U.S. Department of Agriculture Food and Nutrition Service Administrative Review Branch Alexandria, VA FINAL AGENCY DECISION ISSUE AUTHORITY

Transcription

1 U.S. Department of Agriculture Food and Nutrition Service Administrative Review Branch Alexandria, VA Sunoco Food Mart, Appellant, v. Case Number: C Retailer Operations Division, Respondent. FINAL AGENCY DECISION It is the decision of the U.S. Department of Agriculture, Food and Nutrition Service (FNS) that the permanent disqualification from the Supplemental Nutrition Assistance Program (SNAP) imposed upon Sunoco Food Mart (hereinafter Appellant ) by the ROD (Retailer Operations Division, Investigations and Analysis Branch, hereinafter ROD Office ) is hereby sustained. ISSUE The issue accepted for review is whether the ROD Office took appropriate action, consistent with 7 U.S.C. 2021, 7 CFR 278.6(a) and 7 CFR (e)(1) and (i) in its administration of the SNAP when it imposed a permanent disqualification upon Appellant. AUTHORITY 7 U.S.C and the implementing regulations at 7 C.F.R provide that A food retailer or wholesale food concern aggrieved by administrative action under 278.1, or may file a written request for review of the administrative action with FNS. CASE CHRONOLOGY In a letter dated August 11, 2016, the Retailer Operations Division charged the Appellant with trafficking, as defined in Section of the SNAP regulations, based on a series of irregular SNAP transaction patterns that occurred during the months of February through July The letter noted that the sanction for trafficking is permanent disqualification, as provided by 7 CFR 278.6(e)(1). The letter also noted that the Appellant could request a trafficking civil money penalty (CMP) in lieu of a permanent disqualification within 10 days of receipt under the conditions specified in 7 CFR 278.6(i). The record reflects that the SNAP Office received and duly considered Appellant s replies to the Charge Letter. By a letter dated September 20, 2016, 1

2 Appellant was informed that it was permanently disqualified from participation as a retail store in the SNAP and was ordered upon receipt of the letter to cease accepting SNAP benefits; consequently, Appellant ceased to accept said benefits. On October 3, 2016, Appellant requested an administrative review of the SNAP Office s decision; the request was granted. STANDARD OF REVIEW In appeals of adverse actions an appellant bears the burden of demonstrating by a preponderance of the evidence that the administrative actions should be reversed. That means an appellant has the burden of providing relevant evidence which a reasonable mind, considering the record as a whole, would accept as sufficient to support a conclusion that the matter asserted is more likely to be true than not true. CONTROLLING LAW The controlling statute in this matter is contained in the Food & Nutrition Act of 2008, as amended, at 7 U.S.C and in Part 278 of Title 7 of the Code of Federal Regulations (CFR). 7 U.S.C. 2021, Part 278.6(a) and Part (e)(1)(i) of the Regulations establish the authority upon which a permanent disqualification may be imposed upon a retail food store or wholesale food concern. 7 U.S.C (b)(7)(e). 7 U.S.C. 2021(b)(3)(B) states, inter alia: a disqualification under subsection (a) shall be permanent upon 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 7 CFR 278.6(a) states, inter alia: FNS may disqualify any authorized retail food store if the firm fails to comply with the Food & Nutrition Act of 2008, 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. (Emphasis added.) 7 CFR 278.6(e)(1)(i) states: Disqualify a firm permanently if: Personnel of the firm have trafficked as defined in

3 7 CFR states, inter alia: Trafficking means the buying, selling, stealing, or otherwise effecting an exchange of SNAP benefits issued and accessed via Electronic Benefit Transfer (EBT) cards, card numbers, (PINs), or by manual voucher and signature, for cash or consideration other than eligible food, either directly, indirectly, in complicity or collusion with others, or acting alone. 7 CFR 278.6(f)(1) states, inter alia: A civil money penalty for hardship to SNAP households may not be imposed in lieu of a permanent disqualification. 7 CFR 278.6(i) states, inter alia: FNS may impose a civil money penalty in lieu of a permanent disqualification for trafficking as defined in if the firm timely submits to FNS substantial evidence which demonstrates that the firm had established and implemented an effective compliance policy and program to prevent violations 7 CFR 278.6(b)(2)(iii) states, inter alia: 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 278.6(b)(1), the firm shall not be eligible for such a penalty. SUMMARY OF THE CHARGES A series of multiple SNAP transactions 7 U.S.C (b)(6) & (b)(7)(c) were debited from individual benefit accounts in unusually short time frames (Attachment 1). In a series of Supplemental Nutrition Assistance Program EBT transactions 7 U.S.C (b)(6) & (b)(7)(c), the majority or all of individual recipient benefits were exhausted in unusually short periods of time (Attachment 2). A series of excessively large SNAP transactions 7 U.S.C (b)(6) & (b)(7)(c) were debited from recipient accounts (Attachment 3). APPELLANT S CONTENTIONS In Appellant s September 15, 2106 reply to the Charge Letter, in its written request for review dated October 3, 2016, and in subsequent correspondence, it was argued that: 1. The Appellant store is a grocer serving a variety of foodstuffs, nearly all of which qualify as eligible under SNAP regulations. Appellant provides a copy of product purchase receipts/invoices for the month of May 2016 showing the high volume of food that the firm purchases on a monthly basis. 7 U.S.C (b)(7)(e). In truth, the firm s food sales 3

4 are much higher, as is demonstrated by photos taken by the SNAP reviewer who visited the store in 2012; the inventory reflected in the 2016 store visit shows the store between vendor visits and was not as well stocked as it traditionally is. Thus Appellant states that the older images are a more accurate depiction of how the firm traditionally maintains inventory. Additionally, there are a number of errors in the Reviewer s (store visit) report: the report states the commercial space of the firm as 1800 square feet and the ROD Office lists the store s space as 1000 square feet. The store has 1800 square feet of retail space and 900 square feet of storage. The storage area carries a significant amount of inventory. 2. As with many other SNAP retailers, Appellant has noticed an increase in bulk purchases of energy and caffeinated beverages (many cases of which appear in the photos provided by Appellant) as well as purchases of frozen foods and meats, which are not pictured in any of the Reviewer s images. These items are included in almost all of the large transactions seen in the Charge Letter. 3. One of the most significant draws of the firm is its location; it is the only store within walking distance of the surrounding neighborhood as well as the public transportation bus that stops at the firm s location. As such, the firm has crafted its inventory to cover all of the grocery needs of the average local family. Appellant provides photos of the store accurately reflecting its inventory. 4. On the whole, the store s customers typically conform to the traditional transaction patterns of other SNAP participants in that they make large and frequent purchases within a week of receiving SNAP benefits and frequently 7 U.S.C (b)(7)(e). Appellant cites Analysis of EBT Redemption Patterns: Methods and Detailed Tables (USDA, Feb 2011) and notes that SNAP recipients expend more than half of their benefits within 7 days of receiving benefits. Additionally, as noted in FNS publication Benefit Redemption Patterns in the SNAP, Final Report (2011), a large portion of households redeem nearly all of their benefits in the first two weeks of the month. 5. None of the three transaction categories listed by the ROD Office are demonstrative of any level of violation by Appellant but are the necessary and logical conclusions to the inventory and customer base that the store serves. Furthermore, the ROD Office s prior decision was based on inaccurate data and information. The ROD Office used numbers from 15 years ago when evaluating the business transactions of the store. The store does not do as much business as it used to, but these numbers have not been adjusted for inflation. Accordingly, they re fundamentally off base and should be disregarded. The algorithm used by the ROD Office is heavily dependent upon categorical calculations and averages set against other stores located geographically close to the Appellant that the ROD Office believes serve similar items to a similar clientele in similar quantities. However, the ROD Office does not have a store in Appellant s geographic area that could possibly serve as a baseline for comparison purposes; therefore, the algorithm does not take into consideration the unique business practices of the Appellant firm. Appellant cites Brooklyn Mini Market vs. U.S. in support thereof; where the department lacks local comparisons to the store at issue, its evidence of trafficking is insufficient. 6. A permanent disqualification should only occur (where transaction data is the primary information contained in the Charge Letter) where there are no other reasonable explanations for the transactions

5 a. Regarding Attachment 1 to the Charge Letter, Maryland s SNAP benefits are issued on the fourth through the 23 rd day of each month. SNAP participants do not always know what their remaining SNAP balance is; accordingly, they will sort food into two groups: that which is necessary (affordable) and that which is optional (possibly affordable). They make the first purchase of necessary items (which they believe is less than the remaining balance), and then request the second purchase to test the balance to see if they have enough SNAP benefits to purchase the remainder of the food. The food amounts are pre-calculated at the register and then transacted consecutively based upon the authorization of the original amount. b. Additionally, as with many other stores, the Appellant firm encourages impulse purchases at or near the register; Appellant provides a variety of food items within a few steps of the check-out area/register. During transactions for other food items, participants will often make selections of snack and candy items which produces a second transaction following the first. The first transaction would complete around the time the second had been tabulated and the second would be entered into the machine for processing. These transactions appear throughout Attachment 1 and appear with a large transaction first and a smaller transaction second. c. Some SNAP recipients portion monthly benefits between different household members. In order to more easily track such spending, transactions are broken apart by household member. For example, two household members shop at the store at the same time; frequently these purchases include frozen food and bulk food purchases, relatively few items for higher dollar amounts. They appear at the register together and one household member uses the card to pay for a purchase followed by the other household member doing the same. These transactions appear in Attachment 1 as more balances transactions, such as transactions 1-2, 3-4, 5-6, 7-8, 9-10, 11-12, 13-14, 15-16, 17-18, 19-21, and d. A substantial portion of the firm s SNAP clientele lack transportation; as such they are limited in the amount of food that they can transport in a single trip. 7 U.S.C (b)(7)(e). Such purchases are often in similar amounts and are almost certainly bulk purchases: heavy items or items logistically difficult to transport by hand such as cold items. e. The firm does not use an optical reader/scanner but enters food item prices by hand, 7 U.S.C (b)(7)(e). Customers also buy bulk sodas and frozen foods which can be rung up quickly by the clerk resulting in higher purchases in relatively short time frames. Clerks can also run transactions based upon what a SNAP customer identifies after an initial purchase; for example if a customer purchases sodas, frozen food and snack/grocery items, the customer knows what the remaining balance is and requests the clerk to ring up additional cases of eligible items such as energy drinks and sodas. Items do not have to pass over the counter, they are merely identified by the clerk who pushes the appropriate register button and the machine takes care of the calculation. f. 7 U.S.C (b)(7)(e). The vast majority of the items purchased were likely snack foods and sodas items that the clerk was aware of or that the register had 5

6 pre-programmed into it. 7 U.S.C (b)(7)(e). It is not particularly common, but households such as 7 U.S.C (b)(6) & (b)(7)(c) that do not have access to vehicles have to walk their food selections home and come back. 8. Regarding Attachment 2 (balance depletions), Appellant cannot control how quickly SNAP customers spend their benefits, nor should the firm be responsible or required to turn away business because customers choose to make significant purchases. There is no statutory or regulatory basis to punish Appellant for actions over which it has no control and which would harm the business continued existence. a. SNAP customers build up a need for grocery purchases as a result of exhausted benefits from the prior month. b. Households spend SNAP benefits on snack foods rather than staple groceries. Most of the purchases consist of convenience meals and snack items. There are occasional purchases of fresh vegetables and staple foods but most are convenience foods. The firm maintains a stock room with extra inventory of such products. It is not Appellant s position that it is a primary grocer for any of the households. As noted, product purchase receipts are provided in support thereof and show that the firm purchases double the amount of food being sold in exchange for SNAP benefits. Appellant is not purchasing this amount of food to permit it go to waste so it can traffic SNAP benefits. 9. Regarding Attachment 3 (excessively large transactions), these transactions are unequivocally the result of the types of food offered by the store and avoiding trips to a larger grocery store, and sometimes due to inclement weather. Because the store has been in business for 16 years (SNAP-authorized for 15), some customers have formed habits of making the same or similar purchases on a monthly basis. Some customers conducting large transactions do so regularly, from month to month, demonstrating particular personal preferences and spending habits. a. Additionally, customers conducting large transactions do so with friends and family members who help carry the items to the car. The store does not require shopping carts for average customers and the large transactions such as those listed in Attachment 3 are an exception to the rule. The spending habits of some SNAP recipients do not conform to consumer norms; the system was designed to provide for those who cannot provide for themselves, including the mentally handicapped and the mentally ill, as well as those who are victims of their own decisions like drug use. Appellant should not be held responsible for the shopping habits of SNAP recipients. The value of evidence regarding Attachment 3 turns upon whether or not the transactions are more likely trafficking or legitimate (albeit largely irresponsible) purchases. It is much more likely that recipients are conducting large transactions at the Appellant firm in order to obtain snack and convenience foods than in order to engage in trafficking. b. 7 U.S.C (b)(6) & (b)(7)(c). 6

7 ANALYSIS AND FINDINGS At the outset it should be noted that the ROD Office ordered a contracted store visit to the Appellant firm as part of its investigation into Appellant s questionable transaction activity; the visit was conducted on June 18, 2016, as a result of which documentation was obtained including photographs of the exterior and interior of the store, a store layout diagram and a store inventory survey. This documentation reflected the following: No shopping carts or baskets Two registers. One SNAP card reader. No indication of wholesale business. Hot food sold. No dining area. No deli section. No meat/seafood bundles/specials or fruit/vegetable boxes. Night window used. Not a delivery route, farmer s market or specialty food store. Firm sold tobacco and tobacco-related products, paper products, clothing, health and beauty items, lottery tickets, over-the-counter medicines, household items, incense and other non-food items. The firm also operated as a gas station. The check-out area included a register behind a Plexiglas barrier with two small passthroughs inset into the top of the counter; counter space of approximately 1 X 1 foot or less at each pass-through. Photo: 19. Several prices in standard retail variations of $.x9. Photos: 12, 13, 21, 27, 28, 30, 32 and 34. Typical convenience store set up and inventory; mostly snack foods, candy, soda, beer, tobacco and convenience items. Canned goods appear dusty. Photo: 4 and 14. The documentation presents no indication of advertised specials, promotions or bulk or expensive food items. 7 U.S.C (b)(7)(e). The checkout area was set up in convenience store fashion, utilizing two small pass-through windows/trays (approximately 1 by 1 foot each of useable space) but was otherwise surrounded by tobacco products, candy, snack items, lottery tickets and other non-food items. There were no shopping carts or baskets with which customers could transport large orders to the small check-out area or to waiting transportation. This documentation reflects that the firm was a typically-stocked convenience store in all relevant respects. It is worth noting that the average SNAP purchase in a convenience store in Baltimore during the analysis period was $9.06, reflecting that large purchases are not routinely made in such stores. 7

8 In regard to contention 1 above, it is noted that 11 invoices provided by Appellant do not identify the seller or the products sold and merely document cash expenditures. It is not clear that the outlays were for the purchase of eligible food. As such, these cannot be considered reliable documentation of eligible food expenditures. Moreover, store visit photos clearly reflect that eligible food items are not the only products sold at the Appellant firm. As noted in the foregoing, the firm maintained a substantial inventory of tobacco and tobacco-related products, paper products, clothing, health and beauty items, lottery tickets, over-the-counter medicines, household items, incense and other non-food items. Invoices provided by Appellant reflect the purchase of several thousand dollars of tobacco products and automotive supplies. 7 U.S.C (b)(7)(e). The Aldi receipt is dated but the date is illegible. Without further information/verification, it cannot be assumed that certain vendors sell only eligible food items. The George Falter invoices are greatly overstated, and appear to include thousands of dollars of tobacco and automotive products. The following tabulates the eligible food items purchased in May 2016 on the receipts provided by Appellant: 7 U.S.C (b)(7)(e). 7 U.S.C (b)(7)(e). While most food products have a higher mark-up than most of the tobacco products, Appellant did not appear to fully subtract these (or possibly the automotive supplies and other non-foods) when noting the total amount that should be counted as food purchases. It is possible that Appellant counted only food items when determining profit margin but included other products when determining the total invoice amount. 7 U.S.C (b)(7)(e). The photo below, taken during the store visit conducted on June 18, 2016, provides an overview of the size of the store; whether the store is 1000 square feet, approximately 30 X 30 feet, or 1800 square feet, approximately 42 X 42 feet, is of less importance than the type and amount of inventory contained within the retail area. The photo below clearly reflects the interior of a typical convenience store/gas station. To the left and rear of the view taken in this photo are the checkout counter and additional snack foods, tobacco products and non-food items. 8

9 To the right and behind the area depicted in the photo is a three door freezer/cooler containing primarily single-serving ice cream novelty items, heat and serve sandwiches, six packages of bacon, one frozen pizza, five bags of ice, two boxes of frozen spinach, frozen water Fla-Vor-Ice pops (see first and second photo below); and beyond this was a small soda cooler, slushee machine, cappuccino machine, hot coffee and a prepared food area, as shown in the third photo below. 9

10 10

11 Appellant offers no documentation in support of its contention that store visit photos taken in 2012 are a more accurate reflection than store visit photos taken in Appellant moreover states that while sales are now lower inventory is greater, which is inconsistent; Appellant also notes that inventory was unusually low at the time of the store visit. Appellant provides 23 photographs of inventory taken after its receipt of the Charge and Determination Letters photos are date-stamped, January 1, 2016 (photo of three cinnamon rolls/snack cakes), August 20, 2016 (21 photos) and August 23, 2016 (1 photo). The inventory depicted is very similar to that seen in the ROD Office s contracted store visit photos, of which the record contains 33: both reflect the firm to be a typical convenience store in all relevant respects. There is no assortment of fresh meat or fruits/vegetables as one would encounter in even a small grocery store, with the exception of approximately one dozen raw onions seen during the store visit and four or five bunches of bananas seen in Appellant s photos). It is worth again noting that store visit photos depicted dusty canned goods, typically an indication of low turnover. Appellant s photographs of the firm s storage space reflect the presence of additional quantities of soda/soft drinks and non-food items, typical convenience store inventory. The storage area likewise appears in the store visit contractor s photo 18 in which the only visible products are likewise soda and non-food items. In sum, Appellant s documentation and arguments do little to demonstrate that the Appellant firm was other than a typically-stocked convenience store/gas station. Regarding contention 2 above, as noted, photos taken during the June 18, 2016 store visit do in fact reflect Appellant s inventory of frozen ice cream (primarily single-serving novelty items), frozen sandwiches, six packages of bacon, five bags of ice, two boxes of frozen spinach, one frozen pizza and a half carton of flavored ice pops (photograph 9 from the store visit photo file and also shown above). Also photographed during the store visit was Appellant s retail offerings of energy drinks (one small cooler, approximately 2 X 3 X 1.5 feet, by the checkout counter containing Red Bull, and another of the same size containing Rock Star energy drinks, both seen in photo 11). It is clear from the photos that the firm maintained a large inventory of soda/pop, as a large amount of retail space is devoted to these products. It should be noted that a large inventory of snack foods and soda is a very common trait for convenience stores, but does not typically result in large, balance-depleting and repetitive transactions. 7 U.S.C (b)(7)(e). What is lacking is a rationale and supporting documentation explaining why only customers of the Appellant firm, a typical convenience store in all relevant respects, would conduct such a large number of these transactions. One of the nearby convenience stores had analysis-period SNAP sales of more than twice that of the Appellant firm, yet conducted no repetitive transactions or balance-depleting transactions and less than one-fifth the number of excessively large transactions. With regard to contention 3 above, during the analysis period there were 95 other SNAPauthorized firms within a 2-mile radius of the Appellant firm, including six super stores, two supermarkets, three medium grocery stores (one at just over one-half mile from the Appellant firm), 10 small grocery stores (one at just under 500 feet from the Appellant firm), 22 combination grocery/other stores (one at just over one-third mile and one at just over one-half mile) and 49 other convenience stores (six from just over 100 feet to just over one-half mile). 11

12 Moreover, the ROD Office points out that customers conducting implausible transactions at Appellant s typically-stocked convenience store were shopping at much better-stocked and quite likely more competitively-priced super stores, supermarkets and grocery stores (super stores, supermarkets and grocery stores are typically the most competitively-priced in a given area) on or about the same day, calling into question what customers were able to obtain at the Appellant firm that they could not obtain at the better-stocked/better-priced stores. This information also clearly indicates that some customers conducting repetitive, balance-depleting and/or excessively large transactions at the Appellant firm also had access to transportation to visit stores over five miles away. Appellant states that the firm has oriented its inventory to cover all of the grocery needs of the average local family, yet also notes that it is not the firm s position that it is a primary grocer for any of the households. Appellant acknowledges that the firm s primary stock of eligible food is comprised of soda, energy drinks, snack and convenience food. The record moreover reflects that the firm did not stock any fresh meat, poultry or fish or any fresh produce (other than approximately 1 dozen onions) at the time of the store visit. 7 U.S.C (b)(7)(e). Agency data reflects that large and balance- depleting transactions tend not to occur at convenience stores. Regarding contention 5 above, it is unclear what Appellant is referring to when asserting the ROD Office used numbers from 15 years ago; the record reflects that the ROD analyzed Appellant s transaction activity from February through July The firm was initially authorized to participate in the SNAP in 2001; however, the firm was visited again in The firm was subsequently visited again in 2012 and reauthorized for participation in the SNAP upon the basis thereof. The firm s store type, convenience store, has remained unchanged since its initial authorization. As noted in the foregoing, there are a number of SNAP-authorized firms within a two-mile radius of the Appellant firm, including several convenience stores that are comparably stocked. Again as noted, the Appellant firm is a typical convenience store, selling pop/soda, snack and convenience food, as Appellant affirms, and no notably unique inventory appears in the record. The ROD Office does in fact compare the Appellant firm s transaction activity with other firms within a one-mile radius of the Appellant firm. With regard to contention 6 above, as noted in the foregoing, the evidentiary standard applied in the present case relies upon a preponderance of evidence, not the presence only of reasonable explanations, which nonetheless, the ROD Office, and subsequently this review, has duly considered and found uncompelling. In regard to contention 7a above, second transactions conducted to test balances should result in in SNAP customers at least occasionally encountering insufficient SNAP funds7 U.S.C (b)(7)(e). The rationale is moreover unlikely as each purchase receipt states the remaining SNAP balance and thus there is no need to guess at the amount for the second transaction. 7 U.S.C (b)(7)(e). Moreover, SNAP recipients need not engage in such arithmetical and logistical calisthenics, as a balance inquiry can be conducted free of charge at any SNAP- authorized store and/or customers can call a phone number on the back of the SNAP card to ascertain balances. Furthermore, no rationale is provided to explain why 12

13 such elaborate check- out machinations are undertaken only at or primarily at the Appellant firm but not at similar nearby stores. Regarding contention 7b above, while there are legitimate reasons why a SNAP recipient or household member might return to a small grocery store during a short period of time, such purchases are more typically in small amounts and for obtaining just a few items. 7 U.S.C (b)(7)(e). Customers spending such substantial amounts of SNAP allotments in a typically-stocked convenience store, when there are other larger food stores nearby which carry substantially larger varieties of food at lower costs, is implausible. Lastly, large transactions for the purchase of legitimate food items (which at this store would have been a substantial number of lower priced items), using no shopping carts and very little checkout-counter space, is additionally implausible. 7 U.S.C (b)(7)(e). 7 U.S.C (b)(7)(e). Frequent and large transactions conducted in order to purchase eligible foods at Appellant s store are highly unlikely given Appellant s logistical wherewithal and store stock. Moreover, as noted above, impulse purchases might explain small secondary transactions occurring immediately following primary transactions; however, 7 U.S.C (b)(7)(e). 7 U.S.C (b)(7)(e). In regard to contention 7d above, as noted, there are several comparable stores in the area and, moreover, Appellant s customers were shopping at better stocked super stores, supermarkets and grocery stores on or about the same day as conducting implausible transactions at Appellant typically-stocked convenience store. 7 U.S.C (b)(7)(e). The only such signage visible was advertising 10 three-ounce bags of chips for $ There was a very small quantity of frozen food in inventory, as described above. Appellant s invoices for the month of May moreover reflect few purchases of frozen food but predominantly indicated purchases of chips, snacks, soda, tobacco and other non-food items. With regard to contention 7f above, it is acknowledged that the vast majority of items kept in inventory at the firm were snack foods and sodas; that the purchase of such convenience and snack foods would routinely occur in large transactions is implausible. 7 U.S.C (b)(7)(e). It is moreover unclear how the large transactions such as those appearing in Attachment 1, when comprised entirely of large numbers of relatively inexpensive items (without the use of shopping carts or baskets), could be identified, counted and calculated on sight, purportedly faster than using an optical scanner such as those used by highly efficient and rapid throughput operations such as super stores and supermarkets. In regard to contention 8, that Appellant cannot prevent customer SNAP balance-depletions, or that there is no regulatory prohibition of balance depletions, is not the issue in the present case; the issue is whether or not the rationale offered, that only Appellant s customers are depleting SNAP balances in order to purchase large quantities of soda and snack items, is compelling, substantiated by reliable documentation and is the best explanation for the transaction activity contained in the Charge Letter, given the evidence present in the record. Regarding contention 8a above, this contention does not demonstrate that only Appellant s customers would choose to deplete SNAP balances in order to purchase large quantities of soda and snacks; agency data tends to strongly reflect that large purchases are much more likely to 13

14 occur at better-stocked stores and rarely occur at convenience stores. There is no question that SNAP customers purchase soda and snack foods, but they do not routinely deplete balances at convenience stores for such, or any other, items. 7 U.S.C (b)(7)(e). Product purchase receipts/invoices have been discussed in detail above. With regard to contention 9 above, as noted, the ROD Office has presented substantial documentary evidence that customers conducting implausible transactions at the Appellant store are shopping at much better-stocked and very likely more competitively-priced super stores, supermarkets and grocery stores on or about the same day. It is worth noting that not only do such stores also stock soda, snack items and other convenience foods, they also stock a wide variety of fresh meat, poultry and fish, dairy items, often fresh breads and other grain products and fresh fruit and vegetables, and also provide shopping carts and baskets with which customers can transport large orders to check-out areas and to waiting transportation. In regard to contention 9a, above, Appellant notes that large transactions such as those listed in Attachment 3 are an exception to the rule; this is essentially the same point regarding Attachment 3 that the ROD Office also makes: these transactions, in these numbers, are highly unusual. 7 U.S.C (b)(7)(e). As such, the argument that only, or primarily, Appellant s customers regularly conduct these implausible transactions is not compelling. In regard to contention 9b above, the Appellant firm is not viewed as a grocery store and did not maintain the staple food inventory that would qualify the firm to be classified as such. Appellant notes that the firm did not orient itself with the intent to be the primary grocery source for its customers but, rather, to sell convenience foods, snacks and soda. 7 U.S.C (b)(7)(e). 7 U.S.C (b)(7)(e). As noted, the firm is a typically-stocked convenience store in all relevant respects; there exists in the record no legitimate basis for the nature and level of the firm s transaction and redemption activity. 7 U.S.C (b)(7)(e). 7 U.S.C (b)(7)(e) 7 U.S.C (b)(7)(e) 7 U.S.C (b)(7)(e) Lastly, once trafficking is established, there is no latitude to impose a lesser sanction, with the exception of a civil money penalty. There is provision at 7 CFR 278.6(i) for the imposition of a civil money penalty in lieu of permanent disqualification for trafficking. Appellant was advised of this provision in the SNAP Office s Charge Letter dated August 11, 2016, which also advised that documentation of eligibility for that alternative sanction was to have been provided within a specific time limit. In the absence of any such documentation, a civil money penalty was not imposed in lieu of permanent disqualification by the SNAP Office. The SNAP regulations are specific at 7 CFR 278.6(b)(2)(iii) in that if a firm fails to request consideration for a civil money penalty in lieu of a permanent disqualification for trafficking and submit documentation 14

15 and evidence of its eligibility within the 10 days specified (within 10 days of receiving the letter of charges), the firm shall not be eligible for such a penalty. As Appellant did not request such consideration and provided no evidence or information in support thereof, the SNAP Office s decision not to impose a civil money penalty is sustained as appropriate pursuant to 7 CFR 278.6(b)(1); 278.6(b)(2)(ii), 278.6(b)(2)(iii) and 278.6(i). CONCLUSION In view of the above, the decision of the ROD Office to permanently disqualify Appellant from participation in the SNAP is hereby sustained. The decision will become final upon the 30 th day following Appellant s receipt of this document. RIGHTS AND REMEDIES Applicable rights to a judicial review of this decision are set forth in 7 U.S.C and 7 CFR If a judicial review is desired, the complaint must be filed in the U.S. District Court for the district in which Appellant s owner resides, is engaged in business, or in any court of record of the State having competent jurisdiction. This complaint, naming the United States as the defendant, must be filed within thirty (30) days of receipt of this decision. Under the provisions of the Freedom of Information Act (FOIA), FNS is releasing this information in a redacted format as appropriate. FNS will protect, to the extent provided by law, personal information that could constitute an unwarranted invasion of privacy. DANIEL S. LAY June 13, 2017 ADMINISTRATIVE REVIEW OFFICER 15