USC - Civil penalties and disqualification of retail food stores and wholesale food concerns

View all text of Chapter 51 [§ 2011 - § 2036d]

§ 2021. Civil penalties and disqualification of retail food stores and wholesale food concerns

(a) Disqualification

(1) In generalAn approved retail food store or wholesale food concern that violates a provision of this chapter or a regulation under this chapter may be—

(A) disqualified for a specified period of time from further participation in the supplemental nutrition assistance program;

(B) assessed a civil penalty of up to $100,000 for each violation; or

(2) Regulations

(b) Period of disqualificationSubject to subsection (c), a disqualification under subsection (a) shall be—

(1) for a reasonable period of time, not to exceed 5 years, upon the first occasion of disqualification;

(2) for a reasonable period of time, not to exceed 10 years, upon the second occasion of disqualification;

(3) permanent upon—

(A) the third occasion of disqualification;

(B) the first occasion or any subsequent occasion of a disqualification based on the purchase of coupons or trafficking in coupons or authorization cards by a retail food store or wholesale food concern or a finding of the unauthorized redemption, use, transfer, acquisition, alteration, or possession of EBT cards, except that the Secretary shall have the discretion to impose a civil penalty of up to $20,000 for each violation (except that the amount of civil penalties imposed for violations occurring during a single investigation may not exceed $40,000) in lieu of disqualification under this subparagraph, for such purchase of coupons or trafficking in coupons or cards that constitutes a violation of the provisions of this chapter or the regulations issued pursuant to this chapter, if the Secretary determines that there is substantial evidence that such store or food concern had an effective policy and program in effect to prevent violations of the chapter and the regulations, including evidence that—

(i) the ownership of the store or food concern was not aware of, did not approve of, did not benefit from, and was not involved in the conduct of the violation; and

(ii)(I) the management of the store or food concern was not aware of, did not approve of, did not benefit from, and was not involved in the conduct of the violation; or(II) the management was aware of, approved of, benefited from, or was involved in the conduct of no more than 1 previous violation by the store or food concern; or

(C) a finding of the sale of firearms, ammunition, explosives, or controlled substance (as defined in section 802 of title 21) for coupons, except that the Secretary shall have the discretion to impose a civil penalty of up to $20,000 for each violation (except that the amount of civil penalties imposed for violations occurring during a single investigation may not exceed $40,000) in lieu of disqualification under this subparagraph if the Secretary determines that there is substantial evidence (including evidence that neither the ownership nor management of the store or food concern was aware of, approved, benefited from, or was involved in the conduct or approval of the violation) that the store or food concern had an effective policy and program in effect to prevent violations of this chapter; and

(4) for a reasonable period of time to be determined by the Secretary, including permanent disqualification, on the knowing submission of an application for the approval or reauthorization to accept and redeem coupons that contains false information about a substantive matter that was a part of the application.

(1) Civil penalty

(2) Review

(d) Conditions of authorization

(1) In general

(2) Collateral

(3) Bond requirements

(4) Forfeiture

(5) Hearing

(e) Transfer of ownership; penalty in lieu of disqualification period; fines for acceptance of loose coupons; judicial action to recover penalty or fine

(1) In the event any retail food store or wholesale food concern that has been disqualified under subsection (a) is sold or the ownership thereof is otherwise transferred to a purchaser or transferee, the person or persons who sell or otherwise transfer ownership of the retail food store or wholesale food concern shall be subjected to a civil penalty in an amount established by the Secretary through regulations to reflect that portion of the disqualification period that has not yet expired. If the retail food store or wholesale food concern has been disqualified permanently, the civil penalty shall be double the penalty for a ten-year disqualification period, as calculated under regulations issued by the Secretary. The disqualification period imposed under subsection (b) shall continue in effect as to the person or persons who sell or otherwise transfer ownership of the retail food store or wholesale food concern notwithstanding the imposition of a civil penalty under this subsection.

(2) At any time after a civil penalty imposed under paragraph (1) has become final under the provisions of section 2023(a) of this title, the Secretary may request the Attorney General to institute a civil action against 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 to collect the penalty and such court shall have jurisdiction to hear and decide such action. In such action, the validity and amount of such penalty shall not be subject to review.

(3) The Secretary may impose a fine against any retail food store or wholesale food concern that accepts food coupons that are not accompanied by the corresponding book cover, other than the denomination of coupons used for making change as specified in regulations issued under this chapter. The amount of any such fine shall be established by the Secretary and may be assessed and collected in accordance with regulations issued under this chapter separately or in combination with any fiscal claim established by the Secretary. 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.

(f) Fines for unauthorized acceptance

(g) Disqualification of retailers who are disqualified under WIC program

(1) In general

(2) TermsA disqualification under paragraph (1)—

(A) shall be for the same length of time as the disqualification from the program referred to in paragraph (1);

(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and

(h) Flagrant violations

(1) In general

(2) RequirementsUnder the procedures described in paragraph (1), if the Secretary, in consultation with the Inspector General, determines that a retail food store or wholesale food concern is engaged in flagrant violations of this chapter (including regulations promulgated under this chapter), unsettled program benefits that have been redeemed by the retail food store or wholesale food concern—

(A) may be suspended; and

(B)

(i) if the program disqualification is upheld, may be subject to forfeiture pursuant to section 2024(g) of this title; or

(ii) if the program disqualification is not upheld, shall be released to the retail food store or wholesale food concern.

(3) No liability for interest

(i) Pilot projects to improve Federal-State cooperation in identifying and reducing fraud in the supplemental nutrition assistance program

(1) Pilot projects required

(A) In general

(B) RequirementAt least 1 pilot project described in subparagraph (A) shall be carried out in an urban area that is among the 10 largest urban areas in the United States (based on population), if—

(i) the supplemental nutrition assistance program is separately administered in the area; and

(ii) if the administration of the supplemental nutrition assistance program in the area complies with the other applicable requirements of the program.

(2) Selection criteriaPilot projects shall be selected based on criteria the Secretary establishes, which shall include—

(A) enhancing existing efforts by the Secretary to reduce fraud described in paragraph (1)(A);

(B) requiring participant States to maintain the overall level of effort of the States at addressing recipient fraud, as determined by the Secretary, prior to participation in the pilot project;

(D) commitment of the participant State agency to follow Federal rules and procedures with respect to investigations described in paragraph (1)(A); and

(E) the extent to which a State has committed resources to recipient fraud and the relative success of those efforts.

(3) Evaluation

(A) In general

(B) RequirementsThe evaluation shall include—

(i) the impact of each pilot project on increasing the capacity of the Secretary to address fraud described in paragraph (1)(A);

(ii) the effectiveness of the pilot projects in identifying, preventing and reducing fraud described in paragraph (1)(A); and

(iii) the cost effectiveness of the pilot projects.

(4) Report to CongressNot later than September 30, 2017, the Secretary shall submit to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate, a report that includes a description of the results of each pilot project, including—

(A) an evaluation of the impact of the pilot project on fraud described in paragraph (1)(A); and

(B) the costs associated with the pilot project.

(5) Funding

(Pub. L. 88–525, § 12, Aug. 31, 1964, 78 Stat. 707; Pub. L. 95–113, title XIII, § 1301, Sept. 29, 1977, 91 Stat. 974; Pub. L. 97–253, title I, §§ 175, 176(a), Sept. 8, 1982, 96 Stat. 781; Pub. L. 99–198, title XV, § 1532(a), Dec. 23, 1985, 99 Stat. 1582; Pub. L. 100–435, title III, § 344, Sept. 19, 1988, 102 Stat. 1664; Pub. L. 101–624, title XVII, §§ 1743–1745, Nov. 28, 1990, 104 Stat. 3795, 3796; Pub. L. 103–66, title XIII, §§ 13943, 13944, Aug. 10, 1993, 107 Stat. 677; Pub. L. 104–127, title IV, § 401(a), Apr. 4, 1996, 110 Stat. 1026; Pub. L. 104–193, title VIII, §§ 841–843, Aug. 22, 1996, 110 Stat. 2331, 2332; Pub. L. 110–234, title IV, § 4132, May 22, 2008, 122 Stat. 1114; Pub. L. 110–246, § 4(a), title IV, § 4132, June 18, 2008, 122 Stat. 1664, 1875; Pub. L. 113–79, title IV, §§ 4017, 4030(g), Feb. 7, 2014, 128 Stat. 796, 814.)