[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR247.30]

[Page 423-424]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 247_COMMODITY SUPPLEMENTAL FOOD PROGRAM--Table of Contents
 
Sec.  247.30  Claims.

    (a) What happens if a State or local agency misuses program funds? 
If FNS determines that a State or local agency has misused program funds 
through negligence, fraud, theft, embezzlement, or other causes, FNS 
must initiate and pursue a claim against the State agency to repay the 
amount of the misused funds. The State agency will be given the 
opportunity to contest the claim. The State agency is responsible for 
initiating and pursuing claims against subdistributing and local 
agencies if they misuse program funds.
    (b) What happens if a State or local agency misuses program 
commodities? If a State or local agency misuses program commodities, FNS 
must initiate a claim against the State agency to recover the value of 
the misused commodities. The procedures for pursuing claims resulting 
from misuse of commodities are detailed in Sec.  250.15(c) of this 
chapter. Misused commodities include commodities improperly distributed 
or lost, spoiled, stolen, or damaged as a result of improper storage, 
care, or handling. The State agency is responsible for initiating and 
pursuing claims against subdistributing agencies, local agencies, or 
other agencies or organizations if they misuse program commodities. The 
State agency must use funds recovered as a result of claims for 
commodity losses in accordance with Sec.  250.15(c) of this chapter.
    (c) What happens if a participant improperly receives or uses CSFP 
benefits through fraud? The State agency must

[[Page 424]]

ensure that a local agency initiates a claim against a participant to 
recover the value of CSFP commodities improperly received or used if the 
local agency determines that the participant, or the parent or caretaker 
of the participant, fraudulently received or used the commodities. For 
purposes of this program, fraud includes intentionally making false or 
misleading statements, or intentionally withholding information, to 
obtain CSFP commodities, or the selling or exchange of CSFP commodities 
for non-food items. The local agency must advise the participant of the 
opportunity to appeal the claim through the fair hearing process, in 
accordance with Sec.  247.33(a). The local agency must also disqualify 
the participant from CSFP for a period of up to one year, unless the 
local agency determines that disqualification would result in a serious 
health risk, in accordance with the requirements of Sec.  247.20(b).
    (d) What procedures must be used in pursuing claims against 
participants? The State agency must establish standards, based on a 
cost-benefit review, for determining when the pursuit of a claim is 
cost-effective, and must ensure that local agencies use these standards 
in determining if a claim is to be pursued. In pursuing a claim against 
a participant, the local agency must:
    (1) Issue a letter demanding repayment for the value of the 
commodities improperly received or used;
    (2) If repayment is not made in a timely manner, take additional 
collection actions that are cost-effective, in accordance with the 
standards established by the State agency; and
    (3) Maintain all records regarding claims actions taken against 
participants, in accordance with Sec.  247.29.

(Approved by the Office of Management and Budget under control number 
0584-0293)