This rule proposes to amend Food Stamp Program (Program) regulations to implement several provisions of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, and subsequent amendments to these provisions made by the Omnibus Consolidated Appropriations Act of 1996, the Balanced Budget Act of 1997, and the Agricultural Research Extension and Education Reform Act of 1998. This action proposes options related to matching activities, fair hearing and recipient services. This action proposes provisions which would increase State agency flexibility in processing applications for the Program and allow greater use of standard amounts for determining deductions and self-employment expenses. This action also proposes revisions to the requirements for determining alien eligibility and the eligibility and benefits of sponsored aliens, and to require certain transitional housing payments and most State and local energy assistance to be counted as income, exclude the earnings of students under 18 from income, and require proration of benefits following any break in certification. Other provisions of this proposed action would establish ground rules for implementing the Simplified Food Stamp Program, allow State agencies options to issue partial allotments for households in treatment centers, count all, part or, in some cases, none of the income of an ineligible alien in determining the benefits of the rest of the household, issue combined allotments to certain expedited service households, and certify elderly or disabled households up to 24 months and other households up to 12 months. The action also proposes several changes to existing regulations in response to the President's reform initiative to remove overly prescriptive, outdated, and unnecessary regulatory provisions. We are also taking this opportunity to add vehicles to the assets which may be covered under the inaccessible resources provisions of the Food Stamp Act of 1977, to clarify what constitutes an adequate notice of adverse action period, and to make a change to exclude from income on-the-job training payments received under the Summer Youth Employment and Training Program as required by Section 702 of the Job Training Reform Amendments of 1992.