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"(A) ENERGY ASSISTANCE PAYMENTS.-For purposes of subsection (d)(1), a payment made under a State law (other than a law referred to in paragraph (2)(H)) to provide energy assistance to a household shall be considered money payable directly to the household.

"(B) ENERGY ASSISTANCE EXPENSES.-For purposes of subsection (e)(7), an expense paid on behalf of a household under a State law to provide energy assistance shall be considered an out-of-pocket expense incurred and paid by the household.".

SEC. 809. DEDUCTIONS FROM INCOME.

(a) IN GENERAL.-Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended by striking subsection (e) and inserting the following:

"(e) DEDUCTIONS FROM INCOME.—

"(1) STANDARD DEDUCTION.-The Secretary shall allow a standard deduction for each household in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States of $134, $229, $189, $269, and $118, respectively.

"(2) EARNED INCOME DEDUCTION.

"(A) DEFINITION OF EARNED INCOME.-In this paragraph, the term 'earned income' does not include

"(i) income excluded by subsection (d); or "(ii) any portion of income earned under a work supplementation or support program, as defined under section 16(b), that is attributable to public assistance.

"(B) DEDUCTION.-Except as provided in subparagraph (C), a household with earned income shall be allowed a deduction of 20 percent of all earned income to compensate for taxes, other mandatory deductions from salary, and work expenses.

"(C) EXCEPTION.-The deduction described in subparagraph (B) shall not be allowed with respect to determining an overissuance due to the failure of a household to report earned income in a timely manner.

"(3) DEPENDENT CARE DEDUCTION.

"(A) IN GENERAL.-A household shall be entitled, with respect to expenses (other than excluded expenses described in subparagraph (B)) for dependent care, to a dependent care deduction, the maximum allowable level of which shall be $200 per month for each dependent child under 2 years of age and $175 per month for each other dependent, for the actual cost of payments necessary for the care of a dependent if the care enables a household member to accept or continue employment, or training or education that is preparatory for employment.

"(B) EXCLUDED EXPENSES.-The excluded expenses referred to in subparagraph (A)

are

"(i) expenses paid on behalf of the household by a third party;

"(ii) amounts made available and excluded, for the expenses referred to in subparagraph (A), under subsection (d)(3); and

"(iii) expenses that are paid under section 6(d)(4).

"(4) DEDUCTION FOR CHILD SUPPORT PAYMENTS.

"(A) IN GENERAL.-A household shall be entitled to a deduction for child support payments made by a household member to or for an individual who is not a member of the household if the household member is legally obligated to make the payments.

"(B) METHODS FOR DETERMINING AMOUNT.— The Secretary may prescribe by regulation the methods, including calculation on a retrospective basis, that a State agency shall use to determine the amount of the deduction for child support payments.

"(5) HOMELESS SHELTER ALLOWANCE.Under rules prescribed by the Secretary, a State agency may develop a standard homeless shelter allowance, which shall not ex

ceed $143 per month, for such expenses as may reasonably be expected to be incurred by households in which all members are homeless individuals but are not receiving free shelter throughout the month. A State agency that develops the allowance may use the allowance in determining eligibility and allotments for the households. The State agency may make a household with extremely low shelter costs ineligible for the allowance.

"(6) EXCESS MEDICAL EXPENSE DEDUCTION.— "(A) IN GENERAL.-A household containing an elderly or disabled member shall be entitled, with respect to expenses other than expenses paid on behalf of the household by a third party, to an excess medical expense deduction for the portion of the actual costs of allowable medical expenses, incurred by the elderly or disabled member, exclusive of special diets, that exceeds $35 per month.

"(B) METHOD OF CLAIMING DEDUCTION.— "(i) IN GENERAL.-A State agency shall offer an eligible household under subparagraph (A) a method of claiming a deduction for recurring medical expenses that are initially verified under the excess medical expense deduction in lieu of submitting information on, or verification of, actual expenses on a monthly basis.

"(ii) METHOD.-The method described in clause (i) shall—

"(I) be designed to minimize the burden for the eligible elderly or disabled household member choosing to deduct the recurrent medical expenses of the member pursuant to the method;

"(II) rely on reasonable estimates of the expected medical expenses of the member for the certification period (including changes that can be reasonably anticipated based on available information about the medical condition of the member, public or private medical insurance coverage, and the current verified medical expenses incurred by the member); and

"(III) not require further reporting or verification of a change in medical expenses if such a change has been anticipated for the certification period.

"(7) EXCESS SHELTER EXPENSE DEDUCTION.

"(A) IN GENERAL.-A household shall be entitled, with respect to expenses other than expenses paid on behalf of the household by a third party, to an excess shelter expense deduction to the extent that the monthly amount expended by a household for shelter exceeds an amount equal to 50 percent of monthly household income after all other applicable deductions have been allowed.

"(B) MAXIMUM AMOUNT OF DEDUCTION.—In the case of a household that does not contain an elderly or disabled individual, in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States, the excess shelter expense deduction shall not exceed—

"(i) for the period beginning on the date of enactment of this subparagraph and ending on December 31, 1996, $247, $429, $353, $300, and $182 per month, respectively;

“(ii) for the period beginning on January 1, 1997, and ending on September 30, 1998, $250, $434, $357, $304, and $184 per month, respectively;

"(iii) for fiscal years 1999 and 2000, $275, $478, $393, $334, and $203 per month, respectively; and

"(iv) for fiscal year 2001 and each subsequent fiscal year, $300, $521, $429, $364, and $221 per month, respectively.

"(C) STANDARD UTILITY ALLOWANCE.

"(i) IN GENERAL.-In computing the excess shelter expense deduction, a State agency may use a standard utility allowance in accordance with regulations promulgated by the Secretary, except that a State agency may use an allowance that does not fluc

tuate within a year to reflect seasonal variations.

"(ii) RESTRICTIONS ON HEATING AND COOLING EXPENSES.-An allowance for a heating or cooling expense may not be used in the case of a household that—

"(I) does not incur a heating or cooling expense, as the case may be;

"(II) does incur a heating or cooling expense but is located in a public housing unit that has central utility meters and charges households, with regard to the expense, only for excess utility costs; or

"(III) shares the expense with, and lives with, another individual not participating in the food stamp program, another household participating in the food stamp program, or both, unless the allowance is prorated between the household and the other individual, household, or both.

"(iii) MANDATORY ALLOWANCE.—

"(I) IN GENERAL.-A State agency may make the use of a standard utility allowance mandatory for all households with qualifying utility costs if—

"(aa) the State agency has developed 1 or more standards that include the cost of heating and cooling and 1 or more standards that do not include the cost of heating and cooling; and

"(bb) the Secretary finds that the standards will not result in an increased cost to the Secretary.

"(II) HOUSEHOLD ELECTION.-A State agency that has not made the use of a standard utility allowance mandatory under subclause (I) shall allow a household to switch, at the end of a certification period, between the standard utility allowance and a deduction based on the actual utility costs of the household.

"(iv) AVAILABILITY OF ALLOWANCE TO RECIPIENTS OF ENERGY ASSISTANCE.

"(I) IN GENERAL.-Subject to subclause (II), if a State agency elects to use a standard utility allowance that reflects heating or cooling costs, the standard utility allowance shall be made available to households receiving a payment, or on behalf of which a payment is made, under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.) or other similar energy assistance program, if the household still incurs out-ofpocket heating or cooling expenses in excess of any assistance paid on behalf of the household to an energy provider.

"(II) SEPARATE ALLOWANCE.-A State agency may use a separate standard utility allowance for households on behalf of which a payment described in subclause (I) is made, but may not be required to do so.

"(III) STATES NOT ELECTING TO USE SEPARATE ALLOWANCE.-A State agency that does not elect to use a separate allowance but makes a single standard utility allowance available to households incurring heating or cooling expenses (other than a household described in subclause (I) or (II) of clause (ii)) may not be required to reduce the allowance due to the provision (directly or indirectly) of assistance under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.).

"(IV) PRORATION OF ASSISTANCE.-For the purpose of the food stamp program, assistance provided under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.) shall be considered to be prorated over the entire heating or cooling season for which the assistance was provided.".

(b) CONFORMING AMENDMENT.-Section 11(e)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(3)) is amended by striking ". Under rules prescribed" and all that follows through "verifies higher expenses".

SEC. 810. VEHICLE ALLOWANCE.

Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by striking paragraph (2) and inserting the following:

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"(i) any boat, snowmobile, or airplane used for recreational purposes;

"(ii) any vacation home;

"(iii) any mobile home used primarily for vacation purposes;

"(iv) subject to subparagraph (C), any licensed vehicle that is used for household transportation or to obtain or continue employment to the extent that the fair market value of the vehicle exceeds $4,600 through September 30, 1996, and $4,650 beginning October 1, 1996; and

"(v) any savings or retirement account (including an individual account), regardless of whether there is a penalty for early withdrawal.

"(C) EXCLUDED VEHICLES.-A vehicle (and any other property, real or personal, to the extent the property is directly related to the maintenance or use of the vehicle) shall not be included in financial resources under this paragraph if the vehicle is

"(i) used to produce earned income; "(ii) necessary for the transportation of a physically disabled household member; or

"(iii) depended on by a household to carry fuel for heating or water for home use and provides the primary source of fuel or water, respectively, for the household.".

SEC. 811. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME.

Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)(2)) is amended

(1) by striking subparagraph (F); and (2) by redesignating subparagraphs (G) and (H) as subparagraphs (F) and (G), respectively.

SEC. 812. SIMPLIFIED CALCULATION OF INCOME FOR THE SELF-EMPLOYED.

Section 5 of the Food Stamp Act of 1977 (7) U.S.C. 2014), as amended by title I, is amended by adding at the end the following:

"(m) SIMPLIFIED CALCULATION OF INCOME FOR THE SELF-EMPLOYED.—

"(1) IN GENERAL.-Not later than 1 year after the date of enactment of this subsection, the Secretary shall establish a procedure by which a State may submit a method, designed to not increase Federal costs, for the approval of the Secretary, that the Secretary determines will produce a reasonable estimate of income excluded under subsection (d)(9) in lieu of calculating the actual cost of producing self-employment income.

"(2) INCLUSIVE OF ALL TYPES OF INCOME OR LIMITED TYPES OF INCOME.-The method submitted by a State under paragraph (1) may allow a State to estimate income for all types of self-employment income or may be limited to 1 or more types of self-employment income.

*(3) DIFFERENCES FOR DIFFERENT TYPES OF INCOME. The method submitted by a State under paragraph (1) may differ for different types of self-employment income.".

SEC. 813. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PROGRAM REQUIREMENTS.

Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)) is amended

(1) in clause (i), by striking "six months" and inserting "1 year"; and

(2) in clause (ii), by striking "1 year" and inserting "2 years".

SEC. 814. DISQUALIFICATION OF CONVICTED INDIVIDUALS.

Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)(iii)) is amended(1) in subclause (II), by striking "or" at the end;

(2) in subclause (III), by striking the period at the end and inserting "; or"; and

(3) by inserting after subclause (III) the following:

"(IV) a conviction of an offense under subsection (b) or (c) of section 15 involving an item covered by subsection (b) or (c) of section 15 having a value of $500 or more.". SEC. 815. DISQUALIFICATION.

(a) IN GENERAL.-Section 6(d) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)) is amended by striking "(d)(1) Unless otherwise exempted by the provisions" and all that follows through the end of paragraph (1) and inserting the following:

"(d) CONDITIONS OF PARTICIPATION.— "(1) WORK REQUIREMENTS.

"(A) IN GENERAL.-No physically and mentally fit individual over the age of 15 and under the age of 60 shall be eligible to participate in the food stamp program if the individual

"(i) refuses, at the time of application and every 12 months thereafter, to register for employment in a manner prescribed by the Secretary;

"(ii) refuses without good cause to participate in an employment and training program established under paragraph (4), to the extent required by the State agency;

"(iii) refuses without good cause to accept an offer of employment, at a site or plant not subject to a strike or lockout at the time of the refusal, at a wage not less than the higher of

"(I) the applicable Federal or State minimum wage; or

"(II) 80 percent of the wage that would have governed had the minimum hourly rate under section 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) been applicable to the offer of employment;

"(iv) refuses without good cause to provide a State agency with sufficient information to allow the State agency to determine the employment status or the job availability of the individual;

"(v) voluntarily and without good cause"(I) quits a job; or

"(II) reduces work effort and, after the reduction, the individual is working less than 30 hours per week; or

"(vi) fails to comply with section 20.

"(B) HOUSEHOLD INELIGIBILITY. If an individual who is the head of a household becomes ineligible to participate in the food stamp program under subparagraph (A), the household shall, at the option of the State agency, become ineligible to participate in the food stamp program for a period, determined by the State agency, that does not exceed the lesser of

"(i) the duration of the ineligibility of the individual determined under subparagraph (C); or

"(ii) 180 days.

"(C) DURATION OF INELIGIBILITY.—

"(i) FIRST VIOLATION.-The first time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of

"(I) the date the individual becomes eligible under subparagraph (A);

"(II) the date that is 1 month after the date the individual became ineligible; or

"(III) a date determined by the State agency that is not later than 3 months after the date the individual became ineligible.

"(ii) SECOND VIOLATION. The second time that an individual becomes ineligible to participate in the food stamp program under

subparagraph (A), the individual shall remain ineligible until the later of

"(I) the date the individual becomes eligible under subparagraph (A);

"(II) the date that is 3 months after the date the individual became ineligible; or

"(III) a date determined by the State agency that is not later than 6 months after the date the individual became ineligible.

"(iii) THIRD OR SUBSEQUENT VIOLATION.The third or subsequent time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of—

"(I) the date the individual becomes eligible under subparagraph (A);

"(II) the date that is 6 months after the date the individual became ineligible;

"(III) a date determined by the State agency; or

"(IV) at the option of the State agency, permanently.

“(D) ADMINISTRATION.—

"(i) GOOD CAUSE.-The Secretary shall determine the meaning of good cause for the purpose of this paragraph.

"(ii) VOLUNTARY QUIT.-The Secretary shall determine the meaning of voluntarily quitting and reducing work effort for the purpose of this paragraph.

"(iii) DETERMINATION BY STATE AGENCY.“(I) IN GENERAL.-Subject to subclause (II) and clauses (i) and (ii), a State agency shall determine

"(aa) the meaning of any term used in subparagraph (A);

"(bb) the procedures for determining whether an individual is in compliance with a requirement under subparagraph (A); and "(cc) whether an individual is in compliance with a requirement under subparagraph (A).

"(II) NOT LESS RESTRICTIVE.-A State agency may not use a meaning, procedure, or determination under subclause (I) that is less restrictive on individuals receiving benefits under this Act than a comparable meaning, procedure, or determination under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.).

"(iv) STRIKE AGAINST THE GOVERNMENT.— For the purpose of subparagraph (A)(v), an employee of the Federal Government, a State, or a political subdivision of a State, who is dismissed for participating in a strike against the Federal Government, the State, or the political subdivision of the State shall be considered to have voluntarily quit without good cause.

"(v) SELECTING A HEAD OF HOUSEHOLD."(I) IN GENERAL.-For purposes of this paragraph, the State agency shall allow the household to select any adult parent of a child in the household as the head of the household if all adult household members making application under the food stamp program agree to the selection.

"(II) TIME FOR MAKING DESIGNATION.-A household may designate the head of the household under subclause (I) each time the household is certified for participation in the food stamp program, but may not change the designation during a certification period unless there is a change in the composition of the household.

"(vi) CHANGE IN HEAD OF HOUSEHOLD.—If the head of a household leaves the household during a period in which the household is ineligible to participate in the food stamp program under subparagraph (B)

"(I) the household shall, if otherwise eligible, become eligible to participate in the food stamp program; and

"(II) if the head of the household becomes the head of another household, the household that becomes headed by the individual shall become ineligible to participate in the food.

"(2) violating a condition of probation or parole imposed under a Federal or State law.".

SEC. 822. COOPERATION WITH CHILD SUPPORT AGENCIES.

Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 821, is amended by adding at the end the following: "(1) CUSTODIAL PARENT'S COOPERATION WITH CHILD SUPPORT AGENCIES.

"(1) IN GENERAL.-At the option of a State agency, subject to paragraphs (2) and (3), no natural or adoptive parent or other individual (collectively referred to in this subsection as 'the individual') who is living with and exercising parental control over a child under the age of 18 who has an absent parent shall be eligible to participate in the food stamp program unless the individual cooperates with the State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)—

"(A) in establishing the paternity of the child (if the child is born out of wedlock); and

"(B) in obtaining support for— "(i) the child; or

"(ii) the individual and the child.

"(2) GOOD CAUSE FOR NONCOOPERATION.— Paragraph (1) shall not apply to the individual if good cause is found for refusing to cooperate, as determined by the State agency in accordance with standards prescribed by the Secretary in consultation with the Secretary of Health and Human Services. The standards shall take into consideration circumstances under which cooperation may be against the best interests of the child.

"(3) FEES.-Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.).

"(m) NONCUSTODIAL PARENT'S COOPERATION WITH CHILD SUPPORT AGENCIES.

"(1) IN GENERAL.-At the option of a State agency, subject to paragraphs (2) and (3), a putative or identified noncustodial parent of a child under the age of 18 (referred to in this subsection as 'the individual') shall not be eligible to participate in the food stamp program if the individual refuses to cooperate with the State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)—

"(A) in establishing the paternity of the child (if the child is born out of wedlock); and

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"(B) in providing support for the child. "(2) REFUSAL TO COOPERATE."(A) GUIDELINES.-The Secretary, in consultation with the Secretary of Health and Human Services, shall develop guidelines on what constitutes a refusal to cooperate under paragraph (1).

"(B) PROCEDURES.-The State agency shall develop procedures, using guidelines developed under subparagraph (A), for determining whether an individual is refusing to cooperate under paragraph (1).

"(3) FEES.-Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.).

"(4) PRIVACY.-The State agency shall provide safeguards to restrict the use of information collected by a State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to purposes for which the information is collected.". SEC. 823. DISQUALIFICATION RELATING ΤΟ CHILD SUPPORT ARREARS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 822, is amended by adding at the end the following: "(n) DISQUALIFICATION FOR CHILD SUPPORT ARREARS.

"(1) IN GENERAL.-At the option of a State agency, no individual shall be eligible to participate in the food stamp program as a member of any household during any month that the individual is delinquent in any payment due under a court order for the support of a child of the individual.

"(2) EXCEPTIONS.-Paragraph (1) shall not apply if—

“(A) a court is allowing the individual to delay payment; or

"(B) the individual is complying with a payment plan approved by a court or the State agency designated under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to provide support for the child of the individual.".

SEC. 824. WORK REQUIREMENT.

(a) IN GENERAL.-Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 823, is amended by adding at the end the following:

"(0) WORK REQUIREMENT.—

“(1) DEFINITION OF WORK PROGRAM.—In this subsection, the term 'work program' means

"(A) a program under the Job Training Partnership Act (29 U.S.C. 1501 et seq.);

"(B) a program under section 236 of the Trade Act of 1974 (19 U.S.C. 2296); and

"(C) a program of employment and training operated or supervised by a State or political subdivision of a State that meets standards approved by the Governor of the State, including a program under subsection (d)(4), other than a job search program or a job search training program.

"(2) WORK REQUIREMENT.-Subject to the other provisions of this subsection, no individual shall be eligible to participate in the food stamp program as a member of any household if, during the preceding 36-month period, the individual received food stamp benefits for not less than 3 months (consecutive or otherwise) during which the individual did not

"(A) work 20 hours or more per week, averaged monthly;

"(B) participate in and comply with the requirements of a work program for 20 hours or more per week, as determined by the State agency;

"(C) participate in and comply with the requirements of a program under section 20 or a comparable program established by a State or political subdivision of a State; or

"(D) receive benefits pursuant to paragraph (3), (4), or (5).

"(3) EXCEPTION.-Paragraph (2) shall not apply to an individual if the individual is— "(A) under 18 or over 50 years of age; "(B) medically certified as physically or mentally unfit for employment;

"(C) a parent or other member of a household with responsibility for a dependent child;

"(D) otherwise exempt under subsection (d)(2); or

"(E) a pregnant woman. "(4) WAIVER.—

"(A) IN GENERAL.-On the request of a State agency, the Secretary may waive the applicability of paragraph (2) to any group of individuals in the State if the Secretary makes a determination that the area in which the individuals reside

"(i) has an unemployment rate of over 10 percent; or

"(ii) does not have a sufficient number of jobs to provide employment for the individuals.

“(B) REPORT.-The Secretary shall report the basis for a waiver under subparagraph (A) to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate.

“(5) SUBSEQUENT ELIGIBILITY.—

"(A) REGAINING ELIGIBILITY.—An individual denied eligibility under paragraph (2) shall regain eligibility to participate in the food stamp program if, during a 30-day period, the individual

"(i) works 80 or more hours;

"(ii) participates in and complies with the requirements of a work program for 80 or more hours, as determined by a State agency; or

"(iii) participates in and complies with the requirements of a program under section 20 or a comparable program established by a State or political subdivision of a State.

"(B) MAINTAINING ELIGIBILITY.-An individual who regains eligibility under subparagraph (A) shall remain eligible as long as the individual meets the requirements of subparagraph (A), (B), or (C) of paragraph (2). "(C) LOSS OF EMPLOYMENT.—

"(i) IN GENERAL.-An individual who regained eligibility under subparagraph (A) and who no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2) shall remain eligible for a consecutive 3month period, beginning on the date the individual first notifies the State agency that the individual no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2).

“(ii) LIMITATION.-An individual shall not receive any benefits pursuant to clause (i) for more than a single 3-month period in any 36-month period.

"(6) OTHER PROGRAM RULES.-Nothing in this subsection shall make an individual eligible for benefits under this Act if the individual is not otherwise eligible for benefits under the other provisions of this Act.".

(b) TRANSITION PROVISION.-The term "preceding 36-month period" in section 6(0) of the Food Stamp Act of 1977, as added by subsection (a), does not include, with respect to a State, any period before the earlier of—

(1) the date the State notifies recipients of food stamp benefits of the application of section 6(0); or

(2) the date that is 3 months after the date of enactment of this Act.

SEC. 825. ENCOURAGEMENT OF ELECTRONIC

BENEFIT TRANSFER SYSTEMS. (a) IN GENERAL.-Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C. 2016(i)) is amended

(1) by striking "(i)(1)(A) Any State" and all that follows through the end of paragraph (1) and inserting the following:

"(i) ELECTRONIC BENEFIT TRANSFERS.— "(1) IN GENERAL.—

"(A) IMPLEMENTATION.-Not later than October 1, 2002, each State agency shall implement an electronic benefit transfer system under which household benefits determined under section 8(a) or 26 are issued from and stored in a central databank, unless the Secretary provides a waiver for a State agency that faces unusual barriers to implementing an electronic benefit transfer system.

"(B) TIMELY IMPLEMENTATION.-Each State agency is encouraged to implement an electronic benefit transfer system under subparagraph (A) as soon as practicable.

"(C) STATE FLEXIBILITY.-Subject to paragraph (2), a State agency may procure and implement an electronic benefit transfer system under the terms, conditions, and design that the State agency considers appropriate.

“(D) OPERATION.-An electronic benefit transfer system should take into account generally accepted standard operating rules based on

"(i) commercial electronic funds transfer technology;

"(ii) the need to permit interstate operation and law enforcement monitoring; and

"(iii) the need to permit monitoring and investigations by authorized law enforcement agencies.";

(2) in paragraph (2)—

(A) by striking "effective no later than
April 1, 1992,";

(B) in subparagraph (A)—

(i) by striking ", in any 1 year,"; and
(ii) by striking "on-line";

(C) by striking subparagraph (D) and in-
serting the following:

"(D)(i) measures to maximize the security
of a system using the most recent tech-
nology available that the State agency con-
siders appropriate and cost effective and
which may include personal identification
numbers, photographic identification on
electronic benefit transfer cards, and other
measures to protect against fraud and abuse;
and

"(ii) effective not later than 2 years after
the date of enactment of this clause, to the
extent practicable, measures that permit a
system to differentiate items of food that
may be acquired with an allotment from
items of food that may not be acquired with
an allotment;";

(D) in subparagraph (G), by striking "and"
at the end;

(E) in subparagraph (H), by striking the pe-
riod at the end and inserting "; and"; and
(F) by adding at the end the following:
"(I) procurement standards."; and
(3) by adding at the end the following:

"(7) REPLACEMENT OF BENEFITS.-Regula-
tions issued by the Secretary regarding the
replacement of benefits and liability for re-
placement of benefits under an electronic
benefit transfer system shall be similar to
the regulations in effect for a paper-based
food stamp issuance system.

"(8) REPLACEMENT CARD FEE.-A State
agency may collect a charge for replacement
of an electronic benefit transfer card by re-
ducing the monthly allotment of the house-
hold receiving the replacement card.

"(9) OPTIONAL PHOTOGRAPHIC IDENTIFICA-
TION.-

"(A) IN GENERAL.-A State agency may re-
quire that an electronic benefit card contain
a photograph of 1 or more members of a
household.

"(B) OTHER AUTHORIZED USERS.-If a State
agency requires a photograph on an elec-
tronic benefit card under subparagraph (A),
the State agency shall establish procedures
to ensure that any other appropriate mem-
ber of the household or any authorized rep-
resentative of the household may utilize the
card.

"(10) APPLICABLE LAW.-Disclosures, pro-
tections, responsibilities, and remedies es-
tablished by the Federal Reserve Board
under section 904 of the Electronic Fund
Transfer Act (15 U.S.C. 1693b) shall not apply
to benefits under this Act delivered through
any electronic benefit transfer system.

"(11) APPLICATION OF ANTI-TYING RESTRIC-
TIONS TO ELECTRONIC BENEFIT TRANSFER SYS-
TEMS.-

“(A) DEFINITIONS.-In this paragraph:
"(i) AFFILIATE. The term 'affiliate' has
the meaning provided the term in section
2(k) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(k)).

"(ii) COMPANY.-The term 'company' has
the meaning provided the term in section
106(a) of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1971), but shall
not include a bank, a bank holding company,
or any subsidiary of a bank holding com-
pany.

"(iii) ELECTRONIC BENEFIT TRANSFER SERV-
ICE. The term 'electronic benefit transfer
service' means the processing of electronic
transfers of household benefits, determined
under section 8(a) or 26, if the benefits are-
"(I) issued from and stored in a central
databank;

"(II) electronically accessed by household
members at the point of sale; and

"(III) provided by a Federal or State gov-
ernment.

"(iv) POINT-OF-SALE SERVICE.-The term
'point-of-sale service' means any product or
service related to the electronic authoriza-
tion and processing of payments for mer-
chandise at a retail food store, including
credit or debit card services, automated tell-
er machines, point-of-sale terminals, or ac-
cess to on-line systems.

"(B) RESTRICTIONS.-A company may not
sell or provide electronic benefit transfer
services, or fix or vary the consideration for
electronic benefit transfer services, on the
condition or requirement that the
customer-

"(i) obtain some additional point-of-sale
service from the company or an affiliate of
the company; or

"(ii) not obtain some additional point-of-
sale service from a competitor of the com-
pany or competitor of any affiliate of the
company.

"(C) CONSULTATION WITH THE FEDERAL RE-
SERVE BOARD.-Before promulgating regula-
tions or interpretations of regulations to
carry out this paragraph, the Secretary shall
consult with the Board of Governors of the
Federal Reserve System.".

(b) SENSE OF CONGRESS.-It is the sense of
Congress that a State that operates an elec-
tronic benefit transfer system under the
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.)
should operate the system in a manner that
is compatible with electronic benefit trans-
fer systems operated by other States.
SEC. 826. VALUE OF MINIMUM ALLOTMENT.

The proviso in section 8(a) of the Food
Stamp Act of 1977 (7 U.S.C. 2017(a)) is amend-
ed by striking ", and shall be adjusted" and
all that follows through "$5".

SEC. 827. BENEFITS ON RECERTIFICATION.

Section 8(c)(2)(B) of the Food Stamp Act of
1977 (7 U.S.C. 2017(c)(2)(B)) is amended by
striking "of more than one month".

SEC. 828. OPTIONAL COMBINED ALLOTMENT FOR

EXPEDITED HOUSEHOLDS.

Section 8(c) of the Food Stamp Act of 1977
(7 U.S.C. 2017(c)) is amended by striking
paragraph (3) and inserting the following:

"(3) OPTIONAL COMBINED ALLOTMENT FOR
EXPEDITED HOUSEHOLDS.-A State agency
may provide to an eligible household apply-
ing after the 15th day of a month, in lieu of
the initial allotment of the household and
the regular allotment of the household for
the following month, an allotment that is
equal to the total amount of the initial al-
lotment and the first regular allotment. The
allotment shall be provided in accordance
with section 11(e)(3) in the case of a house-
hold that is not entitled to expedited service
and in accordance with paragraphs (3) and (9)
of section 11(e) in the case of a household
that is entitled to expedited service.".
SEC. 829. FAILURE TO COMPLY WITH OTHER
MEANS-TESTED PUBLIC ASSISTANCE
PROGRAMS.

Section 8 of the Food Stamp Act of 1977 (7
U.S.C. 2017) is amended by striking sub-
section (d) and inserting the following:

"(d) REDUCTION OF PUBLIC ASSISTANCE BEN-
EFITS.-

"(1) IN GENERAL.-If the benefits of a
household are reduced under a Federal,
State, or local law relating to a means-test-
ed public assistance program for the failure
of a member of the household to perform an
action required under the law or program,
for the duration of the reduction—

"(A) the household may not receive an in-
creased allotment as the result of a decrease
in the income of the household to the extent
that the decrease is the result of the reduc-
tion; and

"(B) the State agency may reduce the al-
lotment of the household by not more than
25 percent.

"(2) RULES AND PROCEDURES.-If the allot-
ment of a household is reduced under this
subsection for a failure to perform an action
required under part A of title IV of the So-
cial Security Act (42 U.S.C. 601 et seq.), the
State agency may use the rules and proce-
dures that apply under part A of title IV of
the Act to reduce the allotment under the
food stamp program.".

SEC. 830. ALLOTMENTS FOR HOUSEHOLDS RESID-
ING IN CENTERS.

Section 8 of the Food Stamp Act of 1977 (7
U.S.C. 2017) is amended by adding at the end
the following:

"(f) ALLOTMENTS FOR HOUSEHOLDS RESIDING
IN CENTERS.-

"(1) IN GENERAL. In the case of an indi-
vidual who resides in a center for the pur-
pose of a drug or alcoholic treatment pro-
gram described in the last sentence of sec-
tion 3(i), a State agency may provide an al-
lotment for the individual to-

"(A) the center as an authorized represent-
ative of the individual for a period that is
less than 1 month; and

"(B) the individual, if the individual leaves
the center.

"(2) DIRECT PAYMENT.-A State agency
may require an individual referred to in
paragraph (1) to designate the center in
which the individual resides as the author-
ized representative of the individual for the
purpose of receiving an allotment.".
SEC. 831. CONDITION PRECEDENT FOR AP-
PROVAL OF RETAIL FOOD STORES
AND WHOLESALE FOOD CONCERNS.
Section 9(a)(1) of the Food Stamp Act of
1977 (7 U.S.C. 2018(a)(1)) is amended by adding
at the end the following: "No retail food
store or wholesale food concern of a type de-
termined by the Secretary, based on factors
that include size, location, and type of items
sold, shall be approved to be authorized or
reauthorized for participation in the food
stamp program unless an authorized em-
ployee of the Department of Agriculture, a
designee of the Secretary, or, if practicable,
an official of the State or local government
designated by the Secretary has visited the
store or concern for the purpose of deter-
mining whether the store or concern should
be approved or reauthorized, as appro-
priate.".

SEC. 832. AUTHORITY TO ESTABLISH AUTHORIZA-
TION PERIODS.

Section 9(a) of the Food Stamp Act of 1977
(7 U.S.C. 2018(a)) is amended by adding at the
end the following:

"(3) AUTHORIZATION PERIODS.-The Sec-
retary shall establish specific time periods
during which authorization to accept and re-
deem coupons, or to redeem benefits through
an electronic benefit transfer system, shall
be valid under the food stamp program.".
SEC. 833. INFORMATION FOR VERIFYING ELIGI-
BILITY FOR AUTHORIZATION.
Section 9(c) of the Food Stamp Act of 1977
(7 U.S.C. 2018(c)) is amended-

(1) in the first sentence, by inserting ",
which may include relevant income and sales
tax filing documents," after "submit infor-
mation"; and

(2) by inserting after the first sentence the
following: "The regulations may require re-
tail food stores and wholesale food concerns
to provide written authorization for the Sec-
retary to verify all relevant tax filings with
appropriate agencies and to obtain corrobo-
rating documentation from other sources so
that the accuracy of information provided by
the stores and concerns may be verified.".
SEC. 834. WAITING PERIOD FOR STORES THAT
FAIL TO MEET AUTHORIZATION CRI-
TERIA.

Section 9(d) of the Food Stamp Act of 1977
(7 U.S.C. 2018(d)) is amended by adding at the
end the following: "A retail food store or
wholesale food concern that is denied ap-

(2) in paragraph (2)-

(A) by striking "effective no later than
April 1, 1992,";

(B) in subparagraph (A)—

(i) by striking ", in any 1 year,"; and
(ii) by striking "on-line";

(C) by striking subparagraph (D) and in-
serting the following:

"(D)(i) measures to maximize the security
of a system using the most recent tech-
nology available that the State agency con-
siders appropriate and cost effective and
which may include personal identification
numbers, photographic identification
electronic benefit transfer cards, and other
measures to protect against fraud and abuse;
and

on

"(ii) effective not later than 2 years after
the date of enactment of this clause, to the
extent practicable, measures that permit a
system to differentiate items of food that
may be acquired with an allotment from
items of food that may not be acquired with
an allotment;";

(D) in subparagraph (G), by striking "and"
at the end;

(E) in subparagraph (H), by striking the pe-
riod at the end and inserting "; and"; and
(F) by adding at the end the following:
"(I) procurement standards."; and

(3) by adding at the end the following:
"(7) REPLACEMENT OF BENEFITS.-Regula-
tions issued by the Secretary regarding the
replacement of benefits and liability for re-
placement of benefits under an electronic
benefit transfer system shall be similar to
the regulations in effect for a paper-based
food stamp issuance system.

-

"(8) REPLACEMENT CARD FEE. A State
agency may collect a charge for replacement
of an electronic benefit transfer card by re-
ducing the monthly allotment of the house-
hold receiving the replacement card.

"(9) OPTIONAL PHOTOGRAPHIC IDENTIFICA-
TION.-

"(A) IN GENERAL.-A State agency may re-
quire that an electronic benefit card contain
a photograph of 1 or more members of a
household.

"(B) OTHER AUTHORIZED USERS.-If a State
agency requires a photograph on an elec-
tronic benefit card under subparagraph (A),
the State agency shall establish procedures
to ensure that any other appropriate mem-
ber of the household or any authorized rep-
resentative of the household may utilize the
card.

"(10) APPLICABLE LAW.-Disclosures, pro-
tections, responsibilities, and remedies es-
tablished by the Federal Reserve Board
under section 904 of the Electronic Fund
Transfer Act (15 U.S.C. 1693b) shall not apply
to benefits under this Act delivered through
any electronic benefit transfer system.

"(11) APPLICATION OF ANTI-TYING RESTRIC-
TIONS TO ELECTRONIC BENEFIT TRANSFER SYS-
TEMS.-

"(A) DEFINITIONS.-In this paragraph:

"(i) AFFILIATE.-The term 'affiliate' has
the meaning provided the term in section
2(k) of the Bank Holding Company Act of
1956 (12 U.S.C. 1841(k)).

"(ii) COMPANY.-The term 'company' has
the meaning provided the term in section
106(a) of the Bank Holding Company Act
Amendments of 1970 (12 U.S.C. 1971), but shall
not include a bank, a bank holding company,
or any subsidiary of a bank holding com-
pany.

"(iii) ELECTRONIC BENEFIT TRANSFER SERV-
ICE. The term 'electronic benefit transfer
service' means the processing of electronic
transfers of household benefits, determined
under section 8(a) or 26, if the benefits are-
"(I) issued from and stored in a central
databank;

"(II) electronically accessed by household
members at the point of sale; and

"(III) provided by a Federal or State gov-
ernment.

"(iv) POINT-OF-SALE SERVICE.-The term
'point-of-sale service' means any product or
service related to the electronic authoriza-
tion and processing of payments for mer-
chandise at a retail food store, including
credit or debit card services, automated tell-
er machines, point-of-sale terminals, or ac-
cess to on-line systems.

"(B) RESTRICTIONS.-A company may not
sell or provide electronic benefit transfer
services, or fix or vary the consideration for
electronic benefit transfer services, on the
condition or requirement that the
customer-

"(i) obtain some additional point-of-sale
service from the company or an affiliate of
the company; or

"(ii) not obtain some additional point-of-
sale service from a competitor of the com-
pany or competitor of any affiliate of the
company.

"(C) CONSULTATION WITH THE FEDERAL RE-
SERVE BOARD.-Before promulgating regula-
tions or interpretations of regulations to
carry out this paragraph, the Secretary shall
consult with the Board of Governors of the
Federal Reserve System.".

(b) SENSE OF CONGRESS.-It is the sense of
Congress that a State that operates an elec-
tronic benefit transfer system under the
Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.)
should operate the system in a manner that
is compatible with electronic benefit trans-
fer systems operated by other States.
SEC. 826. VALUE OF MINIMUM ALLOTMENT.

The proviso in section 8(a) of the Food
Stamp Act of 1977 (7 U.S.C. 2017(a)) is amend-
ed by striking ", and shall be adjusted" and
all that follows through "$5".

SEC. 827. BENEFITS ON RECERTIFICATION.

Section 8(c)(2)(B) of the Food Stamp Act of
1977 (7 U.S.C. 2017(c)(2)(B)) is amended by
striking "of more than one month".

SEC. 828. OPTIONAL COMBINED ALLOTMENT FOR
EXPEDITED HOUSEHOLDS.

Section 8(c) of the Food Stamp Act of 1977
(7 U.S.C. 2017(c)) is amended by striking
paragraph (3) and inserting the following:
"(3) OPTIONAL COMBINED ALLOTMENT FOR
HOUSEHOLDS.-A State
EXPEDITED
agency
may provide to an eligible household apply-
ing after the 15th day of a month, in lieu of
the initial allotment of the household and
the regular allotment of the household for
the following month, an allotment that is
equal to the total amount of the initial al-
lotment and the first regular allotment. The
allotment shall be provided in accordance
with section 11(e)(3) in the case of a house-
hold that is not entitled to expedited service
and in accordance with paragraphs (3) and (9)
of section 11(e) in the case of a household
that is entitled to expedited service.".
SEC. 829. FAILURE TO COMPLY WITH OTHER
MEANS-TESTED PUBLIC ASSISTANCE
PROGRAMS.

Section 8 of the Food Stamp Act of 1977 (7
U.S.C. 2017) is amended by striking sub-
section (d) and inserting the following:

"(d) REDUCTION OF PUBLIC ASSISTANCE BEN-
EFITS.-

"(1) IN GENERAL.-If the benefits of a
household are reduced under a Federal,
State, or local law relating to a means-test-
ed public assistance program for the failure
of a member of the household to perform an
action required under the law or program,
for the duration of the reduction-

"(A) the household may not receive an in-
creased allotment as the result of a decrease
in the income of the household to the extent
that the decrease is the result of the reduc-
tion; and

"(B) the State agency may reduce the al-
lotment of the household by not more than
25 percent.

"(2) RULES AND PROCEDURES.-If the allot-
ment of a household is reduced under this
subsection for a failure to perform an action
required under part A of title IV of the So-
cial Security Act (42 U.S.C. 601 et seq.), the
State agency may use the rules and proce-
dures that apply under part A of title IV of
the Act to reduce the allotment under the
food stamp program.".

SEC. 830. ALLOTMENTS FOR HOUSEHOLDS RESID-
ING IN CENTERS.

Section 8 of the Food Stamp Act of 1977 (7
U.S.C. 2017) is amended by adding at the end
the following:

"(f) ALLOTMENTS FOR HOUSEHOLDS RESIDING
IN CENTERS.—

"(1) IN GENERAL.-In the case of an indi-
vidual who resides in a center for the pur-
pose of a drug or alcoholic treatment pro-
gram described in the last sentence of sec-
tion 3(1), a State agency may provide an al-
lotment for the individual to-

“(A) the center as an authorized represent-
ative of the individual for a period that is
less than 1 month; and

"(B) the individual, if the individual leaves
the center.

"(2) DIRECT PAYMENT.-A State agency
may require an individual referred to in
paragraph (1) to designate the center in
which the individual resides as the author-
ized representative of the individual for the
purpose of receiving an allotment.".
SEC. 831. CONDITION PRECEDENT FOR AP-
PROVAL OF RETAIL FOOD STORES
AND WHOLESALE FOOD CONCERNS.
Section 9(a)(1) of the Food Stamp Act of
1977 (7 U.S.C. 2018(a)(1)) is amended by adding
at the end the following: "No retail food
store or wholesale food concern of a type de-
termined by the Secretary, based on factors
that include size, location, and type of items
sold, shall be approved to be authorized or
reauthorized for participation in the food
stamp program unless an authorized em-
ployee of the Department of Agriculture, a
designee of the Secretary, or, if practicable,
an official of the State or local government
designated by the Secretary has visited the
store or concern for the purpose of deter-
mining whether the store or concern should
be approved or reauthorized,
appro-
priate.".

as

SEC. 832. AUTHORITY TO ESTABLISH AUTHORIZA-
TION PERIODS.

Section 9(a) of the Food Stamp Act of 1977
(7 U.S.C. 2018(a)) is amended by adding at the
end the following:

"(3) AUTHORIZATION PERIODS.-The Sec-
retary shall establish specific time periods
during which authorization to accept and re-
deem coupons, or to redeem benefits through
an electronic benefit transfer system, shall
be valid under the food stamp program.".
SEC. 833. INFORMATION FOR VERIFYING ELIGI-
BILITY FOR AUTHORIZATION.
Section 9(c) of the Food Stamp Act of 1977
(7 U.S.C. 2018(c)) is amended-

(1) in the first sentence, by inserting ",
which may include relevant income and sales
tax filing documents," after "submit infor-
mation"; and

(2) by inserting after the first sentence the
following: "The regulations may require re-
tail food stores and wholesale food concerns
to provide written authorization for the Sec-
retary to verify all relevant tax filings with
appropriate agencies and to obtain corrobo-
rating documentation from other sources so
that the accuracy of information provided by
the stores and concerns may be verified.".
SEC. 834. WAITING PERIOD FOR STORES THAT
FAIL TO MEET AUTHORIZATION CRI-
TERIA.

Section 9(d) of the Food Stamp Act of 1977
(7 U.S.C. 2018(d)) is amended by adding at the
end the following: "A retail food store or
wholesale food concern that is denied ap-

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