[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2009]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR248.10]

[Page 476-480]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 248_WIC FARMERS' MARKET NUTRITION PROGRAM (FMNP)--Table of Contents
 
                    Subpart E_State Agency Provisions
 
Sec. 248.10  Coupon and market management.


    (a) General. This section sets forth State agency responsibilities 
regarding the authorization of farmers, farmers' markets, and roadside 
stands. The State agency is responsible for the fiscal management of, 
and accountability for, FMNP-related activities for farmers, farmers' 
markets and roadside stands. Each State agency may decide whether to 
authorize farmers individually, farmers' markets, roadside stands, or 
all of the above. All contracts or agreements entered into by the State 
agency for the management or operation of farmers, farmers' markets and 
roadside stands shall conform with the requirements of 7 CFR part 3016, 
Uniform Administrative Requirements for Grants and Cooperative 
Agreements to State and Local Governments.
    (1) Only farmers, farmers' markets and roadside stands authorized by 
the State agency may redeem FMNP coupons. Only farmers authorized by the 
State agency or that have a valid agreement with an authorized farmers' 
market may redeem coupons.
    (2) The State agency shall establish criteria for the authorization 
of individual farmers, farmers' markets and roadside stands. Any 
authorized farmer, farmers' market and roadside stand must agree to sell 
recipients only those foods identified as eligible by the State agency, 
in exchange for FMNP coupons. Individuals who exclusively sell produce 
grown by someone else, such as wholesale distributors, cannot be

[[Page 477]]

authorized to participate in the FMNP, except individuals employed by a 
farmer otherwise qualified under these regulations, or individuals hired 
by a nonprofit organization to sell produce at farmers' markets or 
roadside stands on behalf of local farmers.
    (3) The State agency shall ensure that an appropriate number of 
farmers, farmers' markets and/or roadside stands are authorized for 
adequate recipient access in the area(s) proposed to be served and for 
effective management of the farmers, farmers' markets and/or roadside 
stands by the State agency. The State agency may establish criteria to 
limit the number of authorized farmers, farmers' markets and/or roadside 
stands.
    (4) The State agency shall ensure that face-to-face training is 
conducted prior to start up of the first year of FMNP participation of a 
farmers' market and individual farmer. The face-to-face training shall 
include at a minimum those items listed in paragraph (d) of this 
section.
    (5) Authorized farmers shall display a sign stating that they are 
authorized to redeem FMNP coupons.
    (6) Authorized farmers, farmers' markets and roadside stands shall 
comply with the requirements of Title VI of the Civil Rights Act of 
1964, title IX of the Education Amendments of 1972, section 504 of the 
Rehabilitation Act of 1973, the Age Discrimination Act of 1975, 
Department of Agriculture regulations on non-discrimination (7 CFR parts 
15, 15a and 15b), and FNS Instructions as outlined in Sec. 248.7.
    (7) The State agency shall ensure that there is no conflict of 
interest between the State or local agency and any participating farmer, 
farmers' market and roadside stand.
    (b) Farmers' market agreements. The State agency shall ensure that 
all participating farmers' markets enter into written agreements with 
the State agency. The agreement shall be signed by a representative who 
has legal authority to obligate the farmer, farmers' market and/or 
roadside stand. The agreement shall be signed by a representative who 
has legal authority to obligate the farmers/farmers' market. Agreements 
shall include a description of sanctions for noncompliance with FMNP 
requirements and shall contain at a minimum, the following 
specifications, although the State agency may determine the exact 
wording to be used:
    (1) The farmer, farmers' market and roadside stand shall:
    (i) Provide such information as the State agency may require for its 
periodic reports to FNS;
    (ii) Assure that FMNP coupons are redeemed only for eligible foods;
    (iii) Provide eligible foods at the current price or less than the 
current price charged to other customers;
    (iv) Accept FMNP coupons within the dates of their validity and 
submit such coupons for payment within the allowable time period 
established by the State agency;
    (v) In accordance with a procedure established by the State agency, 
mark each transacted coupon with a farmer identifier. In those cases 
where the agreement is between the State agency and the farmer, each 
transacted FMNP coupon shall contain a farmer identifier and shall be 
batched for reimbursement under that identifier. In those cases where 
the agreement is between the State agency and the farmers' market, each 
transacted FMNP coupon shall contain a farmer identifier and be batched 
for reimbursement under a farmers' market identifier.
    (vi) Accept training on FMNP procedures and provide training to 
farmers and any employees with FMNP responsibilities on such procedures;
    (vii) Agree to be monitored for compliance with FMNP requirements, 
including both overt and covert monitoring;
    (viii) Be accountable for actions of farmers or employees in the 
provision of foods and related activities;
    (ix) Pay the State agency for any coupons transacted in violation of 
this agreement;
    (x) Offer FMNP recipients the same courtesies as other customers;
    (xi) Comply with the nondiscrimination provisions of USDA 
regulations as provided in Sec. 248.7; and
    (xii) Notify the State agency if any farmer, farmers' market and/or 
roadside stand ceases operation prior to the end of the authorization 
period.

[[Page 478]]

    (2) The farmer, farmers' market and roadside stand shall not:
    (i) Collect sales tax on FMNP coupon purchases;
    (ii) Seek restitution from FMNP recipients for coupons not paid by 
the State agency;
    (iii) Issue cash change for purchases that are in an amount less 
than the value of the FMNP coupon(s).
    (3) Neither the State agency nor the farmer, farmers' market nor a 
roadside stand has an obligation to renew the agreement. Either the 
State agency or the farmer, farmers' market or a roadside stand may 
terminate the agreement for cause after providing advance written 
notification.
    (4) The State agency may deny payment to the farmer, farmers' market 
or roadside stand for improperly redeemed FMNP coupons and may demand 
refunds for payments already made on improperly redeemed coupons.
    (5) The State agency may disqualify a farmer, farmers' market or 
roadside stand for FMNP abuse. The farmer, farmers' market and/or 
roadside stand has the right to appeal a denial of an application to 
participate, a disqualification, or a FMNP sanction by the State agency. 
Expiration of a contract or agreement with a farmer, farmers' market or 
roadside stand, and claims actions under Sec. 248.20, are not 
appealable.
    (6) A farmer, farmers' market or a roadside stand which commits 
fraud or engages in other illegal activity is liable to prosecution 
under applicable Federal, State or local laws.
    (7) Agreements may not exceed 3 years.
    (c) Farmer agreements for State agencies which do not authorize 
farmers. Those State agencies which authorize farmers' markets but not 
individual farmers shall require authorized farmers' markets to enter 
into a written agreement with each farmer within the market that is 
participating in FMNP. The State agency shall set forth the required 
terms for the agreement and provide a sample agreement which may be 
used.
    (d) Annual training for farmers/farmers' market managers. State 
agencies shall conduct annual training for farmers/farmers' market 
managers participating in the FMNP. The State agency shall conduct a 
face-to-face training for all farmers and farmers' market managers who 
have never previously participated in the program prior to their 
commencing participation in the FMNP. After a farmer/farmers' market 
manager's first year of FMNP operation, State agencies have discretion 
in determining the method used for annual training purposes. At a 
minimum, annual training shall include instruction emphasizing:
    (1) Eligible food choices;
    (2) Proper FMNP coupon redemption procedures, including deadlines 
for submission of coupons for payment;
    (3) Equitable treatment of FMNP recipients, including the 
availability of produce to FMNP recipients that is of the same quality 
and cost as that sold to other customers;
    (4) Civil rights compliance and guidelines;
    (5) Guidelines for storing FMNP coupons safely; and
    (6) Guidelines for cancelling FMNP coupons, such as punching holes 
or rubber stamping.
    (e) Monitoring and review of farmers, farmers' markets, roadside 
stands and local agencies. The State agency shall be responsible for the 
monitoring of farmers, farmers' markets, roadside stands and local 
agencies within its jurisdiction. This shall include developing a system 
for identifying high risk farmers, farmers' markets, and roadside stands 
and ensuring on-site monitoring, conducting further investigation, and 
sanctioning of such farmers, farmers' markets, or roadside stands as 
appropriate.
    (1) Where coupon reimbursement responsibilities are delegated to 
farmers' market managers, farmers' market associations, or nonprofit 
organizations, the State agency may establish bonding requirements for 
these entities. Costs of such bonding are not reimbursable 
administrative expenses.
    (2) Each State agency shall rank participating farmers, farmers' 
markets and roadside stands by risk factors, and shall conduct annual, 
on-site monitoring of at least 10 percent of farmers, 10 percent of 
farmers' markets and 10 percent of roadside stands which shall

[[Page 479]]

include those farmers, farmers' markets and roadside stands identified 
as being the highest risk. Mandatory high-risk indicators are a 
proportionately high volume of FMNP coupons redeemed by a farmer as 
compared to other farmers within the farmers' market and within the 
State, recipient complaints, and farmers and farmers' markets in their 
first year of FMNP operation. States are encouraged to formally 
establish other high risk indicators for identifying potential problems. 
If additional high risk indicators are established, they shall be set 
forth in the farmers/farmers' market agreement and in the State Plan. If 
application of the high-risk indicators results in fewer than 10 percent 
of farmers and farmers' markets as high-risk, the State agency shall 
randomly select additional farmers and farmers' markets to be monitored 
in order to meet the 10 percent minimum. The high-risk indicators listed 
above generally apply to a State agency already participating in the 
FMNP. A State agency participating in the FMNP for the first time shall, 
in lieu of applying the high-risk indicators, randomly select 10 percent 
of its participating farmers, 10 percent of its participating farmers' 
markets, and 10 percent of its participating roadside stands for 
monitoring visits.
    (3) The following shall be documented for all on-site farmers, 
farmers' markets, and roadside stands monitoring visits. At a minimum, 
documentation must include the names of the farmer, farmers' market or 
roadside stand and the reviewer; date of review; nature of problem(s) 
detected or the observation that the farmer, farmers' market or roadside 
stand appears to be in compliance with FMNP requirements; a record of 
interviews with recipients, market managers and/or farmers; and the 
signature of the reviewer. The State agency shall do so after a 
reasonable delay when necessary to protect the identity of the 
reviewer(s) or the integrity of the investigation. After the farmer/
farmers' market has been informed of any deficiencies detected by the 
monitoring visit, and instances where the farmer/farmers' market will be 
permitted to continue participation, the farmer/farmers' market shall 
provide plans as to how the deficiencies will be corrected.
    (4) At least every 2 years, the State agency shall review all local 
agencies within its jurisdiction. WIC State agency reviews of WIC local 
agencies, which include reviews of FMNP practices, may contribute to 
meeting the requirement that all local agencies be reviewed once every 2 
years.
    (f) Control of FMNP coupons. (1) The State agency shall control and 
provide accountability for the receipt and issuance of FMNP coupons.
    (2) The State agency shall ensure that there is secure 
transportation and storage of unissued FMNP coupons.
    (3) The State agency shall design and implement a system of review 
of FMNP coupons to detect errors. At a minimum, the errors the system 
must detect are a missing recipient signature, a missing farmer and/or 
market identification, and redemption by a farmer outside of the valid 
date. The State agency shall implement procedures to reduce the number 
of errors in transactions, where possible.
    (g) Payment to farmers/farmers' markets. The State agency shall 
ensure that farmers/ farmers' markets are promptly paid for food costs.
    (h) Reconciliation of FMNP coupons. The State agency shall identify 
the disposition of all FMNP coupons as validly redeemed, lost or stolen, 
expired, or not matching issuance records. Validly redeemed FMNP coupons 
are those that are issued to a valid recipient and redeemed by an 
authorized farmers/farmers' market within valid dates. FMNP coupons that 
were redeemed but cannot be traced to a valid recipient or authorized 
farmer/farmers' market shall be subject to claims action in accordance 
with Sec. 248.20. (1) If the State agency elects to replace lost, 
stolen or damaged FMNP coupons, it must describe its system for doing so 
in the State Plan.
    (2) The State agency shall use uniform FMNP coupons within its 
jurisdiction.
    (3) FMNP coupons must include, at a minimum, the following 
information:
    (i) The last date by which the recipient may use the coupon. This 
date shall be no later than November 30 of each year.

[[Page 480]]

    (ii) A date by which the farmer or farmers' market must submit the 
coupon for payment. When establishing this date, State agencies shall 
take into consideration the date financial statements are due to the 
FNS, and allow time for the corresponding coupon reconciliation that 
must be done by the State agency prior to submission of financial 
statements. Currently, financial statements are due to FNS by January 
30.
    (iii) A unique and sequential serial number.
    (iv) A denomination (dollar amount).
    (v) A farmer identifier for the redeeming farmer when agreements are 
between the State agency and the farmer.
    (vi) In those instances where State agencies have agreements with 
farmers' markets, there must be a farmer identifier on each coupon and a 
market identifier on the cover of coupons which are batched by the 
market manager for reimbursement.
    (i) Instructions to recipients. Each recipient shall receive 
instructions on the proper use and redemption of the FMNP coupons, 
including, but not limited to:
    (1) A list of names and addresses of authorized farmers, farmers' 
markets and roadside stands at which FMNP coupons may be redeemed.
    (2) A description of eligible foods and the prohibition against cash 
change.
    (3) An explanation of their right to complain about improper farmer/
farmers' market practices with regard to FMNP responsibilities and the 
process for doing so.
    (j) Recipients and farmer/farmers' market complaints. The State 
agency shall have procedures which document the handling of complaints 
by recipients and farmers/farmers' markets. Complaints of civil rights 
discrimination shall be handled in accordance with Sec. 248.7(b).
    (k) Recipients and farmer/farmers' market sanctions. The State 
agency shall establish policies which determine the type and level of 
sanctions to be applied against recipients and farmers/farmers' markets, 
based upon the severity and nature of the FMNP violations observed, and 
such other factors as the State agency determines appropriate, such as 
whether repeated offenses have occurred over a period of time. Farmers/
farmers' markets may be sanctioned, disqualified, or both, when 
appropriate. Sanctions may include fines for improper FMNP coupon 
redemption procedures and the penalties outlined in Sec. 248.20, in 
case of deliberate fraud. In those instances where compliance purchases 
are conducted, the results of covert compliance purchases can be a basis 
for farmer/farmers' market sanctions. A farmer/farmers' market 
committing fraud or other unlawful activities is liable to prosecution 
under applicable Federal, State or local laws. State agency policies 
shall ensure that a farmer that is disqualified from the FMNP at one 
market or roadside stand shall not participate in the FMNP at any other 
farmers' market or roadside stand in the State's jurisdiction during the 
disqualification period.

[59 FR 11517, Mar. 11, 1994, as amended at 60 FR 49746, Sept. 27, 1995; 
73 FR 65250, Nov. 3, 2008]