[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR276.1]

[Page 864-865]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 276--STATE AGENCY LIABILITIES AND FEDERAL SANCTIONS--Table of Contents
 
Sec. 276.1  Responsibilities and rights.

    (a) Responsibilities. (1) State agencies shall be responsible for 
establishing and maintaining secure control over coupons and cash for 
which the regulations designate them accountable. Except as otherwise 
provided in these regulations, any shortages or losses of coupons and 
cash shall strictly be a State agency liability and the State agency 
shall pay to FNS, upon demand, the amount of the lost or stolen coupons 
or cash, regardless of the circumstances.
    (2) State agencies shall be responsible for preventing losses or 
shortages of Federal funds in the issuance of benefits to households 
participating in the Program. FNS shall strictly hold State agencies 
liable for all losses, thefts and unaccounted shortages that occur 
during issuance, unless otherwise specified. Issuance functions begin 
with the State agency's creation of a record-for-issuance to generate 
each month's issuances from the master issuance file. Shortages or 
losses which result from any functions that occur prior to the creation 
of the record-for-issuance are subject to either paragraph (a)(3) of 
this section or subpart C--Quality Control (QC) Reviews, of part 275--
Performance Reporting System.
    (3) State agencies shall be responsible for preventing losses of 
Federal funds in the certification of households for participation in 
the Program. If FNS makes a determination that there has been negligence 
or fraud on the part of a State agency in the certification of 
households for participation in the Program, FNS is authorized to bill 
the State agency for an amount equal to the amount of coupons issued as 
a result of the negligence or fraud.
    (4) State agencies shall be responsible for efficiently and 
effectively administering the Program by complying

[[Page 865]]

with the provisions of the Act, the regulations issued pursuant to the 
Act, and the FNS-approved State Plan of Operation. A determination by 
FNS that a State agency has failed to comply with any of these 
provisions may result in FNS seeking injunctive relief to compel 
compliance and/or a suspension or disallowance of the Federal share of 
the State agency's administrative funds. FNS has the discretion to 
determine in each instance of noncompliance, whether to seek injunctive 
relief or to suspend or disallow administrative funds. FNS may seek 
injunctive relief and suspend or disallow funds simultaneously or in 
sequence.
    (b) Rights. State agencies may appeal all claims brought against 
them by FNS and shall be afforded an administrative review by a designee 
of the Secretary as provided in Sec. 276.7. State agencies may seek 
judicial review of any final administrative determination made by the 
Secretary's designee, as provided in Sec. 276.7(j).

[54 FR 7016, Feb. 15, 1989]