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Federal Register / Vol. 86, No. 154 / Friday, August 13, 2021 / Rules and Regulations
these reviews provide States with feedback on the States administration of the program, including how their chosen policy options, waivers, and business processes affect the accuracy of their eligibility determinations.
SNAP QC has four goals, identified at 7 CFR 275.10b, which are to provide:
1 A systematic method of measuring the accuracy of the SNAP eligibility caseload; 2 a basis for determining all SNAP error rates; 3 a timely, continuous flow of information on which to base corrective action at all levels of administration; and 4 a basis for establishing State agency liability for errors that exceed the National performance measure pursuant to Section 16c1C of the FNA.
Every Federal fiscal year October through September, State agencies conduct QC reviews for two different sampling framesthe active sampling frame and the negative sampling frame.
For the active frame, States review a sample of their overall participating SNAP households those receiving SNAP benefits. This QC review consists of a detailed examination of household non-financial and financial circumstances including income, resources, and deductions to determine whether benefits were accurately authorized by State eligibility offices for cases in the active frame. For the negative frame, reviewers review a statistical sample of cases that were denied, suspended, or terminated to determine not only their accuracy, but also if the State agency followed the correct procedures according to SNAP
regulations.
After State agencies submit their completed QC reviews to the Federal government, Federal staff select and review a sub-sample of cases from the active and negative frames to verify the accuracy of the States QC review findings. A regression analysis is then performed utilizing both the Federal and State data to calculate national and State error rates. FNS also uses the data gathered through the QC review process for program analysis.
Beginning in calendar year 2015, FNS
conducted integrity reviews of all 53
SNAP State agencies nationwide and USDAs Office of Inspector General OIG conducted an audit on the SNAP
QC review process.2 The integrity reviews and the OIG audit found there were integrity issues with the data submitted by State agencies. In short, the majority of States 42 of 53 were underreporting QC errors in the active frame. In response to these findings, 2 https www.usda.gov/oig/webdocs/27601-000241.pdf.

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FNS undertook significant measures, explained in more detail later in this preamble, to improve training and strengthen controls over the QC process.
In some cases, the Department of Justice DOJ entered into settlement agreements with States for the underreporting of SNAP QC errors in violation of Federal law.
On December 20, 2018, the President signed into law the Agriculture Improvement Act of 2018 2018 Farm Bill. Section 4013 of the 2018 Farm Bill included requirements to reform the SNAP QC system in order to further improve the integrity of the system and accuracy of the data it produces. These requirements build upon the Departmental and DOJ actions taken to address integrity concerns raised by FNS and OIG reviews.
The 2018 Farm Bill included changes in three sections of the legislation that required SNAP to update its regulations accordingly. Section 4013a of the 2018
Farm Bill requires All State SNAP
records, and the entire information systems in which records are contained . . . be made available for inspection and audit by the Secretary. Section 4013b of the 2018 Farm Bill required the Department issue an interim final rule that: 1 Ensures the QC system produces valid statistical results; 2
provides for the oversight of contracts entered into by a State to improve payment accuracy; 3 ensures the accuracy of data collected in the QC
system; and 4 provides for the evaluation of the integrity of the QC
process for a minimum of 2 State agencies per fiscal year, to the maximum extent practicable. The regulations within this rule reflect those requirements.
Good Cause Analysis Pursuant to the Administrative Procedure Act APA, notice and comment are not required prior to the issuance of a rule if an agency, for good cause, finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553bB. USDA
recognizes that courts have held that the good cause exception to notice and comment rulemaking is to be narrowly construed and only reluctantly countenanced.
As a result of the statutory requirement for the Department to promulgate an interim final rule addressing these issues, the Department finds for good cause that notice and public comment is unnecessary and contrary to the public interest for this rule. This interim final rule and the regulatory amendments described below
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address provisions of Sections 4013a, as well as Section 4013b of the 2018
Farm Bill that USDA was directed by Congress to promulgate via interim final rule.
Subpart AAdministration Use of Third-Party Contractors Upholding the integrity of the QC
system is critical to the Departments responsibility for improper payment reporting and proper stewardship of taxpayer funds. Evaluation of the SNAP
caseload and the benefits issued must be reliable in order to accurately measure SNAP payment errors. In their respective reviews, FNS, OIG, and DOJ
found that a majority of States used third-party contractors at various times over the preceding 10 years to provide regulatory and policy advice on how to conduct SNAP QC reviews in their State. It was also found that States following the advice of contractors often underreported errors in active QC case reviews. Advice that contributed to the underreporting of errors included training State QC reviewers to document cases inappropriately, organizing committees that focused on developing methods to mitigate errors and underreport existing payment errors to FNS, and withholding information or disposing of cases contrary to SNAP
regulations and established policy.
On January 20, 2016, FNS issued a policy memorandum 3 on the use of third-party contractors for QC purposes to address these issues. FNS issued this memorandum based the understanding that it is within the agencys regulatory authority to clarify policy. While the memorandum provided timely and clear guidance to States in response to a critical integrity issue, this interim final rule will ensure that the expectations are explicit. The memorandum clarified the appropriate use of contractors in the QC process and established procedures regarding the use of contractors to help ensure that activities performed under the contract are in accordance with Federal regulations and policies. The memorandum required a State to notify FNS of its intent to enter into a contract for the purposes of training State QC
reviewers on SNAP regulations, policies, or manuals to improve payment accuracy, and to provide a copy of its contract and all deliverables to FNS. The memorandum emphasized that any activities or deliverables not complying with Federal regulations and policy would not be eligible for Federal reimbursement, as provided by Section 3 https www.fns.usda.gov/snap/integrity-snapquality-control-system.

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