Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA); Interpretation of “Federal Public Benefit”

II. Interpretation

Statutory construction “‘must begin, and often should end as well, with the language of the statute itself.’” United States v. Steele, 147 F.3d 1316, 1318 (11th Cir. 1998) (quoting Merritt v. Dillard, 120 F.3d 1181, 1185 (11th Cir. 1997). “The plain meaning controls.” United States v. Robinson, 94 F.3d 1325, 1328 (9th Cir. 1996) (citation omitted). The statutory language is clear: if a USDA program falls into either §1611(c)(1)(A) or (c)(1)(B), such benefits are not available to individuals who are aliens, unless (i) that individual is a qualified alien, or (ii) some other exception applies to the USDA program, either under §1611(b) or via the definitional limits on “Federal public benefit” set forth in (c)(2). Thus, the task is simple: construe the plain language of (c)(1)(A) and (c)(1)(B). Those provisions state that “Federal public benefit” means:

1. Any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and
2. any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States.

If USDA “provide[s]” the (i) “grant, contract, loan, professional license, or commercial license,” or if the “grant, contract, loan, professional license, or commercial license” is “provided by” “appropriated funds of the United States,” then such item is a “Federal public benefit.” Similarly, if USDA “provide[s]” the “retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit,” or such “benefit” is “provided by” “appropriated funds of the United States,” then such benefit is a “Federal public benefit,” as long as the benefit is “provided to” one of three types of recipients: (i) “an individual,” (ii) a “household,” or (iii) a “family eligibility unit.”

1. Grant

Section 1611(c)(1)(A) reaches “any grant, contract, loan, professional license, or commercial license” provided by USDA. For purposes of PRWORA, a grant means the award of funding for an individual or entity to carry out specified activities without the direct involvement of USDA. USDA administers a multitude of grant programs, including those in which the grants go to institutions, states, local governments, private entities and private organizations. Sometimes the activity supported by the grant is carried out by the “recipient”; sometimes the recipient issues a subgrant to an individual or entity. For PRWORA purposes, the term “grant” includes any “subgrant” derivative of a grant.

2. Contract

Many USDA programs and activities are carried out by the use of contracts. For example, contracts are used by the Farm Service Agency to provide assistance to agricultural producers in the form of income support payments and by the Forest Service in conducting forest management activities to reduce the risk of wildfires. USDA also provides assistance and benefits to individuals and entities through the use of several different types of instruments including loan guarantees (e.g., programs of the Rural Development agencies), reinsurance agreements (core operations of the Risk Management Agency), cooperative agreements (agreements used by numerous USDA agencies when the agency is working with another party to accomplish a public purpose authorized by law) and “export credit guarantees” (financial assurances made available through programs administered by the Foreign Agricultural Service). In the context of PRWORA, all instruments that are contractual in nature that are used by USDA agencies are considered to be contracts.

With respect to any contract, professional license, or commercial license, PRWORA excludes from the definition of “Federal public benefit” “any contract, professional license or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States, or to a citizen of a freely associated state, if section 141 of the applicable compact of free association approved in Public Law 99-239 or 99-658 (or a successor provision) is in effect.” See 8 USC 1611(c)(2)(A).

3. Loan

The majority of loans made by USDA agencies are “recourse” loans meaning the borrower is responsible for repayment of the full amount of the accumulated principal and interest that has accumulated; in the event the loan collateral is forfeited, the borrower remains responsible for any difference between the value of the collateral and the amount of the outstanding loan balance (principal plus interest). Many loans made by the Commodity Credit Corporation (CCC), an agency and instrumentality of the United States within USDA, are “nonrecourse” loans meaning that a borrower may forfeit the loan collateral to CCC in full satisfaction of the loan. In the context of PRWORA, both recourse and nonrecourse loans are considered to be loans.

4. Commercial license

As in the case of contracts, various types of legal documents are considered by USDA to be a “commercial license” for PRWORA purposes. For example, 7 CFR 6.20(b) provides: “Effective January 1, 1995, the prior regime of absolute quotas for certain dairy products was replaced by a system of tariff-rate quotas. The articles subject to licensing under the tariff-rate quotas are listed in Appendices 1, 2, and 3 to be published annually in a notice in the Federal Register. Licenses permit the holder to import specified quantities of the subject articles into the United States at the applicable in-quota rate of duty. If an importer has no license for an article subject to licensing, such importer will, with certain exceptions, be required to pay the applicable over-quota rate of duty.” The United States Warehouse Act establishes a voluntary system under which parties that store agricultural commodities may obtain a license from USDA in lieu of obtaining licenses from states. These, and similar licenses are “commercial licenses” for PRWORA purposes. The Forest Service issues a variety of permits (i.e., “special use permits” issued under 36 CFR 251) that allow individuals and private entities the privilege of conducting activities on land administered by the Forest Service. These activities include non-commercial and commercial activities. If USDA issues a special permit that allows the holder of the permit to engage in a commercial activity, such permit is a “commercial license” for PRWORA purposes.

5. PRWORA Provisions Applicable to the Food and Nutrition Service (FNS)

As previously discussed, the application of §1611(a) is conceptually distinct from the definition of a “Federal public benefit” under §1611(c). Nonetheless, to avoid confusion the application of 8 USC 1615 to certain FNS programs is briefly discussed. Section 1615(a) provides:

Notwithstanding any other provision of [PRWORA], an individual who is eligible to receive free public education benefits under State or local law shall not be ineligible to receive benefits provided under the school lunch program under the Richard B. Russell National School Lunch Act (42 USC 1751, et seq.) or the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 USC 1773) on the basis of citizenship, alienage, or immigration status.

Further, §1615(b) provides:

Nothing in [PRWORA] shall prohibit or require a state to provide to an individual who is not a citizen or a qualified alien, as defined in section 1641(b) of [Title 8], benefits under programs established under the provisions of law described in paragraph (2).

In particular, the statutory provisions in paragraph (2) are “(A) Programs (other than the school lunch program and the school breakfast program) under the Richard B. Russell National School Lunch Act (42 USC 1751 et seq.) and the Child Nutrition Act of 1966 (42 USC 1771 et seq.)[;] (B) Section 4 of the Agriculture and Consumer Protection Act of 1973 (7 USC 612c note)[;] (C) The Emergency Food Assistance Act of 1983[;] [and] (D) The food distribution program on Indian reservations established under section 2013(b) of Title 7.”

Although they each fall within the meaning of “Federal public benefit” under §1611(c), FNS continues to administer the following programs in accordance with the superseding provisions of §1615:

• Food Distribution Program on Indian Reservations (FDPIR).
• The Emergency Food Assistance Program (TEFAP).
• Commodity Supplemental Food Program (CSFP).
• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
• WIC Farmers’ Market Nutrition Programs.
• Senior Farmers’ Market Nutrition Programs.
• National School Lunch Program.
• School Breakfast Program.
• Child and Adult Care Food Program.
• Fresh Fruit and Vegetable Program.
• Special Milk Program.
• Summer Food Service Program.
• Summer EBT.

USDA Food and Nutrition Service Disaster Assistance. (FNS does not administer a distinct disaster assistance program but utilizes various flexibilities, waivers, and options within the nutrition programs to provide assistance. Therefore, 8 USC 1615 would continue to apply where relevant.)

III. USDA Programs

Programs and Activities of FNS

Federal Public Benefit Under the Meaning of §1611(c)(1)(A)

FNS administers a variety of grants, cooperative agreements, and contracts. FNS grants primarily fall into two categories – discretionary grants and mandatory grants. FNS Standard Operating Procedure (SOP) refer to cooperative agreements and grants under the term “grants.” Authority to enter into contracts, grants, and cooperative agreements in accordance with section 1472 of the National Agricultural Research, Extension, and Teaching Policy Act of 1977, is delegated to the Under Secretary for Food, Nutrition, and Consumer Services pursuant to 7 CFR 2.19. Other legal statutory authorities for such instruments include the Food and Nutrition Act of 2008, as amended, the Richard B. Russell National School Lunch Act, as amended, the Child Nutrition Act of 1966, as amended, and annual appropriations legislation.

Section 1611(c)(1)(A) applies to “any” of the instruments listed. The term “any” is all encompassing. Unlike its neighboring provision, subparagraph (B), §1611(c)(1)(A) is void of limiting language based on characteristics of the recipient(s) of the benefit or other factors if the contract, grant, loan, professional license, or commercial license is “provided by an agency of the United States or by appropriated funds of the United States.” Congress explicitly provided specific exceptions for contracts, professional licenses, and commercial licenses at 8 USC 1611(c)(2) and the absence of other qualifications on instruments listed at §1611(c)(1)(A) indicates there are no others. Therefore, FNS interprets §1611(c)(1)(A) that every grant, contract, loan, commercial license, and professional license, of any kind or nature whatsoever regardless of its authorizing statute or regulation provided by FNS or appropriated funds of the United States is a “Federal public benefit” without exception other than those contained at §1611(c)(2).

The statutory language at §1611(c)(1)(A) reaches all instruments listed if “provided by an agency of the United States or by appropriated funds of the United States.” Therefore, FNS considers a sub-grant and a sub-contract made from a prime grant or prime contract provided by FNS or appropriated federal funds to be a “Federal public benefit.” Accordingly, the ultimate beneficiaries to whom federal funds flow from a contract or grant provided by FNS or appropriated funds of the United States are recipients of a “Federal public benefit.” For example, if a food bank receives a grant which is used to purchase food for distribution, the individual who receives the food assistance has received a “Federal public benefit.”

As stated above, the applicability of other provisions of PRWORA is conceptually distinct from the question of what the term “Federal public benefit” means, and this Notice does not intend to address that question except to the extent of the brief discussion concerning §1615 above.

FNS issues commercial licenses by authorizing retailers to accept Supplemental Nutrition Assistance Program (SNAP) benefits pursuant to 7 CFR 278.1 and 7 USC 2018. Applicants are required to submit an application that FNS must approve. Only if authorized, may a retailer engage in the commercial activity of accepting SNAP benefits as payment for certain commercial goods. Therefore, FNS interprets “Federal public benefit” to include a retailer authorization to participate in SNAP because such authorization is in the form of a commercial license.

FNS administers 16 food and nutrition programs under a variety of statutes like the Food and Nutrition Act of 2008, Richard B. Russell National School Lunch Act, Child Nutrition Act of 1966, Agriculture and Consumer Protection Act of 1973, Emergency Food Assistance Act of 1983, and 7 USC 2013(b) (i.e., Food Distribution Program on Indian Reservations). All food and nutrition programs meet the definition of “Federal public benefit” pursuant to §1611(c)(1)(B). The 16 programs are as follows:

• The Supplemental Nutrition Assistance Program (SNAP).
• Nutrition Assistance Program for Territories.
• Food Distribution Program on Indian Reservations (FDPIR).
• The Emergency Food Assistance Program (TEFAP).
• Commodity Supplemental Food Program (CSFP).
• Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
• WIC Farmers’ Market Nutrition Programs.
• Senior Farmers’ Market Nutrition Programs.
• National School Lunch Program.
• School Breakfast Program.
• Child and Adult Care Food Program.
• Fresh Fruit and Vegetable Program.
• Special Milk Program.
• Summer Food Service Program.
• Summer EBT.
• Disaster Assistance

In particular, these are benefits “provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States.” As discussed earlier, some of the above programs are administered pursuant to 8 USC 1615 even though they are “Federal public benefits”. FNS also recognizes that the definition of “Federal public benefit” is inapplicable “with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the United States under reciprocal treaty agreements is required to pay benefits, as determined by the Attorney General, after consultation with the Secretary of State.” See 8 USC 1611(c)(2)(B).

IV. Verification and Economic Impact

Due to the multitude of USDA programs that are available to tens of millions of individuals, USDA will continue to evaluate the manner in which it will verify compliance with PRWORA. USDA will, to the maximum extent possible, minimize the imposition of reporting and information and information collection requirements. Similarly, USDA continues to analyze the economic impact of this interpretation, but at this time, has not found there to be significant economic impact. USDA will issue subsequent guidance on verification actions and a final determination regarding the economic impact of this interpretation.