were paid on behalf of 25,881 deceased individuals, with these 
individuals ``receiving'' benefits for an average of 4.17 months. If we 
assume that some deceased individuals would have continued to be issued 
benefits for one month before the data match identified them and they 
were removed from the caseload rolls, we estimate that a mandatory 
computer match with SSA databases could have saved $3.2 million per 
year in overpayments. This figure is derived from taking the $8.4 
million they received in benefits over two years, assuming that they 
would still receive benefits for 1 month rather than an average of 4.17 
months, and halving the figure to get an annual total. The 12,941 
deceased individuals (half of the 25,881 individuals identified over a 
two-year period) accounted for 0.14 percent of the 1996 SNAP caseload 
in those four states.
    Between 1989 and 2010, the average number of initial certifications 
was nearly identical to the number of households participating in an 
average month, and the average number of recertifications was close. In 
any given year, the two numbers tracked closely together--when 
caseloads rose, so did the number of initial certifications and 
recertifications. Since we project caseloads and not initial 
certifications and recertifications, we use projected participation 
estimates as a proxy for the number of certifications and 
recertifications.
    The effect on participation resulting from a mandatory computer 
match on deceased individuals at the time of initial certification is 
taken by applying the 0.144 percent impact to the total projected FY 
2013 caseload of 46.9 million. This yields an estimate of nearly 68,000 
deceased individuals who would be taken off the SNAP rolls. Several 
adjustments were made after this point. First, prior to the enactment 
of the legislation mandating matches, a number of States were already 
performing these matches--California, New York, Florida, Illinois, and 
Ohio--accounting for 35 percent of the FY 2011 caseload. We assume that 
10 percent of the matches are false positives. We estimate that 
mandatory matches at certification will identify an estimated 39,000 
deceased individuals being removed from the rolls in 2013.
    Requiring the matches at the time of recertification would identify 
more deceased persons. Since no States were performing matches at 
recertification at the time that the law was enacted, all States would 
be included. We also assume that 10 percent of the matches are false 
positives. Thus, we estimate that performing the match at 
recertification would identify 61,000 deceased individuals in 2013 for 
removal from SNAP caseloads.
    To obtain the impact of performing the matches at initial 
certification and at recertification, we added the two totals together, 
for a total of 100,000 deceased persons identified through matches in 
2013.
    Matches Using the eDRS. Optional matches at initial certification 
using the eDRS as currently being performed will remove more than 6,000 
ineligible persons from caseloads at initial certification in 2013. 
Making matches mandatory at initial certification and conducting a one-
time match at recertification for current participants will remove an 
additional 9,000 ineligible persons from the caseloads in 2013; nearly 
3,000 identified at initial certification and more than 6,000 
identified at recertification.
    The estimate on the impact of the computer match using the eDRS is 
based on a GAO Study, Households Collect Benefits for Persons 
Disqualified for Intentional Program Violations, issued in July 1999. 
GAO examined data from four States: California, Illinois, Louisiana, 
and Texas, and estimated that in 1997, $528,000 in benefits were paid 
to households on behalf of 3,166 disqualified individuals, with these 
individuals receiving benefits for an average of 2.33 months. If we 
assume that some disqualified individuals will continue to be issued 
benefits for one month, we estimate that a mandatory computer match at 
initial certification with the eDRS could have saved $301,000 in 
overpayments.
    The four States accounted for 28 percent of the caseload in 1997 
and 29 percent of benefits issued. Thus, taking the demonstration 
figures and applying them nationally, we estimate that over 11,000 
individuals would have been disqualified.
    We know from the eDRS that as of December 2010, 49,500 individuals 
were currently disqualified from SNAP. We do not have figures for past 
years, so we have no definitive data for whether the number of 
individuals disqualified at any one time has risen or fallen over the 
past decade. However, in the FNS National Data Bank, we have the number 
of disqualifications by year and by length of disqualification. Using 
this data to estimate the number of individuals becoming disqualified 
and the number of individuals whose disqualification expires, we 
estimate that over the past decade, the number of disqualified 
individuals has fluctuated between 50,000 and 70,000, and are not 
correlated with SNAP participation levels. So we did not make any 
adjustments to account for changes in overall participation levels.

[[Page 48051]]

    Under current regulations, States are not required to perform the 
eDRS matches routinely; they are required only to do periodic matches 
on an ad hoc basis. FNS staff members estimate that 27 States, with 64 
percent of the SNAP caseload, are currently doing routine matches at 
initial certification. No States are doing matches at recertification. 
Assuming that the regulations are published by September 2012, and 
adjusting for a 10 percent false positive rate for matches, we assume 
that in 2013, 9,000 ineligible persons will be identified by matches 
performed at initial certification. Of these, we estimate that 6,400 
are currently identified and after publication of this regulation, an 
additional 2,800 will be identified. We are assuming that half the 
States not doing the match will have implemented the match by January 
1, 2013, and the remaining States will have implemented the matches by 
July 1, 2013, for an overall phase-in rate of 75 percent for 2013 and 
100 percent in later years.
    The number of ineligible persons identified at recertification is 
adjusted downwards to account for the fact only new disqualifications 
would be identified. Also, we are assuming that we are only performing 
the recertification matches once, rather than annually or biannually. 
To estimate the impact of running one-time matches at certification, we 
computed the percentage of disqualifications which are for under a year 
(91 percent), and adjusted the estimate by that factor. We estimate 
that over 9,000 ineligible individuals will be identified through 
matches performed at recertification. We are assuming that in 2013, 
half the remaining States will have implemented the one-time matches at 
recertification by January 1, 2013, and the remaining half by July 1, 
2013; so we are assuming a 75 percent impact for 2013 and a 25 percent 
impact for 2014. Thus, we are assuming the newly-matching States will 
identify nearly 7,000 ineligible individuals in 2013, and the remaining 
2,000 individuals identified in FY 2014.
    To obtain the impact of performing the matches at initial 
certification and at recertification, we added the totals for initial 
certification and recertification together for a total of 6,000 
disqualified individuals identified by States currently performing 
matches and 10,000 disqualified individuals identified by States newly 
implementing matches in 2013.
    Effects on Administering State Agencies: This rule affects State 
agencies by codifying computer matches mandated by legislation and 
requiring a previously optional computer match.
    Effect on Retailers. This action is not anticipated to have any 
measurable impact on SNAP retailers.
    Cost Impact. This action reduces benefit costs by identifying and 
removing ineligible and deceased individuals from the SNAP. It does not 
affect benefit levels for households without individuals identified in 
the computer matches.
    PVS Matches: FNS estimates that mandatory computer matches using 
the PVS will save approximately $26 million in benefits that would have 
been paid to households on behalf of ineligible prisoners in Fiscal 
Year 2013. Of that, nearly $18 million will be saved through matches 
performed at initial certification, which were made mandatory by 
legislation and are incorporated in current budgetary baselines. Nearly 
$8 million will be saved through matches performed at recertification, 
which will be required under discretionary provisions of this 
regulation. The savings is estimated at $115 million for the five-year 
period 2013-2017.
    The cost estimate was derived using the same methodology as that 
used for the participation impact estimate. Using data from the GAO 
report, we estimate that about $2,618,847 in overpayments could have 
been avoided using the computer match at initial certification. This 
accounted for 0.03 percent of benefits issued in Fiscal Year 1995.
    Applying this to the Fiscal Year 2013 estimated benefits of $75.2 
billion yields an unadjusted savings of $24 million in reduced 
overpayments to prisoners at initial certification. After taking out 
those States who used the PVS prior to the legislation making such 
matches mandatory, adjusting for increases in the number of prisoners 
since 1995, and assuming a 10 percent false positive rate for matches, 
we estimate that the savings will be $18 million.
    Requiring the matches at the time of recertification would yield 
additional savings. Since all States are performing matches at 
recertification, any cost savings are included in the current budget 
baseline. There would be no savings from those prisoners who were 
identified in previous matches. According to the most recent SNAP 
characteristics report, the average certification period for SNAP 
households is 12 months. However, the number of new prisoners who 
entered the system in 2010 is about half the total prison population as 
of June 30, 2011. Therefore, matches at recertification would yield 
only half as many hits as matches performed at initial certification. 
Therefore, we halved the original savings of $24 million. We also 
adjusted for increases in the number of prisoners and assume a 10 
percent false positive rate for matches. Finally, we halved the 
estimate because the recertification matches will be performed 
biennially, rather than annually. The savings from performing matches 
at recertification is an estimated $8 million in Fiscal Year 2013.
    To obtain the impact of performing the matches at initial 
certification and at recertification, we added the two totals together, 
for savings of $26 million. The five-year savings are an estimated $115 
million.
    Matches Using Social Security Deceased Lists. The mandatory 
computer matches using SSA lists of deceased individuals may save over 
$45 million in benefits that would have been issued to households on 
behalf of deceased individuals in FY 2013. Of that, $18 million will be 
saved through matches performed at initial certification, which were 
made mandatory by legislation and are incorporated in current budgetary 
baselines. Nearly $27 million will be saved through matches performed 
at recertification, which will be required under discretionary 
provisions of this regulation. The total savings over the five-year 
period is estimated to be $203 million.
    The cost estimate was derived using the same methodology as that 
used for the participation impact estimate. Using data from the GAO 
report, we estimate that about $3,185,000 in overpayments could have 
been avoided using the computer match. This accounted for 0.04 percent 
of benefits issued in Fiscal Year 1996.
    Applying this to Fiscal Year 2013 estimated benefits of $75.2 
billion yields an unadjusted savings of $30 million in reduced 
overpayments to deceased individuals. After taking out those States who 
ran computer matches with SSA death lists prior to the legislation 
making such matches mandatory, and assuming a 10 percent false positive 
rate for matches, the cost savings for performing matches at initial 
certification is $18 million.
    Since all States currently perform matches with SSA death lists at 
recertification, these costs are all incorporated in the current budget 
baselines. The average certification period is 12 months; we take an 
annual estimate as for initial certification. The cost savings for 
performing matches at recertification is estimated at nearly $27 
million in 2013 and $121 million for 2013-2017.
    We then combined the savings for matches at initial certification 
and at

[[Page 48052]]

recertification for a total of $45 million. The five-year savings are 
an estimated $203 million.
    Matches Using the eDRS. Matches at initial certification and 
recertification using the eDRS may save nearly $3 million in benefits 
that would have been paid out to individuals disqualified from 
participating in SNAP in Fiscal Year 2013 and $8 million for 2013-2017. 
Of that, more than $1 million of these savings is incorporated in the 
budgetary baseline for FY 2013; the five-year estimate is nearly $6 
million. Under current law, States are only required to do periodic 
matches; however, 27 States currently perform matches at initial 
certification. No States perform matches at recertification. New 
savings are estimated to be nearly $2 million for Fiscal Year 2013. The 
five-year savings for 2013-2017 is estimated at $2.2 million.
    The cost estimate was derived using the same methodology used for 
the participation impact estimate. Using data from the GAO report, we 
estimate that about $301,000 in overpayments could have been avoided 
using the computer match. Since the states featured in the GAO study 
accounted for 29 percent of all benefits, applying the study estimates 
nationally would have saved nearly $1.1 million in FY 1997.
    No adjustments were made to account for caseload changes, since 
recent data, as discussed earlier, does not show a correlation between 
the number of disqualified individuals and SNAP participation levels. 
Since 1997, the average monthly benefit has risen; we anticipate that 
the average monthly benefit will be about 85 percent higher in 2013-
2017. (The American Recovery and Reinvestment Act of 2009 increased the 
maximum allotment by 13.6 in April 2009 and froze it until FY 2014.) 
Inflating the 1997 cost to capture 2013 benefit costs yields nearly $2 
million in savings.
    We estimate that today, 64 percent of benefits were issued to 
States currently performing routine matches at initial certification. 
We then adjust for past and expected increases in the average monthly 
benefit, and assume a 10 percent false positive match rate. We estimate 
that the 2013 cost savings estimate will be $1.1 million for States 
currently performing the match, with a five year savings of nearly $6 
million. We assume that the final regulation is published by October 1, 
2012. We assume that 50 percent of the States currently not performing 
matches at recertification will start by January 1, 2013, and the 
remaining States will start by July 1, 2013, so the overall phase-in 
rate for 2013 is 75 percent. The 2013 cost savings by States newly 
performing the match will be nearly $500,000, and the five year savings 
will be $3 million.
    Today, no States are performing matches at recertification, so all 
savings are ``new'' and not incorporated in the budget baseline. This 
proposal would require all States to perform a one-time match at 
recertification to capture cases not recently certified. The cost 
savings from disqualifying ineligible persons identified at 
recertification is adjusted downwards to account for the fact only new 
disqualifications would be identified. To estimate that, we computed 
the percentage of disqualifications that is for under a year (90 
percent) and adjusted the estimate by that percentage. We also assumed 
that 10 percent of matches will be false positives. We estimate that 
the 2013 cost savings will be $1.1 million, with 75 percent of the 
matches run the first year; and the remainder matches run the second 
year. The five-year savings will be $1.6 million.
    The combined savings for matches against the eDRS performed at 
initial certification and recertification is nearly $3 million in 2013 
and $8 million over the 2013-2017 five-year time period. Of that, $1 
million in 2013 savings comes from States currently performing the 
match and $1.7 million comes from new States. For the five-year period, 
nearly $6 million in savings comes from States currently performing the 
match and $2.2 million comes from new States.
    The total savings from the computer matches is estimated at $73 
million in 2013 and $326 million for the five-year period of 2013-2017. 
Of this, an estimated $324 million is incorporated in the current 
budget and $2 million represents new savings.

                      Table 1--Cost Impact of Computer Match Requirements (Federal Outlays)
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                                       2013
                                                                                                   Participant
                                  2013       2014       2015       2016       2017      5-Year     Impact  (in
                                                                                                    thousands)
----------------------------------------------------------------------------------------------------------------
Mandatory prisoner
 verification match:
    Baseline Savings.........        -25        -23        -23        -22        -22       -115              -64
    New Savings..............         -0         -0         -0         -0         -0         -0               -0
                              ----------------------------------------------------------------------------------
    Total Savings............        -25        -23        -23        -22        -21       -115              -64
Mandatory death master file
 match:
    Baseline Savings.........        -45        -41        -40        -39        -38       -203             -100
    New Savings..............         -0         -0         -0         -0         -0         -0               -0
                              ----------------------------------------------------------------------------------
    Total Savings............        -45        -41        -40        -39        -38       -203             -100
Mandatory disqualified
 recipient subsystem match:
    Baseline Savings.........         -1         -1         -1         -1         -1         -6               -6
    New Savings..............         -2         -1         -0         -0         -0         -2              -10
    Total Savings............         -3         -2         -1         -1         -1         -8              -16
                              ----------------------------------------------------------------------------------
Total:
    Baseline Savings.........        -71        -65        -64        -63        -61       -324             -170
    New Savings..............         -2         -1         -0         -0         -0         -2              -10
    Total Savings............        -73        -65        -64        -63        -61       -326             -180
----------------------------------------------------------------------------------------------------------------
Note: Totals may not add up to the sum because of rounding.


[[Page 48053]]

    Uncertainty: Because FNS lacks administrative or survey data that 
provides information about deceased persons, prisoners, and 
disqualified persons that are reported as part of households receiving 
SNAP, this estimate relied on small GAO studies run on a handful of 
States in the mid 1990s, and applying the impacts to the National 
Program, as operating today. To the extent that these small GAO studies 
are not nationally representative, the estimate will be skewed. FNS has 
no way to determine the size or direction of any bias based on the 
reliance of the GAO studies.
    Our estimates also assume that the number of deceased persons 
identified by the match on SSA records is directly proportional to past 
and projected changes in SNAP caseloads. If the number of deceased 
persons identified by the match grows more quickly or slowly than the 
number of SNAP participants, the estimates will be biased.
    Likewise, we assume that the number of households claiming prisoner 
members and thus losing benefits as a result of the match is directly 
proportional to past and projected changes in SNAP caseloads and the 
number of individuals incarcerated. If the number of prisoners 
identified by the match grows more quickly or more slowly than the 
number of SNAP participants or than the number of prisoners, the 
estimates will be biased.
    Finally, we assume that the number of disqualified individuals has 
remained fairly constant over the past decade.
    In all three cases, FNS has no way to determine the size or 
direction of the bias.
    Because of these issues, there is a moderate degree of uncertainty 
with these estimates.
    Societal Costs. While this regulatory impact analysis details the 
expected impacts on SNAP costs affected by the provisions described 
above, it does not provide an estimate of the overall social costs of 
the provisions, nor does it include a monetized estimate of the 
benefits they bring to society. FNS anticipates that the provisions 
will improve Program operations and strengthen Program integrity.

  Rule Title--Supplemental Nutrition Assistance Program: Electronic Disqualified Recipient System Reporting and
     Computer Matching Requirements that Affect the Supplemental Nutrition Assistance Program RIN 0584-AB51.
----------------------------------------------------------------------------------------------------------------
            Category               Primary estimate    Minimum estimate    Maximum estimate
----------------------------------------------------------------------------------------------------------------
                                                    BENEFITS
----------------------------------------------------------------------------------------------------------------
Annualized, monetized Benefits.  Not applicable.
Annualized, quantified but       Not applicable.
 unmonetized, benefits.
Qualitative (unquantified)       Not applicable.
 benefits.
----------------------------------------------------------------------------------------------------------------
                                                      COSTS
----------------------------------------------------------------------------------------------------------------
Annualized monetized costs.....  Not applicable.
Qualitative (unquantified)       Not applicable.
 costs.
----------------------------------------------------------------------------------------------------------------
                                                    TRANSFERS
----------------------------------------------------------------------------------------------------------------
Annualized monetary transfers:   $180 million.......  $180 million......  $180 million......  Regulatory Impact
 ``on budget''.                                                                                Analysis
----------------------------------------------------------------------------------------------------------------
From whom to whom..............  Funds that would have been received by ineligible participants are not issued,
                                  representing savings to the taxpayer.
Annualized monetized transfers:  Not applicable.
 ``off-budget''.
From whom to whom?.............  Not applicable.
----------------------------------------------------------------------------------------------------------------

Regulatory Flexibility Act

    This rule has been reviewed with regard to the requirements of the 
Regulatory Flexibility Act (5 U.S.C. 601-612). The Administrator of the 
Food and Nutrition Service has certified that this rule will not have a 
significant economic impact on a substantial number of small entities. 
State and local welfare agencies will be the most affected to the 
extent that they administer the Program. Applicants may be affected to 
the extent that matching client information with records in eDRS, PVS 
and Death Master Files may identify a client as disqualified, 
preventing them from Program participation.

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandate Reform Act of 1995 (UMRA) 
established 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 UMRA, FNS generally must 
prepare a written statement, including a cost-benefit analysis, for 
proposed and final rules with ``Federal mandates'' that may result in 
expenditures 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 UMRA generally 
requires FNS to identify and consider a reasonable number of regulatory 
alternatives and adopt the least costly, more cost-effective or least 
burdensome alternative that achieves the objectives of the rule. This 
rule contains no Federal mandates (under the regulatory provisions of 
Title II of UMRA) for State, local and tribal governments, or the 
private sector, of $100 million or more in any one year. Therefore, 
this rule is not subject to the requirements of sections 202 and 205 of 
UMRA.

Executive Order 12372

    The Supplemental Nutrition Assistance Program is listed in the 
Catalog of Federal Domestic Assistance under No. 10.551. For the 
reasons set forth in the Final Rule codified in 7 CFR part 3015, 
Subpart V and related Notice

[[Page 48054]]

(48 FR 29115), this Program is excluded from the scope of Executive 
Order 12372, which requires intergovernmental consultation with State 
and local officials.

Federalism Summary Impact Statement

    Executive Order 13132 requires Federal agencies to consider the 
impact of their regulatory actions on State and local governments. 
Where such actions have federalism implications, agencies are directed 
to provide a statement included in the preamble to the regulations 
describing the agency's consideration in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13132. In 
adherence with verification laws, this final rule allows for little 
State agency flexibility on when and how States must match SNAP 
recipients with SSA Death Master Files, eDRS records, and PVS records. 
FNS understands that State flexibility is important and will work with 
each State agency through a waiver process if they can make a 
reasonable argument for a more efficient procedure that would still 
comply with the law.

Was there prior consultation with State officials?

    Prior to drafting this final rule, FNS consulted with State and 
local agencies at various times. FNS regional offices have formal and 
informal discussions with State and local officials on an ongoing basis 
regarding program implementation and policy issues. This arrangement 
allows State and local agencies to provide comments that form the basis 
for many discretionary decisions in this and other SNAP rules. FNS has 
responded to numerous written requests for policy guidance on IPV 
disqualification data reporting. Also, guidance for the prisoner 
verification and deceased data matching programs were implemented by 
agency directive with the consultation and input from State and local 
SNAP agencies. Finally, FNS presented ideas and received feedback on 
Program policy at various National, State, and professional conferences 
regarding the matching requirements in this rule.

What is the nature of concern and the need to issue this rule?

    FNS believes that it is important to standardize matching 
procedures to provide quality services to all SNAP participants and 
qualified applicants while ensuring that SNAP benefits are issued only 
to qualified individuals and households. In doing so, FNS and State 
agencies contribute to the success and integrity of the Program, 
garnering public support and user confidence in SNAP.
    State and local SNAP agencies, however, want flexibility in Program 
administration. To the extent possible, FNS will consider alternate 
means of meeting the objectives of the law and has considered State 
comments in finalizing this rule.

What is the extent to which FNS meets those concerns?

    This rule contains changes that are required by law and were 
implemented by agency directives in response to the implementation 
timeframes required in legislation. The changes to SNAP rules 
describing State agency responsibility for reporting IPV information 
will clarify how State agencies access disqualification information and 
follow-up on it, as well as provide for greater flexibility to State 
agencies for processing, retaining and sharing disqualification 
information. FNS is not aware of any case where the discretionary 
provision of this rule would preempt State law.

Executive Order 12988

    FNS has considered the impact of the final rule on State and local 
agencies. This rule is intended to have a preemptive effect with 
respect to any State and local laws, regulations or policies, which 
conflict with its provisions or would otherwise impede its full 
implementation. Prior to any judicial challenge to the provisions of 
this rule, or the application of its provisions, all applicable 
administrative procedures must be exhausted.
    This rule makes changes to the verification procedures for prisoner 
and deceased person data match programs, as well as reinforces 
requirements for disqualified recipient reporting and computer match 
benefits adjustments, as required by law. These procedures for matching 
prisoner and deceased persons were implemented by agency directives in 
May 1999 and February 2000, respectively, in response to implementation 
timeframes required in legislation. These changes to SNAP rules 
describing State agency responsibilities for reporting IPV information 
will clarify access and follow-up procedures for processing, retaining 
and sharing disqualification information.

Executive Order 13175

    Executive Order 13175 requires Federal agencies to consult and 
coordinate with Tribes on a government-to-government basis on policies 
that have Tribal implications, including regulations, legislative 
comments or proposed legislation, and other policy statements or 
actions that have substantial direct effects on one or more Indian 
Tribes, on the relationship between the Federal Government and Indian 
Tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian Tribes. In late 2010 and early 2011, 
USDA engaged in a series of consultative sessions to obtain input by 
Tribal officials or their designees concerning the effect of this and 
other rules on Tribes or Indian Tribal governments, or whether this 
rule may preempt Tribal law.
    Reports from the consultative sessions will be made part of the 
USDA annual reporting on Tribal Consultation and Collaboration. USDA 
will offer future opportunities, such as webinars and teleconferences, 
for collaborative conversations with Tribal leaders and their 
representatives concerning ways to improve rules with regard to their 
affect on Indian country.
    We are unaware of any current Tribal laws that could be in conflict 
with the final rule.

Civil Rights Impact Analysis

    FNS has reviewed this rule in accordance with 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 careful review of the rule's intent 
and provisions, and the characteristics of SNAP households and 
individual participants, FNS has determined that there is no way to 
determine their effect on any of the protected classes. The changes 
required to be implemented by law have already been implemented and are 
further clarified in this regulation. Regulations in Sec.  272.6 
specifically state that ``State agencies shall not discriminate against 
any applicant or participant in any aspect of program administration, 
including, but not limited to, the certification of households, the 
issuance of coupons, the conduct of fair hearings, or the conduct of 
any other program service for reasons of age, race, color, sex, 
handicap, religious creed, national origin, or political beliefs.''
    Discrimination in any aspect of program administration is 
prohibited, stated in Sec.  272.6 and title VI of the Civil Rights Act 
of 1964 (42 U.S.C. 2000d). Enforcement action may be brought under any 
applicable federal law, thus enabling FNS to implement verification 
standards mandating that SNAP State agencies systematize their 
application process. This would ensure that those who qualify are given 
a just amount of

[[Page 48055]]

SNAP support and that those that do not qualify are prohibited from 
receiving SNAP benefits. Title VI complaints shall be processed in 
accordance with 7 CFR part 15. 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 in Sec.  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 rule does not contain new information 
collection requirements subject to approval by OMB under the Paperwork 
Reduction Act of 1995. Information collection requirements and burden 
associated with this rule have been approved as part of OMB 
0584-0064, ``Application and Certification of Food Stamp Program 
Households'' (expiration March 2013) and OMB 0584-0492, ``SNAP 
Repayment Demand and Program Disqualification'' (expiration September 
2014).

E-Government Act Compliance

    FNS is committed to complying with the E-Government Act of 2002, to 
promote the use of the Internet and other information technologies to 
provide increased opportunities for citizen access to government 
information and services, and for other purposes. The information 
collection associated with this regulation is available for electronic 
submission through eDRS, which complies with the Paperwork Reduction 
Act.

List of Subjects

7 CFR Part 272

    Civil rights, Supplemental Nutrition Assistance Program, Grant 
programs-social programs, Reporting and recordkeeping requirements.

7 CFR Part 273

    Administrative practice and procedure, Claims, Supplemental 
Nutrition Assistance Program, Fraud, Grant programs-social programs, 
Penalties, Reporting and recordkeeping requirements, Social Security.

    For the reasons set out in the preamble, 7 CFR parts 272 and 273 
are amended as follows:

0
1. The authority citation for parts 272 and 273 continues to read as 
follows:

    Authority:  7 U.S.C. 2011-2036.

PART 272--REQUIREMENTS FOR PARTICIPATING STATE AGENCIES

0
2. In Sec.  272.1, paragraph (f) is revised to read as follows:


Sec.  272.1  General terms and conditions.

* * * * *
    (f) Retention of records. Each State agency shall retain all 
Program records in an orderly fashion for audit and review purposes for 
no less than 3 years from the month of origin of each record. In 
addition:
    (1) The State agency shall retain fiscal records and accountable 
documents for 3 years from the date of fiscal or administrative 
closure. Fiscal closure means that obligations for or against the 
Federal government have been liquidated. Administrative closure means 
that the State agency has determined and documented that no further 
action to liquidate the obligation is appropriate. Fiscal records and 
accountable documents include, but are not limited to, claims and 
documentation of lost benefits.
    (2) Case records relating to intentional Program violation 
disqualifications and related notices to the household shall be 
retained indefinitely until the State agency obtains reliable 
information that the record subject has died or until FNS advises via 
the disqualified recipient database system edit report that all records 
associated with a particular individual, including the disqualified 
recipient database record, may be permanently removed from the database 
because of the individual's 80th birthday.
    (3) Disqualification records submitted to the disqualified 
recipient database must be purged by the State agency that submitted 
them when the supporting documents are no longer accurate, relevant, or 
complete. The State agency shall follow a prescribed records management 
program to meet this requirement. Information about this program shall 
be available for FNS review.
* * * * *

0
3. New Sec. Sec.  272.12, 272.13, and 272.14 are added to read as 
follows:


Sec.  272.12  Computer matching requirements.

    (a) General purpose. The Computer Matching and Privacy Protection 
Act (CMA) of 1988, as amended, addresses the use of information from 
computer matching programs that involve a Federal System of Records. 
Each State agency participating in a computer matching program shall 
adhere to the provisions of the CMA if it uses an FNS system of records 
for the following purposes:
    (1) Establishing or verifying initial or continuing eligibility for 
Federal Benefit Programs;
    (2) Verifying compliance with either statutory or regulatory 
requirements of the Federal Benefit Programs; or
    (3) Recouping payments or delinquent debts under such Federal 
Benefit Programs.
    (b) Matching agreements. State agencies must enter into written 
agreements with USDA/FNS, consistent with 5 U.S.C. 552a(o) of the CMA, 
in order to participate in a matching program involving a USDA/FNS 
Federal system of records.
    (c) Use of computer matching information. (1) A State agency shall 
not take any adverse action to terminate, deny, suspend, or reduce 
benefits to an applicant or recipient based on information produced by 
a Federal computer matching program that is subject to the requirements 
of the CMA, unless:
    (i) The information has been independently verified by the State 
agency (in accordance with the independent verification requirements 
set out in the State agency's written agreement as required by 
paragraph (b) of this section) and a Notice of Adverse Action or Notice 
of Denial has been sent to the household, in accordance with Sec.  
273.2(f); or
    (ii) The Federal agency's Data Integrity Board has waived the two-
step independent verification and notice requirement and notice of 
adverse action has been sent to the household, in accordance with Sec.  
273.2(f) of this chapter.
    (2) A State agency which receives a request for verification from 
another State agency, or from FNS pursuant to the provisions of Sec.  
273.16(i) of this chapter shall, within 20 working days of receipt, 
respond to the request by providing necessary verification (including 
copies of appropriate documentation and any statement that an 
individual has asked to be included in their file).


Sec.  272.13  Prisoner verification system (PVS).

    (a) General. Each State agency shall establish a system to monitor 
and prevent individuals who are being held in any Federal, State, and/
or local detention or correctional institutions for more than 30 days 
from being included in a SNAP household.
    (b) Use of match data. State prisoner verification systems shall 
provide for:
    (1) The comparison of identifying information about each household

[[Page 48056]]

member, excluding minors, as that term is defined by each State, and 
one-person households in States where a face-to-face interview is 
conducted, against identifying information about inmates of 
institutions at Federal, State and local levels;
    (2) The reporting of instances where there is a match;
    (3) The independent verification of match hits to determine their 
accuracy;
    (4) Notice to the household of match results;
    (5) An opportunity for the household to respond to the match prior 
to an adverse action to deny, reduce, or terminate benefits; and
    (6) The establishment and collections of claims as appropriate.
    (c) Match frequency. State agencies shall make a comparison of 
match data for adult household members at the time of application and 
at recertification. States that opt to obtain and use prisoner 
information collected under Section 1611(e)(1)(I)(i)(I) of the Social 
Security Act (42 U.S.C. 1382(e)(1)(I)(i)(I)) shall be considered in 
compliance with this section. States shall enter into a computer 
matching agreement with the SSA under authority contained in 42 U.S.C. 
405(r)(3).


Sec.  272.14  Deceased matching system.

    (a) General. Each State agency shall establish a system to verify 
and ensure that benefits are not issued to individuals who are 
deceased.
    (b) Data source. States shall use the SSA's Death Master File, 
obtained through the State Verification and Exchange System (SVES) and 
enter into a computer matching agreement with SSA pursuant to authority 
to share data contained in 42 U.S.C. 405(r)(3).
    (c) Use of match data. States shall provide a system for:
    (1) Comparing identifiable information about each household member 
against information from databases on deceased individuals. States 
shall make the comparison of matched data at the time of application 
and no less frequently than once a year.
    (2) The reporting of instances where there is a match;
    (3) The independent verification of match hits to determine their 
accuracy;
    (4) Notice to the household of match results;
    (5) An opportunity for the household to respond to the match prior 
to an adverse action to deny, reduce, or terminate benefits; and
    (6) The establishment and collection of claims as appropriate.

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

0
4. In Sec.  273.2, a new paragraph (f)(11) is added to read as follows:


Sec.  273.2  Office operations and application processing.

* * * * *
    (f) * * *
    (11) Use of disqualification data. (i) Pursuant to Sec.  273.16(i), 
information in the disqualified recipient database will be available 
for use by any State agency that executes a computer matching agreement 
with FNS. The State agency shall use the disqualified recipient 
database for the following purposes:
    (A) Ascertain the appropriate penalty to impose based on past 
disqualifications in a case under consideration;
    (B) Conduct matches as specified in Sec.  273.16 on:
    (1) Program application information prior to certification and for 
a newly added household member whenever that might occur; and
    (2) The current recipient caseload at the time of recertification 
for a period of 1 year after the implementation date of this match. 
State agencies do not need to include minors, as that term is defined 
by each State.
    (3) States having the ability to conduct a one-time match of their 
entire active caseload against active cases from the disqualified 
recipient database may do so and be exempted from the 1-year 
requirement to conduct matches at recertification.
    (ii) State agencies shall not take any adverse action to terminate, 
deny, suspend, or reduce benefits to an applicant, or SNAP recipient, 
based on disqualified recipient match results unless the match 
information has been independently verified. The State agency shall 
provide to an applicant, or recipient, an opportunity to contest any 
adverse disqualified recipient match result pursuant to the provisions 
of Sec.  273.13.
    (iii) Independent verification shall take place separate from and 
prior to issuing a notice of adverse action--a two-step process. 
Independent verification for disqualification purposes means contacting 
the applicant or recipient household and/or the State agency that 
originated the disqualification record immediately to obtain 
corroborating information or documentation to support the reported 
disqualification information in the intentional Program violation 
database.
    (A) Documentation may be in any form deemed appropriate and legally 
sufficient by the State agency considering the adverse action. Such 
documentation may include, but shall not be limited to, electronic or 
hard copies of court decisions, administrative disqualification hearing 
determinations, signed disqualification consent agreements or 
administrative disqualification hearing waivers.
    (B) A State may accept a verbal or written statement from another 
State agency attesting to the existence of the documentation listed in 
paragraph (f)(11)(iii)(A) of this section.
    (C) A State may accept a verbal or written statement from the 
household affirming the accuracy of the disqualification information if 
such a statement is properly documented and included in the case 
record.
    (D) If a State agency is not able to provide independent 
verification because of a lack of supporting documentation, the State 
agency shall so advise the requesting State agency or FNS, as 
appropriate, and shall take immediate action to remove the unsupported 
record from the disqualified recipient database in accordance with 
Sec.  273.16(i)(6).
    (iv) Once independent verification has been received, the 
requesting State agency shall review and immediately enter the 
information into the case record and send the appropriate notice(s) to 
the record subject and any remaining members of the record subject's 
SNAP household.
    (v) Information from the disqualified recipient database is subject 
to the disclosure provisions in Sec.  272.1(c) of this chapter and the 
routine uses described in the most recent ``Notice of Revision of 
Privacy Act System of Records'' published in the Federal Register.
* * * * *

0
5. In Sec.  273.11, paragraph (c)(4)(i) is amended by adding a new 
sentence to the end of the paragraph to read as follows:


Sec.  273.11  Action on households with special circumstances.

* * * * *
    (c) * * *
    (4) * * *
    (i) * * * However, a participating household is entitled to a 
notice of adverse action prior to any action to reduce, suspend or 
terminate its benefits, if a State agency determines that it contains 
an individual who was disqualified in another State and is still within 
the period of disqualification.
* * * * *

0
6. In Sec.  273.12:
0
a. The section heading is revised:
0
b. Paragraph (e)(3) introductory text is amended by removing the last 
six

[[Page 48057]]

sentences and adding four new sentences in their place.
0
c. New paragraphs (e)(3)(i) and (e)(3)(ii) are added; and
0
d. The introductory text of paragraph (e)(4) is revised.
    The additions and revision read as follows:


Sec.  273.12  Requirements for change reporting households.

* * * * *
    (e) * * *
    (3) * * * A State agency may require households to report the 
change on the appropriate monthly report or may handle the change using 
the mass change procedures in this section. If the State agency 
requires the household to report the information on the monthly report, 
the State agency shall handle such information in accordance with its 
normal procedures. Households that are not required to report the 
change on the monthly report, and households not subject to monthly 
reporting, shall not be responsible for reporting these changes. The 
State agency shall be responsible for automatically adjusting these 
households' SNAP benefit levels in accordance with either paragraph 
(e)(3)(i) or (e)(3)(ii) of this section.
    (i) The State agency may make mass changes by applying percentage 
increases communicated by the source agency to represent cost-of-living 
increases provided in other benefit programs. These changes shall be 
reflected no later than the second allotment issued after the month in 
which the change becomes effective.
    (ii) The State agency may update household income information based 
on cost-of-living increases supplied by a data source covered under the 
Computer Matching and Privacy Protection Act of 1988 (CMA) in 
accordance with Sec.  272.12 of this chapter. The State agency shall 
take action, including proper notices to households, to terminate, deny 
or reduce benefits based on this information if it is considered 
verified upon receipt under Sec.  273.2(f)(9). If the information is 
not considered verified upon receipt, the State agency shall initiate 
appropriate action and notice in accordance with Sec.  273.2(f)(9).
    (4) Notice for mass change. When the State agency makes a mass 
change in SNAP eligibility or benefits by simultaneously converting the 
caseload, or that portion of the caseload that is affected, using the 
percentage increase calculation provided for in Sec.  273.12(e)(3)(i), 
or by conducting individual desk reviews using information not covered 
under the Computer Matching and Privacy Protection Act (CMA) in place 
of a mass change, it shall notify all households whose benefits are 
reduced or terminated in accordance with the requirements of this 
paragraph, except for mass changes made under Sec.  273.12(e)(1); and
* * * * *

0
7. In Sec.  273.13:
0
a. Paragraph (a)(2) is amended by adding two new sentences to the end 
of the paragraph;
0
b. Paragraph (b)(1) is revised; and
0
c. Paragraph (b)(7) is amended by removing the first sentence of the 
paragraph and adding three new sentences in its place.
    The additions and revision read as follows:


Sec.  273.13  Notice of adverse action.

    (a) * * *
    (2) * * * A notice of adverse action that combines the request for 
verification of information received through an IEVS computer match 
shall meet the requirements in Sec.  273.2(f)(9). A notice of adverse 
action that combines the request for verification of information 
received through a SAVE computer match shall meet the requirements in 
Sec.  273.2(f)(10).
* * * * *
    (b) * * *
    (1) The State initiates a mass change through means other than 
computer matches as described in Sec.  273.12(e)(1), (e)(2), or 
(e)(3)(i).
* * * * *
    (7) A household member is disqualified for an intentional Program 
violation in accordance with Sec.  273.16, or the benefits of the 
remaining household members are reduced or terminated to reflect the 
disqualification of that household member, except as provided in Sec.  
273.11(c)(3)(i). A notice of adverse action must be sent to a currently 
participating household prior to the reduction or termination of 
benefits if a household member is found through a disqualified 
recipient match to be within the period of disqualification for an 
intentional Program violation penalty determined in another State. In 
the case of applicant households, State agencies shall follow the 
procedures in Sec.  273.2(f)(11) for issuing notices to the 
disqualified individual and the remaining household members. * * *
* * * * *

0
8. In Sec.  273.16, paragraph (i) is revised to read as follows:


Sec.  273.16  Disqualification for intentional program violation.

* * * * *
    (i) Reporting requirements. (1) Each State agency shall report to 
FNS information concerning individuals disqualified for an intentional 
Program violation, including those individuals disqualified based on 
the determination of an administrative disqualification hearing 
official or a court of appropriate jurisdiction, and those individuals 
disqualified as a result of signing either a waiver of right to a 
disqualification hearing or a disqualification consent agreement in 
cases referred for prosecution. This information shall be submitted to 
FNS so that it is received no more than 30 days after the date the 
disqualification took effect.
    (2) State agencies shall report information concerning each 
individual disqualified for an intentional Program violation to FNS. 
FNS will maintain this information and establish the format for its 
use.
    (i) State agencies shall report information to the disqualified 
recipient database in accordance with procedures specified by FNS.
    (ii) State agencies shall access disqualified recipient information 
from the database that allows users to check for current and prior 
disqualifications.
    (3) The elements to be reported to FNS are name, social security 
number, date of birth, gender, disqualification number, 
disqualification decision date, disqualification start date, length of 
disqualification period (in months), locality code, and the title, 
location and telephone number of the locality contact. These elements 
shall be reported in accordance with procedures prescribed by FNS.
    (i) The disqualification decision date is the date that a 
disqualification decision was made at either an administrative or 
judicial hearing, or the date an individual signed a waiver to forego 
an administrative or judicial hearing and accept a disqualification 
penalty.
    (ii) The disqualification start date is the date the 
disqualification penalty was imposed by any of the means identified in 
Sec.  273.16(i)(3)(i).
    (iii) The locality contact is a person, position or entity 
designated by a State agency as the point of contact for other State 
agencies to verify disqualification records supplied to the 
disqualified recipient database by the locality contact's State.
    (4) All data submitted by State agencies will be available for use 
by any State agency that is currently under a valid signed Matching 
Agreement with FNS.
    (i) State agencies shall, at a minimum, use the data to determine 
the eligibility of individual Program applicants prior to 
certification, and for 1 year following implementation, to determine 
the

[[Page 48058]]

eligibility at recertification of its currently participating caseload. 
In lieu of the 1-year match at recertification requirement and for the 
same purpose, State agencies may conduct a one-time match of their 
participating caseload against active disqualifications in the 
disqualified recipient database. State agencies have the option of 
exempting minors from this match.
    (ii) State agencies shall also use the disqualified recipient 
database for the purpose of determining the eligibility of newly added 
household members.
    (5) The disqualification of an individual for an intentional 
Program violation in one political jurisdiction shall be valid in 
another. However, one or more disqualifications for an intentional 
Program violation, which occurred prior to April 1, 1983, shall be 
considered as only one previous disqualification when determining the 
appropriate penalty to impose in a case under consideration, regardless 
of where the disqualification(s) took place. State agencies are 
encouraged to identify and report to FNS any individuals disqualified 
for an intentional Program violation prior to April 1, 1983. A State 
agency submitting such historical information should take steps to 
ensure the availability of appropriate documentation to support the 
disqualifications in the event it is contacted for independent 
verification.
    (6) If a State determines that supporting documentation for a 
disqualification record that it has entered is inadequate or 
nonexistent, the State agency shall act to remove the record from the 
database.
    (7) If a court of appropriate jurisdiction reverses a 
disqualification for an intentional Program violation, the State agency 
shall take action to delete the record in the database that contains 
information related to the disqualification that was reversed in 
accordance with instructions provided by FNS.
    (8) If an individual disputes the accuracy of the disqualification 
record pertaining to him/herself the State agency submitting such 
record(s) shall be responsible for providing FNS with prompt 
verification of the accuracy of the record.
    (i) If a State agency is unable to demonstrate to the satisfaction 
of FNS that the information in question is correct, the State agency 
shall immediately, upon direction from FNS, take action to delete the 
information from the disqualified recipient database.
    (ii) In those instances where the State agency is able to 
demonstrate to the satisfaction of FNS that the information in question 
is correct, the individual shall have an opportunity to submit a brief 
statement representing his or her position for the record. The State 
agency shall make the individual's statement a permanent part of the 
case record documentation on the disqualification record in question, 
and shall make the statement available to each State agency requesting 
an independent verification of that disqualification.
* * * * *

    Dated: July 10, 2012.
Kevin Concannon,
Under Secretary, Food, Nutrition, and Consumer Services.
[FR Doc. 2012-19768 Filed 8-10-12; 8:45 am]
BILLING CODE 3410-30-P