Supplemental Nutrition Assistance Program: Standardization of State Heating and Cooling Standard Utility Allowances, 91198-91245 [2024-26845]

Agencies

• DEPARTMENT OF AGRICULTURE
• Food and Nutrition Service

[Federal Register Volume 89, Number 222 (Monday, November 18, 2024)]
[Rules and Regulations]
[Pages 91198-91245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-26845]



[[Page 91197]]

Vol. 89

Monday,

No. 222

November 18, 2024

Part VI





Department of Agriculture





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 Food and Nutrition Service





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7 CFR Part 273





Supplemental Nutrition Assistance Program: Standardization of State 
Heating and Cooling Standard Utility Allowances; Final Rule

Federal Register / Vol. 89 , No. 222 / Monday, November 18, 2024 / 
Rules and Regulations

[[Page 91198]]


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DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 273

[FNS-2019-0009]
RIN 0584-AE69


Supplemental Nutrition Assistance Program: Standardization of 
State Heating and Cooling Standard Utility Allowances

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

ACTION: Final rule.

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SUMMARY: This rule finalizes changes proposed October 3, 2019, by the 
Department to revise Supplemental Nutrition Assistance Program (SNAP) 
regulations for calculating standard utility allowances (SUAs) and 
expand allowable shelter expenses to include basic internet costs. It 
requires State agencies to submit for FNS approval their SUA 
methodologies at least every five years, and methodology submissions 
must incorporate any revisions necessary to demonstrate that the 
baseline expenditure data and underlying methodology reflect recent 
trends and changes. This rule also provides State agencies with the 
flexibility necessary to ensure that they meet households' needs while 
also aligning SUAs with data on low-income household utility costs in a 
more consistent manner. This rule also finalizes updates proposed April 
20, 2016, regarding the treatment of Low Income Home Energy Assistance 
Program or other similar energy assistance program payments, in 
accordance with amendments made to the Food and Nutrition Act of 2008 
by the Agricultural Act of 2014. The intent of this final rule is to 
ensure consistency and integrity of SUAs across the country, which the 
Department believes is good governance.

DATES: 
    Effective date: This final rule is effective January 17, 2025.
    Compliance date: The compliance date for SUA changes is October 1, 
2025.

ADDRESSES: SNAP Program Development Division, Food and Nutrition 
Service, USDA, 1320 Braddock Place, Alexandria, Virginia 22314.

FOR FURTHER INFORMATION CONTACT: Catrina Kamau, Certification Policy 
Branch, Program Development Division, Food and Nutrition Service, 1320 
Braddock Place, Alexandria, Virginia 22314. Email: 
[email protected]. Phone: (703) 305-2022.

SUPPLEMENTARY INFORMATION: 

Acronyms or Abbreviations

American Community Survey, ACS
Code of Federal Regulations, CFR
Consumer Expenditure Survey, CEX
Consumer Price Index, CPI
Fiscal Year, FY
Food and Nutrition Act of 2008, the Act
Food and Nutrition Service, FNS
Heating and Cooling Standard Utility Allowance, HCSUA
Limited Utility Allowance, LUA
Low-Income Home Energy Assistance Act of 1981, LIHEAA
Low-Income Home Energy Assistance Program, LIHEAP
Residential Energy Consumption Survey, RECS
Short Term Energy Outlook, STEO
Standard Utility Allowance, SUA
State SNAP Agencies, State agencies or States
Supplemental Nutrition Assistance Program, SNAP
U.S. Department of Agriculture, the Department or USDA

References

 Title 7 of the Code of Federal Regulations, part 273
 Holleyman, Chris, Timothy Beggs, and Alan Fox. Methods to 
Standardize State Standard Utility Allowances. Prepared by 
Econometrica for the U.S. Department of Agriculture, Food and 
Nutrition Service, August 2017. https://www.fns.usda.gov/snap/methods-standardize-state-standard-utility-allowances.
 Holleyman, Chris, Pratima Damani, and Erick Torres. 
Updating Standardized State Heating and Cooling Utility Allowance 
Values. Prepared by SP Group, LLC for the U.S. Department of 
Agriculture, Food and Nutrition Service, March 2023. https://www.fns.usda.gov/snap/updating-hcsua-values.
 MD/DC/DE Broadcasters Ass'n v. F.C.C., 253 F.3d 
732, 734 (D.C. Cir. 2001).
 U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, Characteristics of Supplemental Nutrition 
Assistance Program Households: Fiscal Year 2022, by Mia Monkovic. 
Project Officer, Aja Weston. Alexandria, VA, 2024. https://www.fns.usda.gov/research/snap/characteristics-fy22.
 U.S. Department of Agriculture, Food and Nutrition Service, 
Supplemental Nutrition Assistance Program--Section 4006 Agricultural 
Act of 2014--Implementing Memorandum, 5 March 2014. Retrieved from: 
https://www.fns.usda.gov/snap/eligibility/deduction/liheap-implementation-memo in November 2023.
 U.S. Department of Health & Human Services. LIHEAP IM 1999-
10 on Federal Public Benefits Under the Welfare Reform Law--Revised 
Guidance, June 15, 1999. Retrieved from https://www.acf.hhs.gov/ocs/policy-guidance/liheap-im-1999-10-federal-public-benefits-under-welfare-reform-law-revised in November 2023.
 U.S. Energy Information Administration, 2015 Residential 
Energy Consumption Survey in section, ``Electricity Use in Homes.'' 
Retrieved from https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php in November 2023.
 U.S. Energy Information Administration, Residential Energy 
Consumption Survey for indicated years (1980-2015). Retrieved from 
https://www.eia.gov/energyexplained/use-of-energy/homes.php in 
November 2023.
 U.S. Energy Information Administration, Monthly Energy 
Review, Table 2.2, April 2022, preliminary data for 2021. Retrieved 
from https://www.eia.gov/energyexplained/use-of-energy/homes.php in 
November 2023.
 U.S. Energy Information Administration, U.S. Energy 
Insecure Households were Billed More for Energy than Other 
Households, May 23, 2023. Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=56640 in November 2023.
 USGCRP, 2018: Impacts, Risks, and Adaptation in the United 
States: Fourth National Climate Assessment, Volume II [Reidmiller, 
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. 
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research 
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.

Combined Final Rule

    This final rule incorporates provisions originally proposed in two 
separate notices of proposed rulemaking (NPRM): The October 3, 2019, 
NPRM titled ``Supplemental Nutrition Assistance Program: 
Standardization of State Heating and Cooling Standard Utility 
Allowances'' (84 FR 52809), and the April 20, 2016, NPRM titled 
``Supplemental Nutrition Assistance Program: Standard Utility 
Allowances Based on the Receipt of Energy Assistance Payments Under the 
Agricultural Act of 2014'' (81 FR 23189). While originally published as 
separate NPRMs, the provisions contained in these rules both relate to 
determining household shelter expenses, and therefore, the Department 
is addressing the NPRMs in this single final rule. In this final rule, 
the Department will refer to the October 3, 2019, NPRM as the SUA NPRM. 
The Department will refer to the April 20, 2016, NPRM as the LIHEAP 
NPRM.
    The Department intends for the LIHEAP NPRM provisions of this final 
rule and the SUA NPRM provisions to be separate and severable from one 
another. If any provision related to the SUA NPRM is stayed or 
determined to be invalid, it is the Department's intention that the 
remaining provisions

[[Page 91199]]

related to the LIHEAP NPRM shall continue in effect. For example, if a 
court were to invalidate the final rule's HCSUA standardization 
provision, the provisions related to the LIHEAP NPRM would remain in 
effect, as those provisions ``could function sensibly without the 
stricken provision.'' \1\
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    \1\ MD/DC/DE Broadcasters Ass'n v. F.C.C., 253 F.3d 732, 734 
(D.C. Cir. 2001) (internal quotations omitted).
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    This rule redesignates several regulatory citations to reflect 
amendments to the regulatory text resulting from this final rule. Where 
applicable, each redesignation is reflected explicitly in the 
discussion of the corresponding provision.

Background on SUAs and the SUA NPRM

    The Food and Nutrition Act of 2008 (the Act) establishes national 
eligibility standards for SNAP, including net income standards, and 
provides allowable deductions from gross income to determine the net 
income of a household. Apart from a standard deduction for all 
households, deductions are available to households based on their 
circumstances. Some of these deductions include: earned income; 
dependent care costs when needed for work, searching for work, 
training, or education; medical expenses over $35 for elderly or 
disabled households; and excess shelter costs.
    The excess shelter deduction allows households to deduct shelter 
expenses that exceed 50 percent of their income after all other 
deductions are taken. For households without an elderly or disabled 
member, the deduction must not exceed a maximum limit. Households with 
elderly or disabled members are not subject to a limit. Shelter 
expenses include the basic cost of housing as well as certain utilities 
and other allowable expenses listed in 7 CFR 273.9(d)(6)(ii). To help 
streamline the application and certification process, section 5(e)(6) 
of the Act permits State agencies to develop SUAs to use in lieu of 
actual utility expenses in determining a household's shelter costs for 
the purposes of the excess shelter deduction. The Act requires that 
State SUAs must be developed ``in accordance with regulations 
promulgated by the [USDA].'' \2\
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    \2\ 7 U.S.C. 2014(e)(6)(C)(i).
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    Per USDA's regulations, at 7 CFR 273.9(d)(6)(iii), State agencies 
may create three types of SUAs: a heating and cooling SUA (HCSUA); a 
limited utility allowance (LUA); and single utility allowances (also 
referred to as ``individual standards''). The HCSUA is the largest of 
the SUAs and is available to households that incur heating or cooling 
expenses separate from their rent or mortgage. The HCSUA is 
comprehensive and includes costs for heating or cooling and all other 
allowable utilities. The LUA includes expenses for at least two 
utilities; single utility allowances may be used for stand-alone 
utility costs. Neither the LUA nor single utility allowances include 
costs for heating and/or cooling. Utility expenses captured in SUAs may 
include: electricity or fuel for purposes other than heating or 
cooling, water, sewerage, well and septic tank installation and 
maintenance, telephone, and garbage or trash collection.\3\
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    \3\ 7 CFR 273.9(d)(6)(ii)(C).
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    A State agency may mandate use of SUAs for all households with 
qualifying expenses if the State agency has developed one or more SUAs 
that include the costs of heating and cooling and one or more SUAs that 
do not include the costs of heating and cooling.\4\ Under this option, 
households entitled to the SUA may not claim actual expenses, even if 
the expenses are higher than the SUA. Households not entitled to the 
SUA may claim actual allowable expenses.
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    \4\ 7 U.S.C. 2014(e)(6)(C)(iii); 7 CFR 273.9(d)(6)(iii)(E).
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    SNAP regulations require State agencies to review SUAs annually and 
adjust to reflect changes in costs.\5\ State agencies must submit the 
figures to FNS for approval at the annual update and whenever a State 
agency changes methodologies (Office of Management and Budget (OMB) 
Control Number 0584-0496; Expiration Date 7/31/2026). In developing 
SUAs, program requirements do not prescribe a particular methodology or 
data sources for State agencies to use. State agencies have a certain 
amount of flexibility to tailor the program's administration to meet 
the needs of their residents. SUAs embody this flexibility, as they 
vary from State to State and reflect not only the different costs, but 
the different utility needs in each State. For example, the heating and 
cooling needs of Maine residents are not the same as those in 
Mississippi as these States have differing climates, energy usage, and 
commonly used energy sources. While this flexibility is critical and 
each State's circumstances are unique, without consistent parameters 
for SUA methodologies, the Department is concerned that the information 
State agencies use to determine SUAs is outdated and may not reflect 
low-income households' current utility costs.
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    \5\ 7 CFR 273.9(d)(6)(iii)(B).
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    Monthly shelter costs, such as rent, mortgage, and utilities, 
comprise a significant share of most Americans' household budgets. 
Similarly, in the SNAP benefit calculation, SUAs comprise a significant 
share of household shelter costs. The use of SUAs allows for a 
streamlined approach over an itemized, case-by-case approach to 
determine household utility costs and is a substantial factor in 
evaluating whether the household is eligible for the excess shelter 
deduction. As such, SUAs can affect a household's eligibility for the 
excess shelter deduction and, ultimately, the household's eligibility 
for SNAP and their benefit amount. Aligning SUAs with current household 
conditions, including in households with unusually high utility 
expenses, is important to ensure that the application of the excess 
shelter deduction adequately reflects household circumstances and 
ultimately, the appropriateness of the benefit levels.
    The Department explored options for standardizing State SUAs in a 
2017 study, ``Methods to Standardize State Standard Utility 
Allowances'' (Holleyman, et al., 2017) (2017 SUA Study).\6\ The 2017 
SUA Study evaluated State agency methodologies and reviewed available 
utility cost data sources. The study found that most of the 
methodologies State agencies employ fall into one of two categories: 
(1) those that rely on recent State-specific utility data; and (2) 
those that adjust a base number using an inflation measure such as the 
CPI of utility costs. Of the 19 State agencies that update a base 
number, the study found that less than half (seven States) knew the 
source of their base number, and many did not know when it was 
established.
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    \6\ Holleyman, Chris, Timothy Beggs, and Alan Fox. Methods to 
Standardize State Standard Utility Allowances. Prepared by 
Econometrica for the U.S. Department of Agriculture, Food and 
Nutrition Service, August 2017.
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    Further, the 2017 SUA Study noted that State HCSUAs differed 
considerably from the average utility expenditures among low-income 
households in their State. The authors speculated that State agencies 
may set their SUAs higher than the average costs to minimize benefit 
loss for households with very high utility expenses. In evaluating this 
possibility, the authors compared State HCSUA values to values derived 
from Federal survey data and found variation in the degree to which 
State agencies set their HCSUAs compared to HCSUAs set at the 85th 
percentile of utility costs for low-income households. The study used 
the

[[Page 91200]]

85th percentile for illustrative purposes and not as a recommended 
threshold, as the Department has not previously set a designated 
threshold for SUAs and has allowed State agencies flexibility in this 
area.
    The authors found that most State agencies used HCSUAs below the 
85th percentile of utility costs for low-income households in their 
State based on the Federal survey data, meaning that their HCSUAs may 
be under-representing the costs for households with high utility 
expenses.
    To ensure consistent and transparent application of the HCSUA 
across the country, the Department proposed a methodology to 
standardize the way State agencies calculate HCSUAs in the SUA NPRM 
published October 3, 2019. The Department notes that it also used the 
term ``benefit equity'' in the NPRM to describe the purpose of 
standardizing SUA methodologies. Multiple commenters, described in more 
detail below, raised concerns about the use of this term given that 
benefit levels depend on household circumstances, including differences 
in utility costs. This term, in addition to ``consistency'' and 
``integrity,'' were used to describe the Department's goal of ensuring 
each State's SUAs represent utility costs for low-income households in 
the State by proposing clear data requirements to calculate them. 
However, after considering this terminology, the Department agrees with 
commenters that ``benefit equity'' is imprecise compared with the other 
terms used. Therefore, the Department will use the terms 
``consistency'' and ``integrity'' throughout to describe the purpose of 
the SUA NPRM and the final rule.
    The methodology in the proposed rule would establish each State 
agency's HCSUA at the 80th percentile of low-income households' utility 
costs in the State. The proposed rule would cap most LUAs and 
individual standards for other utility costs at a percentage of the 
State agency's HCSUA. The proposed rule would add the cost of basic 
internet as an allowable utility expense and establish a national 
maximum amount for a new telecommunications SUA that would include 
internet and telephone costs. FNS would calculate the initial figures 
and update them annually.

Summary of General Comments on the October 3, 2019, (SUA) NPRM

    The Department received over 125,000 public comment submissions on 
the SUA NPRM.\7\ Of these, approximately 6,500 were unique and nearly 
118,800 were associated with form letter campaigns. The Department 
reviewed and considered all comments received.
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    \7\ Posted public comments may be found at regulations.gov 
https://www.regulations.gov/document/FNS-2019-0009-0001/comment.
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    Approximately 35 individual commenters expressed general support 
for the proposed changes, citing concerns about increasing government 
spending and the need to prevent fraudulent activity. A non-profit 
organization argued that SUAs have led to significant distortions in 
eligibility determinations and benefit levels between States and 
significantly weaken program integrity. This commenter claimed that 
State agencies frequently set SUA thresholds above what applicants are 
paying for utilities, creating a greater risk for abuse and violating 
the statutory intent of SUA policies. While the Department appreciates 
these comments, the Department notes that setting SUAs above what some 
applicants are paying for utilities is not fraudulent, as SUAs are not 
meant to represent average household utility expenses.
    In past guidance,\8\ the Department encouraged State agencies to 
set SUAs high enough to ensure most households use the SUA rather than 
claim actual utility costs, while also reflecting actual costs. Most 
State agencies mandate the use of SUAs, as described above. The 
flexibility State agencies have to set SUAs above the average 
household's costs protects vulnerable households with higher-than-
average utility costs in mandatory SUA States. The Department proposed 
changes to SUA methodologies out of concern that SUAs are outdated and 
do not reflect recent trends and data on household utility costs, 
leading to inconsistencies between State SUA values and the utility 
costs SNAP households incur.
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    \8\ U.S. Department of Agriculture, Food and Nutrition Service, 
Food Stamp Program Standard Utility Allowances Requirements and 
Methodologies, FNS Notice 79-47, May 1979. Retrieved from: https://www.fns.usda.gov/snap/sua-requirements-and-methodologies in December 
2023.
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    Additionally, approximately 15 commenters supported the proposed 
update to the telephone standard to include basic internet services. 
Multiple commenters, including advocacy groups, a policy advocacy 
organization, multiple State government agencies, a religious 
organization, and a trade association, agreed with the Department's 
argument that internet is an essential service. Additional commenters, 
including an advocacy group, a legal services organization, a policy 
advocacy organization, and State government agencies generally 
supported updating the telephone standard to include internet services.
    Approximately 107,980 commenters, the majority of which were from 
form letter campaigns, generally opposed the proposed changes in the 
SUA NPRM. Many of these commenters expressed concerns that 
standardizing HCSUAs at the 80th percentile would decrease benefits and 
negatively impact the general health and well-being of certain 
demographics, including women, elderly individuals, individuals with 
higher-than-average shelter costs, individuals with disabilities, and 
children. Some commenters also expressed concern over how the changes 
might affect the stability of the economy.
    One food bank, ten non-profit and advocacy organizations, six form 
letter campaigns, one professional association, one religious 
organization, one food service industry organization, and two local 
governments expressed opposition to the proposed rule because it was 
projected to cut SNAP benefits for a significant number of households. 
The same religious organization and two other form letter campaigns 
opposed the changes because they were projected to cause 8,000 people 
to lose SNAP benefits. An advocacy group wrote that the proposed rule 
would eliminate 18 percent of the average SNAP family's food budget. 
The Department notes that most SNAP households (81 percent) would have 
experienced no change to their benefits or a benefit increase under the 
proposed rule, as noted in the Regulatory Impact Analysis (RIA). The 
Department also notes that these projections are no longer accurate, 
given the changes in the final rule, which are described in more detail 
below.
    Further, a form letter campaign, a State-elected official, three 
advocacy organizations, one policy advocacy organization, and an 
individual commented that the proposed rule would force struggling 
families to choose between heating and cooling their homes and putting 
food on the table. Two food banks, a form letter campaign, a religious 
organization, a State government, a trade association, and four 
advocacy groups cited evidence that suggests SNAP supports housing 
stability and alleviates the trade-offs families often face between 
purchasing food or other basic necessities, such as healthcare and 
utilities. A form letter campaign wrote that the proposed rule 
discriminates against families with high shelter costs.
    Multiple commenters raised concerns about the proposed rule's cut 
to SNAP benefits and the associated food security and health 
implications. A food bank, a

[[Page 91201]]

healthcare association, and an individual expressed concerns regarding 
the negative impacts of food insecurity on a person's health. A legal 
services organization, four religious organizations, a healthcare 
association, an educational institution, two advocacy groups, and a 
policy advocacy organization commented that the proposed rule would 
exacerbate food insecurity and significantly increase healthcare costs. 
A form letter campaign stated that Congress authorized SNAP to 
encourage participant households to consume nutritious foods and found 
that limiting the purchasing power of low-income households contributed 
to food insecurity and malnutrition.
    Commenters also raised concerns regarding the overall impact of the 
SUA NPRM in conjunction with the final rule published on December 5, 
2019, entitled ``Supplemental Nutrition Assistance Program: 
Requirements for Able-Bodied Adults Without Dependents'' (84 FR 66782), 
and the proposed rule published on July 24, 2019, entitled ``Revision 
of Categorical Eligibility in the Supplemental Nutrition Assistance 
Program (SNAP)'' (84 FR 35570). Commenters expressed concern that these 
regulatory changes proposed by the Department would adversely impact 
households and their benefits, compounding the impact of the SUA NRPM 
for some households. These comments are no longer relevant as the 
Department rescinded (86 FR 34605) and withdrew (86 FR 30795) these 
proposed and final changes to program rules.
    Approximately 17,340 commenters discussed the proposed rule as it 
relates to SNAP's statutory purpose and Congressional intent. Two food 
banks, two religious organizations, three local/municipal governments, 
a policy advocacy organization, a trade association, two legal services 
groups, two form letter campaigns, a health care association, a 
community organization, and seven advocacy groups claimed that the 
proposed rule was an attempt to sidestep Congress and reduce SNAP 
benefits. Many of these commenters, as well as two form letter 
campaigns, two federally-elected officials, 11 advocacy groups, three 
legal services groups, a religious organization, three food banks, an 
academic, a trade association, and a community organization, argued 
that the proposed rule subverts the 2018 Farm Bill, which made no 
changes to SUAs.
    Twelve commenters, including a policy advocacy organization, two 
advocacy groups, a lawyer, four legal services groups, two individual 
commenters, a local/municipal government, and a federally-elected 
official, claimed the proposed rule was in violation of the 
Administrative Procedure Act (APA). Two of the legal services 
commenters alleged the proposed rule was arbitrary and capricious 
because it did not provide adequate reasoned rationale to inform 
meaningful comment, as required by the APA. A federally-elected 
official and an advocacy group claimed the proposed rule violates the 
APA because it failed to consider all relevant factors. A policy 
advocacy organization said that the proposed rule does not provide 
enough information for the public to meaningfully comment on the 
proposed methodology. The commenter wrote that the proposed rule 
violates the APA because it does not provide a justification for the 
80th percentile HCSUA cap.
    The Department appreciates the commenters' concerns about the 
proposed rule's potential adverse impact on SNAP households and has 
made changes in the final rule that may address these concerns. These 
changes include the Department not finalizing the proposed HCSUA 
methodology standardization provision and the proposed caps on LUAs and 
individual standards. The Department still believes it is necessary to 
ensure a clear justification for the any SUA that a State sets, and 
therefore the Department is providing State agencies with the 
flexibility to continue setting their own SUAs while standardizing the 
data and methodology criteria that FNS will use to approve SUAs. As 
noted above, commenters broadly supported accounting for basic internet 
costs in SUAs. The final rule makes changes to treat basic internet 
costs like any other allowable utility cost that can be included in the 
HCSUA, LUA, and as an individual standard. The Department further 
explains these changes and the accompanying rationale later in this 
preamble.
    The Department disagrees with commenters' claims that the 
Department lacks the authority to standardize SUAs. While the 
Department agrees that Congress did not make changes to SUAs during the 
passage of the 2018 Farm Bill, the Department notes that Congress did 
not change sec. 5(e)(6)(C)(i) of the Food and Nutrition Act of 2008 
either, which gives the Secretary the authority to promulgate 
regulations concerning how SUAs are set by State agencies.\9\ As such, 
the Department maintains the authority to regulate SUAs within the 
statutory framework.
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    \9\ 7 U.S.C. 2014(e)(6)(C)(i) (``[A] State agency may use a 
standard utility allowance in accordance with regulations 
promulgated by the Secretary. . . .'').
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    In the sections that follow, the Department presents each provision 
of the proposed rule: the relevant, substantive comments related to the 
provision; and any changes made to the final rule in a section-by-
section format. Throughout this comment analysis, the Department views 
a comment as substantive if it provides an opinion or recommendation on 
a specific policy and includes detailed reasoning.

Standardizing HCSUA Methodology

    In the SUA NPRM, the Department proposed to amend SNAP regulations 
at 7 CFR 273.9(d)(6)(iii) to create a new, standardized methodology for 
calculating State HCSUAs. The proposed standardization set HCSUAs at 
the 80th percentile of utility costs for low-income households in each 
State, calculated annually by FNS.
    The NPRM methodology would use best-available utility cost 
information from nationally representative Federal sources that reflect 
State-specific household expenses, such as the American Community 
Survey (ACS), drawing on the recommendations of the 2017 SUA Study. The 
methodology would also allow the Department to use other data sources 
if such Federal sources are not available or if better data becomes 
available. Under the SUA NPRM, FNS would calculate and provide States 
with standardized HCSUAs using the following sources and set SUAs at 
the 80th percentile of utility costs for low-income households:
     ACS with adjustments based on the Residential Energy 
Consumption Surveys (RECS) to derive the energy component of the HCSUA.
     ACS and Consumer Expenditure Surveys (CEX) data to derive 
the water, sewer, and trash component of the HCSUA.
     Current pricing information on telecommunications services 
from service providers.
    As needed, FNS would adjust the estimates from the sources listed 
above using utility expenditure growth rates and population growth 
estimates in order to reflect the current fiscal year.
    Since the proposed data sources do not collect information for 
territories, such as Guam and the Virgin Islands, the Department 
proposed to continue to allow these territories to use their own 
methodologies, and conduct their own calculations, subject to FNS 
approval.
    Using the utility cost information from these sources, FNS would 
set the standardized HCSUAs at the 80th percentile of utility costs for 
low-income households in each state. In the

[[Page 91202]]

SUA NPRM, the Department explained that it chose the 80th percentile 
because standardizing at this level would reduce the amount of 
variation between utility costs and HCSUA amounts across States. 
Additionally, the Department argued that setting HCSUA values at the 
80th percentile would balance the need to create more accurate 
standards while still capturing households that have higher than 
average utility costs, as most States mandate SUAs in lieu of actual 
costs.
    Commenters expressed opposition to the proposed standardized HCSUA 
methodology due to concerns about the following, which are discussed in 
more detail in the paragraphs below:
     Negatively impacting SNAP participants, especially among 
certain demographics.
     Setting HCSUAs at the 80th percentile of low-income 
households' utility costs without clear rationale;
     Limiting State agencies' flexibility to address their 
unique needs; and
     Using the data sources the Department proposed, in lieu of 
other State-specific data sources.
    Approximately 240 commenters expressed general opposition to the 
proposal to set HCSUAs at the 80th percentile of low-income households' 
utility costs in the State. Many of these commenters requested further 
explanation for the Department's rationale for capping the HCSUA at the 
80th percentile. These comments included those from form letter 
campaigns, multiple members of the U.S. Congress, a legal center, a 
legal services organization, a health care association, multiple local/
municipal commenters, a State agency, and advocacy groups.
    Approximately 107,980 commenters expressed general opposition to 
standardizing the HCSUA methodology process due to the potential 
adverse effects on certain demographics. Three form letter campaigns, a 
food bank, five advocacy groups, and an individual, discussed the 
negative impacts of the proposed changes on people with disabilities. 
Two of these form letter campaigns, the same individual, an additional 
food bank, and an additional advocacy group stated that 11 percent of 
SNAP households include a person with a disability, and those 
households will be disproportionately impacted by the proposed rule. 
Many of these same commenters, and an additional food bank and advocacy 
group, argued that the proposed rule would similarly harm elderly SNAP 
recipients. Another form letter campaign stated that households with a 
family member with disabilities are two to three times more likely to 
experience food insecurity than households without a family member with 
disabilities. This form letter further claimed that the proposed rule 
would force people with disabilities and their families to choose 
between spending their limited resources on food or other necessities 
such as housing, utilities, and medical expenses.
    A policy advocacy organization and an advocacy group argued that 
the rule would have a disproportionate negative impact on women because 
women make up the majority of SNAP recipients. Comments from one 
advocacy group and a policy advocacy organization argued the proposed 
changes would increase food insecurity for children, and two food 
banks, four advocacy groups, and a policy advocacy organization cited 
the proposed rule's RIA, which estimated a 19 percent net reduction in 
SNAP benefits for households with children, with an average annual loss 
of $336 in food assistance. The Department notes that the proposed 
rule's RIA did not estimate a 19 percent net reduction in SNAP benefits 
for households with children. Rather, it noted that 19 percent of SNAP 
households with children were expected to see a reduction in their SNAP 
benefits under the proposed rule.
    In addition to the impact on certain demographics, commenters 
expressed concern that standardizing the HCSUA at the 80th percentile 
would not adequately cover the lowest-income household's high utility 
costs and would result in decreases to SNAP benefits. Two form letter 
campaigns noted that the proposed rule would cut $4.5 billion over five 
years in SNAP benefits. A community organization, multiple advocacy 
groups, multiple State government agencies, a food bank, a professional 
association, and a legal services organization criticized the proposed 
methodology, writing that 19 percent, or approximately one in five, of 
SNAP households would see a reduction in benefits under the proposed 
rule. Three legal services organizations, one attorney, four advocacy 
groups, four policy advocacy organizations, and one religious 
organization stated that using the 80th percentile would result in 
lower HCSUAs than the Department has allowed under long-standing 
policy. Some commenters raised the potential for the Department to set 
default HCSUAs at a different percentile and provided suggestions. 
Advocacy groups and an attorney stated that, while interstate 
inequities exist, it would be preferable for States with lower-than-
average utility allowances to raise them rather than standardizing all 
States' HCSUAs.
    The Department appreciates commenters' concerns about the proposed 
rule's potential adverse impact on certain demographics. The Department 
is aware of the potential negative impact on elderly and disabled 
households since they do not have a cap on their excess shelter 
deduction in the Act. Therefore, without the cap on shelter expenses 
that all other households have, households with elderly or disabled 
members are more likely to see a greater change in their benefit 
amounts (both increases and decreases) due to any change in HCSUA 
methodologies than households without elderly or disabled members. The 
Department is committed to serving all households, including those with 
elderly or disabled members who are most affected by changes to SUAs, 
and will support State agencies' implementation of the final rule as 
they help households understand any changes to their benefits and are 
available for questions, as necessary.
    Numerous commenters also expressed broader concerns about potential 
SNAP benefit decreases under this rule. The Department understands the 
importance of benefit stability for households, but also recognizes 
that SUAs must reflect low-income household utility costs in order to 
serve their purpose. SUAs may change as utility costs increase or 
decrease, and those changes are reflected in the SNAP benefit level. 
The impact that SUAs have on benefits is important, which is why the 
SUA NPRM sought to bring more consistency to the SUA process and ensure 
greater integrity in the data used to calculate them. The Department 
has made changes in the final rule to allow State agencies more 
flexibility in developing their SUA methodologies to ensure that they 
meet households' needs in a more consistent manner. These changes also 
address commenter concerns regarding the SUA NPRM's impact on SNAP 
benefit levels. The Department will provide targeted technical 
assistance to State agencies highlighting the flexibilities provided in 
this final rule and considerations for minimizing potential negative 
impacts on households, including the Department's waiver authority.
    In addition to concerns regarding SNAP benefit impacts, many 
commenters expressed concerns that standardizing HCSUA methodologies 
would remove important, existing flexibility for State agencies to 
address their residents' unique needs. An advocacy group argued that 
the existing regulations provide State agencies the

[[Page 91203]]

flexibility to accurately address the needs of their residents as 
energy prices vary by location and reflect differing climates. The 
commenter added that the new process would remove State specificity in 
relation to the State's unique circumstances and decrease the overall 
precision of the HCSUAs. Similarly, a policy advocacy organization 
argued that States are best positioned to develop and administer their 
own methodologies and determine appropriate SUA amounts based on their 
region and climate. A non-profit organization criticized the 
Department's approach in trying to find data sets that fit all States, 
and instead suggested allowing individual States to use data sets that 
would best fit their needs.
    In addition to State flexibility concerns, multiple commenters, 
including two advocacy groups, three legal services organizations, a 
religious organization, two policy advocacy groups, a trade 
association, two State government agencies, and local government raised 
concerns about the data sources the Department proposed using as part 
of its methodology. Specifically, the commenters questioned: (1) the 
multi-year lags in the availability of RECS data; (2) the effects of 
possible recall bias on ACS-based cost estimates; (3) the rationale for 
using RECS data which, at the time of the proposed rule, used regional 
averages for some States when there was not enough information to 
develop a State-level estimate; \10\ and (4) why the Department did not 
consider using utility cost data sourced from State public service 
commissions. Additionally, commenters requested that the Department 
codify the proposed methodology in the rule and regulations, rather 
than providing FNS with the flexibility to change it in the future.
---------------------------------------------------------------------------

    \10\ The Department notes that RECS data is available for all 
States now.
---------------------------------------------------------------------------

    Commenters also expressed concern that State agencies with more 
accurate data than the sources used in the Department's proposed 
methodology would not have the opportunity to appeal or submit their 
methodologies. Multiple commenters wrote that individual State agencies 
will be able to develop much more accurate utility usage figures from 
utility provider data in comparison to the proposed standardization 
methodology. A State government agency commented that the Department 
should allow State agencies to resubmit their HCSUA base methodology 
with justification and data to support it. A legal services 
organization and an advocacy group that opposed using RECS suggested 
that the Department develop a process for State agencies and the public 
to appeal or present alternative data in calculating HCSUA values. 
Similarly, an advocacy group and a State agency criticized the 
omittance in the proposed rule of any opportunity to provide more 
accurate State data in lieu of the data sources used by the Department. 
Finally, a non-profit organization suggested that the Department 
provide technical assistance to State agencies to determine whether 
their current HCSUA approach best reflects the needs of their 
individual State, or if the proposed Department methodology would be a 
better fit.
    Lastly, the Department solicited comments specifically related to 
the standardization exception made for territories for which ACS and 
RECS do not collect data. The Department received one comment from an 
advocacy group that supported this treatment of Guam and the Virgin 
Islands. Another commenter stated that Puerto Rico is similar to Guam 
and the Virgin Islands and should therefore also be allowed to use its 
own SUA methodologies. The Department notes that currently, Puerto Rico 
does not operate SNAP, so SUA policy does not impact this territory; 
however, the Department agrees that it would treat all territories 
subject to SUA policy similarly.
    After careful consideration of the comments related to the 
importance of State flexibility and concerns about the limitations of 
the Department's proposed standardization methodology, the Department 
is not finalizing the proposed HCSUA standardization as proposed. The 
Department agrees that State agencies need flexibility to reflect their 
households' unique utility needs and that, in some cases, State utility 
data provides more specific, accurate information to inform HCSUA 
methodologies. Rather than finalizing the proposed HCSUA 
standardization, the Department will continue to allow State agencies 
to set their own HCSUA methodology, subject to FNS approval.
    Additionally, the Department understands commenters' concerns 
regarding the rationale for setting HCSUAs at the 80th percentile and 
the need for State flexibility in setting HCSUAs. As such, the 
Department will not require State agencies to set HCSUAs at a specific 
percentile of low-income households' utility costs in the State.
    While the Department will no longer set HCSUA values based on a 
standardized methodology or specific percentile across all States, the 
Department maintains the purpose of the SUA NPRM is to improve 
consistency and data integrity in State SUA calculations, albeit 
through a different method. The Department maintains that there should 
be clearer guidelines and requirements for State agencies to follow 
when developing their HCSUAs to ensure these standards accurately 
reflect low-income households' utility costs. Therefore, in lieu of the 
proposed HCSUA methodology standardization, the Department is revising 
7 CFR 273.9(d)(6)(iii) to allow States to continue to set their own 
HCSUAs, while standardizing the data and methodology criteria that FNS 
will use to approve SUAs. This standardization method includes two 
requirements.
    First, State agencies must submit for FNS approval their HCSUA 
methodology at least every five years. Methodology submissions must 
incorporate any revisions necessary to demonstrate that the baseline 
expenditure data and underlying methodology reflect recent trends and 
changes. The methodology update must include changes to the baseline 
expenditure data and an explanation of the State agency's methodology 
for deriving HCSUAs from such data.
    The Department notes that this is in addition to the existing 
requirement in regulations that State agencies must review their SUAs 
annually and adjust to reflect changes in costs, such as by using 
sources like CPI. This annual update to reflect changes in costs refers 
to interim years between the State agency's full methodology update, 
when new utility data may not be available yet. The Department is also 
maintaining the existing regulatory requirement that State agencies 
must submit their methodologies for FNS approval when the State agency 
develops or changes its methodology.
    This five-year period strikes an appropriate balance between 
capturing changes to general trends in energy markets and utility 
prices while minimizing the burden on State agencies or utility 
providers. The Department considered requiring State agencies to revise 
and submit their methodologies more often than every five years but 
deemed the existing annual update requirement sufficient to capture 
changes in interim years; however, State agencies may update their 
HCSUA methodology more frequently if they wish.
    Similarly, the Department considered a longer period between 
methodology revisions. A longer period raised concerns about how well 
State agencies could capture shifts in utility costs and account for 
trends like changing climate

[[Page 91204]]

conditions' impact on energy sources. State agencies unable to source 
data directly from utility providers are likely to rely on survey data, 
which can lag behind current conditions by several years. As such, 
allowing State agencies to update their methodologies every seven to 
eight years could result in baseline methodologies reflecting 
conditions that are a decade or more out-of-date. This five-year period 
requirement ensures that State agencies electing to use survey sources 
will use more recent ones.
    Second, State agencies' methodologies must:
     Reflect the entire State or geographic area the SUA 
covers;
     Use data sourced from utility providers or similarly 
reliable source;
     Reflect expenses incurred by low-income households,
     Distinguish if the utility is for heating or cooling, if 
applicable; and
     Reflect residential utility expenses.
    The Department chose these criteria to ensure HCSUAs accurately 
represent the utility costs of low-income households, including 
households with higher than average utility costs, in the designated 
area while providing State agencies additional flexibility in creating 
their standards. These criteria align with the goals of the data and 
methodology the Department proposed to use in the SUA NPRM. The 
Department notes that, for the purposes of these criteria, ``utility 
providers'' includes any company or organization that supplies or sells 
a utility allowed under 7 CFR 273.9(d)(6)(ii)(C).
    The standardized criteria outlined above will ensure State agencies 
are developing HCSUAs based in appropriate data to support the values; 
however, it is important that HCSUAs reflect more than just the average 
household's costs. SUAs need to also represent households with higher-
than-average utility costs since most State agencies mandate the use of 
SUAs. The final rule is forgoing setting a specific percentile for 
HCSUAs to provide State agencies with additional flexibility and to 
avoid mandating significantly lower SUAs. While the NPRM proposed 
requiring that HCSUAs be set at the 80th percentile, this final rule 
modifies this approach. Under this final rule, State agencies may set 
HCSUAs at levels higher than the 80th percentile. State agencies have 
good reasons to take into account the need to capture utility expenses 
for the vast majority of households, which requires including those 
that have higher than average utility costs. This final rule allows 
states this flexibility. Since most State agencies mandate the use of 
SUAs, it is important that their values reflect more than just the 
average household's costs and account for households with significant 
utility expenses. The Department will provide State agencies with 
technical assistance and support to assess appropriate distributions of 
utility costs as part of its methodology review.
    In developing or revising their HCSUA methodologies, State agencies 
may select to use Federal sources to meet these requirements. While the 
Department is no longer finalizing the use of ACS data, in conjunction 
with RECS and CEX data, to standardize HCSUAs, the Department maintains 
that this methodology is acceptable and based on the best currently 
available, annually-updated national Federal surveys for determining 
utility expenses for low-income households at the State level. For 
example, RECS is the only source that validates households' reported 
energy expenditures with data from their utility providers. It also 
provides end-use information, which allows for estimation of energy 
expenses by low-income households with heating and cooling expenses. 
The Department also notes that ACS is updated annually and based on a 
very large sample, which makes it valuable for producing 
representative, recent estimates for every State.
    The 2017 SUA Study, as well as a subsequent 2023 study \11\ 
conducted by the Department, found that combining this data with ACS 
data offsets some of the limitations of each data source with the 
advantages of the other. While not mandating their use, the Department 
encourages State agencies without more recent and accurate State-
specific data to review and consider using Federal survey data, such as 
ACS and RECS, to develop their HCSUAs. These sources would be 
considered ``similarly reliable'' to utility provider data. The 
Department will publish guidance and provide State agencies with 
technical assistance in developing their HCSUA methodologies as needed. 
As part of this technical assistance, FNS will provide factors for 
State agencies to consider when identifying data sources and 
establishing methodologies. FNS will also provide examples of approved 
State agency methodologies for reference. FNS will work with State 
agencies on a state-by-state basis to address their unique 
circumstances and review flexibilities that may minimize potential 
negative impacts on households.
---------------------------------------------------------------------------

    \11\ Holleyman, Chris, Pratima Damani, and Erick Torres. 
Updating Standardized State Heating and Cooling Utility Allowance 
Values. Prepared by SP Group, LLC for the U.S. Department of 
Agriculture, Food and Nutrition Service, March 2023.
---------------------------------------------------------------------------

    While these criteria allow State agencies more flexibility than the 
proposed standardization, the Department understands that some 
commenters were wary of any changes to the current process. A State 
government agency asked for the Department to simply maintain the 
current system. A legal services organization wrote that the proposed 
rule provides insufficient reasons for departure from prior policy in 
removing States' ability to set their own SUAs. Multiple members of the 
U.S. Congress, a State government agency, and a professional 
association commented that the Department did not provide any evidence 
as to why the proposed rule's standardization approach is preferable to 
current State agency methodologies. Similarly, an advocacy group stated 
that by nature of the SUA approval process and methodologies not being 
public, the Department did not provide any insight into the SUA process 
and what specific issues the Department has with State agencies' 
methodologies as a rationale for the proposed rule. A legal services 
organization asked why the Department has not altered or rejected State 
agency SUAs, when it has the option to review them, if current 
methodologies used by State agencies are objectionable.
    The Department recognizes the impact of HCSUAs in determining 
eligibility and benefit amounts and has provided additional information 
to reiterate the purpose and rationale of the SUA NPRM below. Rather 
than only adjusting certain State HCSUAs, the Department is making 
changes through regulations because the Department's concerns with 
HCSUAs are not specific to any one State agency, and the changes would 
affect consistency and integrity throughout the program nationwide.
    In response to comments asking for additional rationale and clarity 
on issues with the current SUA methodologies, the Department reexamined 
State agencies' HCSUA base methodologies. In line with the 2017 SUA 
Study's findings, discussed above, the Department found several State 
agencies adjusting a base number annually using an inflation measure 
such as the CPI Fuels and Utilities index but could not locate the 
underlying source or methodology behind their base number. Other State 
agencies submitted methodologies based on old data (ranging from 10-47 
years old), did not consider low-income households' utility costs, and/
or did not consider end-use for the utility. Only a few State agencies' 
methodologies used more

[[Page 91205]]

recent data sourced from utility providers, but these often did not 
account for low-income households' utility costs.
    Prior to this rulemaking, the Department has provided State 
agencies limited information on specific parameters or requirements for 
calculating data-driven SUA methodologies. As a result, the Department 
has approved changes to SUA methodologies and annual updates to SUA 
values based on a variety of methodologies and data sources.
    Since some State agencies continue to adjust historic base numbers 
without an underlying, clear methodology, the Department has growing 
concerns that some State agencies' data is outdated and may not reflect 
low-income households' utility costs today. Since the mid-1970s, when 
the Department first introduced SUAs, household utility usage and 
composition has changed significantly. For example, the U.S. Energy 
Information Administration found that energy use per household has 
declined steadily between 1980-2015, due to improvements in building 
insulation and materials and improved efficiencies of heating and 
cooling equipment and other appliances.\12\ While there have been 
improvements to building materials across all homes in the past few 
decades, households that struggle to pay their energy costs are ``more 
likely to report their homes are drafty or poorly or not insulated [. . 
.] than households that did not experience energy insecurity.'' \13\ 
These same energy insecure households, some of which may also receive 
SNAP benefits given their low-incomes, were billed more for energy than 
other households in 2020.\14\
---------------------------------------------------------------------------

    \12\ U.S. Energy Information Administration, Residential Energy 
Consumption Survey for indicated years (1980-2015). Retrieved from 
https://www.eia.gov/energyexplained/use-of-energy/homes.php in June 
2022.
    \13\ U.S. Energy Information Administration, U.S. Energy 
Insecure Households were Billed More for Energy than Other 
Households, May 23, 2023. Retrieved from https://www.eia.gov/todayinenergy/detail.php?id=56640 in November 2023.
    \14\ Ibid.
---------------------------------------------------------------------------

    Further, residential energy sources have shifted from primarily 
natural gas in 1970 to electricity in 2020.\15\ In this same period, 
air conditioning has become ``one of the fastest growing energy uses in 
homes.'' \16\ The U.S. Energy Information Administration found that 
while in 1980, 57 percent of homes used air conditioning, 87 percent of 
homes used air conditioning in 2015.\17\ Factors such as changing 
climate conditions may continue to shift energy use, the mix of energy 
sources used by households, and the prices of those energy sources over 
time. The U.S. Global Change Research Program's Fourth National Climate 
Assessment notes that ``by 2040, nationwide, residential, and 
commercial electricity expenditures are projected to increase by six 
percent to 18 percent under a higher [temperature increase] scenario 
(RCP8.5), four percent to 15 percent under a lower scenario (RCP4.5), 
and four percent to 12 percent under an even lower scenario (RCP2.6).'' 
\18\
---------------------------------------------------------------------------

    \15\ U.S. Energy Information Administration, Monthly Energy 
Review, Table 2.2, April 2022, preliminary data for 2021. Retrieved 
from https://www.eia.gov/energyexplained/use-of-energy/homes.php in 
June 2022.
    \16\ U.S. Energy Information Administration, 2015 Residential 
Energy Consumption Survey in section, ``Electricity Use in Homes.'' 
Retrieved from https://www.eia.gov/energyexplained/use-of-energy/electricity-use-in-homes.php in September 2022.
    \17\ Ibid.
    \18\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United 
States: Fourth National Climate Assessment, Volume II [Reidmiller, 
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. 
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research 
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
---------------------------------------------------------------------------

    These factors and changes confirm that State agencies must review 
and revise their SUA methodologies as needed to accurately reflect low-
income households' utility costs and reflect current trends. Beyond 
outdated source values, when HCSUA methodologies do not incorporate 
changes in energy sources, the methodology can under (or over) count 
the share of different utility expenses in a household's budget. The 
Department recognizes that providing State agencies broad discretion 
and allowing HCSUA updates based on outdated methodologies may have 
embedded inconsistency into the process. Further, the Department 
understands that while some State agencies have an HCSUA methodology 
that is outdated, unknown, or unclear, other State agencies have State-
specific data sourced from utility providers that is more recent or 
accurate than the proposed data sources used by FNS.
    In acknowledgement of these issues, the Department is finalizing 
revisions to the HCSUA methodology process, albeit with changes and 
more State agency flexibility, to recalibrate the process. While the 
Department is not finalizing the proposed HCSUA standardization 
provision, the standardized criteria outlined above will ensure more 
consistency between HCSUA methodologies across the nation.
    Since the Department is no longer finalizing HCSUA standardization, 
this final rule treats territories the same as all other States and 
does not contain any special rules related to territories.
    While the proposed rule included standardized HCSUA language at 7 
CFR 273.9(d)(6)(iii)(B)(1), the final rule amends the proposed language 
to remove HCSUA standardization and add methodology requirements and 
redesignates this section at 7 CFR 273.9(d)(6)(iii)(C) for clarity.

Changes to Current SUA Options

    The SUA NPRM proposed to eliminate State agency options to vary 
SUAs by season, household size, or geographic area as part of the 
Department's efforts to bring greater consistency across States and in 
recognition of the low number of State agencies taking these options. 
Currently, six State agencies vary their SUAs by household size, only 
Alaska and New York vary by geographical area, and no State agencies 
adjust their SUAs by season.
    Approximately 75 commenters, including individuals, a legal 
services association, a policy advocacy organization, community 
organization, and State agencies, expressed opposition to eliminating 
these options. Commenters shared concerns that removing these 
flexibilities may cause harm to SNAP recipients by treating all States 
and localities in the same manner when energy needs, heat sources, 
climates, and housing types are varied. An individual commenter stated 
that citizens burdened with paying very high heating and cooling bills 
in certain regions are more likely to suffer because of a SUA 
calculation that does not account for regional differences in poverty 
and climate. Further, a legal services commenter stated that the 
flexibility allowing State agencies to calculate utility costs and 
rates is essential for States where heating costs, sources, and housing 
types vary. A federally-elected official expressed concern that the 
proposed rule would negatively impact the residents of the official's 
State, who rely on SNAP benefits calculated using factors specific to 
their community and costs associated with the disparate regions of 
their State. Commenters also expressed that removing these options 
would unduly restrict State agency flexibilities.
    Two form letter campaigns noted that the proposal would force a 
``one-size-fits-all'' policy for both shelter and utility costs across 
the country. Several commenters, including multiple advocacy groups, a 
federally-elected official, and an attorney highlighted specific 
impacts the proposed rule would have on certain geographic areas. An 
advocacy group and an attorney said that the proposed rule would harm 
SNAP participants living in northern

[[Page 91206]]

and colder states, with specific mentions of Vermont and California. An 
individual commenter stated that the proposed rule would harm SNAP 
participants living in southern cities, such as Memphis, Tennessee, 
where low-income households spend an average of 13.2 percent of their 
income on energy. The commenter also cited the large energy burdens of 
other southern cities, including Birmingham, Alabama; Atlanta, Georgia; 
and New Orleans, Louisiana.
    An advocacy group expressed disagreement with the concept in the 
proposed rule that eliminating State agency options to vary SUAs by 
season, household size, or geographic areas would bring greater benefit 
equity across States. Similarly, a policy advocacy organization stated 
that the Department failed to explain how eliminating an option 
available to all State agencies (even if only adopted by a few States) 
improves benefit equity and ignores the potential harm to low-income 
households in rural areas that need the benefits. Further, an advocacy 
group stated that incorrectly treating all States' and localities' 
needs the same causes inequity. After considering the terminology and 
these comments, the Department maintains the purpose of the SUA NPRM, 
to improve the integrity and consistency of SUAs, but has decided to 
use the term ``consistency'' rather than ``benefit equity'' throughout 
the final rule to be more precise.
    As noted above, one of the two State agencies that currently varies 
its SUAs by geographical areas is Alaska. Program rules grant Alaska 
and Hawaii additional considerations \19\ to account for cost-of-living 
differences and provide further program flexibilities to Alaska because 
of its extremely remote geography. The SUA NPRM did not include any 
exceptions for Alaska and Hawaii. The Department solicited comments on 
whether additional flexibilities for Alaska and Hawaii should be 
included in the final rule.
---------------------------------------------------------------------------

    \19\ For example, there are specific gross and net income 
eligibility limits for Alaska and Hawaii. See 7 CFR 273.9(a)(1) and 
(2).
---------------------------------------------------------------------------

    The Department received comments in support of allowing exceptions 
for Alaska and Hawaii. Alaska State government officials commented 
explaining how their current SUA calculations use data from utility 
companies to create region-specific values and that their methodology 
allows for more accurate SUAs. An advocacy group also expressed 
surprise that the SUA NPRM did not include special considerations for 
Alaska and Hawaii. This advocacy group asked if the 2017 SUA Study 
considered using ACS five-year data to develop SUAs at the sub-State 
regional level. A policy advocacy organization also stated that it is 
possible that States like Alaska, Minnesota, Nebraska, South Dakota, 
Washington, and other States with sizable Tribal populations may want 
the option to create a separate SUA for households that live on Tribal 
lands. The commenter suggested Tribes could collect data on the utility 
costs of their Tribal members living in remote areas, and such an 
approach might allow State agencies to more adequately reflect the 
utility costs of Tribal members who participate in SNAP in those areas.
    The Department agrees with commenters that some States and 
localities have unique needs related to energy use, climates, 
remoteness, and heat sources and may have data to support an HCSUA 
based on these factors. As described above, the final rule permits 
State agencies to develop their own SUA methodologies subject to FNS 
approval, while incorporating data and methodology requirements. To 
align with that action, the Department will also maintain the option 
for State agencies to vary SUAs by season, household size, or 
geographic area, which will address concerns for Alaska and Hawaii in 
particular. The Department will amend the proposed language at 7 CFR 
273.9(d)(6)(iii)(A) to maintain the option for States to vary SUAs 
based on these factors.
    The SUA NPRM proposed changes to additional existing SUA options, 
one of which was to eliminate the option for State agencies to include 
the excess heating and cooling costs of public housing residents in the 
LUA if they wish to offer the lower standard to such households. The 
SUA NPRM also withdrew the option for State agencies to include the 
cooling expense in the electricity utility allowance for States where 
cooling expenses are minimal. Due to the changes proposed for 
calculating HCSUAs and LUAs, the Department proposed to discontinue 
these options to ensure all households that incurred heating and 
cooling costs would be eligible to receive the HCSUA, and not a lower 
LUA.
    A State government supported the clarification that public housing 
residents who incur heating or cooling costs in States that mandate 
SUAs would receive the HCSUA. A legal services organization argued that 
the Department provided insufficient rationale for this change, and an 
individual commenter alleged that the proposal would harm public 
housing residents and would enhance institutional discrimination 
against people with disabilities, low-income seniors, African 
Americans, Hispanics, Asian-Pacific Islanders, and Native Americans. 
However, these households would actually receive a higher standard by 
eliminating this option because HCSUAs encompass full heating and 
cooling costs, and the Department's position is that all households 
that incur heating or cooling costs in a State that mandates use of 
SUAs should be entitled to the HCSUA to ensure consistency across 
households and States. Therefore, the Department will finalize as 
proposed, aside from a small technical correction to replace the word 
``to'' with ``for'' in the sentence ``[. . .] it must use a standard 
utility allowance that includes heating and cooling costs to residents 
of public housing units [. . .].'' While the proposed rule included 
this provision at 7 CFR 273.9(d)(6)(iii)(E)(2), the Department will 
redesignate this section as 7 CFR 273.9(d)(6)(iii)(G)(2).

LUAs and Individual Standards

    The Department proposed in the SUA NPRM that State agencies would 
continue to use their own methodologies to determine LUA and individual 
standard amounts, if amounts do not exceed maximum limits established 
by the Department. State agencies would submit their annual LUA and 
individual standard values to FNS for approval. The proposal would cap 
LUAs at 70 percent of a State's HCSUA and individual standards at 35 
percent of a State's HCSUA. When analyzing the SUA values developed as 
part of the 2017 SUA Study, the researchers found that most States' 
individual standards were near 35 percent of their HCSUA. Similarly, 
most States' LUAs did not exceed 70 percent of their HCSUA. FNS would 
issue the capped amounts via memo to the State agencies and provide the 
values publicly on the FNS website.
    In FY 2022, only 9.0 percent of households used a LUA or individual 
standard when determining SNAP eligibility and benefit levels.\20\ 
Although they impact a small portion of SNAP participants, the 
Department proposed to cap these standards at a percentage of the HCSUA 
to extend standardization efforts and mitigate future inconsistencies.
---------------------------------------------------------------------------

    \20\ U.S. Department of Agriculture, Food and Nutrition Service, 
Office of Policy Support, Characteristics of Supplemental Nutrition 
Assistance Program Households: Fiscal Year 2022, by Mia Monkovic. 
Project Officer, Aja Weston. Alexandria, VA, 2024.
---------------------------------------------------------------------------

    Five commenters opposed the proposed cap of LUAs and individual 
standards. An advocacy group

[[Page 91207]]

expressed concern that the cap on LUAs would harm low-income families 
and disproportionately impact the elderly and persons with 
disabilities. One advocacy group and a public policy advocacy 
organization stated that the Department's proposed caps were arbitrary 
and that the SUA NPRM did not adequately explain the need to cap LUAs. 
The same public policy advocacy organization and a legal service 
organization questioned why the Department would standardize the HCSUA 
methodology but allow State agencies to develop their own LUAs and 
individual standards. Further, a State government official commented 
that the 70 percent maximum is too low for their State's LUA and that 
the cap does not relieve the administrative burden on State agencies.
    One commenter, a State agency, proposed an alternative to the 
proposed cap on LUAs and individual standards. The commenter expressed 
support for the proposed methodology outlined in the rule since it 
would result in a higher HCSUA and increase SNAP benefits for 35 
percent of recipients in their State. However, the commenter 
recommended that the Department either change the percentage cap 
amount, calculate the cap on LUAs based on the total utility costs from 
the ACS and RECS, or allow State agencies to use their own methodology 
with Department approval.
    Given the revisions to the proposed HCSUA standardization 
provision, the Department also reevaluated the proposed caps to LUAs 
and individual standards and whether they align with the purpose of the 
SUA NPRM to increase SUA consistency and integrity through data-based 
methodologies. The Department agrees with commenters that State 
agencies should retain the flexibility to base LUA and individual 
standard values in data reflective of the utility costs these standards 
represent rather than uniformly cap them as a percentage of the HCSUA. 
Retaining this flexibility also maintains consideration of the unique 
aspects of each State, such as utility composition and trends.
    As such, the Department will not finalize the proposed cap for LUAs 
and individual standards. Instead, State agencies will continue to set 
their own LUAs and individual standards and submit these figures to the 
Department annually. Consistent with the revised requirements for HCSUA 
methodologies, State agencies' must submit for FNS approval their LUA 
and individual standard methodologies at least every five years. 
Methodology submissions must incorporate any revisions necessary to 
demonstrate that the baseline expenditure data and underlying 
methodology reflect recent trends and changes. Additionally, State 
agencies' methodologies must:
     Reflect the entire State or geographic area the SUA 
covers;
     Use data sourced from utility providers or similarly 
reliable source;
     Reflect expenses incurred by low-income households,
     Distinguish if the utility is for heating or cooling, if 
applicable; and
     Reflect residential utility expenses.
    Like with HCSUA methodologies, the Department chose these criteria 
to ensure LUAs and individual standards accurately represent the 
utility costs of low-income households, including households with 
higher than average utility costs, in the designated area while 
providing State agencies additional flexibility in creating their 
standards. The Department will publish guidance and provide State 
agencies with technical assistance in developing their LUA and 
individual standard methodologies as needed. As part of this technical 
assistance, FNS will provide factors for State agencies to consider 
when identifying data sources and establishing methodologies. FNS will 
also provide examples of approved methodologies for reference.
    The Department amended, combined, and redesignated this provision 
from the proposed 7 CFR 273.9(d)(6)(iii)(B)(2) and (3) and finalizes at 
7 CFR 273.9(d)(6)(iii)(B) and (C).

Including Basic Internet as an Allowable Shelter Cost and Updating SUAs 
To Include Basic Internet Costs

    In recognition of internet access as a necessity for school, work, 
and job search, the Department proposed to amend 7 CFR 
273.9(d)(6)(ii)(C) to add the cost of basic internet service. The 
proposed changes would replace the telephone standard (i.e., the 
individual standard for telephone costs) with a broader 
telecommunications standard that includes costs for one telephone, 
basic internet service, or both. The proposed rule would not allow an 
individual standard for only basic internet service costs, as internet 
costs could only be part of the new telecommunications standard. The 
Department proposed to calculate the maximum telecommunications 
standard amount annually by reviewing nationally available low-cost 
plans for one telephone line and basic internet access for essential 
services. Similar to LUAs and individual standards, State agencies 
would still calculate their own telecommunications figures annually. 
The Department would review and approve the methodology and final 
figures, subject to the national cap. The Department estimated that the 
telecommunications standard cap would be approximately $55 in FY 2020 
based on a search of available resources for low-cost carriers.
    As proposed, the new telecommunications standard would be available 
to households with utility costs for one telephone, basic internet 
service, or both. Households with basic internet and/or telephone costs 
would either receive the telecommunications standard or use their 
actual costs, subject to the national cap. For example, households with 
more than basic internet packages, such as those combined with cable 
television service, would not be able to count the cost of their entire 
package. These households would instead either receive the 
telecommunications standard or have their actual costs of phone and/or 
basic internet counted, up to the amount of the standard, depending on 
the option the State agency selects. Additionally, State agencies would 
be allowed to include the telecommunications costs as part of their LUA 
so long as the telecommunications share of the LUA would not exceed the 
amount set for the telecommunications standard.
    Approximately 15 commenters supported the proposed update to the 
telephone standard. Multiple commenters, including advocacy groups, a 
policy advocacy organization, multiple State government agencies, a 
religious organization, and a trade association, agreed with the 
Department's argument that internet is an essential service. Additional 
commenters, including an advocacy group, a legal services organization, 
a policy advocacy organization, and State government agencies generally 
supported updating the telephone standard to include internet services.
    Two advocacy groups and a legal services organization also 
commented that the estimated $55 telecommunications standard cap is too 
low. One recommended creating a separate internet standard from the 
telephone standard rather than a combined telecommunications standard, 
and others argued the cap should be set at the 80th or 95th percentile. 
A food bank and a legal services organization argued that the 
explanation for how the Department developed the $55 cap was 
insufficient. A State agency recommended that State agencies should 
have the option to either accept the maximum limit established for the 
telecommunications standard or to use their own methodology, as 
approved by the Department.

[[Page 91208]]

    An advocacy group shared alternatives to the Department's proposed 
telecommunications standard methodology, including comments on which 
expenses should be allowable as a deduction. The commenter argued that 
FNS should allow modem rentals, costs of hardware, and subscription 
costs as allowable expenses and that State agencies should be able to 
choose whether to offer a standalone internet individual standard, a 
combined telecommunications standard, or both, depending on their 
States' needs.
    The Department appreciates commenters who supported and confirmed 
the importance of including basic internet costs as an allowable 
shelter cost. The Department agrees that this change is critical, as 
the internet plays a pivotal role in Americans' daily lives, regardless 
of income level, and is a necessary expense in a household's budget. 
High-speed internet is a necessary utility for school, work, and job 
searches. As such, the final rule allows the costs for basic internet 
service as an allowable shelter cost.
    The Department also appreciates the suggestions for alternative 
ways of allowing basic internet costs. The Department agrees with 
commenters that allowing State agencies to set a basic internet 
individual standard, instead of a combined telecommunications standard, 
is better aligned with how the Department treats other individual 
standards. For instance, under current rules, State agencies may offer 
all other utilities (including telephone) as individual standards but 
may only combine them when using HCSUAs and LUAs. Therefore, the final 
rule allows State agencies to develop a basic internet individual 
standard, independent from the telephone standard, rather than as part 
of a telecommunications standard. Under the final rule, State agencies 
have the option to develop their own methodology for the basic internet 
individual standard, similar to other individual standards, rather than 
abiding by a national maximum amount proposed by the Department in the 
SUA NPRM. State agencies that choose this option will calculate their 
basic internet individual standards each fiscal year and submit them to 
FNS for approval, similar to other LUAs and individual standards.
    State agencies may also include basic internet costs in their LUAs 
and HCSUAs. Rather than FNS incorporating a capped telecommunications 
standard into a standardized HCSUA as proposed, the final rule allows 
State agencies to incorporate basic internet costs in their HCSUA 
methodologies in line with how other utility expenses are reflected in 
the HCSUA.
    Consistent with the revised requirements for other SUA 
methodologies, including individual standards like telephone, State 
agencies must submit for FNS approval their basic internet individual 
standard methodology at least every five years. Methodology submissions 
must incorporate any revisions necessary to demonstrate that the 
baseline expenditure data and underlying methodology reflect recent 
trends and changes. Additionally, State agencies' methodologies must:
     Reflect the entire State or geographic area the SUA 
covers;
     Use data sourced from utility providers or similarly 
reliable source;
     Reflect expenses incurred by low-income households,
     Distinguish if the utility is for heating or cooling, if 
applicable; and
     Reflect residential utility expenses.
    Like with HCSUA methodologies, the Department chose these criteria 
to ensure basic internet individual standards accurately represent the 
utility costs of low-income households, including households with 
higher than average utility costs, in the designated area while 
providing State agencies additional flexibility in creating their 
standards. the Department will publish guidance and provide State 
agencies with technical assistance in developing their basic internet 
methodology as needed. As part of this technical assistance, FNS will 
provide factors for State agencies to consider when identifying data 
sources and establishing methodologies. FNS will also provide examples 
of approvable methodologies for reference.
    In determining which costs to include in the basic internet 
individual standard, the Department agrees with commenters on the need 
to create consistency across similar utilities, such as telephone. 
Program rules at 7 CFR 273.9(d)(6)(ii)(C) include the following 
allowable costs for telephone: all service fees required to provide 
service for one telephone, including, but not limited to, basic service 
fees, wire maintenance fees, subscriber line charges, relay center 
surcharges, 911 fees, and taxes; and fees charged by the utility 
provider for initial installation of the utility. One-time deposits 
cannot be included.
    Therefore, the Department is finalizing the following costs as part 
of the basic internet individual standard: all service fees required to 
provide households with basic internet service, including but not 
limited to, monthly subscriber fees for a basic internet connection 
(i.e. the base rate paid by the household each month in order to 
receive service, which may include high-speed internet); taxes and fees 
charged to the household by the provider that recur on monthly bills; 
and the cost of one modem rental.
    The Department believes the abovementioned allowable costs are 
consistent with the costs allowed for the telephone individual 
standard. The Department also notes that if a household does not pay 
any of its internet costs, including because those costs are paid in 
full by a program similar to, for example, the Lifeline program or the 
former Affordable Connectivity Program, then the household would not 
qualify for the basic internet individual standard.
    These changes, including the change to the basic internet 
individual standard calculation and allowable costs are finalized by 
amending the proposed 7 CFR 273.9(d)(6)(ii)(C); amending the proposed 7 
CFR 273.9(d)(6)(iii)(A)(3); amending and redesignating the proposed 7 
CFR 273.9(d)(6)(iii)(B)(3) as 7 CFR 273.9(d)(6)(iii)(B); and adding 
methodology requirements at 7 CFR 273.9(d)(6)(iii)(C).

Compliance Dates for Implementing SUA NPRM Changes

    The Department expects State agencies to need time to review their 
current SUA methodologies and make updates to align with the new 
requirements. Similarly, the Department will need time to review State 
agencies' methodologies and work with each State agency to ensure they 
meet the new requirements. As such, the compliance date for SUA changes 
is October 1, 2025. The Department encourages State agencies to 
implement changes at the beginning of the Federal fiscal year to 
minimize disruption to SNAP households since State agencies typically 
make changes to SUAs and Cost of Living Adjustments at this time. The 
Department will provide State agencies with technical assistance to 
revise and receive approval for SUA methodologies in advance of the 
compliance date, including information on State flexibilities to ensure 
that SUAs meet households' needs while also aligning with the data 
available on low-income household utility costs in a more consistent 
manner.

Background and Summary of Comments on the April 20, 2016, (LIHEAP) NPRM

    In addition to the changes to HCSUA methodologies and SUA options, 
the final rule will also update 7 CFR 273.9(d)(6)(iii)(C). These 
changes

[[Page 91209]]

finalize revisions for how Low-Income Home Energy Assistance Program 
(LIHEAP) payments are considered to confer eligibility for the HCSUA. 
This update is consistent with requirements included in the 
Agricultural Act of 2014 (Pub. L. 113-79).
    Section 4006 of the Agricultural Act of 2014 amended requirements 
for how payments issued under the Low-Income Home Energy Assistance Act 
(LIHEAA), as amended, confer HCSUAs to households. These changes 
require that State agencies confer the HCSUA to households receiving a 
payment, or on behalf of which payments were made, under LIHEAA or 
other similar energy assistance program, only when the payment is 
greater than $20 annually and received in either the current month or 
in the immediately preceding 12 months. The changes were effective with 
the enactment of the Agricultural Act of 2014, and State agencies were 
required to begin implementation on March 10, 2014. The Department 
published an implementation memo,\21\ ``Supplemental Nutrition 
Assistance Program--Section 4006 Agricultural Act of 2014--Implementing 
Memorandum,'' on March 5, 2014, instructing State agencies to implement 
the change.
---------------------------------------------------------------------------

    \21\ U.S. Department of Agriculture, Food and Nutrition Service, 
Supplemental Nutrition Assistance Program--Section 4006 Agricultural 
Act of 2014--Implementing Memorandum, 5 March 2014. Retrieved from: 
https://www.fns.usda.gov/snap/eligibility/deduction/liheap-implementation-memo in September 2022.
---------------------------------------------------------------------------

    To make the corresponding update to SNAP regulations, the LIHEAP 
NPRM titled ``Supplemental Nutrition Assistance Program: Standard 
Utility Allowances Based on the Receipt of Energy Assistance Payments 
Under the Agricultural Act of 2014,'' was published on April 20, 2016, 
and proposed updates to 7 CFR 273.9(d)(6)(iii)(C). The Department 
received a total of nine comments on the LIHEAP NPRM from five advocate 
groups, two legal services organizations, and two nonprofit 
organizations. The comments were generally favorable of the proposed 
provisions, while also providing helpful feedback for consideration in 
developing the final provisions in this rule. Six commenters in 
particular were supportive of the rule overall. Several of these 
commenters noted the real and helpful impact of conferring the HCSUA to 
eligible LIHEAP receiving households. A more detailed discussion of the 
comments regarding the NPRM and the changes made in the final rule 
follows below.

Agricultural Act of 2014 Changes

    For the purposes of the HCSUA, receipt of a LIHEAP payment serves 
as a proxy for State agencies to determine if a household incurs 
heating or cooling utility costs. Before the enactment of the 
Agricultural Act of 2014, section 5(e)(6)(C)(iv) of the Act provided 
that all households receiving a LIHEAP payment or all households on 
behalf of which a LIHEAP payment was made automatically qualified for 
the HCSUA, regardless of the amount of the LIHEAP payment. Some State 
agencies used this policy to maximize use of the HCSUA by issuing a 
nominal LIHEAP payment (generally around $1) to all SNAP households. 
Receipt of the nominal payment allowed the household to receive the 
HCSUA, even when the household would not have otherwise qualified for 
the HCSUA because they did not pay for heating or cooling.
    The Agricultural Act of 2014 amended section 5(e)(6)(C)(iv)(I) of 
the Act to adjust how the HCSUA is applied to households receiving 
LIHEAP payments. The amendment altered this process by requiring State 
agencies to make the HCSUA available to households that received a 
payment (or households on behalf of which a payment was made), in the 
current month or in the immediately preceding 12 months, that was 
greater than $20 annually under the LIHEAA, or other similar energy 
assistance program. These requirements were effective March 10, 2014. 
As a result, the current regulations at 7 CFR 273.9(d)(6)(iii)(C) must 
be updated to reflect the Agricultural Act of 2014 changes.
    As in the LIHEAP NPRM, in this discussion, the phrase ``qualifying 
LIHEAP or other payment'' refers to those LIHEAP or other similar 
energy assistance program payments that are in excess of $20 annually 
and have been received by or made on behalf of the household in the 
current or immediately preceding 12 months.

Other Similar Energy Assistance Programs

    In the LIHEAP NPRM, the Department proposed that the statutory term 
``other similar energy assistance program'' be defined as a separate 
home energy assistance program designed to provide heating or cooling 
assistance through a payment directly to or on behalf of low-income 
households. Three commenters supported the proposed standard for what 
constitutes an ``other similar energy assistance program.'' The 
proposed definition is adopted as final in this rule.
    One of those three commenters suggested adding this definition in 
the general definitions section at 7 CFR 271.2. Although the Department 
appreciates the suggestion, 7 CFR 271.2 contains more general 
definitions relevant to the program overall, instead of issue-specific 
areas such as this one. For example, Low Income Home Energy Assistance 
Act of 1981 (LIHEAA) is referenced at the standard utility allowance 
section of the regulations at 7 CFR 273.9 but not 7 CFR 271.2. As a 
result, the Department did not add the definition to the general 
definitions section at 7 CFR 271.2 in this final rule.
    The above commenter also asked that the Department provide examples 
of other similar energy assistance programs and include payments from 
housing authorities to individually billed tenants, State fuel funds, 
and State analogues to LIHEAP. The Department believes other similar 
energy assistance programs could include (but are not limited to) 
certain State-only funded programs designed to assist households with 
heating or cooling expenses (separate from a household's rent or 
mortgage), home energy bills, weatherization (see below for additional 
discussion on weatherization payments) or energy-related minor home 
repairs. The Department did not add examples of specific energy 
assistance programs to the regulatory language because those programs 
may change in the future and may no longer meet the definition of an 
``other similar energy assistance program.'' The Department notes that, 
in general, State agencies should evaluate a potentially eligible 
program on a case-by-case basis. To ensure consistency and fairness 
across the caseload, State agencies must establish clear and reasonable 
standards for evaluating whether a program constitutes a similar energy 
assistance program.
    Finally, this commenter agreed with the Department's proposal to 
allow people living in public housing, not just private housing, and 
billed individually for heating and cooling costs to qualify for the 
HCSUA. However, the commenter argued that the utility allowances that 
individuals in public housing receive either as a rent reduction or a 
cancellation of their cash rental obligation and a partial rebate are 
energy assistance similar to LIHEAP. This commenter also suggested that 
the entire amount of the allowance is energy assistance, not just the 
smaller (or zero) amount that the household receives as a rebate after 
the housing authority nets out the household's rental obligation.
    Although the Department appreciates this comment, the Department 
notes that section 5(e)(6)(C)(ii)(II) of the Act

[[Page 91210]]

prohibits the use of an HCSUA for households that incur a heating or 
cooling expense but live in public housing that has central utility 
meters and charges households only for excess utility costs. The 
prohibition does not apply in States that have mandated the use of 
SUAs, per section 5(e)(6)(C)(iii)(III) of the Act. Therefore, the 
Department proposed at 7 CFR 273.9(d)(6)(iii)(C)(1)(ii) that households 
in public housing units with central utility meters and who are charged 
only for excess heating or cooling costs are not entitled to a standard 
that includes heating or cooling costs, unless the State agency 
mandates the use of SUAs in accordance with the proposed paragraph 7 
CFR 273.9(d)(6)(iii)(E). This provision is adopted as proposed but 
redesignated at 7 CFR 273.9(d)(6)(iii)(D)(2).
    The definition of an ``other similar energy assistance program'' is 
designed to provide parameters but also give State agencies flexibility 
to determine what constitutes a potentially eligible program within the 
confines of this definition. The Department maintains that the 
definition provided in the final rule sufficiently addresses the 
concerns noted by the commenter.

Current Month

    The Agricultural Act of 2014 included a requirement at sec. 
5(e)(6)(C)(iv)(I) of the Act that households receive an energy 
assistance payment in the ``current month'' or the immediately 
preceding 12 months in order to qualify for the HCSUA. The Department 
proposed to define ``current month'' to refer strictly to the calendar 
month, meaning from the first to the final day of a given month.
    One commenter encouraged the Department to use a broader 
interpretation of ``current month'' to mean the first full calendar 
month of the certification period. Another commenter believed the 
proposed definition of ``current month'' is too restrictive and 
suggested the Department allow payments made within SNAP's 30-day 
processing period to confer eligibility.
    The Department appreciates the commenters' concerns; however, the 
Agricultural Act of 2014 revised the Act to prohibit State agencies 
from anticipating receipt of a LIHEAP or other qualifying payment to 
confer a household's eligibility for the HCSUA. The changes allow a 
household to be eligible for the HCSUA if it receives the qualifying 
payment in the current month or immediately preceding 12 months. In the 
LIHEAP NPRM, the Department proposed that the HCSUA may be applied only 
if the household is scheduled to receive a payment in the current 
calendar month to allow for some flexibility within the timeline set in 
the Act. The proposed definition of ``current month'' balances 
flexibility with the need to adhere to the timeline in the statutory 
text. For these reasons, the Department adopts this provision as 
proposed in the final rule.

Moving Households

    In the LIHEAP NPRM, the Department indicated that State agencies 
using HCSUAs would provide the standard to households who receive a 
qualifying LIHEAP or other payment, regardless of any change in the 
household's residence or address. One commenter suggested that the 
Department incorporate this clarification into final regulatory text. 
The Department agrees this change promotes consistency across States 
and is making this revision to the regulations at 7 CFR 
273.9(d)(6)(iii)(D)(3).
    One commenter supported the proposal that if a State agency has an 
indication that a household received a qualifying LIHEAP payment in 
another State, the State agency should act on this information. The 
Department reiterates that if, at the time of certification, the State 
agency has an indication that a household received a qualifying LIHEAP 
or other payment in another State, the new State agency should pursue 
clarification. Procedures regarding acting on changes after 
certification are already contained in 7 CFR 273.12 of the regulations, 
and the Department did not make any changes to these existing 
requirements in the final rule.

Overissuance

    Section 4006 of the Agricultural Act of 2014 no longer allows a 
State agency to use an HCSUA in determining eligibility and benefit 
amount for a household that does not otherwise incur heating or cooling 
costs based on the State agency's expectation that the household would 
receive a qualifying LIHEAP or other payment in future months. The 
Department proposed to only allow the HCSUA to be applied to a 
household's case based on anticipated receipt if the payment is 
scheduled to be received within the current calendar month. This allows 
State agencies the option to consider a qualifying LIHEAP or other 
payment received by the household for the purposes of conferring HCSUA 
eligibility, so long as the payment is scheduled in the current month. 
If the anticipated payment is not received within that month, benefits 
received by the household would be considered an overissuance and the 
State agency may be required to pursue a claim against the household.
    The Department received adverse comments on this provision. One 
commenter stated the language regarding claims is confusing and 
inappropriate. Another commenter suggested removing claims language for 
overissuance from the regulatory text since State agencies are already 
responsible for determining overissuances. Another commenter believed 
that the overpayments language suggests a lapse or delay in a payment 
itself triggers an overpayment and suggested deleting this language and 
indicating that State agencies must follow overpayment regulations at 7 
CFR 273.18.
    The Department agrees that 7 CFR 273.18 already requires State 
agencies to collect overissuances and the proposed language is 
unnecessary and potentially confusing. Therefore, the Department 
revised 7 CFR 273.9(d)(6)(iii)(C)(1)(iii) in the final rule to remove 
the reference to claims to avoid such confusion. State agencies will be 
expected to pursue claims in these circumstances under existing 
regulations at 7 CFR 273.18. State agencies are already aware of the 
procedures and requirements regarding the establishment of a claim 
against a household for any benefits issued in error under 7 CFR 
273.18. Additionally, the Department has redesignated the proposed 7 
CFR 273.9(d)(6)(iii)(C)(1)(iii) as 7 CFR 273.9(d)(6)(D)(3).

Proration

    The Department proposed to revise language at 7 CFR 273.10(d)(6) to 
reflect the requirement in section 5(e)(6)(C)(iv)(IV) of the Act that 
assistance under LIHEAA be considered prorated over the heating or 
cooling season for which the assistance was provided. One commenter 
believed that the rule should reflect that a payment need not actually 
be paid during the preceding 12 months, so long as one of those months 
was in the heating season for which a LIHEAP payment was made and the 
prorated amount of the grant exceeded $20.
    The Act requires the receipt of a qualifying LIHEAP or other 
program payment in the current month or immediately preceding 12 months 
that was greater than $20 annually. State agencies are also expected to 
prorate LIHEAP payments over an entire heating or cooling season. As 
the commenter suggested, because State agencies must prorate LIHEAP 
payments over a season, each month covered by the proration could be 
used to confer eligibility for the HCSUA based on the receipt of a 
LIHEAP

[[Page 91211]]

payment. For example, if a household receives a $150 LIHEAP payment in 
October 2021, intended for the heating season in that State (from 
October through February), the State agency would consider the payment 
prorated to $30 per month from October 2021 through February 2022. If 
the household applies for SNAP in January 2023, the household would be 
eligible for the HCSUA based on the receipt of LIHEAP payment in the 
immediately preceding 12 months.
    Furthermore, the Act does not restrict proration to only one 
heating or cooling season as the amount could qualify the household for 
the HCSUA for multiple seasons. For example, if an existing SNAP 
household received a $200 LIHEAP payment in October 2021, the household 
could use the LIHEAP payment to qualify for the HCSUA from October 2021 
through February 2022, as well as from October 2022 through February 
2023 since the household received the payment within the immediately 
preceding 12 months. In summary, the household's receipt of a $200 
LIHEAP payment in October 2021 could effectively make the household 
eligible for the HCSUA from October 2021 through February 2023.
    As such, it is reasonable that a household could be eligible for 
the HCSUA in more than one heating or cooling season, based on the 
receipt of one LIHEAP payment. In order to clarify this, the final rule 
revises the regulatory text at 7 CFR 273.10(d)(6) to specify that a 
prorated qualifying LIHEAP may qualify an individual or household for 
the HCSUA in more than one heating or cooling season, so long as the 
payment was received within the last 12 months or the proration period 
covered at least one month in the preceding 12 months.
    The Department would also like to note that while the LIHEAP NPRM 
preamble correctly stated that the statutory requirement to prorate 
over the entire heating or cooling season only applied to assistance 
provided under LIHEAA, this was not clearly reflected in the proposed 
amendatory language. The final amended 7 CFR 273.10(d)(6) will reflect 
this specification.

Quantifiable

    As the Act requires LIHEAP or other payments to exceed $20 in order 
to confer HCSUA eligibility, these payments must be quantifiable in 
order to exceed this established threshold. The Department proposed 
that State agencies must be able to quantify, in dollars, the amount of 
the payment for purposes of granting the HCSUA.
    Two commenters supported the Department's proposed definition of 
``quantifiable.'' One commenter said the rule should be amended to make 
clear that the provider of the energy assistance may provide the 
assistance in the form of an in-kind benefit which may not have a 
precise value and the State agency may rely on estimates to determine 
if the $20 threshold has been exceeded (for example, if a household 
receives firewood or coal).
    The Department appreciates the concern that some households may 
receive assistance in the form of in-kind items as opposed to receiving 
a payment from LIHEAP or similar assistance programs. Organizations may 
provide households with home heating oil, firewood, or coal, and other 
goods which vary based on geographic area. The Act does not specify 
that the payment be cash, and the Department agrees that State agencies 
may include in-kind assistance as a qualifying LIHEAP or other payment 
for purposes of conferring the HCSUA. The State agency must be 
reasonably able to quantify that the amount of this assistance exceeds 
the $20 threshold. State agencies must develop workable, reasonable 
procedures to determine how in-kind assistance would be quantified, 
including how to reasonably estimate the value of those goods, and must 
apply those procedures consistently and fairly across the caseload. The 
Department revises the regulations at proposed 7 CFR 
273.9(d)(6)(iii)(C)(1)(iii) and redesignates this section to 7 CFR 
273.9(d)(6)(iii)(D)(3), as described above, to incorporate this change.

Split Households

    The Department proposed that if a household that received a 
qualifying LIHEAP or other payment subsequently splits into two SNAP 
households, State agencies must determine which household is eligible 
for the HCSUA. The Department maintained the State agency is in the 
best situation to determine which household would receive the HCSUA 
based on the qualifying LIHEAP or other payment. The State's chosen 
policy would need to be applied in a consistent and equitable way. The 
Department proposed to revise 7 CFR 273.9(d)(6)(iii)(C) to incorporate 
these standards.
    Commenters expressed concern that the regulatory language in the 
LIHEAP NPRM provided too much State discretion and could have error-
prone results. For example, one commenter argued that because there are 
so many ways for a household to divide, State agencies will find it 
difficult to apply the policy consistently, which could lead to quality 
control errors. This commenter, in addition to others, suggested that 
the fairest and most administratively straightforward way to apply this 
policy is to make the HCSUA available to any member who lived in a 
household that received a qualifying LIHEAP payment in the prior 12 
months.
    Due to concerns that the proposed regulatory language could lead to 
inconsistent application and be unfair for households, the Department 
is revising the regulations at proposed 7 CFR 
273.9(d)(6)(iii)(C)(1)(iii) (redesignated at 7 CFR 
273.9(d)(6)(iii)(D)(3) in this final rule). The Department is making 
this change to require State agencies that elect to use the HCSUA to 
grant the HCSUA to a household in which a member: (1) previously 
received a qualifying LIHEAP payment as part of different household, or 
(2) was previously a member of a different household on which behalf a 
LIHEAP payment was made. While these individuals no longer reside in 
the same household, they did receive a qualifying payment in the 
preceding 12 months, and therefore are eligible for the HCSUA under the 
Act. This procedure will allow for consistent treatment of all impacted 
SNAP households.

Actions on Changes

    The Department explained in the LIHEAP NPRM preamble that if a SNAP 
household subsequently receives a qualifying LIHEAP or other payment 
after certification, or if one is made on the household's behalf during 
the certification period, the State agency must take action according 
to the rules of their chosen reporting system under 7 CFR 273.12.
    One commenter requested that the Department add this language to 
the regulatory text. This commenter explained that it is not clear that 
receipt of LIHEAP should be known to the State agency and acted on 
during a certification period without further action from the 
household. While the Department appreciates this feedback, provisions 
regarding reporting and State agency actions on changes, including 
unclear information, are addressed in 7 CFR 273.12, and this rulemaking 
will not affect those provisions. Specifying the applicability of the 7 
CFR 273.12 procedures to enumerated issues may cause confusion. The 
provision is finalized as proposed.

Verification

    Under Federal rules, households applying for SNAP do not need to 
provide verification for utility costs unless questionable, if the 
household is claiming expenses in excess of the

[[Page 91212]]

State's HCSUA, or in accordance with a State-specific verification 
requirement. Similarly, the Department proposed that receipt of more 
than $20 in qualifying LIHEAP or other payments would not require 
verification for SNAP purposes unless questionable.
    Two commenters commended the Department for codifying that LIHEAP 
or similar energy assistance payments do not need to be verified for 
SNAP unless questionable. One of those commenters also said when a 
State agency learns of a payment from an energy assistance provider, 
the information should be verified upon receipt and the State agency 
should immediately change the benefit level. That commenter also 
believes State agencies should be encouraged to develop regular 
automated data feeds from energy assistance providers. Similarly, three 
commenters requested clarification regarding the treatment of payments 
received after certification and asked the Department to work with 
States to develop best practices for prompt re-budgeting.
    The Department appreciates these comments. Federal requirements at 
7 CFR 273.2(f)(1)(iii) provide that utility costs must be verified only 
if questionable, if the household is claiming expenses in excess of the 
State's SUA, or in accordance with a State-specific verification 
requirement. State agencies establish standards for what is 
questionable. For purposes of LIHEAP payments, when the information is 
received directly from an energy assistance provider by the State 
agency, there is no Federal requirement for the State agency to request 
additional information from the household unless it is considered 
questionable. In limited situations, a household's receipt of a LIHEAP 
payment may be considered questionable, and the State agency could 
require a household to provide verification, for example, if the 
household has moved. The existing regulations at 7 CFR 273.12(c) 
provide State agency requirements for processing changes. Note that 
although the regulations only require State agencies to verify utility 
information if it is questionable, State agencies have the option under 
7 CFR 273.2(f)(3) to choose to verify utility costs even if not 
questionable. If a State agency chooses to verify non-questionable 
utility costs, the State agency must ensure that procedures are 
consistent across the caseload.
    For the reasons stated above, the Department is finalizing this 
provision as proposed.

Tracking

    The Department proposed that State agencies would be responsible 
for tracking the date of receipt of the qualifying LIHEAP or other 
similar energy assistance payment to ensure the requirements are met. 
At 7 CFR 273.9(d)(6)(iii)(C)(1)(iii), the Department proposed that the 
State agency must document the date of receipt of a payment made under 
LIHEAA or other similar energy assistance program to ensure the payment 
was received in the current month or the immediately preceding 12 
months and exceeded $20 annually. Five commenters found the use of the 
term ``document'' confusing as it could be interpreted as 
``verification''. They also requested clarification that the 
documentation requirement is the responsibility of State agencies, not 
the household.
    The Department proposed to use the term ``document'' in the 
regulatory text instead of the term ``verify'' intentionally. 
Regardless of the State agency's choice on verification when the 
information is not questionable, the State agency must document in the 
case file the date of receipt of a qualifying payment. This will ensure 
the payment was received in the current month or the immediately 
preceding 12 months and exceeded $20 annually. State agencies have the 
discretion to follow whatever procedure works best for them to ensure 
that they accurately document this information in the case file beyond 
the general requirement that the State agency document the receipt of 
payment. This provision is finalized as proposed in the redesignated 7 
CFR 273.9(d)(6)(iii)(D)(3)(iii).

Data Sharing Agreements

    In the LIHEAP NPRM, the Department encouraged State agencies to 
modify data sharing agreements with their respective LIHEAP agencies, 
as appropriate, to ensure transmission of timely and accurate 
information needed for SNAP eligibility and benefit determinations. One 
commenter recommended that the final rule should include safeguards to 
ensure that State agencies have data sharing agreements with LIHEAP 
administrative agencies.
    While the Department appreciates this suggestion, the Department 
declines to finalize this requirement. The Agricultural Act of 2014 
does not require State agencies to enter into data sharing agreements 
with LIHEAP administrative agencies and requiring such agreements in 
regulation may be unwieldy. Nevertheless, the Department believes these 
agreements could be highly beneficial for both the State agencies and 
the LIHEAP agencies. Such agreements could establish standard operating 
procedures, expectations, and other details that would help ensure both 
parties are clear on the terms of the relationship. The Department 
encourages States to enter into data sharing agreements when possible. 
States should modify their data sharing agreements with their 
respective LIHEAP agencies as appropriate to ensure transmission of 
timely and accurate information needed for SNAP eligibility and benefit 
determination.

Weatherization

    Because the Act requires that the LIHEAP or other payment must have 
been received by or made on behalf of a household, the Department 
proposed that weatherization payments paid to a landlord cannot confer 
eligibility for the HCSUA. The Department declined to confer 
eligibility for the HCSUA for households within a multi-family dwelling 
when the multi-family dwelling receives weatherization project funding. 
The Department explained that the Act does not explicitly address how 
State agencies should evaluate LIHEAP funds that are used to pay for 
weatherization projects in multi-family dwellings and noted that a June 
15, 1999, Information Memorandum \22\ issued by the Department of 
Health and Human Services (HHS), which oversees LIHEAP at the Federal 
level, found that weatherization of multi-unit buildings ``is not a 
benefit provided to an individual, household or family eligibility 
unit.'' \23\ The Department requested comments on this issue and 
potential alternative approaches.
---------------------------------------------------------------------------

    \22\ U.S. Department of Health & Human Services. LIHEAP IM 1999-
10 on Federal Public Benefits Under the Welfare Reform Law--Revised 
Guidance, June 15, 1999. Retrieved from https://www.acf.hhs.gov/ocs/policy-guidance/liheap-im-1999-10-federal-public-benefits-under-welfare-reform-law-revised in July 2022.
    \23\ HHS has since confirmed that this guidance was issued 
exclusively for a different purpose and requested its removal from 
consideration. See preamble language for additional information.
---------------------------------------------------------------------------

    Three commenters responded to the Department's request for feedback 
on this issue. One commenter believed receipt of weatherization 
assistance from a LIHEAP or other similar energy assistance program 
should automatically confer the HCSUA to a household. Two commenters 
encouraged the Department to allow multi-unit weatherization projects 
to make all SNAP households within the multi-unit dwelling eligible for 
HCSUA. To do so, these commenters suggested that State agencies could 
divide the total value of a weatherization payment (or in-kind service, 
per the discussion

[[Page 91213]]

above on quantifiable benefits) by the number of units in the multi-
unit dwelling to determine the payment received on behalf of each 
household. One of these commenters argued that prohibiting 
weatherization payments from conferring the HCSUA to households living 
in multi-family dwellings would unfairly exclude these households since 
LIHEAP funds often pay for weatherization programs.
    The Department concurs with commenters that while the determination 
may be more difficult for multi-family dwellings, weatherization 
payments paid to a landlord could be considered a payment made on 
behalf of the household depending on the circumstances. The Department 
agrees that all households that receive a LIHEAP or other similar 
energy assistance program payment that meets the statutory requirements 
to confer HCSUA eligibility should be treated similarly. Further, HHS 
has since confirmed that its June 15, 1999, Information Memorandum was 
issued exclusively to assist in the application of rules under the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
and requested that the Department remove it from consideration in 
determining whether weatherization payments for multi-unit buildings 
can be considered a payment made ``on behalf of a household.'' As such, 
the Department is revising its position on weatherization payments and 
confirms that a household is eligible for the HCSUA if the household 
lives in a multi-unit dwelling or an individual unit and receives a 
qualifying weatherization program payment.
    However, the Department maintains that prescribing how 
weatherization payments are divided among households in a multi-unit 
dwelling when they are paid directly to a building manager or 
contractor would be administratively burdensome and restrictive. While 
two commenters suggested a method for how State agencies could quantify 
multi-unit dwelling weatherization payments for each household within 
that dwelling, the Department understands that State SNAP agencies may 
have different access to weatherization funding information depending 
on the structure of the State, data sharing agreements, and eligibility 
systems. Further, the Department establishing a methodology could 
hinder State agencies from using more workable solutions based on the 
information they have access to or require other State agencies to 
establish complicated processes to meet this lone requirement.
    Therefore, the Department is providing State agencies flexibility 
to determine the method for assessing whether a weatherization payment 
was received by (or on behalf of the household), in the current month 
or in the immediately preceding 12 months, and that the payment was 
greater than $20 annually, as required by the Act. State agencies must 
develop workable, reasonable procedures to determine how multi-unit 
dwelling weatherization payments would be quantified for households and 
must apply those procedures consistently and fairly across the 
caseload. The revised language is found at 7 CFR 
273.9(d)(6)(iii)(D)(3)(vii).

Procedural Matters

Executive Order 12866, 13563, and 14094

    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. Executive Order 14094 of April 6, 2023, focuses on 
modernizing regulatory review and updates the definition of a 
significant regulation.
    This final rule has been determined to be significant under section 
3(f)(1) of Executive Order (E.O.) 12866, as amended by E.O 14094, and 
was reviewed by OMB in conformance with Executive Order 12866.

Regulatory Impact Analysis

    The Department estimates the total increase in Federal SNAP benefit 
spending associated with the SUA provisions of the final rule to be 
approximately $5.4 billion over the five-year period FY 2025-FY 2029. 
This represents an increase in Federal transfers (SNAP benefits). 
Effects on Federal transfers are expected to begin in FY 2025. Effects 
on Federal costs are expected to begin in FY 2025 and are estimated to 
be approximately $612,000 over the 5-year period FY 2025-FY 2029. 
Effects on State administrative costs are expected to begin in FY 2025 
and are estimated to be approximately $561,000 over the five-year 
period. The final rule will not affect household burden.
    The Department estimates that approximately 29 percent of SNAP 
households will see an average 6 percent increase in their monthly SNAP 
benefit ($15 per month, per household) and 5 percent of SNAP households 
will see an average 2.6 percent reduction their monthly SNAP benefit 
($7 per month, per household). A very small number of households (less 
than 0.01 percent of all SNAP households) are estimated to lose 
benefits as a result of the final rule, losing an average of $30 in 
monthly benefits. The remaining 66 percent of households will see no 
change to their SNAP benefit. The rule is also expected to result in an 
increase in ongoing administrative burden for most State SNAP 
agencies.\24\
---------------------------------------------------------------------------

    \24\ This rule will increase the existing burden currently 
approved (OMB Control Number 0584-0496; Expiration Date 7/31/2026).
---------------------------------------------------------------------------

    Regarding the LIHEAP provisions, the Department notes that States 
were required by statute to implement the Agricultural Act of 2014's 
change related to LIHEAP immediately for any household whose initial 
certification period began on or after March 10, 2014. Therefore, any 
reduction in transfers related to the LIHEAP provisions of this final 
rule is assumed to be fully incorporated into the current SNAP 
baseline.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires Agencies 
to analyze the impact of rulemaking on small entities and consider 
alternatives that would minimize any significant impacts on a 
substantial number of small entities. Pursuant to that review, it has 
been certified that this rule would not have a significant impact on a 
substantial number of small entities.
    The final rule primarily impacts SNAP households. Small entities, 
such as smaller SNAP-authorized retailers, would not be subject to any 
new requirement. On average, nationwide, SNAP retailers would likely 
see an increase in the amount of SNAP benefits redeemed at stores under 
this final rule as the final rule is expected to increase transfers 
(SNAP benefit spending) by 1.3 percent. As of FY 2022, approximately 76 
percent of authorized SNAP retailers (about 195,700 retailers) were 
small groceries, convenience stores, combination grocery stores, and 
specialty stores, store types that are likely to fall under the Small 
Business Administration gross sales threshold to qualify as a small 
business for Federal Government programs. While these stores make up 
most authorized

[[Page 91214]]

retailers, collectively they redeem about 12 percent of all SNAP 
benefits.
    Amongst States, 43 States are expected to experience a net increase 
in SNAP benefit as a result of the final rule, ranging from 0.1 percent 
to 3.4 percent. In these States, small retailers may experience a small 
increase in sales. The remaining 10 States are expected to see a net 
decrease, ranging from -0.4 percent to -1.8 percent, in total SNAP 
benefits because of the final rule. These States are: Maine, 
Massachusetts, New Hampshire, New Jersey, New York, North Dakota, Ohio, 
Rhode Island, South Dakota, and Vermont. Of the total 195,700 
authorized SNAP retailers that likely qualify as a small business, 17 
percent are located in these 10 States. They account for 16 percent of 
redemptions among likely small, authorized SNAP retailers.

Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), 
the Office of Information and Regulatory Affairs has determined that 
this rule meets the criteria set forth in 5 U.S.C. 804(2).

Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and Tribal 
governments and the private sector. Under section 202 of the UMRA, the 
Department generally must prepare a written statement, including a cost 
benefit analysis, for proposed and final rules with ``Federal 
mandates'' that may result in expenditures by State, local, or Tribal 
governments, in the aggregate, or the private sector, of $100 million 
or more in any one year. When such a statement is needed for a rule, 
section 205 of the UMRA generally requires the Department to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the most cost effective or least burdensome alternative that achieves 
the objectives of the rule.
    This final rule does not contain Federal mandates (under the 
regulatory provisions of Title II of the UMRA) for State, local, and 
Tribal governments or the private sector of $100 million or more in any 
one year. Thus, the rule is not subject to the requirements of sections 
202 and 205 of the UMRA.

Executive Order 12372

    SNAP 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 a final rule related notice (48 FR 29115, 
June 24, 1983), 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 for inclusion in the preamble to the regulations 
describing the agency's considerations in terms of the three categories 
called for under section (6)(b)(2)(B) of Executive Order 13132.
    The Department has considered the impact of this rule on State and 
local governments and has determined that this rule does not have 
federalism implications. Therefore, under section 6(b) of the Executive 
order, a federalism summary is not required.

Executive Order 12988, Civil Justice Reform

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. This rule is intended to have preemptive effect 
with respect to any State or local laws, regulations or policies which 
conflict with its provisions or which would otherwise impede its full 
and timely implementation. This rule is not intended to have 
retroactive effect unless so specified in the Effective Dates section 
of the final rule. Prior to any judicial challenge to the provisions of 
the final rule, all applicable administrative procedures must be 
exhausted.

Civil Rights Impact Analysis

    The Department has reviewed the final rule in accordance with the 
Department Regulation 4300-004, ``Civil Rights Impact Analysis'' 
(CRIA), to identify and address any major civil rights impacts the 
final rule might have on SNAP participants by gender, race, and 
ethnicity, as well as impacts on children, the elderly, and persons 
with disabilities. The final rule allows State agencies to continue to 
set their own SUA methodologies, subject to FNS approval. State 
agencies must submit for FNS approval their SUA methodologies at least 
every five years. Methodology submissions must incorporate any 
revisions necessary to demonstrate that the baseline expenditure data 
and underlying methodology reflect recent trends and changes. State 
agencies' methodologies must also meet certain criteria. The final rule 
also expands allowable shelter expenses to include basic internet 
costs. Finally, the final rule finalizes updates to the treatment of 
LIHEAP payments, in accordance with the Agricultural Act of 2014 (2014 
Farm Bill).
    The Department ran a simulation using FY 2022 SNAP Quality Control 
data to estimate how the final rule would impact SNAP participants by 
gender, race, and ethnicity, as well as impacts on children, the 
elderly, and persons with disabilities. SNAP participants identified as 
female are slightly more likely to both gain and lose benefits than 
SNAP participants identified as male. Households with children are 
slightly less likely to gain or lose benefits than all households. 
Households headed by a non-Hispanic White individual or Asian 
individual are more likely to lose benefits under the final rule. 
Households headed by an Asian individual are also slightly more likely 
to gain benefits compared to all households. Households headed by a 
non-Hispanic Black individual are slightly less likely to gain benefits 
compared to all households. Among households expected to lose benefits 
under the final rule, households headed by an Asian or Hispanic 
individual are expected to experience a larger average benefit loss. 
Additionally, households with elderly individuals or individuals with 
disabilities are more likely to lose or gain benefits due to finalized 
changes to SUAs because these households are not subject to the cap on 
the allowable excess shelter deduction. Thus, these households with 
elderly individuals and individuals with disabilities are more likely 
to be impacted by changes to the HCSUA. The mitigation and outreach 
strategies outlined in the regulation and this CRIA are intended to 
minimize the impacts on the protected groups.
    Finally, households that previously qualified for the HCSUA based 
on receipt of a LIHEAP payment of less than $20 without actual costs 
experienced a benefit change due to the provisions contained in 2014 
Farm Bill. Due to the unavailability of data on the specific 
individuals impacted by the LIHEAP provision within the final rule, the 
Department is unable to determine whether this change had an adverse or 
disproportionate impact on SNAP participants who are members of 
protected classes.

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

[[Page 91215]]

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.
    This rule has potential Tribal implications. FNS provided an 
opportunity for consultation on this issue on October 30, 2020. One 
question was received and answered on the impact of the proposed 
changes State-by-State and no additional requests for consultation were 
received. If further consultation on the provisions of this final rule 
is requested, the Office of Tribal Relations will work with FNS to 
ensure quality consultation is provided.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. Chap. 35) requires 
OMB to approve all collections of information by a Federal agency 
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.
    In accordance with the Paperwork Reduction Act of 1995, this final 
rule contains information collections that are subject to review and 
approval by the Office of Management and Budget. The Department 
solicited public comments in the respective NPRMs that were 
incorporated into this final rulemaking regarding changes in the 
information collection burden that would result from the finalization 
of changes in the rule. The respective NPRMs were proposed on October 
3, 2019, ``Supplemental Nutrition Assistance Program: Standardization 
of State Heating and Cooling Standard Utility Allowances'' (RIN 0584-
AE69); and on April 20, 2016, ``Supplemental Nutrition Assistance 
Program: Standard Utility Allowances Based on the Receipt of Energy 
Assistance Payments Under the Agricultural Act of 2014'' (RIN 0584-
AE43). The Department will refer to the October 3, 2019, NPRM as the 
SUA NPRM and the April 20, 2016, NPRM as the LIHEAP NPRM. The LIHEAP 
NPRM finalized by this rulemaking does not have associated burden under 
the Paperwork Reduction Act.
    These changes are contingent upon OMB approval under the Paperwork 
Reduction Act of 1995. Once the information collection request is 
approved by OMB, the agency will publish a separate notice in the 
Federal Register announcing OMB approval.
    Due to the timeline of the SUA NPRM, the Department had initially 
requested a new information collection (designated by OMB as Control 
Number 0584-0651). However, there are no longer conflicts with the 
0584-0496 revision timeline given changes to the final rule publication 
date. Therefore, instead of creating a new information collection, the 
Department is revising the existing information collection (0584-0496) 
to reflect State agencies updating SUA baseline methodology at least 
every five years; State agencies using contractors to support updates 
to SUA baseline methodology; and State agencies establishing a basic 
internet individual standard.
    Title: Supplemental Nutrition Assistance Program (SNAP): State 
Agency Options for Standard Utility Allowances and Self-Employment 
Income.
    OMB Number: 0584-0496.
    Form Number: None.
    Expiration Date: Previously approved through July 31, 2026.
    Type of Request: Revision.
    Abstract: Section 5 of the Food and Nutrition Act of 2008 (FNA), as 
amended, permits States to use standard utility allowances (SUAs) in 
lieu of actual utility expenses in determining a household's shelter 
costs for the purposes of the excess shelter deduction. This final rule 
revises SNAP regulations for calculating standard utility allowances 
and expands allowable shelter expenses to include basic internet costs.
    Commenters on the proposed rule explained that portions of the 
proposed rule would not decrease or may increase State agency burden. 
The Department agrees and is including additional burden to account for 
changes in policy in the final rule, such as State agencies updating 
SUA methodology to align with criteria in the final rule and State 
agencies establishing SUAs including basic internet costs. The final 
rule also adjusts the estimates for updating and reporting on SUAs to 
reflect changes in the approved information collection during the 2023 
revision of this information collection (OMB Control number: 0584-0496; 
Expiration Date 7/31/2026).
    The Department is revising the existing information collection 
covering State agency reporting and recordkeeping for on SUAs (OMB 
Control Number: 0584-0496, Expiration Date 7/31/2026) to reflect 
changes from the final rule. There are no new or revised recordkeeping 
burden or third-party disclosure requirements.
    This rule also finalizes the updates to the treatment of Low-Income 
Home Energy Assistance Program (LIHEAP) payments in accordance with 
amendments made to the FNA by the Agricultural Act of 2014. These 
changes do not have associated burden under the Paperwork Reduction Act 
and are not reflected in this section.

PRA-Related Comments on Proposed Rule

    Following publication of the SUA NPRM, the Department received 
comments directly on the estimated cost and burden hours and comments 
related to the underlying proposed program changes. As a result, the 
Department has made changes to the estimated burden in the final rule. 
Two State agencies agreed that the proposal for FNS to standardize and 
calculate the Heating and Cooling Standard Utility Allowance (HCSUA) 
would reduce the State administrative burden associated with 
determining values and reporting to FNS. However, most comments 
asserted that State agencies would experience more administrative 
burden than reflected in the proposed rule.
    Multiple commenters, representing two State agencies, a city 
government, a congressional office and six advocacy organizations, 
argued that due to the lower HCSUA because of the proposed rule, some 
State agencies would switch from using a mandatory HCSUA to a voluntary 
HCSUA. The commenters explained that these State agencies would have an 
increase in administrative burden due to calculating households' actual 
heating and cooling costs. Since the final rule does not require State 
agencies adopt a lower HCSUA and instead allows State agencies to 
continue calculating their own HCSUAs, subject to FNS approval, the 
Department does not expect State agencies will switch from using a 
mandatory HCSUA to a voluntary HCSUA.
    A State agency and a non-profit organization commented that the 
proposed standardization of the HCSUA and proposed caps on LUAs would 
do little to relieve administrative burden on State agencies. The 
commenters argued that State agencies will still be required to 
calculate LUAs and that much of the data used to calculate LUAs are 
from the same sources that are used to calculate the HCSUA. The final 
rule requires State agencies to continue calculating all SUAs, 
including the HCSUA, LUAs and individual standards. Therefore, the 
Department increased the burden for State agencies to annually update 
SUAs.
    A State agency and a county government suggested that State 
agencies and counties will incur administrative costs for policy and 
system automation changes required to implement the proposed rule. The

[[Page 91216]]

Department agreed and added start-up burden for each State agency to 
account for the hours they will spend establishing SUAs that include 
the cost of basic internet. The Department also considered the burden 
households may newly experience when reporting on applications or in 
interviews whether they incur internet costs and verifying costs if the 
State agency uses voluntary SUAs and the applicant wishes to claim 
actual expenses in excess of the State SUA. Similarly, State agencies 
will have burden associated with requesting such information. The 
Department maintains this burden is already included in OMB-approved 
ICR 0584-0064 (exp. 6/30/2027), which accounts for the burden on 
households and State agencies associated with the SNAP application 
process. This information collection includes burden for applications, 
interviews, and verification. Therefore, the Department is not 
including additional household or State burden related to these 
activities in this information collection.
    Additionally, one advocacy organization expressed opposition to the 
proposed information collection due to their general opposition to the 
proposed rule. The commenter explained that they think the 
administrative burden component is irrelevant compared to the potential 
negative impact on families losing benefits under the proposed rule. 
The Department believes that the changes in the final rule, which give 
States more flexibility to reflect their households' unique utility 
needs, address the commenter's broad concerns.
    Beyond specific comments on the information collection and 
administrative burden, other comments impact the total burden under the 
final rule. Commenters to the NPRM expressed concerns about the data 
sources the Department intends to use to calculate HCSUA values. In 
response to these and other comments, the Department is not finalizing 
the proposed HCSUA methodology standardization. Instead, the Department 
is providing State agencies with the flexibility to continue setting 
their own SUAs while standardizing the data and methodology criteria 
that FNS will use to approve SUAs. State agencies submit for FNS 
approval their SUA methodologies at least every five years. Methodology 
submissions must incorporate any revisions necessary to demonstrate 
that the baseline expenditure data and underlying methodology reflect 
recent trends and changes. The methodology update must include changes 
to the baseline expenditure data and an explanation of the State 
agency's methodology for deriving HCSUAs from such data. The Department 
added to the burden to reflect burden hours incurred by State agencies 
revising their SUA methodologies every five years. Additionally, given 
the methodology criteria, the Department assumes that some State 
agencies will choose to solicit contractor support to identify data 
sources and revise SUA methodologies. The Department added to the 
burden to reflect the time to solicit, award, and oversee such 
contracts, as well as the estimated cost of the contracts.

Changes to Burden Estimates in the Final Rule

    In this revision, the Department differentiates between annual 
burden, burden incurred every five (5) years due to rule provisions, 
and start-up burden for implementing rule provisions. For the first 
year of implementation of the final rule, the reporting burden will 
include the annual burden, burden incurred every five (5) years, and 
start-up burden. The Department estimates the total first year 
reporting burden will be 6,680 total annual burden hours and 275 total 
annual responses from 53 State agencies. For subsequent years, the 
burden will only include annual burden and one-fifth (\1/5\) of the 
burden incurred every five (5) years. The Department estimates the 
subsequent year reporting burden will be 2,118 total burden hours and 
approximately 133 total annual responses from 53 State agencies. The 
Department estimates that the total recordkeeping annual burden will be 
13.25 total burden hours and 53 annual responses from 53 State 
agencies.
    In the proposed rule information collection request, the Department 
estimated that State agencies that accept the FNS-calculated HCSUA 
value would spend one (1) hour per State to update their existing LUAs 
and individual standards and respond to this data collection. The final 
rule requires that State agencies continue making annual updates to all 
SUAs, including the HCSUA, instead of accepting an FNS-calculated 
value. Therefore, the Department now estimates that all 53 State 
agencies will submit two (2) responses, at ten (10) hours each to 
update their SUAs annually. This includes burden to update SUAs based 
on the consumer price index (CPI) or similar sources, correspond with 
FNS, and update systems and policy materials.
    Compared to the prior revision, this represents a decrease of 2.5 
hours because the burden for updating SUA baseline methodology is now 
accounted for separately, as discussed below. In alignment with the 
prior revision, the burden now includes two responses to account for 
State agencies' review of their preliminary SUA amounts and their final 
SUA amounts. The estimated total burden for this provision is 1,060 
hours (53 State agencies x 2 SUA requests per State agency x 10 hours 
per request = 1,060 hours).
    In addition to annual updates, the Department estimates that given 
the requirements of the final rule to update SUA baseline methodology, 
in the first year and every five (5) years thereafter, all 53 State 
agencies will submit two (2) responses at 40 hours each. This includes 
burden to gather and analyze data sources, calculate SUAs, and submit 
revisions to SUA methodology to FNS. This includes two (2) responses to 
account for State agencies' review of their preliminary methodology and 
their final methodology. This estimate is based on the Department's 
recent experience evaluating annual SUA updates and providing technical 
assistance to State agencies, with additional time for State agencies 
to ensure data sources and methodology meet the criteria in the final 
rule. The estimated total burden for this provision is 4,240 hours (53 
State agencies x 2 SUA methodology updates per State agency x 40 hours 
per request = 4,240 hours). Since the Department estimates State 
agencies will incur this burden every five (5) years, the average 
annual burden is 848 hours (4,240 hours/5 years = 848 hours annually).
    The Department estimates that in the first year and every five (5) 
years thereafter, five (5) State agencies will solicit contractor 
support to make required updates to SUA baseline methodology. This 
estimate assumes that approximately one-fifth to one-quarter of the 
State agencies FNS identified as likely to make substantial revisions 
to their HCSUA methodology will solicit contractor support. Based on 
prior review of State agency SUA submissions, the Department assumes 
most State agencies will perform updates internally, but some may seek 
contractor support. The Department estimates that each State agency 
will spend approximately 160 hours soliciting, awarding, and managing 
such contracts and spend approximately $100,000 on such contracts. 
These estimates are based on the Department's experience with previous 
Federal and State agency contracts for data analysis. The estimated 
total burden for this provision is 800 hours (5 State agencies x 1 
contract per State agency x 160 hours per request = 800 hours). Since 
the Department estimates State agencies

[[Page 91217]]

will incur this burden every five (5) years, the average annual burden 
is 160 hours (800 hours/5 years = 160 hours annually).
    Additionally, there will be start-up responses for establishing 
SUAs covering basic internet costs. The Department estimates that in 
the first year all 53 States will submit one (1) response at ten hours 
each to establish a basic internet individual standard and HCSUA or 
LUAs covering basic internet costs. The includes the burden to gather 
and analyze internet data sources and to build the ability to use the 
basic internet individual standard into their systems and processes. 
The estimated total burden for this provision is 530 hours (53 State 
agencies x 1 response per State agency x 10 hours per request = 530 
hours).
    This rule also finalizes updates proposed on April 30, 2016, to the 
treatment of Low-Income Home Energy Assistance Program (LIHEAP) 
payments, in accordance with amendments made to the FNA by the 
Agricultural Act of 2014. These changes do not have associated burden 
under the Paperwork Reduction Act.
    In addition to the program changes related to the final rule, this 
information collection also covers the burden of State agency 
methodologies for determining the cost of doing business in self-
employment cases. Current data indicates 23 out of 53 State agencies 
have already incorporated a self-employment methodology. For this 
revision, the Department continues to estimate that five (5) State 
agencies will establish a new methodology for offsetting the cost of 
producing self-employment income, either for the first time or as an 
update to their current methodology. This estimate is consistent with 
the estimate in the most recent approval of this information 
collection, approved 7/7/2023. The Department has received few updates 
to State agencies' self-employment methodologies over the last five 
years, so five (5) States represents the high end of the estimate. The 
Department estimates that each of these five (5) responses will have a 
response time of 10 hours, for a total annual burden of 50 hours (5 
State agencies x 1 request per State agency x 10 working hours per 
request = 50 hours). This burden estimate is consistent with the prior 
revision of this information collection.

Recordkeeping Burden

    All 53 State agencies are required to keep and maintain one record 
of the information gathered and submitted to FNS for SUA and self-
employment options, and the Department estimates this process takes 15 
minutes (or 0.25 hours) per year. The total annual burden for this 
provision is estimated at 13.25 hours (53 State agencies x 1 record per 
State agency x 0.25 hours = 13.25 hours). This burden estimate is 
consistent with the prior submission for this activity.
    There are no new recordkeeping or third-party disclosure 
requirements resulting from the final rule, and there have been no 
other changes to this recordkeeping requirement since the Department 
last consulted with State agencies on the estimate.
    The full burden estimates are shown in the chart below:
BILLING CODE 3410-30-P

[[Page 91218]]

[GRAPHIC] [TIFF OMITTED] TR18NO24.037


[[Page 91219]]


[GRAPHIC] [TIFF OMITTED] TR18NO24.038

BILLING CODE 3410-30-C
    Estimated Number of Respondents: 53 State Agencies.
    Estimated Frequency of Response: 5.19 (first year), 2.51 
(subsequent years).

[[Page 91220]]

    Estimated Total Annual Responses: 275 (first year), 133.20 
(subsequent years).
    Estimated Time per Response: 24.29 hours (first year), 15.90 hours 
(subsequent years).
    Estimated Total Annual Burden Hours: 6,680 (first year), 2,118 
(subsequent years).

E-Government Act Compliance

    The Department is committed to complying with the E-Government Act, 
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.

List of Subjects in 7 CFR Part 273

    Administrative practice and procedure, Claims, Employment, Food 
stamps, Fraud, Government employees, Grant programs--social programs, 
Supplemental Security Income, Wages.

    Accordingly, 7 CFR part 273 is amended as follows:

PART 273--CERTIFICATION OF ELIGIBLE HOUSEHOLDS

0
1. The authority citation for part 273 continues to read as follows:

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


0
2. In Sec.  273.9, revise paragraphs (d)(6)(ii)(C) and (d)(6)(iii) to 
read as follows:


Sec.  273.9  Income and deductions.

* * * * *
    (d) * * *
    (6) * * *
    (ii) * * *
    (C) The cost of fuel for heating; cooling (i.e., the operation of 
air conditioning systems or room air conditioners); electricity or fuel 
used for purposes other than heating or cooling; water; sewerage; well 
installation and maintenance; septic tank system installation and 
maintenance; garbage and trash collection; all service fees required to 
provide service for one telephone, including, but not limited to, basic 
service fees, wire maintenance fees, subscriber line charges, relay 
center surcharges, 911 fees, and taxes; service fees associated with 
basic internet connection, including, but not limited to, monthly 
subscriber fees (i.e., the base rate paid by the household each month 
in order to receive service, which may include high-speed internet), 
taxes and fees charged to the household by the provider that recur on 
monthly bills, and the cost of one modem rental; and fees charged by 
the utility provider for initial installation of the utility. One-time 
deposits cannot be included.
* * * * *
    (iii) Standard utility allowances. (A) A State agency may use 
standard utility allowances (standards) in place of actual costs in 
determining a household's excess shelter deduction. The State agency 
may use different types of standards but cannot allow households the 
use of two standards that include the same expense. The State agency 
may vary the standards by factors such as household size, geographical 
area, or season. Only utility costs identified in paragraph 
(d)(6)(ii)(C) of this section may be used in developing standards 
described in paragraphs (d)(6)(iii)(A)(1) through (3) of this section. 
The following standards are allowable:
    (1) An individual standard for each type of utility expense;
    (2) A standard utility allowance for all utilities that includes 
heating or cooling costs (HCSUA); and
    (3) A limited utility allowance (LUA) that includes electricity and 
fuel for purposes other than heating or cooling, water, sewerage, well 
and septic tank installation and maintenance, and garbage or trash 
collection. The LUA may also include telephone and/or internet costs. 
The LUA must include expenses for at least two utilities.
    (B) The State agency must review the standards annually and make 
adjustments to reflect changes in costs, rounded to the nearest whole 
dollar. State agencies must provide the amounts of standards to FNS 
annually and submit methodologies to FNS for approval when the 
methodologies are developed or changed.
    (C) The State agency must submit for FNS approval their 
methodologies at least every five years. Methodology submissions must 
incorporate any revisions necessary to demonstrate that the baseline 
expenditure data and underlying methodology reflect recent trends and 
changes. State agencies' methodologies must:
    (1) Reflect the entire State or geographic area the SUA covers;
    (2) Use data sourced from utility providers or similarly reliable 
source;
    (3) Reflect expenses incurred by low-income households;
    (4) Distinguish if the utility is for heating or cooling, if 
applicable; and
    (5) Reflect residential utility expenses.
    (D) A standard with a heating or cooling component must be made 
available to the following households:
    (1) Households that incur heating or cooling expenses separately 
from their rent or mortgage;
    (2) Households in rental housing who are billed by their landlords 
on the basis of individual usage or who are charged a flat rate 
separately from their rent. However, households in public housing units 
which have central utility meters and which charge households only for 
excess heating or cooling costs are not entitled to a standard that 
includes heating or cooling costs based only on the charge for excess 
usage, unless the State agency mandates the use of standard utility 
allowances in accordance with paragraph (d)(6)(iii)(G) of this section; 
and
    (3) Households that receive a payment or on behalf of which a 
payment was made under the Low Income Home Energy Assistance Act of 
1981 (LIHEAA) or other similar energy assistance program, if in the 
current month or in the immediately preceding 12 months and such 
payment was greater than $20 annually.
    (i) Other similar energy assistance programs are separate home 
energy assistance programs designed to provide heating or cooling 
assistance through a payment received by or made on behalf of low-
income households. State agencies must establish clear and reasonable 
standards for evaluating whether a program constitutes a similar energy 
assistance program.
    (ii) A payment received by a household or made on behalf of a 
household under LIHEAA or other similar energy assistance program must 
be quantifiable in order to confer eligibility for the heating and 
cooling standard utility allowance. A quantifiable payment is one that 
the State agency quantifies, in dollars. In-kind energy assistance, 
such as firewood or coal, may be considered an other similar energy 
assistance program payment if the State agency establishes reasonable 
procedures for quantifying the payment in a manner that is applied 
consistently across the caseload.
    (iii) The State agency shall document the date and receipt of a 
payment made under LIHEAA or other similar energy assistance program to 
ensure the payment was received in the current month or the immediately 
preceding 12 months and exceeds $20 annually.
    (iv) State agencies shall not consider anticipated receipt of a 
payment to be an actual payment received under the LIHEAA or other 
similar energy assistance program when determining a household's 
eligibility for the HCSUA. However, for purposes of this sub clause, a 
State agency may consider a payment under the LIHEAA or other similar 
energy assistance program to be received by the household, or on behalf 
of the household, if the household is scheduled to receive the payment 
in the current month.

[[Page 91221]]

    (v) In a case where a payment is scheduled to be received in the 
current month and the payment is not actually made within that month, 
the State agency is responsible for determining whether an overissuance 
has occurred.
    (vi) A State agency must grant the HCSUA to individuals who 
received a qualifying LIHEAP or other payment, regardless of changes in 
residence or address. Individuals who live in a household that received 
a qualifying LIHEAP or other payment who subsequently move into a 
separate household are entitled to receive the HCSUA in their new, 
separate households.
    (vii) A household is eligible for the HCSUA if the household lives 
in a multi-unit dwelling or individual unit and receives a qualifying 
weatherization program payment. State agencies must develop workable, 
reasonable procedures to determine how multi-unit dwelling 
weatherization payments would be quantified for households and must 
apply those procedures consistently and fairly across the caseload.
    (E) A household that has both an occupied home and an unoccupied 
home is only entitled to one standard.
    (F) At initial certification, recertification, and when a household 
moves, the household may choose between a standard or verified actual 
utility costs for any allowable expense identified in paragraph 
(d)(6)(ii)(C) of this section, unless the State agency has opted, with 
FNS approval, to mandate use of a standard. Households certified for 24 
months may also choose to switch between a standard and actual costs at 
the time of the mandatory interim contact required by Sec.  
273.10(f)(1) if the State agency has not mandated use of the standard.
    (G)(1) A State agency may mandate use of standard utility 
allowances for all households with qualifying expenses if the State 
uses one or more standards that include the costs of heating and 
cooling and one or more standards approved by FNS that do not include 
the costs of heating and cooling, and the standards will not result in 
increased program costs. The prohibition on increasing program costs 
does not apply to necessary increases to standards resulting from 
utility cost increases.
    (2) If the State agency chooses to mandate use of standard utility 
allowances, it must use a standard utility allowance that includes 
heating or cooling costs for residents of public housing units which 
have central utility meters and which charge the households only for 
excess heating or cooling costs. The State agency also must not prorate 
a standard utility allowance that includes heating or cooling costs 
provided to a household that lives and shares heating or cooling 
expenses with others.
    (3) In a State that chooses this option, households entitled to the 
standard may not claim actual expenses, even if the expenses are higher 
than the standard. Households not entitled to the standard may claim 
actual allowable expenses.
    (H) If a household lives with and shares heating or cooling 
expenses with another individual, another household, or both, the State 
agency shall not prorate the standard for such households if the State 
agency mandates use of standard utility allowances in accordance with 
paragraph (d)(6)(iii)(G) of this section. The State agency may not 
prorate the SUA if all the individuals who share utility expenses but 
are not in the SNAP household are excluded from the household only 
because they are ineligible.

0
3. In Sec.  273.10, revise paragraph (d)(6) to read as follows:


Sec.  273.10   Determining household eligibility and benefit levels.

* * * * *
    (d) * * *
    (6) Energy assistance payments. The State agency shall prorate 
energy assistance payments as provided for in Sec.  273.9(d) over the 
entire heating or cooling season the payment is intended to cover. Any 
such prorated energy assistance payments may qualify an individual or 
household for the HCSUA in more than one heating or cooling season.
* * * * *

Tameka Owens,
Acting Administrator and Assistant Administrator, Food and Nutrition 
Service.

    Note: The following appendix will not appear in the Code of 
Federal Regulations.

Appendix A--Regulatory Impact Analysis

I. Statement of Need

    The United States Department of Agriculture (the Department) is 
finalizing this rule, which revises Supplemental Nutrition 
Assistance Program (SNAP) regulations to expand allowable shelter 
expenses to include basic internet costs and establish clearer 
guidelines and requirements for State agencies to follow when 
developing standard utility allowances (SUAs) to ensure consistency 
and integrity in the application of SUAs across the country. While 
the Department is not finalizing the proposed rule's provision 
standardizing the methodology for calculating SUAs nor establishing 
a percentile at which they must be calculated, the Department 
maintains that clearer requirements will improve consistency and 
integrity in the program, which the Department believes is good 
governance. This rule also finalizes updates to the treatment of 
Low-Income Home Energy Assistance Program (LIHEAP) payments or other 
similar energy assistance program payments, in accordance with 
amendments made to the Food and Nutrition Act of 2008 by the 
Agricultural Act of 2014.
    Without consistent parameters for SUA methodologies and the data 
used to calculate SUAs, the Department is concerned that information 
State agencies use to determine SUAs is outdated and may not reflect 
low-income households' current utility costs. In a 2017 study, 
``Methods to Standardize State Standard Utility Allowances'' 
(Holleyman, et al., 2017) (referred to in this analysis as the 2017 
SUA Study), the Department found differences in how well State 
heating and cooling standard utility allowance (HCSUA) values 
reflected data on utility expenditures among low-income households 
in each State. These findings persisted in a 2023 update, ``Updating 
Standardized State Heating and Cooling Utility Allowance Values'' 
(Holleyman, et al., 2023) (referred to in this analysis as the 2023 
SUA Study). Establishing clearer requirements for how States should 
use data to establish SUAs is important to ensure SUAs are aligned 
with current household conditions and that the application of the 
excess shelter deduction reflects household circumstances and, 
ultimately, the appropriateness of the benefit level.

II. Summary of Impacts

    The Department estimates the total increase in Federal SNAP 
benefit spending associated with the SUA provisions of the final 
rule to be approximately $5.4 billion over the five-year period FY 
2025-FY 2029, averaging $1.1 billion per year. This represents a 
1.34 percent increase in Federal transfers (SNAP benefits) upon full 
implementation. Effects on Federal transfers are expected to begin 
in FY 2025. Effects on Federal costs are expected to begin in FY 
2025 and are estimated to be approximately $612,000 over the 5-year 
period FY 2025-FY 2029, averaging about $122,000 annually. Effects 
on State administrative costs are expected to begin in FY 2025 and 
are estimated to be approximately $561,000 over the five-year period 
(an increase of less than 0.01 percent from baseline projections), 
averaging $112,000 annually.
    The Department estimates that approximately 29 percent of SNAP 
households will see an average 6 percent increase in their monthly 
SNAP benefit (averaging $15 per month, per household) and 5 percent 
of SNAP households will see an average 2.6 percent reduction their 
monthly SNAP benefit (averaging $7 per month, per household). 
Benefit increases are primarily due to the inclusion of internet 
service as an allowable shelter expense in SUAs. In addition, a 
small share of households will experience a benefit gain due to 
increases in some States' HCSUA values due to new data quality 
standards and periodic methodology reviews, particularly in States 
that have not updated their HCSUA methodologies or underlying data 
in recent

[[Page 91222]]

years. Benefit losses are due to expected decreases in some States' 
HCSUA values due to new data quality standards and periodic 
methodology reviews, particularly in States that have not updated 
their HCSUA methodologies or underlying data in recent years. The 
remaining 66 percent of households will see no change to their SNAP 
benefit. A very small number of households (less than 0.01 percent 
of all SNAP households) are estimated to lose benefits as a result 
of the final rule, losing an average of $30 in monthly benefits. The 
rule is also expected to result in an increase in ongoing 
administrative burden for most State SNAP agencies.\1\ The final 
rule will not affect household burden.
---------------------------------------------------------------------------

    \1\ This rule will increase the existing burden currently 
approved (OMB Control Number 0584-0496; Expiration Date: July 31, 
2026).
---------------------------------------------------------------------------

    The final rule's effects are summarized in the following table 
(Table 1). Increases in SNAP benefit payments are categorized as 
transfers in the accounting statement (Table 2); increases in 
administrative burden for States are categorized as costs; and 
Federal costs to administer the provisions of the final rule are 
categorized as Federal costs. Regarding the LIHEAP provisions of the 
final rule, which finalize how LIHEAP payments are considered to 
confer eligibility for the HCSUA, the Department notes that States 
were required by statute to implement the Agricultural Act of 2014's 
change related to LIHEAP immediately for any household whose initial 
certification period began on or after March 10, 2014. For 
households that were already certified for SNAP, States had some 
flexibility in determining when to implement this change but were 
required to implement no later than August 1, 2015, for most 
households. Thus, reductions in transfers related to the LIHEAP 
provisions of this final rule are assumed to be fully incorporated 
into the current SNAP baseline, as noted in Table 1, and therefore 
are not included in the accounting statement of transfer effects in 
Table 2. This analysis focuses on effects over the five-year period 
FY 2025-FY 2029. Ten-year estimates are available in Appendix Table 
A.
BILLING CODE 3410-30-P

[[Page 91223]]

[GRAPHIC] [TIFF OMITTED] TR18NO24.039

BILLING CODE 3410-30-C
    As required by OMB Circular A-4, in Table 2 below, the 
Department has prepared an accounting statement showing the 
annualized estimates of benefits, costs, and

[[Page 91224]]

transfers associated with the provisions of this rule. Increases in 
SNAP benefit payments are categorized as transfers; increases in 
administrative burden for State agencies, households, and the 
Federal Government are categorized as costs.
[GRAPHIC] [TIFF OMITTED] TR18NO24.040

    In the discussion that follows, there is a section-by-section 
description of the impacts of each rule provision.

III. Proposed Rule and Comments Received

    This final rule incorporates provisions originally proposed in 
two separate notices of proposed rulemaking (NPRM): The October 3, 
2019, NPRM titled ``Supplemental Nutrition Assistance Program: 
Standardization of State Heating and Cooling Standard Utility 
Allowances'' (84 FR 52809), and the April 20, 2016, NPRM titled 
``Supplemental Nutrition Assistance Program: Standard Utility 
Allowances Based on the Receipt of Energy Assistance Payments'' (81 
FR 23189). While originally published as separate NPRMs, the 
provisions contained in these rules both relate to calculating 
household shelter expenses, and therefore the Department is 
combining the provisions from each rule into a single final rule. 
For clarity, provisions included in the October 3, 2019, proposed 
rule are referred to throughout this analysis as SUA NPRM 
provisions. Provisions included in the April 20, 2016, proposed rule 
are referred to as LIHEAP NPRM provisions.
    The Department received over 125,000 public comment submissions 
on the SUA NPRM. Of these, approximately 6,500 were unique and 
nearly 118,800 were associated with form letter campaigns. Comments 
on the SUA NPRM came from a broad range of stakeholders, including 
State SNAP agencies, elected officials, local governments, advocacy 
groups, religious organizations, food banks, legal services 
organizations, private citizens, and others. The Department received 
nine comments on the LIHEAP NPRM from advocate groups, legal 
services organizations, and nonprofit organizations.

A. Comments Related to Impacts of SUA NPRM

    While most comments received were related to provisions of the 
proposed rule that were expected to reduce monthly SNAP benefits for 
some households, the Department also received comments on the 
Regulatory Impact Analysis (RIA) published with the proposed rule. 
Commenters did not suggest alternative, national datasets nor 
alternative methods of analysis for use in the RIA. Many commenters 
discussed the effects of the proposed rule in general terms, though 
some commenters noted specific potential

[[Page 91225]]

costs that they did not believe were sufficiently addressed in the 
RIA, including secondary impacts. Secondary impacts noted in the 
received comments included:
     Healthcare costs related to increases in food 
insecurity and poverty;
     Costs to the U.S. and local economies due to SNAP's 
role in generating economic activity and acting as an economic 
stabilizer; and
     Impacts on other nutrition assistance programs or 
providers, including food banks.
    The Department notes, that while there are studies that describe 
the relationships between SNAP, food security, poverty, and health 
care costs, these studies do not allow the Department to estimate 
potential costs specific to the impacts of the proposed rule, nor 
the final rule. Therefore, secondary impacts of reduced SNAP 
benefits are not assessed in this final rule RIA.

B. Comments Related to Administrative Costs of the Proposed Rule

    Some commenters on the SUA NPRM stated that the Department had 
not adequately addressed potential administrative costs to State and 
local agencies of complying with the proposed rule. The final rule's 
RIA includes additional detail and updates to reflect costs State 
and local agencies will incur because of the final rule. The 
Department anticipates that the final rule will cause a small, 
intermittent increase in the administrative burden associated with 
SUAs for most State agencies because they will be required to 
periodically review and update their SUA methodology, making any 
revisions necessary to demonstrate that the baseline data and 
underlying methodology reflect low-income household utility costs, 
rather than continuously adjusting the prior year's SUA values with 
an index of inflation. Additionally, State agencies will experience 
a one-time increase in burden due to the inclusion of basic internet 
as an allowable shelter expense. These increases in administrative 
burden are discussed in greater detail in the Section-by-Section 
Analysis.

C. Comments Related to Impacts of the SUA NPRM on Vulnerable 
Populations

    Many comments on the SUA NPRM noted specific impacts the 
proposed rule was anticipated to have on certain subgroups of SNAP 
participants. These are summarized below:
     Several commenters noted specific impacts on households 
with elderly or disabled members. In the proposed rule RIA, the 
Department discussed in-depth the impacts of the proposed rule, 
including disparate impacts on households with elderly or disabled 
members. The Department recognizes that households with individuals 
who are elderly or who have a disability may see a greater change 
(including increases and decreases) in their benefit amounts because 
of any changes to SUA values as they are not subject to a cap on 
their excess shelter deduction amount. The Department is committed 
to serving households with elderly and disabled members and will 
support State agencies' implementation of the final rule as they 
help these households understand any changes to their benefits and 
are available for questions, as necessary. The Department has made 
changes to the final rule that give States more flexibility to set 
SUA levels while also noting the expectation that SUAs will be 
sufficient to account for the utility expenses of the vast majority 
of households. The Department is not finalizing the requirement to 
standardize HCSUAs nor the provision that would have capped limited 
utility allowances (LUAs) and single utility allowances (also 
referred to as ``individual standards'').
     A legal services organization, trade association, and 
advocacy groups stated that rural communities would be more likely 
to be adversely impacted by the proposed rule because they spend a 
disproportionately higher share of their income on utilities. 
Approximately 6 percent of SNAP households live in a rural area.\2\ 
However, the Department does not currently have data available that 
would allow it to determine if there is a meaningful difference 
between rural and non-rural SNAP households' utility expenses. 
Additionally, the Department is not finalizing the proposed rule's 
provision to standardize HCSUAs as statewide values. Instead, State 
agencies will retain the flexibility to develop SUAs for different 
regions within their State.
---------------------------------------------------------------------------

    \2\ Source: FY 2022 SNAP Quality Control data.
---------------------------------------------------------------------------

     Advocacy groups stated that the proposed rule would 
disproportionately and negatively impact renters as they have higher 
utility costs than homeowners. As previously discussed, the 
Department is not finalizing provisions included in the proposed 
rule that would have standardized SUA values.
    Advocacy groups stated the proposed rule would negatively affect 
households with high housing costs and, by extension, households 
living in areas with expensive housing markets. The Department notes 
that the HCSUA and other SUAs are meant to represent utility costs 
incurred by low-income households, rather than other expenses that 
may be affected by living in an expensive housing market. Those 
expenses, like rent and mortgage payments, will continue to be 
accounted for in the excess shelter deduction calculation. However, 
the Department acknowledges that some households incur high utility 
expenses, and those expenses can vary by geographic region of a 
State. In the final rule, the Department is retaining States' 
flexibility to establish SUA values for different geographic regions 
within each State.

D. Comments Related to the SUA NPRM's RIA Methodology and Proposed 
Data Sources

    The Department also received comments on the SUA NPRM that 
expressed concerns with the data sources used in the proposed rule's 
RIA and stated concerns that the methodology used in the RIA was not 
sufficiently clear. A legal services group stated that the use of 
data from the American Community Survey (ACS) is questionable 
because it relies on customer recall of their utility expenses and 
an advocacy group questioned the use of the Residential Energy 
Consumption Survey (RECS) because the 2015 data release did not 
provide individual estimates for every State. In addition, some 
commenters raised concerns that the RECS is only administered every 
four years, and there is a three- to four-year delay before the data 
are published. Many commenters, including advocacy groups and State 
government agencies expressed concerns that the data sources the 
Department intended to use do not sufficiently capture climate 
variations within States, cost variation within States (including in 
Tribal areas) or are less accurate than sources State agencies may 
currently use for their own methodologies.
    The Department appreciates these comments and is making use of 
Federal survey data, like ACS and RECS, an available option for 
State agencies to use, rather than mandating their use. The 
Department maintains that, as of FY 2025, the Federal survey data 
sources used in the proposed rule's RIA methodology are the best 
existing national data sources on the utility expenditures of low-
income households. Additionally, beginning with the 2020 RECS data 
collection, the Department notes that RECS data are available for 
each of the 50 States and the District of Columbia. These data 
sources may be used by State agencies to calculate their SUAs.
    As discussed in the 2017 and 2023 SUA studies, ACS and RECS data 
each have strengths and limitations as sources of information about 
low-income households' utility expenditures. When used together, 
each survey's strengths can mitigate weaknesses in the other survey. 
For example, RECS data are not subject to customer recall bias that 
can affect ACS data because RECS collects billing data directly from 
energy providers to validate the responses provided by surveyed 
households. RECS data also specify whether a household incurred 
heating or cooling expenses, permitting estimation of energy 
expenditures specific to the households that would be eligible for 
an HCSUA. However, RECS data are not published on an annual basis. 
ACS data can provide a more recent estimation of low-income 
households' utility expenditures because it is an annual survey. ACS 
is also a larger survey than RECS, resulting in larger sample sizes 
of low-income households in each state and the District of Columbia. 
RECS and ACS both gather information about respondents' household 
income, permitting estimates specific to the low-income households 
who participate in SNAP. Further information about the strengths and 
weaknesses of each of the Federal surveys used in the proposed rule 
RIA can be found in the 2017 and 2023 SUA studies.
    Although the Department is not finalizing the standardization 
provision of the proposed rule, which relied on Federal survey data 
sources to calculate States' HCSUA values, the Department maintains 
that ACS, RECS, and Consumer Expenditure Survey data from the Bureau 
of Labor Statistics remain reputable sources of data on low-income 
households' utility expenditures in each State and the District of 
Columbia.\3\
---------------------------------------------------------------------------

    \3\ Data on utility expenditures in U.S. territories 
administering SNAP (Guam and U.S. Virgin Islands) are not available 
from these surveys. However, GU and U.S. VI do not currently use 
HCSUAs.

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

[[Page 91226]]

    The Department also received comments that expressed concerns 
about how the proposed telecommunications SUA would be calculated 
and how it was estimated in the proposed rule RIA. As proposed, the 
telecommunications standard would have been available to households 
with utility costs for one telephone, basic internet service, or 
both. Households with basic internet and/or telephone costs would 
either receive the telecommunications standard or use their actual 
costs, subject to the proposed national cap. The final rule no 
longer creates a telecommunications standard and, instead, includes 
basic internet service as an allowable shelter cost and allows State 
agencies to incorporate the cost of basic internet service into the 
HCSUA. Additionally, the final rule provides States with the option 
to develop a basic internet individual standard, independent from 
the telephone individual standard. State agencies may also include 
basic internet costs in their LUAs. The Department is not finalizing 
a standardized method of calculating basic internet costs. State 
agencies will develop their own methodology for including basic 
internet expenses in the HCSUA. Additionally, States that choose to 
include internet costs in their LUAs or as an individual standard 
will develop their own methodology and calculate their basic 
internet individual standards or LUAs containing the cost of basic 
internet each fiscal year and submit them to FNS for approval, like 
other individual standards or LUAs. Consistent with the requirements 
for other SUA methodologies, including individual standards like the 
telephone standard, State agencies must submit for FNS approval 
their basic internet individual standard methodology every five 
years, and data underlying these methodologies must meet certain 
criteria.

E. Comments Related to LIHEAP NPRM

    Comments on the LIHEAP NPRM were generally favorable of the 
proposed provisions and did not directly address the LIHEAP NPRM's 
RIA.

IV. Background

A. Shelter Expenses and Standard Utility Allowances in SNAP

    The Food and Nutrition Act of 2008, as amended, establishes 
uniform national eligibility standards for SNAP and defines the 
parameters used to calculate SNAP benefits. Household benefits are 
calculated by subtracting 30 percent of the household's total net 
income from the maximum allowable benefit allotted for that 
household's size. Net income is calculated by subtracting allowable 
deductions from the household's gross monthly income.
    One such deduction is an excess shelter expense deduction, which 
is available to households with shelter costs exceeding 50 percent 
of their adjusted gross income after other deductions. This 
deduction has a maximum value for households that do not include 
elderly or disabled members that is updated annually (sometimes 
referred to as the ``shelter cap'').\4\ Shelter expenses include the 
basic cost of housing like rent or mortgage payments, as well as 
utilities and other allowable expenses. Most parameters for 
eligibility are established at the Federal level, but States are 
afforded limited discretion to establish SUAs which may be used in 
place of actual utility expenses when calculating the excess shelter 
deduction. Using SUAs can help simplify the certification process 
for applicants and State agencies. State agencies have the option to 
require that households with eligible utility expenditures use a SUA 
rather than documenting actual utility costs; 48 State agencies have 
opted to make the use of SUAs mandatory.5 6
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    \4\ In FY 2024, the shelter deduction is capped at $672 in the 
contiguous 48 States and the District of Columbia, $1,073 in Alaska, 
$905 in Hawaii, $789 in Guam, and $529 in the U.S. Virgin Islands.
    \5\ The five States without mandatory SUAs are Guam, Hawaii, 
Tennessee, Virginia, and the U.S. Virgin Islands.
    \6\ Throughout this analysis, the term ``State'' is used to 
refer to the 50 States, as well as District of Columbia, Guam, and 
the U.S. Virgin Islands (53 State agencies, in total).
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    State agencies with mandatory SUAs must establish at least two 
SUAs, one for households with heating and/or cooling expenses (the 
HCSUA), and another for households without such expenses. State 
agencies may establish multiple SUAs to reflect differences in 
households' circumstances. Types of SUAs include:
     A Heating and Cooling SUA (HCSUA), for households that 
pay heating and/or cooling expenses separate from their rent or 
mortgage;
     A Limited Utility Allowance (LUA), for households with 
expenses for at least two allowable utility costs, but no heating 
and/or cooling costs;
     A telephone-only allowance, for households that have no 
utility expenses other than telephone; and
     Other individual standards, for households with one 
utility expense, such as water, that is separate from rent or 
mortgage.
    Nearly all State agencies have an HCSUA and a telephone 
individual standard. Most have LUAs and about half have at least one 
other individual standard. Appendix Table B contains the FY 2024 SUA 
values for each State. Table 3, below, provides information about 
the share of SNAP households that claim each type of SUA.
[GRAPHIC] [TIFF OMITTED] TR18NO24.041

    Households that receive LIHEAP payments greater than $20 
annually are eligible for the HCSUA and do not need to demonstrate 
actual utility costs. Section 4006 of the Agricultural Act of 2014 
mandates that those State agencies electing to use an HCSUA may only 
offer the HCSUA to households receiving LIHEAP or other similar 
energy assistance if the household received a payment greater than 
$20 in the current month or in the immediately preceding 12 months. 
Prior to the Agricultural Act of 2014, HCSUAs were available to 
households that received any payment, or were eligible for a payment 
if not yet received, under LIHEAP

[[Page 91227]]

or a similar energy assistance program, regardless of the size of 
the payment.
    State agencies must update SUAs annually, but are not directed 
to use specific data sources, and can revise their methodology at 
any time so long as they receive FNS approval. In practice, most 
States update their SUAs each October, at the start of the fiscal 
year,\7\ and the values remain constant throughout the fiscal year. 
SUAs are not required to be benchmarked to a particular percentile, 
and State agencies may opt to set them at a higher percentile to 
ensure the SUA's value is sufficient for a large portion of the SNAP 
caseload.
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    \7\ All States except for Indiana and Maryland follow the 
Federal fiscal year calendar for their HCSUA updates. Indiana's 
update occurs in May and Maryland's update occurs in January.
---------------------------------------------------------------------------

    Most State agencies use one of two different types of 
methodologies when calculating their SUAs. The first is a 
methodology that relies on State-specific recent utility data, often 
from a sample of areas and/or providers throughout the State. The 
second is a methodology that adjusts a base number using an 
inflation measure such as the Consumer Price Index (CPI). Some State 
agencies use a methodology that combines both approaches. A review 
of information available to FNS about how State agencies most 
recently updated their SUA values indicates that at least 10 States 
have not updated the utility data used to calculate their HCSUA in 
10 or more years. These State agencies have adjusted their HCSUA on 
an annual basis using CPI-based inflation factors. However, 
inflationary adjustments alone cannot account for broader changes in 
the household utility expenditures, like the mix of energy sources 
households use, nor the quantity of energy used. They also are not 
specific to the circumstances of low-income households and may miss 
trends in spending among low-income households that diverge from 
trends among higher-income households.
    While the use of SUAs simplifies the application process from 
the perspective of both the State agency and the applicant, the 
Department believes program simplification needs to be balanced with 
ensuring consistency and integrity in how SUAs are calculated. SUAs 
must align with low-income households' utility costs to ensure that 
the application of the excess shelter deduction reflects household 
circumstances and ultimately, the appropriateness of the benefit 
levels.

B. HCSUA Values and Utility Expenditures

    The 2017 SUA Study and the 2023 SUA Study found that States' 
HCSUA values differed considerably from data on what low-income 
households \8\ paid for utilities, using different illustrative 
benchmarks.\9\ The studies also revealed that HCSUA values may not 
respond to changes in low-income households' utility expenses. In 
particular, the 2023 SUA Study examined ACS data and found that 
average monthly energy costs for low-income households in States 
with HCSUAs were lower in 20 States in 2019 than in 2014.\10\ 
However, 18 of the 20 State agencies had higher HCSUAs in FY 2019 
than in FY 2014, with an average increase of $56. The 2023 Study 
also found that the range of utility expenses incurred by low-income 
households narrowed since FY 2014 in 48 States, meaning fewer 
households experienced extremely high monthly utility expenses.\11\ 
These findings from FY 2014-FY 2019 suggest that there have been 
fundamental shifts in the energy market, like improvements in energy 
efficiency, changes in the types of energy used (e.g., lower 
reliance on high-cost fuels), and changes in prices that have 
affected low-income households' utility expenses within the past 10 
years. While CPI-based inflationary adjustments to base values may 
account for overall changes in expenses for a wide range of 
consumers, they are not specific to the expenses incurred by low-
income households, are not responsive to changes in the mix of 
energy sources low-income households use, and are not responsive to 
increases or decreases in the number of low-income households who 
incur extremely high expenses (i.e., the spread of expenses a SUA 
seeks to accommodate). This illustrates why the Department believes 
it is problematic for State agencies to rely on outdated 
methodologies and/or data sources to calculate their SUA values, 
which may not reflect current conditions. If the base-year data 
underlying a State agency's SUA calculation is outdated, the SUA 
will be reflective of outdated patterns in consumption, efficiency, 
and prices.
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    \8\ The studies defined ``low-income'' as households with 
incomes at or below 150 percent of the Federal poverty level.
    \9\ The 2023 SUA study primarily examined low-income households' 
average expenditures, as well as expenses at the 80th percentile, 
90th percentile and 95th percentile. The 2017 SUA Study looked at 
average expenses for low-income households, as well as the 85th 
percentile.
    \10\ See Appendix Table F-1. Holleyman, Chris, Pratima, Damani, 
and Torres, Erick. Updating Standardized State Heating and Cooling 
Utility Allowance Values. Prepared by SP Group LLC. for the U.S. 
Department of Agriculture, Food and Nutrition Service, March 2023.
    \11\ This is indicated by what the report authors described as 
``a slightly negative difference in the scaling factors used to 
escalate the average utility expenditures of low-income households 
to the 80th percentile of low-income households.'' In other words, 
the 80th percentile of low-income households had moved closer to the 
median, indicating that fewer households had expenses near the top 
of the range of all low-income households' expenses.
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Internet as a Utility Expense

    Under current SNAP regulations, internet service is not an 
allowable shelter cost that can be deducted from a SNAP household's 
gross income. However, internet access has become a necessity for 
school, work, and job search activities. As such, internet has 
become a necessary expense in SNAP households' monthly budgets and 
the Department is designating it as an allowable shelter cost in the 
final rule. To understand the costs incurred by low-income 
households for basic internet access, FNS's 2023 SUA Study included 
a methodology for developing a basic internet individual standard 
using estimates of typical costs for internet access in each State. 
Broadband was used to represent a level of service that is conducive 
to economically important household activities, like job searching 
and virtual education, in contrast to dial-up internet service. The 
study determined that no national, public database of household 
broadband expenditures is available at this time. The final rule 
will permit States to develop their own methodology to estimate 
internet costs for inclusion in SUAs.
    In addition to geographic variation in the availability and 
price of internet service, the 2023 SUA study also found that 
understanding the costs low-income families incur for internet 
service requires evaluating participation in government programs 
that reduce the cost of internet for many low-income households. The 
Department notes that if a household does not pay any of its 
internet costs, including because those costs are paid in full by a 
program such as the Lifeline program or the former Affordable 
Connectivity Program (ACP), then the household would not qualify for 
the basic internet individual standard.

[[Page 91228]]

C. Baseline and Time Horizon for Analysis

    Our baseline for measuring the costs, benefits, and transfers 
associated with this final rule is the Department's estimated SNAP 
participation and benefit spending for FYs 2025-2029, shown in Table 
4 below.\12\ This regulatory impact analysis (RIA) uses FY 2025-FY 
2029 as the time horizon to measure the effects of the final rule. 
The Department chose this timeframe as it will permit assessment of 
all start-up costs as well as analysis of the ``steady state'' of 
the final rule's full implementation, expected to occur in FY 2027. 
A ten-year cost estimate (FY 2025-FY 2034) is provided as a 
supplementary resource in Appendix Table A. Additionally, changes in 
State administrative expenses (SAE) are compared to the Department's 
baseline projections.
[GRAPHIC] [TIFF OMITTED] TR18NO24.042

    As previously noted, the LIHEAP NPRM provisions finalized in 
this rule have been in effect since FY 2015 and are therefore 
considered to be fully incorporated in the SNAP baseline presented 
above. This RIA uses FY 2013 as a reference year to estimate the 
impacts of the LIHEAP NPRM provisions of the final rule.
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    \12\ Each year as part of the process of developing the 
President's Budget, the Department produces estimates of expected 
SNAP participation and benefit spending over a 10-year period. 
Transfer estimates in this Regulatory Impact Analysis are based on 
Department estimates for the FY 2025 Mid-session Review of the 
President's Budget. Estimates related to State administrative 
expenses (SAE) are compared to the Department's FY 2025 President's 
Budget baseline estimates.
---------------------------------------------------------------------------

D. Methodology

i. Measuring Transfer Changes

    The SNAP QC Minimodel is one of the microsimulation models 
maintained by FNS to estimate the impacts of changes in policy on 
current SNAP households. The FY 2022 SNAP QC Minimodel uses SNAP QC 
data from all States from October 2021, through September 2022. SNAP 
QC data are collected annually as part of the ongoing effort to 
determine the accuracy of SNAP certification actions.\13\ Data are 
collected for a sample of SNAP households that is statistically 
representative at both the national and State levels. It includes 
data from 41,391 households, including information on household 
income, income sources, expenses, household composition, and utility 
allowances to simulate the impact of various policy changes to SNAP 
on current SNAP participants. The FY 2022 SNAP QC data and Minimodel 
are the most recent data available to FNS for microsimulation. The 
data are weighted to be representative of the SNAP caseload 
nationally and in each State. Like all microsimulation models, this 
model simulates the effects of program changes at the ``micro'' 
level (in this case, SNAP households). These micro-level effects on 
SNAP eligibility and benefit amounts are combined to estimate the 
total effect of program changes at the State and national level. 
Although most households received emergency allotments related to 
COVID-19 which supplemented their benefit amounts in FY 2022, this 
analysis uses households' certified, pre-supplement SNAP benefit 
amounts. Therefore, estimated benefit effects in this RIA are not 
affected by emergency allotments.
---------------------------------------------------------------------------

    \13\ Detailed information on the QC review process, including 
sampling requirements and procedures for conducting QC reviews, can 
be found on the FNS website here: https://www.fns.usda.gov/snap/quality-control.
---------------------------------------------------------------------------

    To estimate the impact on SNAP benefit spending (transfers) of 
the final rule, the FY 2022 QC Minimodel baseline was adjusted to 
better reflect current program operations. As all the income, 
deduction, and benefit data in the model, including HCSUA values, 
are from FY 2022, a revised baseline was created to reflect changes 
in the value of States' HCSUAs between FY 2022 and FY 2024, relative 
to the cap on shelter expense deductions. FNS determined that the FY 
2022 HCSUA values in the model were not reflective of FY 2024 HCSUA 
values in some States because some States have made significant 
changes to their HCSUA values between FY 2022 and FY 2024 (see next 
paragraph for an illustrative example). As the changes to HCSUA 
values in this 2-year period were greater than changes to other 
parameters in the model, the marginal effect of a State's HCSUA in 
FY 2022 on a household's SNAP benefit calculation may not reflect 
its marginal effect in FY 2024, which is the outcome of interest for 
the purposes of this RIA.
    To provide an example of how some State agencies' HCSUAs have 
changed substantially since FY 2022, State A, whose FY 2022 HCSUA 
was valued at 98 percent of the FY 2022 cap on the excess shelter 
deduction, has an FY 2024 HCSUA valued at 126 percent of the FY 2024 
cap, a difference of 29 percent. To control for this type of change 
in States' behavior since FY 2022, the FY 2022 HCSUA values pre-
programmed into the QC Minimodel were replaced by adjusted HCSUAs 
set to reflect the FY 2024 relationship between HCSUAs in each State 
and the shelter cap. To return to the example of State A, its HCSUA 
in the QC Minimodel was adjusted to equal 126 percent of the FY 2022 
shelter cap.
    Simulations of further changes to SUA values, reflecting changes 
caused by provisions of the final rule, were run against the revised 
baseline. A brief description of our methodology to measure the 
transfer effect of each provision of the final rule follows. Against 
the adjusted baseline described above, separate simulations 
individually evaluated each SUA-related provision of the final 
rule:\14\
---------------------------------------------------------------------------

    \14\ As noted previously, the LIHEAP provisions of the final 
rule are considered fully incorporated in the SNAP baseline due to 
their implementation in FY 2015.
---------------------------------------------------------------------------

    1. Establishing standards for the quality of data used in SUA 
calculations and requiring updates at a minimum of 5-year intervals: 
To simulate the effects of this provision, we assume that 10 States 
will lower their HCSUAs by 10 percent and 6 States will increase 
their HCSUAs by 10 percent, on average, because of the final rule's 
data and methodological update requirements. This assumption was 
informed by a review of States' FY 2024 HCSUAs and information 
available to FNS about the methodologies and data used to produce 
those values. In some cases, FNS has limited information about the 
methodologies and data used because of the age of some State 
agencies' methodologies and/or the information shared with FNS lacks 
a robust description. The 16 States selected for adjustment in this 
simulation are those identified by FNS as most likely to require a 
significant revision to their current HCSUA calculation to meet the 
final rule's data and methodological update requirements. 
Additionally, these 16 States were determined to have HCSUAs with 
the greatest deviation from Federal survey data on average State-
level utility expenditures among low-income households, defined as 
households below 150 percent of the Federal poverty level. These 
data are sources States may use to calculate their SUAs and are of 
the quality that State agencies will be required to use when 
developing SUAs. FNS made this determination by examining the 
Federal data sources examined in FNS's 2017 and 2023 SUA studies 
(ACS, RECS, and CEX). Some of these 16 States may need to make 
larger or smaller changes to their HCSUA as a result of the data 
quality and methodological review provision, but the Department is

[[Page 91229]]

estimating a 10 percent average change to the HCSUA in each of the 
16 States. We assume 10 States will decrease their HCSUA by 10 
percent and 6 States will increase their HCSUA by 10 percent. No 
States were assumed to change their LUA or individual standard 
values because of the final rule's data and methodological update 
provisions.\15\ Alternative assumptions are tested in the 
sensitivity analysis of this RIA.
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    \15\ FNS does not anticipate that these changes will result in 
similar decreases or increases to LUA and individual standard values 
because FNS's review of States' current LUA and individual standard 
values indicates that these standards do not display the same degree 
of variability between States and misalignment with current utility 
data for low-income households that is present among current HCSUA 
values.
---------------------------------------------------------------------------

    2. Requiring basic internet expenses as an allowable shelter 
expense within the HCSUA. To simulate changes to HCSUA values due to 
incorporating basic internet expenses into the allowance, we assumed 
States would increase their HCSUAs by an average of $50. This is 
based on two States which currently have approval from FNS to 
provide a basic internet individual standard through an 
administrative waiver. Both States use a $50 standard to represent 
internet expenses, providing an indication of how other State 
agencies may behave. While some States may use higher or lower 
values to approximate low-income households' internet expenses, $50 
is used in this analysis to approximate the average value FNS 
estimates States will use. We assume that all States with an HCSUA 
choose to incorporate internet into the HCSUA. Alternative 
assumptions are tested in the sensitivity analysis of this RIA.
    3. Providing States with the option of incorporating basic 
internet expenses in the LUA and as an individual standard: To 
simulate State-calculated internet allowances in the LUA and a new 
basic internet individual standard, we simulated a $50 average 
increase to LUA values for households that currently receive the LUA 
and estimated that about 5 percent of SNAP households would take-up 
a new basic internet individual standard.\16\ We also assumed 
households using actual utility expenses would have an increase of 
$50 in utility expenses if they can newly claim basic internet 
expenses. We assume all State agencies will take the option to 
include internet expenses in the LUA and establish a basic internet 
individual standard, given expressed interest by State SNAP agencies 
in establishing internet allowances.
---------------------------------------------------------------------------

    \16\ Five percent was selected as an estimate, informed by the 
share of SNAP households that use a telephone individual standard, 
to approximate how many households might use a basic internet 
standard. In the absence of more precise data, the Department 
estimates that the share of households that may pay an internet 
bill, but not other utilities which would make them eligible for a 
LUA or HCSUA, may be similar to the share of household that only pay 
a telephone bill.
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    In each simulation, household benefits were recalculated for 
each household that claimed utility expenses and then aggregated to 
estimate the percentage change in total benefit spending and changes 
to eligibility. The percentage change applicable to each rule 
provision was applied to the baseline benefit spending (Table 4 
above) to estimate the annual change in SNAP benefit spending 
(transfers) resulting from each rule provision.
    An additional simulation was conducted to estimate the impact of 
the LIHEAP NPRM. A brief description of the methodology follows:
    1. The QC Minimodel includes a variable that indicates whether 
the household received the HCSUA because they also received LIHEAP. 
This variable was used to estimate the annual benefit impact on 
households and total SNAP benefits if all households flagged as 
receiving a HCSUA due to receipt of LIHEAP no longer received the 
HCSUA.\17\
---------------------------------------------------------------------------

    \17\ This simulation used 2013 QC data as that was the period 
prior to implementation of the Agricultural Act of 2014's LIHEAP 
change.
---------------------------------------------------------------------------

    2. Because only 17 States providing energy assistance payments 
that conferred HCSUA eligibility and were affected by the 
Agricultural Act of 2014 provision, the simulated impacts were 
adjusted to remove the effects in the 34 unaffected States. The 
annual benefit impact was further adjusted because 13 of the 17 
States that issued affected LIHEAP payments to their SNAP caseload 
opted to increase those payments above the $20 threshold. Therefore, 
the impact within these 13 States was removed from the initial 
estimate, leaving only the effects in the four States that did not 
increase their LIHEAP payments. These results were then used to 
estimate the average, per household benefit impact for households 
affected by the Agricultural Act of 2014's LIHEAP change.
    Households that no longer receive LIHEAP payments may continue 
to receive a SUA (the HCSUA, the LUA, or a different utility 
standard) if they qualify based on incurred utility expenses. To 
estimate the proportion of households in the affected States that 
continued to be eligible for a SUA after discontinuation of LIHEAP 
payments that conferred HCSUA eligibility, we used SNAP QC data from 
before and after implementation of the Agricultural Act of 2014 to 
tabulate how many households in the affected States received the 
various types of SUAs. Table 5 shows how those percentages changed 
in the four States that discontinued use of LIHEAP payments to 
confer HCSUA eligibility.
[GRAPHIC] [TIFF OMITTED] TR18NO24.043

    3. Based on this re-distribution, we see that 54 percent of 
households no longer receive the HCSUA based on LIHEAP receipt. 
These households are redistributed into the other SUA categories, 
with some households no longer receiving any SUA, some continuing to 
receive the HCSUA, and others receiving a different SUA (a LUA or 
individual standard).
    4. Overall, of the 54 percent of households that no longer 
receive the HCSUA based on

[[Page 91230]]

receipt of LIHEAP, 43.8 percent no longer receive any SUA 
(calculated as 23.7/54.0), 39.2 percent continue to receive the 
HCSUA, 6.0 percent receive the LUA or an individual standard, and 
10.6 percent receive only the telephone individual standard.\18\
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    \18\ These percentages vary from the percentages used in the 
proposed rule RIA because the final rule RIA uses actual changes in 
SUA receipt documented in the SNAP QC data, rather than estimated 
changes used before actual data were available. The proposed rule 
RIA assumed that 55 percent of households would no longer be coded 
as receiving the HCSUA due to LIHEAP. Of those, we estimated that 36 
percent would receive no SUA, 55 percent would continue to receive 
the HCSUA, 1 percent would receive the LUA or an individual 
standard, and 7 percent would receive the telephone individual 
standard.
---------------------------------------------------------------------------

    5. Benefit impacts were adjusted as follows:
    a. Households no longer eligible for any SUA were allocated 100 
percent of the per-household benefit impact of this provision (0.438 
x # affected households x per-household benefit impact x 1.00).
    b. Households eligible for a LUA were allocated 50 percent \19\ 
of the per-household impact of the provision (0.060 x # affected 
households x per-household benefit impact x 0.50).
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    \19\ We chose 50 percent based on the relative size of the LUA, 
compared to a HCSUA at the time the LIHEAP change went into effect. 
On average, the HCSUA value was about twice that of the LUA, so the 
benefit impact would be reduced by roughly 50 percent. Similarly, we 
chose 75% based on the relative size of a single utility allowance 
or telephone allowance, compared to a HCSUA. On average, the HCSUA 
value was about four times that of an individual or telephone 
standard, so the benefit impact would be reduced by roughly 75%. 
Information on the relative size of different utility allowances in 
FY 2024 can be found at: https://www.fns.usda.gov/snap/eligibility/deduction/standard-utility-allowances.
---------------------------------------------------------------------------

    c. Households eligible for a telephone individual standard were 
allocated 75 percent of the per-household impact of the provision 
(.106 x # affected households x per-household benefit impact x 
0.75).
    d. These amounts were totaled to get the annual SNAP benefit 
impact due to discontinued LIHEAP payments.

ii. Measuring Changes to State and Federal Costs

    State administrative costs, burden estimates, and Federal costs 
(non-transfer) are estimated using information from revisions to a 
currently approved Information Collection Request (ICR) (OMB Control 
Number 0584-0496; Expiration Date 7/31/2026). This information 
collection addresses the State agency reporting burden associated 
with State options under SNAP for developing SUAs and a methodology 
for offsetting the cost of producing self-employment income, as 
required in 7 CFR part 273. The revision accounts for requirement in 
the final rule. The value of State administrative costs and Federal 
costs in future years are adjusted annually for inflation using the 
Consumer Price Index for Urban Wage Earners and Clerical Workers 
(CPI-W) fiscal year-over-fiscal year projections from OMB's Economic 
Assumptions for the Mid-session Review of the FY 2025 President's 
Budget.

V. Section-by-Section Analysis

    The costs and savings associated with each provision of the 
final rule are discussed separately in this section of the RIA. The 
section-by-section analysis often uses FY 2026 as a reference year 
to discuss the transfer and cost impacts of the final rule, given 
that FY 2026 is when all provisions of the final rule are expected 
to be fully implemented.

A. Requirement To Update SUA Calculation Methodology Every 5 Years 
and Meet Data Quality Specifications

    Discussion: While the Department is not adopting the proposed 
rule's provisions to standardize the calculation of HCSUAs, nor cap 
LUAs and individual standards as a percentage of the HCSUA, it 
maintains that there should be clearer guidelines and requirements 
for State agencies to follow when developing their SUAs to ensure 
SUAs accurately reflect low-income households' utility costs. 
Therefore, the Department is establishing new requirements to guide 
State agencies' calculation of SUAs. These requirements apply to 
HCSUAs, LUAs, and individual standards. State agencies must submit 
for FNS approval their SUA methodologies at least every 5 years and 
make any revisions necessary to demonstrate that the baseline 
expenditure data and underlying methodology reflect low-income 
household utility costs along with recent trends and changes. The 
methodology update must include updated baseline expenditure data, 
per certain data criteria, and an explanation of the State agency's 
methodology for deriving HCSUAs from such data. In interim years, 
State agencies must continue to review and adjust their SUAs 
annually to reflect changes in costs, in line with existing 
regulations. State agencies may use appropriate indices of 
inflation, like the Consumer Price Index (CPI) values specific to 
the utilities incorporated into an HCSUA, to perform these interim, 
annual updates. State agencies must also continue to submit their 
methodologies for FNS approval any time the State agency develops or 
changes a methodology.
    Additionally, State agencies' methodologies must:
     Reflect the entire State or geographic area the SUA 
covers;
     Use data sourced from utility providers or similarly 
reliable source;
     Reflect expenses incurred by low-income households;
     Distinguish if the utility is for heating or cooling, 
if applicable; and
     Reflect residential utility expenses.
    The Department chose these criteria to ensure HCSUAs accurately 
represent the utility costs of low-income households, including 
households with higher-than-average utility costs, in the designated 
area while providing State agencies additional flexibility in 
creating their standards. These criteria align with the goals of the 
data and methodology the Department proposed to use in the SUA NPRM. 
The Department notes that, for the purposes of these criteria, 
``utility providers'' includes any company or organization that 
supplies or sells a utility allowed under 7 CFR 273.9(d)(6)(ii)(C).
    Additional SUA provisions in the final rule that are expected to 
have minimal effects include:
     Eliminating the option for State agencies to use a LUA 
instead of the HCSUA for public housing residents with excess 
heating and cooling costs, as proposed in the SUA NPRM.
     Eliminating the option for State agencies to use a LUA 
instead of the HCSUA for States where cooling expenses are minimal, 
as proposed in the SUA NPRM.
    Effect on SNAP Participants: The Department anticipates that new 
guidelines directing States to update their SUA methodologies at 
least once every 5 years and establishing data quality requirements 
will result in changes to HCSUA values in States which currently use 
methodologies or data sources that would not meet the requirements 
of the final rule. The Department estimates that 10 States will 
reduce their HCSUAs and 6 States will increase their HCSUAs as a 
result of this provision, each by an average of 10 percent. These 
changes will reduce the monthly SNAP benefits of approximately 5.2 
percent of all SNAP households by an average of 7.5 percent, or 
about $21 and will increase the monthly SNAP benefits of 
approximately 2.1 percent of all SNAP households by an average of 
3.5 percent, or about $10. A small number of households (less than 
0.01 percent) would no longer be eligible for SNAP if this provision 
was implemented without the internet provision, discussed later in 
this RIA, resulting in an average monthly benefit loss of $45. These 
households have a low average monthly benefit because they have 
monthly incomes close to the maximum allowed for SNAP eligibility. 
Affected households live in 16 States that FNS has identified as 
those most likely to require significant revisions to their HCSUA to 
meet the new data quality and recency guidelines. No effects are 
anticipated for SNAP households in the other 37 States.

[[Page 91231]]

[GRAPHIC] [TIFF OMITTED] TR18NO24.044

    Effect on Federal Spending: The data quality and methodological 
revision provision of the final rule is expected to decrease SNAP 
benefit payments (transfers) by $293 million in FY 2026 and by $1.2 
billion over 5 years (FY 2025-FY 2029). Effects on transfers will 
not be fully phased-in until FY 2026 because FNS expects that States 
may need until the start of FY 2026 to revise their SUA 
methodologies and underlying data. This provision results in a 0.3 
percent decrease in SNAP benefit payments when fully implemented. 
The decrease in transfers in 10 States that are estimated to reduce 
their HCSUAs is larger than the increase in transfers in 6 States 
that are estimated to increase their HCSUAs, resulting in a net 
decrease in transfers.
    Additionally, Federal administrative burden and the Federal 
share of States' administrative expenses for this provision of the 
final rule are expected to increase. The Federal share of States' 
administrative expenses for initial implementation of this provision 
is estimated to be about $438,000 in FY 2025. The Federal share of 
all State agencies' ongoing administrative expenses caused by this 
provision of the final rule are estimated to be about $152,000 over 
five years (FY 2025-FY 2029), averaging about $30,000 annually. 
Federal administrative burden is expected to increase on an ongoing 
basis due to this provision of the final rule. Every 5 years, the 
Department expects FNS staff will spend a total of 689 hours 
reviewing and approving State agencies' methodological updates and 
providing technical assistance to State agencies as they make those 
updates. This is expected to cost about $51,000 in FY 2025, the 
first year in which a methodological update is expected to occur.
    Effect on State Agencies: This provision of the final rule is 
expected to create start-up costs, in addition to recurring 
increases in State agency burden. FNS estimates 5 State agencies 
will opt to solicit contractor support to update their SUA 
methodologies, resulting in about $21,000 in staff costs and 
$250,000 in contract costs after 50 percent Federal reimbursement 
over FYs 2024 and 2025 ($271,000 total for 5 state agencies). Non-
contract State costs associated with implementation burden and 
system changes are estimated to be about $145,000 after 50 percent 
Federal reimbursement across all 53 State agencies.
    State agencies are not expected to incur annual increased 
administrative burden or costs because of this provision. However, 
every 5 years, State agencies will experience a greater increase in 
burden, when they will be required to conduct a full review of their 
SUA methodologies and update the base data used to calculate their 
SUAs.

B. Allow Basic Internet Costs as an Allowable Shelter Expense

    Discussion: The final rule designates basic internet service as 
an allowable shelter cost and gives State agencies the option to 
include basic internet costs in their HCSUAs and LUAs and to develop 
a basic internet individual standard. State agencies will be 
expected to develop their own methodology for including the cost of 
basic internet service in the HCSUA, LUA, and as a standalone basic 
internet individual standard, as they are expected to do for all 
other allowable utility expenses. The Department assumes that 25 
percent of the SNAP caseload lives in States that will establish an 
individual internet SUA in FY 2025, and all States will implement an 
individual internet SUA in FY 2026. We assume that all States will 
implement an HCSUA that incorporates internet expenses in FY 2026.
    Effect on SNAP Participants: By allowing basic internet expenses 
to be incorporated into SUAs, SNAP households using the HCSUA or LUA 
will be eligible for a larger allowance, which can increase the 
excess shelter deduction for households that are not at the shelter 
cap. SNAP households that receive a larger excess shelter deduction 
may also see their benefits increase, depending on other household 
circumstances.
    Additionally, a portion of SNAP households that do not use a SUA 
will be eligible for a basic internet individual standard or to 
claim the value of their actual expenses for basic internet if they 
incur out-of-pocket expenses for basic internet service. The 
Department expects the share of households that will claim a basic 
internet individual standard to be approximately 5 percent of all 
SNAP households, informed by the share of SNAP households that 
currently receive a telephone-only utility allowance (see Table 3). 
These households may also see their excess shelter deduction 
increase if they are not affected by the shelter cap, potentially 
increasing their benefits.
    Inclusion of basic internet as an allowable utility expense is 
expected to increase SNAP benefits for an additional 27.1 percent of 
SNAP households (29.2 percent, total). This provision will not 
result in benefit losses for any SNAP households. Among households 
gaining benefits, because of this provision, monthly SNAP benefits 
will increase by an average of $15. No households are expected to 
lose eligibility because of this provision. Some of the <0.01 
percent of households estimated to lose eligibility due to the 
previously discussed data quality and methodological review 
provision (if, hypothetically, that provision were finalized on its 
own) retain eligibility because of the inclusion of internet 
expenses in SUAs. Sample sizes for this group are too small for the 
Department to be more precise in its estimates for this group.
    Effect on Federal Spending: Including basic internet as an 
allowable shelter expense is expected to increase SNAP benefit 
payments (transfers) by $1.6 billion upon full implementation in FY 
2026 and by $6.6 billion over five years (FY 2025-FY 2029). This 
represents a 1.6 percent increase in SNAP benefit payments when 
fully implemented. On average, the Department estimates that 
including basic internet expenses will increase State-calculated 
HCSUA values by $50, though the amount is expected to vary by State. 
Additionally, the Federal share of States' administrative expenses 
to incorporate a basic internet individual standard is estimated to 
be a one-time expense of about $14,000. The Department does not 
estimate a measurable change in ongoing Federal burden or costs 
related to this provision.
    Effect on State Agencies: The Department expects it will take 
each State agency approximately 10 hours to establish a new basic 
internet individual standard and include basic internet in their 
HCSUA and LUA calculations. States' share of this expense is 
estimated to be a total annual cost of about $14,000. The Department 
does not estimate a measurable change in State agencies' ongoing 
administrative expenses due to the new inclusion of basic internet 
as an allowable shelter cost.

[[Page 91232]]

C. LIHEAP Provisions

    Discussion: The rule also finalizes how Low-Income Home Energy 
Assistance Program (LIHEAP) payments are considered to confer 
eligibility for the HCSUA, in accordance with amendments made to the 
Food and Nutrition Act of 2008 by the Agricultural Act of 2014. 
While originally published as a separate 2016 NPRM, the LIHEAP 
provisions are integrally linked to the SUA provisions, and 
therefore the Department is combining the provisions from each 
proposed rule into a single rule.
    In accordance with the Agricultural Act of 2014, the final rule 
no longer allows States to confer HCSUAs to households receiving a 
payment, or on behalf of which payments were made, under the Low 
Income Home Energy Assistance Act (LIHEAA) or similar programs 
unless the payment is greater than $20 annually and received in 
either the current month or in the immediately preceding 12 months. 
This provision's effects are discussed in the following paragraphs.
    Additional LIHEAP provisions which are expected to result in 
minimal effects include:
     Requiring State agencies to confer HCSUA eligibility to 
both households if a household receiving a qualifying LIHEAP payment 
splits into two households.
     Allowing weatherization payments to confer eligibility 
for the HCSUA in limited circumstances.
    As previously discussed, the LIHEAP provisions of this final 
rule were self-implementing as of 2014 and are therefore fully 
captured in one of the SNAP participation and benefits baselines 
relevant to this regulatory analysis.
    Effect on SNAP Participants: At the time of implementation, the 
Department estimates that one-third of SNAP households were affected 
in States that have a minimum LIHEAP payment below the $20 threshold 
when this change went into effect beginning in 2014. Most of these 
households remained eligible for SNAP but may have received a lower 
monthly benefit. Less than 0.1 percent of all SNAP households are 
estimated to have lost eligibility. Affected households with an 
elderly or disabled member generally saw greater reductions in their 
monthly benefit because they do not face a cap on the amount of 
their excess shelter expenses deduction. If they were no longer 
eligible for the HCSUA, their shelter deduction may have become 
smaller, resulting in a smaller monthly benefit.
    Effect on Federal Spending: The Department estimates that these 
statutory changes reduced Federal transfers (SNAP benefit payments) 
by approximately $2.2 billion over the 5-year period of FY 2025-FY 
2029. Because these provisions were implemented shortly after 
passage of the Agricultural Act of 2014, this reduction in transfers 
is already fully captured in one of the SNAP participation and 
benefits baselines relevant to this analysis and will not result in 
a reduction, as compared with that baseline, in predicted SNAP 
spending in future years relevant to this regulatory analysis.
    Effect on State Agencies: Among the 17 States that issued LIHEAP 
payments to confer eligibility for the HCSUA prior to the amendments 
made by the Agricultural Act of 2014, the four States that opted not 
to raise those payments to meet the new threshold were required to 
make minimal, one-time changes to their eligibility systems, 
manuals, and training procedures for staff. Other minimal burdens 
imposed on State agencies, such as documenting LIHEAP receipt, were 
already required as part of the certification process and are 
considered usual and customary within the course of States' normal 
administrative activities. States had flexibility in terms of when 
they made the change for their current caseload, reducing 
administrative burden.

D. Combined Effects of the Final Rule

    Effect on SNAP Participants: The Department estimates that most 
SNAP households will experience either an increase or no change to 
their SNAP benefit because of the final rule (see Table 7). Upon 
full implementation of the rule, about 4.9 percent of SNAP 
households are expected to receive, on average, 2.6 percent lower 
monthly benefits (an average monthly decrease of $7). An estimated 
29.2 percent of SNAP households are expected to receive, on average, 
6.0 percent higher monthly benefits (an average monthly increase of 
$15). The remaining two-thirds of SNAP households will see no change 
to their monthly benefits.
    The internet provision of the final rule reduces the monthly 
benefit losses experienced by households in the States that are 
expected to reduce their HCSUAs because of the data quality and 
methodological review provision of the final rule. The internet 
provision reduces the share of households losing benefits under the 
final rule by 0.4 percentage points. Among households losing 
benefits due to the data quality and methodology requirements 
established by the final rule, the marginal effect of including 
internet expenses in SUAs reduces their average monthly benefit loss 
from $21 to $7.
[GRAPHIC] [TIFF OMITTED] TR18NO24.045

    Effect on Federal Spending: The Department estimates full 
implementation of the final rule will increase SNAP benefit spending 
(transfers) by $1.3 billion in FY 2026 and $5.4 billion over the 5-
year period FY 2025-FY 2029. This increase in spending is primarily 
driven by the rule's provision to allow internet as an allowable 
shelter expense. The full cost of the internet provision ($6.6 
billion over 5 years) is partially offset by savings (-$1.2 billion 
over 5 years) due to establishing data quality and update frequency 
requirements for SUAs.
    Total Federal non-transfer costs associated with the final rule 
are estimated to be about $612,000 over 5 years (FY 2025-FY 2029). 
Non-transfer costs will be higher at implementation in FY 2025 
(about $489,000) and every 5 years thereafter, when State agencies 
are expected to conduct a complete review and resubmission of their 
SUA calculations. In intervening years, Federal non-transfer costs 
will be about $31,000.
    Effect on State Agencies: The Department expects full 
implementation of the final rule will increase State agency costs by 
about $561,000 over 5 years (FY 2025-FY 2029) after 50 percent 
Federal reimbursement. Most of this cost (about $438,000 in FY 2025) 
is associated with staff burden and contract costs State agencies 
are expected to incur every 5 years, when they will be required to 
conduct a full review and update of their SUA calculations.

VI. Distributive Impacts

A. Differences in State-Level impacts

    Effects of the final rule vary by State. The 4.9 percent of 
households expected to see

[[Page 91233]]

reduced SNAP benefits under the final rule are in 10 States, based 
on FNS's assessment of the likelihood that those 10 State agencies' 
HCSUA methodologies will require significant revisions to meet the 
guidelines established by the final rule. Within these 10 States, 
the share of households estimated to lose a portion of their SNAP 
benefits ranges from 21.5 percent to 44.9 percent. Among these 10 
States, 9 are also expected to have a small share of their SNAP 
households gaining benefits because of the final rule, ranging from 
0.3 percent to 11.6 percent. Simulation results indicated that one 
State agency is expected to have no households gaining benefits 
because of the final rule, however this result may be due to small 
sample sizes in that State, and it is possible that a small number 
of households in that State could see increased benefits. In the 
remaining 52 States, the share of households expected to gain 
benefits under the final rule in each State ranges from a high of 
47.6 percent to a low of 0.3 percent. The share of households 
expected to be unaffected by the final rule ranges from 98.4 percent 
to 52.5 percent. The LIHEAP provisions of the final rule primarily 
affect just 4 States that previously issued LIHEAP payments to their 
SNAP caseloads to confer HCSUA eligibility and did not opt to 
increase those payments above the $20 threshold.\20\
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    \20\ The four States that chose not to increase their LIHEAP 
payments to greater than $20.00 at the time of implementation are 
Delaware, New Hampshire, New Jersey, and Wisconsin.

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    The average household monthly benefit gain within each State 
(among States with households gaining benefits) ranges from a low of 
$12 to a high of $23 among households that see larger benefits. 
Among all households expected to gain benefits

[[Page 91235]]

under the final rule, the nationwide average gain is about $15. The 
average household monthly benefit loss per State (among the 10 
States with households losing benefits) ranges from -$4 to -$11 
among households that see smaller benefits. Among all households 
expected to lose benefits under the final rule, the nationwide 
average loss is about -$7 per month. See Appendix Table C for 
estimates in each State.
[GRAPHIC] [TIFF OMITTED] TR18NO24.047

B. Differences Among Subgroups Resulting From Changes to SUA 
Methodology

    The final rule's changes to SUAs have the greatest impact on 
households that contain an elderly or disabled individual. These 
households are not subject to the cap on the excess shelter 
deduction, and thus are more likely to be affected by changes to the 
HCSUA, as larger HCSUAs result in a larger shelter deduction.\21\ 
Households with elderly members and households with disabled members 
make up a disproportionate share of those who gain benefits as well 
as of those who lose benefits, as shown in Table 10, below. 
Households with members who are elderly or disabled are more likely 
than other households to claim an excess shelter deduction, and 
those deductions are larger on average than the shelter deductions 
of other households (Table 11). More households with members who are 
elderly or disabled are expected to gain benefits under the final 
rule than to lose benefits. Additionally, the average benefit gain 
for these households is more than twice the average benefit loss.
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    \21\ All other things being equal, households containing elderly 
or disabled individuals may qualify for a larger shelter deduction 
than a similar household without an elderly or disabled member 
because their shelter deduction is not capped. As a result, the 
household with an elderly or disabled member has lower net income, 
resulting in a larger SNAP benefit.
---------------------------------------------------------------------------

    SNAP households with children are slightly less likely than all 
SNAP households to gain benefits because of the final rule (27.3 
percent, compared to 29.2 percent for all households) and are 
slightly less likely to lose benefits of the final rule (3.8 
percent, compared to 4.9 percent for all households). SNAP 
households with children who gain or lose benefits because of the 
final rule are estimated to experience similar average changes in 
their monthly benefits as all SNAP households (see Table 10).

[[Page 91236]]

[GRAPHIC] [TIFF OMITTED] TR18NO24.048

[GRAPHIC] [TIFF OMITTED] TR18NO24.049

    Households headed by a non-Hispanic white or Asian individual 
are more likely to lose benefits (about 7 percent, v. about 5 
percent for all households). Households headed by an Asian 
individual are also slightly more likely to gain benefits due to the 
final rule (about 31 percent, v. about 29 percent for all 
households). Households headed by a non-Hispanic black individual 
are slightly less likely to gain benefits under the final rule 
(about 27 percent, v. about 29 percent for all households). 
Households headed by an Asian or Hispanic individual are expected to 
experience a larger average benefit loss (about -$9, v. about -$7 
for all households). Average benefit gains are consistent across the 
protected class subgroups examined in this analysis (see Table 10).

VII. Uncertainties

    Uncertainties related to this regulatory impact analysis include 
the following:

A. Changes in SNAP Caseload Numbers and Composition

    This analysis estimates the economic circumstances of SNAP 
households based on historical data. Macroeconomic trends in 
employment, wage growth, and inflation may alter household incomes 
and expenses in future years in a way that differs significantly 
from the SNAP caseload in FY 2022. Households that gain or lose 
benefits under this rule do so because the changes to SUA values 
result in changes to households' net

[[Page 91237]]

incomes, which are used to calculate their SNAP allotments. Smaller 
SUAs mean households have higher net incomes and thus receive lower 
benefits; higher SUAs have the opposite effect. If SNAP households' 
shelter expenses rise faster than their incomes due to inflation in 
the housing market, they may be more likely to be subject to the cap 
on shelter expense deductions in the future and may not be impacted 
by changes to SUA values. Similarly, if SNAP households' gross 
incomes rise, the excess shelter deduction could have a more limited 
impact on their SNAP benefit calculation, as only those shelter 
expenses that exceed 50 percent of net income after other deductions 
may be deducted. As net income rises, the share of shelter expenses 
that can be deducted can decrease. In this scenario, changes in SUA 
values could have a more limited impact on their benefit 
calculation. It should be noted that households with elderly or 
disabled members are not subject to the cap on shelter expense 
deductions and would be less impacted by this uncertainty.
    Additionally, State agencies have changed their SUA values, some 
in significant ways since FY 2022. The model used in this analysis 
attempted to control for these changes by adjusting each State's FY 
2022 HCSUA value to proportionately reflect the relationship between 
each State's FY 2024 HCSUA and the FY 2024 shelter cap. The 
Department believes the methodology in this analysis controls for 
changes to HCSUA values since FY 2022 to the greatest extent 
feasible.

B. Values of Internet Component of HCSUAs and LUAs and Values of 
Internet Single Utility Allowances

    It is possible that some State agencies may establish 
significantly higher or lower allowances for internet expenses than 
the Department anticipates. If States implement values that skew the 
average across States higher or lower than the $50 average value 
used in this RIA, the cost of the final rule could increase or 
decrease. Two alternative scenarios are explored in the following 
Sensitivity Analysis section. The Department does not currently have 
information about how each State agency may choose to calculate 
internet allowances in reaction to this rule.

C. Share of State Agencies That Opt To Include Internet in Their 
SUAs

    While FNS expects all State agencies will choose to account for 
internet expenses in their HCSUAs, they are not required to do so. 
If fewer State agencies opt to include basic internet expenses in 
their SUAs, then the cost of the proposed rule will be lower. 
However, most of the final rule's cost is due to the mandatory 
inclusion of internet within States' HCSUAs. Therefore, States' 
individual decisions about including internet in the LUA or as an 
individual standard would likely have small effects on the rule's 
overall cost. An alternative scenario, in which 15 percent of the 
SNAP caseload lives in a State that chooses not to include internet 
expenses in its SUAs, is explored in the following Sensitivity 
Analysis section. The Department does not currently have information 
about whether some States will opt to only include internet expenses 
in their HCSUA.
    D. Share of States That Issue LIHEAP Payments Greater Than $20 
to Their SNAP Caseload
    The estimates in this analysis are based on 4 of 17 States that 
discontinued LIHEAP payments to their SNAP caseloads that conferred 
HCSUA eligibility and 13 States continuing to provide payments above 
the $20 threshold. It is possible that more or fewer State agencies 
will issue LIHEAP payments above the $20 threshold in the future.

VIII. Sensitivity Analysis

    Table 12, below, illustrates how the RIA's estimates of the 
finalized SUA NPRM provisions might change if different assumptions 
regarding the uncertainties discussed above were used. Sensitivity 
analysis estimates were produced using the same methodology as was 
used for the RIA estimates. Alternative assumptions used for the 
sensitivity analysis include:
    A. Assume the average internet allowance value States calculate 
for their HCSUAs, LUAs, and basic internet individual standard is 
$40, rather than $50.
    B. Assume the average internet allowance value States calculate 
for their HCSUAs, LUAs, and basic internet individual standard is 
$60, rather than $50.
    C. Assume the average reduction in 10 States' HCSUAs and average 
increase in 6 States' HCSUAs due to the final rule's data quality 
and 5-year update requirements is lower, 5 percent rather than 10 
percent.
    D. Assume the average reduction in 10 States' HCSUAs and average 
increase in 6 States' HCSUAs due to the final rule's data quality 
and 5-year update requirements is higher, 15 percent rather than 10 
percent.
    E. Assume the average reduction in 10 States' HCSUAs and average 
increase in 6 States' HCSUAs due to the final rule's data quality 
and 5-year update requirements is higher, 20 percent rather than 10 
percent.
    F. Assume the average reduction in 10 States' HCSUAs is higher 
(20 percent) and the average increase in 6 States' HCSUAs remains 10 
percent.
    G. Assume the average reduction in 10 States' HCSUAs remains 10 
percent and the average increase in 6 States' HCSUAs is higher (20 
percent).
    H. Assume 15 percent of the SNAP caseload lives in a State where 
the State agency does not opt to incorporate basic internet into 
their SUAs.

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    The simulations that assessed Scenarios A and B (see table 12) 
indicate that, on average, a $10 change in the average internet 
allowances implemented by State agencies will result in 
approximately a corresponding one-third of a percentage point change 
in the final rule's effect on transfer spending. In the RIA, as 
finalized, the final rule results in a 1.34 percent increase in 
total SNAP benefit spending. If the average value of internet 
standards is $10 higher than anticipated, the final rule would be 
estimated to result in a 1.66 percent increase in total SNAP benefit 
spending. Similarly, if the average value of internet standards is 
$10 lower than anticipated, the final rule would be estimated to 
result in a 1.01 percent increase in total SNAP benefit spending. A 
one-third of a percentage point change in the overall impact of the 
final rule would result in approximately a $322 million increase or 
decrease in the cost of final rule in FY 2026.
    Given that the Department cannot precisely estimate which States 
will change their HCSUA values because of the final rule, nor the 
degree to which they will increase or decrease their HCSUAs, several 
different scenarios were tested (see Table 12, Scenarios C-G). 
Across these scenarios, the transfer cost of the final rule in FY 
2026 ranges from a low of $939 million to a high of $1.6 billion. 
Over the 5-year period FY 2025-FY 2029, the transfer cost of the 
final rule in scenarios C through G ranges from a low of $3.8 
billion to a high of $6.6 billion.
    Finally, if some State agencies decide not to incorporate basic 
internet expenses into their SUAs (Scenario H in Table 12), the 
Department estimates there would be a corresponding 0.2 percentage 
point decrease in the estimated transfer cost of the final rule. 
This would result in approximately a $197 million decrease in the 
transfer cost of the final rule in FY 2026 and approximately an $800 
million decrease in the transfer cost of the final rule of the 5-
year period FY 2025-FY 2029. To produce this estimate, the 
Department assumes 15 percent of SNAP households may live in a State 
that will choose not to include basic internet expenses in their 
SUAs.

X. Alternatives

    The Department used the same methodology (as applicable) and FY 
2022 SNAP QC Minimodel to assess the final rule and to assess the 
alternatives presented in this section.

A. Finalizing LIHEAP and Internet Provisions, Only

    The Department considered finalizing the LIHEAP provisions of 
the 2016 NPRM and finalizing internet as an allowable shelter 
expense for the purposes of calculating the excess shelter expense 
deduction, without making any additional changes to SUA regulations. 
This alternative would have made no changes to how States calculate 
their HCSUAs, LUAs, and individual standards, except for permitting 
standard allowances to incorporate basic internet expenses. States 
would retain full flexibility in how they calculate SUAs.
    Under this approach, no household would experience reduced 
monthly SNAP benefits, in comparison to the 4.9 percent of 
households estimated to lose an average of $7 in monthly benefits 
under the rule, as finalized. The transfer cost of the final rule 
would be higher ($6.6 billion over five years FY 2025- FY 2029, 
compared to $5.4 billion), as there would be no savings due to data 
quality and methodological requirements.
    The Department determined this approach would not address 
concerns about consistency and data integrity in how States 
calculate their SUAs, and therefore was an insufficient alternative.

B. Standardizing HCSUAs at the 90th Percentile

    The Department considered retaining the proposed rule's 
provision to standardize HCSUAs, though at the 90th percentile of 
low-income households' expenses, rather than the 80th percentile as 
proposed. Under this approach, the Department would have also 
finalized the LIHEAP provisions of the final rule and added internet 
as an allowable expense for the purposes of calculating the excess 
shelter expense deduction. It also would have retained the final 
rule provisions to make HCSUAs statewide values, calculated by FNS. 
The Department considered this approach as it would have addressed 
concerns about fairness and transparency in how SUAs are calculated, 
while also mitigating benefit losses to households if the 80th 
percentile was used, as proposed. The Department estimates that this 
approach would have resulted in a 2.8 percent reduction in SNAP 
benefit spending (-$11.2 billion over five years if implemented in 
FY 2026), compared to the 1.3 percent increase ($5.4 billion over 
five years) estimated for the final rule.
    Although this approach would address concerns about consistency 
and transparency in calculating SUAs, the Department

[[Page 91239]]

determined that this approach would constrain States' flexibility in 
developing SUAs that utilize local utility provider data and respond 
to within-State variations in expenses, to a greater degree than 
necessary. It also would have resulted in approximately five times 
as many households losing benefits (25 percent, v. 5 percent) and 
about seven times larger average household benefit losses (-$41, v. 
-$6) than the final rule, resulting in disruption, confusion, and 
negative consequences for households' food budgets. See Table 13, 
below, for further details about this alternative's estimated 
effects on SNAP households.
[GRAPHIC] [TIFF OMITTED] TR18NO24.051

C. Permitting State Agencies a Longer Timeframe Between 
Methodological Updates

    The Department considered permitting States to conduct 
methodological updates of their SUAs less frequently than every five 
years. If States were allowed to update their SUA methodologies and 
base data every seven years, State agencies would experience a 
reduced administrative burden due to conducting the updates. Less 
frequent methodological updates could also affect benefit spending 
if States continued to use SUAs that were out of alignment with 
households' current circumstances for a longer period of time. 
However, the Department cannot predict if less-frequent SUA updates 
in the future would be more likely to result in SUAs being 
inappropriately high or low, and therefore is unable to estimate if 
benefit spending would have increased or decreased under this 
alternative.
    The Department determined that a five-year update requirement 
was more appropriate than a longer timeframe because it strikes an 
appropriate balance between ensuring SUAs remain responsive to 
current trends in consumption, efficiency, and utility prices, while 
minimizing the burden on State agencies to conduct frequent, 
extensive updates of their SUA methodologies. The Department 
believes a longer period between updates could result in SUAs become 
outdated, particularly if a State bases its SUA calculations on 
survey data, rather than data sourced directly from utility 
providers. Survey data from sources like ACS and RECS can lag behind 
current conditions by multiple years, and their publication does not 
always take place in time for an annual SUA update. As a result, 
allowing State agencies to update their methodologies every seven 
years could result in baseline SUA data that are a decade or more 
out-of-date.
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[FR Doc. 2024-26845 Filed 11-15-24; 8:45 am]
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