[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR276.3]

[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.  276.3  Negligence or fraud.

    (a) General. If FNS determines that there has been negligence or 
fraud on the part of the State agency in the certification of applicant 
households, the State agency shall, upon demand, pay to FNS a sum equal 
to the amount of coupons issued as a result of such negligence or fraud.
    (b) Negligence provisions. (1) FNS may determine that a State agency 
has been negligent in the certification of applicant households if a 
State agency disregards Food Stamp Program requirements contained in the 
Food Stamp Act, the regulations issued pursuant to the Act, the FNS-
approved State Plan of Operation and a loss of Federal funds results or 
a State agency implements procedures which deviate from food stamp 
requirements contained in the Food Stamp Act, the food stamp 
regulations, the FNS-approved State Plan of Operation without first 
obtaining FNS approval, and the implementation of the procedures results 
in a loss of Federal funds.
    (2) In computing amounts of losses of Federal funds due to 
negligence, FNS may use actual, documented amounts or amounts which have 
been determined through the use of statistically valid projections. When 
a statistically valid projection is used, the methodology will include a 
95 percent, one-sided confidence level.
    (3) FNS will base its determinations of negligence on information 
drawn from any of a number of sources. These information sources 
include, but are not limited to, State and Federal Performance Reporting 
reviews, State and Federal audits and investigations,

[[Page 865]]

State corrective action plans and any required reports.
    (4) Failure by the State agency to remit payment upon demand, within 
the specified time period, may result in FNS recovering the lost funds 
through offsets to the State agency's Letter of Credit, in accordance 
with Sec.  277.16(c).
    (c) Fraud provisions. For purposes of this subsection, the term 
fraud shall mean the wrongful acquisition or issuance of food coupons by 
the State agency or its officers, employees or agents, including 
issuance agents, through false representation or concealment of material 
facts. State agencies shall be liable to FNS for the amount of loss of 
Federal funds as a result of fraud. Failure by the State agency to remit 
payment on demand by FNS, within the time period specified, may result 
in offsets to the Letter of Credit in accordance with Sec.  277.16(c).

[Amdt. 168, 45 FR 77263, Nov. 21, 1980, as amended by Amdt. 262, 49 FR 
50598, Dec. 31, 1984; Amdt. 356, 59 FR 29713, June 9, 1994]