Food Stamp Program: Modifying the Limit on Civil Money Penalties for Trafficking in Benefit Redemption Instruments

SUMMARY: The Omnibus Budget Reconciliation Act of 1993 includes several

provisions which amend the Food Stamp Act of 1977, as amended (the

Act). This final rule implements those nondiscretionary provisions

pertaining to increased limits for civil money penalties for

trafficking in benefit redemption instruments and for selling firearms,

ammunition, explosives, or controlled substances for benefit redemption

instruments. The intended effect of this rule is to raise the amounts

of civil money penalties paid by authorized firms for the types of

violations specified.

DATES: The provisions of this final rule are effective on October 1,

1993.

FOR FURTHER INFORMATION CONTACT: Suzanne Fecteau, Coupon and Retailer

Branch, Benefit Redemption Division, Food and Nutrition Service,

Alexandria, Virginia, 22302, (703) 305-2419.

SUPPLEMENTARY INFORMATION:

Classification

Executive Order 12866

This final rule has been determined to be not significant for

purpose of Executive Order 12866 and therefore has not been reviewed by

OMB.

Executive Order 12372

The Food Stamp Program is listed in the Catalog of Federal Domestic

Assistance under No. 10.551. For the reasons set forth in the final

rule and related Notice(s) to 7 CFR part 3015, subpart V (48 FR 29115,

June 24, 1983, or 48 FR 54317, December 1, 1983, as appropriate, and

any subsequent notices that may apply), this program is excluded from

the scope of Executive Order 12372 which requires intergovernmental

consultation with State and local officials.

Regulatory Flexibility Act

This rule has been reviewed with regard to the requirements of the

Regulatory Flexibility Act of 1980 (Pub. L. No. 96-354). The

Administrator of the Food and Nutrition Service has certified that this

action does not have a significant economic impact on a substantial

number of small entities. The rule would have almost no impact on the

vast majority of authorized firms, most of which follow the program

rules carefully.

Paperwork Reduction Act

This rule does not contain recordkeeping or reporting requirements

subject to review by the Office of Management and Budget under the

Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

Executive Order 12778

This final rule has been reviewed under Executive Order 12778,

Civil Justice Reform. This rule is intended to have preemptive effect

with respect to any State or local laws, regulations or policies which

conflict with its provisions or which would otherwise impede its full

implementation. This rule is not intended to have retroactive effect

unless so specified in the ``Effective Date'' paragraph of this

preamble. Prior to any judicial challenge to the provisions of this

rule or the application of its provisions, all applicable

administrative procedures must be exhausted. In the Food Stamp Program

the administrative procedures are as follows: (1) for program benefit

recipients--state administrative procedures issued pursuant to 7 U.S.C.

2020 (e)(10) and 7 CFR 273.15; (2) for State agencies--administrative

procedures issued pursuant to 7 U.S.C. 2023 set out at 7 CFR 276.7 (for

rules related to non-quality control (QC) liabilities) or Part 283 (for

rules related to QC liabilities); (3) for program retailers and

wholesalers--administrative procedures issued pursuant to 7 U.S.C. 2023

set out at 7 CFR 278.8.

Public Participation and Justification for Less than a Thirty-day

Effective Date

This action is being finalized without prior notice or public

comment under authority of 5 U.S.C. 553(b)(3)(A) and (B). The matters

addressed by this rulemaking are nondiscretionary. The provisions in

this rule have already been implemented and were effective on October

1, 1993. Therefore, the Department has determined in accordance with 5

U.S.C. 553(b) that Notice of Proposed Rulemaking and Opportunity for

Public Comments is unnecessary and contrary to the public interest and,

in accordance with 5 U.S.C. 553(d), finds that good cause exists for

making this action effective prior to the date of publication.

Background

Section 344 of the Hunger Prevention Act of 1988, Pub. L. No. 100-

435, provided the Secretary with authority to impose a civil money

penalty (CMP) of up to $20,000 per violation in lieu of a permanent

disqualification of a firm for trafficking in food stamps or other

program benefit instruments, if the Secretary determines that there is

substantial evidence that the firm had an effective policy and program

in effect to prevent trafficking violations. Section 1743 of the Food,

Agriculture and Trade Act of 1990, Pub. L. No. 101-624, limited the CMP

authority to $40,000 over a two-year period, and extended the same

authority to firms which exchange firearms, ammunition, explosives or

controlled substances for coupons. Current regulations at 7 CFR

278.6(j) specify, in accordance with the Act, that such CMP's shall not

exceed $20,000 for each violation, and shall not exceed $40,000 during

a two-year period.

Section 13943 of the Omnibus Budget Reconciliation Act of 1993

(Pub. L. No. 103-66) further amends Section 12(b)(3)(B) of the Act 7

U.S.C. 2021(b)(3)(B) to modify the monetary cap on CMPs by applying the

$40,000 cap to each single investigation, rather than to a two-year

period of time. Further, Section 13944 of Pub. L. No. 103-66 amends

Section 12(b)(3)(C) of the Act to make the same modification to the

$40,000 cap on CMPs for the sale of firearms, ammunition, explosives,

or controlled substances for food stamps (or other benefit redemption

instruments).

Accordingly, this rulemaking provides at 7 CFR 278.6 that a CMP in

lieu of permanent disqualification for trafficking may not exceed

$40,000 for all violations occurring during a single investigation. The

$20,000 limit per trafficking violation in a single investigation

remains unchanged. This rulemaking also makes a conforming change in

the definition of trafficking at 7 CFR 271.2. by eliminating

unnecessary wording.

List of Subjects

7 CFR Part 271

Administrative practice and procedure, Food Stamps, Grant

programs--social programs.

7 CFR Part 278

Administrative practice and procedure, Banks, Banking, Claims, Food

stamps, Groceries--retail, Groceries, General line--wholesalers,

Penalties.

Accordingly, 7 CFR Parts 271 and 278 are amended as follows:

1. The authority citation for Parts 271 and 278 continues to read

as follows:

Authority: 7 U.S.C. 2011-2032

Sec. 271.2 [Amended]

2. In Sec. 271.2, the definition of ``Trafficking'' is amended by

removing the words ``the term is.''

PART 278--PARTICIPATION OF RETAIL FOOD STORES, WHOLESALE FOOD

CONCERNS AND INSURED FINANCIAL INSTITUTIONS

3. In Sec. 278.6, the first sentence of the introductory text of

paragraph (j) is revised to read as follows:

Sec. 278.6 Disqualification of retail food stores and wholesale food

concerns, and imposition of civil money penalties in lieu of

disqualifications.

* * * * *

(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 $20,000 for each

violation and shall not exceed $40,000 for all violations occurring

during a single investigation. * * *

* * * * *

4. In Sec. 278.9, a new paragraph (j) is added to read as follows:

Sec. 278.9 Implementation of amendments relating to the participation

of retail food stores, wholesale food concerns and insured financial

institutions.

* * * * *

(j) Amendment No. 354. The program changes made to Sec. 271.2 and

Sec. 278.6 by this amendment are effective October 1, 1993.

Dated: May 23, 1994.

William E. Ludwig,

Administrator Food and Nutrition Service.

[FR Doc. 94-13055 Filed 5-26-94; 8:45 am]

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