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Statement of Need: The rule is needed to implement the food stamp quality control provisions of Public Law 107-171, the Farm Security and Rural Investment Act of 2002.

Summary of the Legal Basis: The legal basis for this rule is Public Law 107-171, the Farm Security and Rural Investment Act of 2002.

Alternatives: This proposed rule deals with changes required by Public Law 107-171, the Farm Security and Rural Investment Act of 2002. The Department has limited discretion in implementing provisions of that law. The provisions in this rule are effective for fiscal year 2002 quality control review period and must be implemented by FNS and State agencies during fiscal year 2002.

Anticipated Costs and Benefits: The provisions of this rule will eliminate enhanced funding for low payment error rates and revise the quality control sanction and liability requirements. The provisions of Public Law 107-171 implemented by this rule will save $190 million over 5 years through elimination of the current enhanced funding system. This savings will be partially offset by costs of implementing a new performance system. The costs for the new performance system are estimated to be $144 million.

Risks: The FSP provides nutrition assistance to millions of Americans nationwide. The quality control system measures the accuracy of States providing food stamp benefits to the program recipients. This rule is intended to implement the quality control provisions of Public Law 107-701, the Farm Security and Rural Investment Act of 2002. The provisions of this rule will eliminate enhanced funding for low payment error rates. It will significantly revise the system for determining State agency liabilities and sanctions for high payment error rates.