[Code of Federal Regulations]

[Title 7, Volume 4]

[Revised as of January 1, 2006]

From the U.S. Government Printing Office via GPO Access

[CITE: 7CFR278.6]



[Page 936-943]

 

                          TITLE 7--AGRICULTURE

 

    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE

 

PART 278_PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD CONCERNS 

AND INSURED FINANCIAL INSTITUTIONS--Table of Contents

 

Sec. 278.6  Disqualification of retail food stores and wholesale food 

concerns, and imposition of civil money penalties in lieu of 

disqualifications.



    (a) Authority to disqualify or subject to a civil money penalty. FNS 

may disqualify any authorized retail food store or authorized wholesale 

food concern from further participation in the program if the firm fails 

to comply with the Food Stamp Act of 1977, as amended, or this part. 

Such disqualification shall result from a finding of a violation on the 

basis of evidence that may include facts established through on-site 

investigations, inconsistent redemption data, evidence obtained through 

a transaction report under an electronic benefit transfer system, or the 

disqualification of a firm from the Special Supplemental Nutrition 

Program for Women, Infants and Children (WIC), as specified in paragraph 

(e)(8) of this section. Disqualification shall be for a period of 6 

months to 5 years for the firm's first sanction; for period of 12 months 

to 10 years for a firm's second sanction; and disqualification shall be 

permanent for a disqualification based on paragraph (e)(1) of this 

section. Any firm which has been disqualified and which wishes to be 

reinstated at the end of the period of disqualification, or at any later 

time, shall file a new application under Sec. 278.1 so that FNS may 

determine whether reauthorization is appropriate. The application may be 

filed no earlier than 10 days before the end of the period of 

disqualification. FNS may, in lieu of a disqualification, subject a firm 

to a civil money penalty of up to an amount specified in Sec. 

3.91(b)(3)(i) of this title for each violation if FNS determines that a 

disqualification would cause hardship to participating households. FNS 

may impose a civil money penalty of up to an amount specified in 

Sec. 3.91(b)(3)(ii) of this title for each violation in lieu of a 

permanent disqualification for trafficking, as defined in Sec. 271.2 of 

this chapter, in accordance with the provisions of paragraphs (i) and 

(j) of this section.

    (b) Charge letter--(1) General provisions. Any firm considered for 

disqualification or imposition of a civil money penalty under paragraph 

(a) of this section or a fine as specified under paragraph (l) or (m) of 

this section shall have full opportunity to submit to FNS information, 

explanation, or evidence concerning any instances of noncompliance 

before FNS makes a final administrative determination. The FNS regional 

office shall send the firm a letter of charges before making such 

determination. The letter shall specify the violations or actions which 

FNS believes constitute a basis for disqualification or imposition of a 

civil money penalty or fine. The letter shall specify the violations or 

actions which FNS believes constitute a basis for disqualification or 

imposition of a civil money penalty. The letter shall inform the firm 

that it may respond either orally or in writing to the charges contained 

in the letter within 10 days of receiving the letter. The firm's 

response shall set forth a statement of evidence, information, or 

explanation concerning the specified violations or acts. The firm shall 

make its response, if any, to the officer in charge of the FNS field 

office which has responsibility for the project area in which the firm 

is located. In the case of a firm for which action is taken in 

accordance with paragraph (e)(8) of this section, the charge letter 

shall inform such firm that the disqualification action is not subject 

to administrative or judicial review, as specified in paragraph (e)(8) 

of this section.

    (2) Charge letter for trafficking. (i) The charge letter shall 

advise a firm being considered for permanent disqualification based on 

evidence of trafficking as defined in Sec. 271.2 that the firm must 

notify FNS if the firm desires FNS to consider the sanction of a civil 

money penalty in lieu of permanent disqualification. The charge letter 

shall also advise the firm that the permanent disqualification shall be 

effective immediately upon the date of receipt of the notice of 

determination, regardless of



[[Page 937]]



whether a request for review is filed in accordance with part 279 of 

this chapter. If the disqualification is reversed through administrative 

or judicial review, the Secretary shall not be liable for the value of 

any sales lost during the disqualification period. Firms that request 

and are determined eligible for a civil money penalty in lieu of 

permanent disqualification for trafficking may continue to participate 

in the program pending review and shall not be required to pay the civil 

money penalty pending appeal of the trafficking determination action.

    (ii) Firms that request consideration of a civil money penalty in 

lieu of a permanent disqualification for trafficking shall have the 

opportunity to submit to FNS information and evidence as specified in 

Sec. 278.6(i), that establishes the firm's eligibility for a civil 

money penalty in lieu of a permanent disqualification in accordance with 

the criteria included in Sec. 278.6(i). This information and evidence 

shall be submitted within 10 days, as specified in Sec. 278.6(b)(1).

    (iii) If a firm fails to request consideration for a civil money 

penalty in lieu of a permanent disqualification for trafficking and 

submit documentation and evidence of its eligibility within the 10 days 

specified in Sec. 278.6(b)(1), the firm shall not be eligible for such 

a penalty.

    (c) Review of evidence. The letter of charges, the response, and any 

other information available to FNS shall be reviewed and considered by 

the appropriate FNS regional office, which shall then issue the 

determination. In the case of a firm subject to permanent 

disqualification under paragraph (e)(1) of this section, the 

determination shall inform such a firm that action to permanently 

disqualify the firm shall be effective immediately upon the date of 

receipt of the notice of determination from FNS, regardless of whether a 

request for review is filed in accordance with part 279 of this chapter. 

If the disqualification is reversed through administrative or judicial 

review, the Secretary shall not be liable for the value of any sales 

lost during the disqualification period. Firms that request and are 

determined eligible to a civil money penalty in lieu of permanent 

disqualification for trafficking may continue to participate in the 

program pending review and shall not be required to pay the civil money 

penalty pending appeal of the trafficking determination action. In the 

case of a firm for which action is taken in accordance with paragraph 

(e)(8) of this section, the determination notice shall inform such firm 

that the disqualification action is not subject to administrative or 

judicial review, as specified in paragraph (e)(8) of this section.

    (d) Basis for determination. The FNS regional office making a 

disqualification or penalty determination shall consider: (1) The nature 

and scope of the violations committed by personnel of the firm, (2) any 

prior action taken by FNS to warn the firm about the possibility that 

violations are occurring, and (3) any other evidence that shows the 

firm's intent to violate the regulations.

    (e) Penalties. FNS shall take action as follows against any firm 

determined to have violated the Act or regulations. For the purposes of 

assigning a period of disqualification, a warning letter shall not be 

considered to be a sanction. A civil money penalty and a 

disqualification shall be considered sanctions for such purposes. The 

FNS regional office shall:

    (1) Disqualify a firm permanently if:

    (i) Personnel of the firm have trafficked as defined in Sec. 271.2; 

or

    (ii) Violations such as, but not limited to, the sale of ineligible 

items occurred and the firm had twice before been sanctioned.

    (iii) It is determined that personnel of the firm knowingly 

submitted information on the application that contains false information 

of a substantive nature that could affect the eligibility of the firm 

for authorization in the program, such as, but not limited to, 

information related to:

    (A) Eligibility requirements under Sec. 278.1(b), (c), (d), (e), 

(f), (g) and (h);

    (B) Staple food stock;

    (C) Annual gross sales for firms seeking to qualify for 

authorization under Criterion B as specified in the Food Stamp Act of 

1977, as amended;

    (D) Annual staple food sales;



[[Page 938]]



    (E) Total annual gross retail food sales for firms seeking 

authorization as co-located wholesale/retail firms;

    (F) Ownership of the firm;

    (G) Employer Identification Numbers and Social Security Numbers;

    (H) Food Stamp Program history, business practices, business ethics, 

WIC disqualification or authorization status, when the store did (or 

will) open for business under the current ownership, business, health or 

other licenses, and whether or not the firm is a retail and wholesale 

firm operating at the same location; or

    (I) Any other information of a substantive nature that could affect 

the eligibility of a firm.

    (2) Disqualify the firm for 5 years if it is to be the firm's first 

sanction, the firm had been previously advised of the possibility that 

violations were occurring and of possible consequences of violating the 

regulations, and the evidence shows that:

    (i) It is the firm's practice to sell expensive or conspicuous 

nonfood items, cartons of cigarettes, or alcoholic beverages in exchange 

for food coupons; or

    (ii) The firm's coupon redemptions for a specified period of time 

exceed its food sales for the same period of time; or

    (iii) A wholesale food concern's redemptions of coupons for a 

specified period of time exceed the redemptions of all the specified 

authorized retail food stores, nonprofit cooperative food-purchasing 

ventures, group living arrangements, drug addict and alcoholic treatment 

programs, homeless meal providers, and shelters for battered women and 

children which the wholesale food concern was authorized to serve during 

that time; or

    (iv) A wholesale food concern's stated redemptions of coupons for a 

particular retail food store, nonprofit cooperative food-purchasing 

venture, group living arrangement, drug addict and alcoholic treatment 

program, homeless meal providers, or shelters for battered women and 

children exceeded the actual amount of coupons which that firm or 

organization redeemed through the wholesaler; or

    (v) Personnel of the firm knowingly accepted coupons from an 

unauthorized firm or an individual known not to be legally entitled to 

possess coupons.

    (3) Disqualify the firm for 3 years if it is to be the first 

sanction for the firm and the evidence shows that:

    (i) It is the firm's practice to commit violations such as the sale 

of common nonfood items in amounts normally found in a shopping basket 

and the firm was previously advised of the possibility that violations 

were occurring and of the possible consequences of violating the 

regulations; or

    (ii) Any of the situations described in paragraph (e)(2) of this 

section occurred and FNS had not previously advised the firm of the 

possibility that violations were occurring and of the possible 

consequences of violating the regulations; or

    (iii) The firm is an authorized communal dining facility, drug 

addiction or alcoholic treatment and rehabilitation program, group 

living arrangement, homeless meal provider, meal delivery service, or 

shelter for battered women and children and it is the firm's practice to 

sell meals in exchange for food coupons to persons not eligible to 

purchase meals with food coupons and the firm has been previously 

advised of the possibility that violations were occurring and of the 

possible consequences of violating the regulations; or

    (iv) A wholesale food concern accepted coupons from an authorized 

firm which it was not authorized to serve and the wholesale food concern 

had been previously advised of the possibility that violations were 

occurring and of possible consequences of violating the regulations; or

    (v) The firm is an authorized retail food store and personnel of the 

firm have engaged in food coupon transactions with other authorized 

retail stores, not including treatment programs, group living 

arrangements, homeless meal providers, or shelters for battered women 

and children, and the firm had been previously advised of the 

possibility that violations were occurring and of the possible 

consequences of violating the regulations.

    (vi) Personnel of the firm knowingly submitted information on the 

application that contained false information of a substantive nature 

related to the



[[Page 939]]



ability of FNS to monitor compliance of the firm with FSP requirements, 

such as, but not limited to, information related to:

    (A) Annual eligible retail food sales;

    (B) Store location and store address and mailing address;

    (C) Financial institution information; or

    (D) Store name, type of ownership, number of cash registers, and 

non-food inventory and services.

    (4) Disqualify the firm for 1 year if it is to be the first sanction 

for the firm and the ownership or management personnel of the firm have 

committed violations such as the sale of common nonfood items in amounts 

normally found in a shopping basket, and FNS had not previously advised 

the firm of the possibility that violations were occurring and of the 

possible consequences of violating the regulations.

    (5) Disqualify the firm for 6 months if it is to be the first 

sanction for the firm and the evidence shows that personnel of the firm 

have committed violations such as but not limited to the sale of common 

nonfood items due to carelessness or poor supervision by the firm's 

ownership or management.

    (6) Double the appropriate period of disqualification prescribed in 

paragraphs (e) (2) through (5) of this section as warranted by the 

evidence of violations if the same firm has once before been assigned a 

sanction.

    (7) Send the firm a warning letter if violations are too limited to 

warrant a disqualification.

    (8) FNS shall disqualify from the Food Stamp Program any firm which 

is disqualified from the WIC Program:

    (i) Based in whole or in part on any act which constitutes a 

violation of that program's regulation and which is shown to constitute 

a misdemeanor or felony violation of law, or for any of the following 

specific program violations:

    (A) A pattern of claiming reimbursement for the sale of an amount of 

a specific food item which exceeds the store's documented inventory of 

that food item for a specified period of time;

    (B) Exchanging WIC food instruments for cash, credit or 

consideration other than eligible food; or the exchange of firearms, 

ammunition, explosives or controlled substances, as defined in section 

802 of title 21 of the United States Code, for food instruments;

    (C) A pattern of receiving, transacting and/or redeeming WIC food 

instruments outside of authorized channels;

    (D) A pattern of exchanging non-food items for a WIC food 

instrument;

    (E) A pattern of charging WIC customers more for food than non-WIC 

customers or charging WIC customers more than the current shelf price; 

or

    (F) A pattern of charging for food items not received by the WIC 

customer or for foods provided in excess of those listed on the food 

instrument.

    (ii) FNS shall not disqualify a firm from the Food Stamp Program on 

the basis of a WIC disqualification unless:

    (A) Prior to the time prescribed for securing administrative review 

of the WIC disqualification action, the firm was provided individual and 

specific notice that it could be disqualified from the Food Stamp 

Program based on the WIC violations committed by the firm;

    (B) A signed and dated copy of such notice is provided to FNS by the 

WIC administering agency; and

    (C) A determination is made in accordance with paragraph (a) of this 

section that such action will not cause a hardship for participating 

Food Stamp households.

    (iii) Such a Food Stamp disqualification:

    (A) Shall be for the same length of time as the WIC 

disqualification;

    (B) May begin at a later date than the WIC disqualification; and

    (C) Shall not be subject to administrative or judicial review under 

the Food Stamp Program.

    (f) Criteria for civil money penalties for hardship and transfer of 

ownership. (1) FNS may impose a civil money penalty as a sanction in 

lieu of disqualification when the firm subject to a disqualification is 

selling a substantial variety of staple food items, and the firm's 

disqualification would cause hardship to food stamp households because 

there is no other authorized retail food store in the area selling as 

large a variety of staple food items at comparable prices. FNS may 

disqualify a store which meets the criteria for a civil money



[[Page 940]]



penalty if the store had previously been assigned a sanction. A civil 

money penalty for hardship to food stamp households may not be imposed 

in lieu of a permanent disqualification.

    (2) In the event any retail food store or wholesale food concern 

which has been disqualified is sold or the ownership thereof is 

otherwise transferred to a purchaser or transferee, the person or other 

legal entity who sells or otherwise transfers ownership of the retail 

food store or wholesale food concern shall be subjected to and liable 

for a civil money penalty in an amount to reflect that portion of the 

disqualification period that has not expired, to be calculated using the 

method found at Sec. 278.6(g). If the retail food store or wholesale 

food concern has been permanently disqualified, the civil money penalty 

shall be double the penalty for a ten year disqualification period. The 

disqualification shall continue in effect at the disqualified location 

for the person or other legal entity who transfers ownership of the 

retail food store or wholesale food concern notwithstanding the 

imposition of a civil money penalty under this paragraph.

    (3) At any time after a civil money penalty imposed under paragraph 

(f) (2) of this section has become final under the provisions of part 

279, the Food and Consumer Service may request the Attorney General 

institute a civil action to collect the penalty from the person or 

persons subject to the penalty in a district court of the United States 

for any district in which such person or persons are found, reside, or 

transact business.

    (4) A bona fide transferee of a retail food store shall not be 

required to pay a civil money penalty imposed on the firm prior to its 

transfer. A buyer or transferee (other than a bona fide buyer or 

transferee) may not be authorized to accept or redeem coupons and may 

not accept or redeem coupons until the Secretary receives full payment 

of any penalty imposed on such store or concern.

    (g) Amount of civil money penalties for hardship and transfer of 

ownership. FNS shall determine the amount of the civil money penalty as 

follows:

    (1) Determine the firm's average monthly redemptions of coupons for 

the 12-month period ending with the month immediately preceding that 

month during which the firm was charged with violations.

    (2) Multiply the average monthly redemption figure by 10 percent.

    (3) Multiply the product arrived at in paragraph (g)(2) by the 

number of months for which the firm would have been disqualified under 

paragraph (e) of this section. The civil money penalty may not exceed an 

amount specified in Sec. 3.91(b)(3)(i) of this title for each 

violation.

    (h) Notifying the firm of civil money penalties for hardship and 

transfer of ownership. A firm has 15 days from the date the FNS regional 

office notifies the firm in writing in which to pay the civil money 

penalty, or to notify the regional office in writing of its intent to 

pay in installments as specified by the regional office. The firm must 

present to FNS a collateral bond as specified in Sec. 278.1(b)(4), 

within the same 15-day period. The civil money penalty must be paid in 

full by the end of the period for which the firm would have been 

disqualified. FNS shall:

    (1) Disqualify the firm for the period determined to be appropriate 

under paragraph (e) of this section if the firm refuses to pay any of 

the civil money penalty;

    (2) Disqualify the firm for a period corresponding to the unpaid 

part of the civil money penalty if the firm does not pay the civil money 

penalty in full or in installments as specified by the FNS regional 

office; or

    (3) Disqualify the firm for the prescribed period if the firm does 

not present a collateral bond within the required 15 days. Any payment 

on a civil money penalty which have been received by FNS shall be 

returned to the firm. If the firm presents the required bond during the 

disqualification period, the civil money penalty may be reinstated for 

the duration of the disqualification period.

    (i) Criteria for eligibility for a civil money penalty in lieu of 

permanent disqualification for trafficking. FNS may impose a civil money 

penalty in lieu of a permanent disqualification for trafficking as 

defined in Sec. 271.2 if the firm timely submits to FNS substantial 

evidence which demonstrates that the



[[Page 941]]



firm had established and implemented an effective compliance policy and 

program to prevent violations of the Program. Firms assessed a CMP under 

this paragraph shall be subject to the applicable penalties included in 

Sec. Sec. 278.6(e) (2) through (6) for the sale of ineligible items. 

Only those firms for which a permanent disqualification for trafficking 

took effect on or after October 1, 1988, are eligible for a civil money 

penalty in lieu of permanent disqualification for trafficking, except 

that firms that have been disqualified but are awaiting a judicial 

review decision are eligible for a civil money penalty in lieu of a 

permanent disqualification. In determining the minimum standards of 

eligibility of a firm for a civil money penalty in lieu of a permanent 

disqualification for trafficking, the firm shall, at a minimum, 

establish by substantial evidence its fulfillment of each of the 

following criteria:



    Criterion 1. The firm shall have developed an effective compliance 

policy as specified in Sec. 278.6(i)(1); and

    Criterion 2. The firm shall establish that both its compliance 

policy and program were in operation at the location where the 

violation(s) occurred prior to the occurrence of violations cited in the 

charge letter sent to the firm; and

    Criterion 3. The firm had developed and instituted an effective 

personnel training program as specified in Sec. 278.6(i)(2); and

    Criterion 4. Firm ownership was not aware of, did not approve, did 

not benefit from, or was not in any way involved in the conduct or 

approval of trafficking violations; or it is only the first occasion in 

which a member of firm management was aware of, approved, benefited 

from, or was involved in the conduct of any trafficking violations by 

the firm. Upon the second occasion of trafficking involvement by any 

member of firm management uncovered during a subsequent investigation, a 

firm shall not be eligible for a civil money penalty in lieu of 

permanent disqualification. Notwithstanding the above provision, if 

trafficking violations consisted of the sale of firearms, ammunition, 

explosives or controlled substances, as defined in 21 U.S.C. Sec. 802, 

and such trafficking was conducted by the ownership or management of the 

firm, the firm shall not be eligible for a civil money penalty in lieu 

of permanent disqualification. For purposes of this section, a person is 

considered to be part of firm management if that individual has 

substantial supervisory responsibilities with regard to directing the 

activities and work assignments of store employees. Such supervisory 

responsibilities shall include the authority to hire employees for the 

store or to terminate the employment of individuals working for the 

store.



    (1) Compliance policy standards. As specified in Criterion 1 above, 

in determining whether a firm has established an effective policy to 

prevent violations, FNS shall consider written and dated statements of 

firm policy which reflect a commitment to ensure that the firm is 

operated in a manner consistent with this part 278 of current FSP 

regulations and current FSP policy on the proper acceptance and handling 

of food coupons. As required by Criterion 2, such policy statements 

shall be considered only if documentation is supplied which establishes 

that the policy statements were provided to the violating employee(s) 

prior to the commission of the violation. In addition, in evaluating the 

effectiveness of the firm's policy and program to ensure FSP compliance 

and to prevent FSP violations, FNS may consider the following:

    (i) Documentation reflecting the development and/or operation of a 

policy to terminate the employment of any firm employee found violating 

FSP regulations;

    (ii) Documentation of the development and/or continued operation of 

firm policy and procedures resulting in appropriate corrective action 

following complaints of FSP violations or irregularities committed by 

firm personnel;

    (iii) Documentation of the development and/or continued operation of 

procedures for internal review of firm employees' compliance with FSP 

regulations;

    (iv) The nature and scope of the violations charged against the 

firm;

    (v) Any record of previous firm violations under the same ownership; 

and

    (vi) Any other information the firm may present to FNS for 

consideration.

    (2) Compliance training program standards. As prescribed in 

Criterion 3 above, the firm shall have developed and implemented an 

effective training program for all managers and employees on the 

acceptance and handling of food coupons in accordance with this part 

278. A firm which seeks a civil money



[[Page 942]]



penalty in lieu of a permanent disqualification shall document its 

training activity by submitting to FNS its dated training curricula and 

records of dates training sessions were conducted; a record of dates of 

employment of firm personnel; and contemporaneous documentation of the 

participation of the violating employee(s) in initial and any follow-up 

training held prior to the violation(s). FNS shall consider a training 

program effective if it meets or is otherwise equivalent to the 

following standards:

    (i) Training for all managers and employees whose work brings them 

into contact with food stamps or who are assigned to a location where 

food stamps are accepted, handled or processed shall be conducted within 

one month of the institution of the compliance policy under Criterion 1 

above. Employees hired subsequent to the institution of the compliance 

policy shall be trained within one month of employment. All employees 

shall be trained periodically thereafter;

    (ii) Training shall be designed to establish a level of competence 

that assures compliance with Program requirements as included in this 

part 278;

    (iii) Written materials, which may include FNS publications and 

program regulations that are available to all authorized firms, are used 

in the training program. Training materials shall clearly state that the 

following acts are prohibited and are in violation of the Food Stamp Act 

and regulations: the exchange of food coupons, ATP cards or other 

program access devices for cash; and, in exchange for coupons, the sale 

of firearms, ammunition, explosives or controlled substances, as the 

term is defined in section 802 of title 21, United States Code.

    (j) Amount of civil money penalty in lieu of permanent 

disqualification for trafficking. A civil money penalty assessed in 

accordance with Sec. 278.6(i) shall not exceed the amount specified in 

Sec. 3.91(b)(3)(ii) of this title for each violation and shall not 

exceed the amount specified in Sec. 3.91(b)(3)(ii) of this title for 

all violations occurring during a single investigation. FNS shall 

determine the amount of the civil money penalty as follows:

    (1) Determine the firm's average monthly redemptions for the 12-

month period ending with the month immediately preceding the month 

during which the firm was charged with violations;

    (2) Multiply the average monthly redemption figure by 10 percent;

    (3) For the first trafficking offense by a firm, multiply the 

product obtained in Sec. 278.6(j)(2) by 60 if the largest amount of 

food coupons, ATP cards, or other benefit instruments involved in a 

single trafficking transaction had a face value of $99 or less. If the 

face value of coupons, ATP cards or other benefit instruments involved 

in the largest single trafficking transaction was $100 or more, the 

amount of the product obtained in this paragraph shall be doubled;

    (4) For a second trafficking offense by a firm, multiply the product 

obtained in Sec. 278.6(j)(2) by 120 if the largest amount of food 

coupons, ATP cards, or other benefit instruments involved in a single 

trafficking transaction had a face value of $99 or less and the same 

firm has once before been sanctioned for trafficking in food coupons, 

ATP cards, or other benefit instruments. If the face value of food 

coupons, ATP cards, or other benefit instruments involved in the largest 

single trafficking transaction was $100 or more, the amount of the 

product obtained in this paragraph shall be doubled; and

    (5) If a third trafficking offense is committed by the firm, the 

firm shall not be eligible for a civil money penalty in lieu of 

disqualification.

    (k) Payment of civil money penalty in lieu of a permanent 

disqualification for trafficking. Payment of the full amount of the 

civil money penalty in lieu of permanent disqualification for 

trafficking shall be made within 30 days of the date the final 

determination was received by the firm. If payment is not made within 

the prescribed period, the right to the civil money penalty in lieu of a 

permanent disqualification is forfeited and disqualification shall 

become effective immediately.

    (l) Fines for the acceptance of loose coupons. FNS may impose a fine 

against any retail food store or wholesale food concern that accepts 

coupons



[[Page 943]]



that are not accompanied by the corresponding book cover, other than the 

denomination of coupons used for making change as specified in Sec. 

278.2(d) or coupons accepted from homeless meal providers as specified 

in Sec. 278.2(c). The fine to be assessed against a firm found to be 

accepting loose coupons shall be $500 per investigation plus an amount 

equal to double the face value of each loose coupon accepted, and may be 

assessed and collected in addition to any fiscal claim established by 

FNS. The fine shall be paid in full within 30 days of the firm's receipt 

of FNS' notification to pay the fine. The Attorney General of the United 

States may institute judicial action in any court of competent 

jurisdiction against the store or concern to collect the fine. FNS may 

withdraw the authorization of the store, as well as other authorized 

locations of a multi-unit firm which are under the same ownership, for 

failure to pay such a fine as specified under Sec. 278.1(k). FNS may 

deny the authorization of any firm that has failed to pay such fines as 

specified under Sec. 278.1(j).

    (m) Fines for unauthorized third parties that accept food stamps. 

FNS may impose a fine against any individual, sole proprietorship, 

partnership, corporation or other legal entity not approved by FNS to 

accept and redeem food coupons for any violation of the provisions of 

the Food Stamp Act or the program regulations, including violations 

involving the acceptance of coupons. The fine shall be $1,000 for each 

violation plus an amount equal to three times the face value of the 

illegally accepted food coupons. The fine shall be paid in full within 

30 days of the individual's or legal entity's receipt of FNS' 

notification to pay the fine. The Attorney General of the United States 

may institute judicial action in any court of competent jurisdiction 

against the person to collect the fine. FNS may withdraw the 

authorization of any firm that is under the same ownership as an 

unauthorized firm that has failed to pay such a fine, as specified under 

Sec. 278.1(k). FNS may deny authorization to any firm that has failed 

to pay such a fine, as specified under Sec. 278.1(j).

    (n) Review of determination. The determination of FNS shall be final 

and not subject to further administrative or judicial review unless a 

written request for review is filed within the period stated in part 279 

of this chapter.

    Notwithstanding the above, any FNS determination made on the basis 

of paragraph (e)(8) of this section shall not be subject to further 

administrative or judicial review.

    (o) Delivery of notice. The delivery by certified mail or personal 

service of any notice required of FNS by this part will constitute 

notice to the addressee of its contents.



[Amdt. 136, 43 FR 43274, Sept. 22, 1978, as amended by Amdt. 236, 47 FR 

56471, Dec. 17, 1982; Amdt. 236, 49 FR 22057, May 25, 1984; Amdt. 258, 

49 FR 28393, July 12, 1984; Amdt. 286, 52 FR 7558, Mar. 11, 1987; Amdt. 

280, 52 FR 13222, Apr. 22, 1987; Amdt. 311, 54 FR 18645, May 2, 1989; 

Amdt. 323, 55 FR 31812, Aug. 6, 1990; Amdt. 344, 56 FR 54778, Oct. 23, 

1991; Amdt. 334, 57 FR 3912, Feb. 3, 1992; Amdt. 354, 59 FR 27434, May 

27, 1994; 62 FR 40928, July 31, 1997; 64 FR 23172, Apr. 30, 1999; Amdt. 

391, 66 FR 2800, Jan. 12, 2001; 68 FR 41052, July 10, 2003; 70 FR 29579, 

May 24, 2005]



    Effective Date Note: By Amdt. 397, 70 FR 72354, Dec. 5, 2005, Sec. 

278.6 was amended by removing the words ``certified mail or personal 

service'' and adding in their place the words ``any method that provides 

evidence of delivery'' in the first sentence in paragraph (o), effective 

January 4, 2006.