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

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1 U.S. Department of Agriculture Food and Nutrition Service Administrative Review Branch Alexandria, VA Rising Sun Dollar Plus, Inc, Appellant, v. Case Number: C Retailer Operations Division, Respondent. FINAL AGENCY DECISION It is the decision of the USDA, FNS that the one-year WIC reciprocal disqualification from the SNAP (Supplemental Nutrition Assistance Program), imposed upon Rising Sun Dollar Plus, Inc. (hereinafter Appellant ) by the ROD, IAB Office (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(e)(8) and 7 CFR 278.6(f), (g) and (h) in its administration of the SNAP when it imposed the above-referenced adverse action upon Appellant. AUTHORITY 7 U.S.C and its 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 The record reflects that the Pennsylvania Department of Health issued a letter dated April 25, 2016 disqualifying the Appellant firm from the WIC program for a period of one year, effective upon May 26, The disqualification was based upon violations of the WIC program rules and regulations. The violations noted therein in fact warrant the disqualification and Appellant was duly notified that such sanction may precipitate a reciprocal disqualification from the SNAP; the subsequent SNAP disqualification was appropriate and is not appealable, administratively or judicially, in accordance with 7 CFR 278.6(e)8(iii)(C), as noted below. 1

2 In a letter dated June 14, 2016, the Appellant was informed that the ROD Office was considering the imposition of a one-year disqualification from the SNAP, or a hardship civil money penalty (HCMP) in lieu thereof, upon Appellant in accordance with 7 CFR 278.6(e). The record reflects that the ROD Office received and considered Appellant s replies to the Charge Letter. By a letter dated July 7, 2016, Appellant was informed that the ROD Office was imposing upon it a one-year reciprocal disqualification from the SNAP due to Appellant s one-year disqualification from the Women, Infants and Children program (WIC) and was informed that the firm may request an administrative review of the decision regarding Appellant s eligibility for a civil money penalty in lieu of the disqualification; Appellant was notified that it may continue to participate in the SNAP pending the outcome of the review. On July 19, 2016 Appellant requested an administrative review of the ROD Office s decision. The request was granted. STANDARD OF REVIEW In appeals of adverse actions an appellant bears the burden of proving 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, 7 CFR 278.6(e)(8) and 7 CFR 278.6(f), (g) and (h) of the Regulations establish the authority upon which a reciprocal disqualification (or a civil money penalty in lieu thereof) from the SNAP for violations of the WIC program may be imposed upon a retail food store or wholesale food concern. 7 U.S.C (b)(7)(e). 7 CFR 278.6(e)8 states, inter alia: FNS shall disqualify from the SNAP any firm which is disqualified from the WIC Program: Based in whole or in part on any act which constitutes a violation of that program s regulation and which is shown to constitute a misdemeanor or felony violation of law, or for any of the following specific program violations. 7 CFR 278.6(e)(8)(iii)(A) states that such a disqualification: Shall be for the same length of time as the WIC disqualification. 7 CFR 278.6(e)(8)(iii)(C) states, inter alia, that such a disqualification: Shall not be subject to administrative or judicial review under the SNAP. 2

3 7 CFR 278.6(f)(1) states: FNS may impose a civil money penalty as a sanction in lieu of disqualification when the firm subject to a disqualification is selling a substantial variety of staple food items, and the firm s disqualification would cause hardship to SNAP households because there is no other authorized retail food store in the area 7 CFR 278.6(g) details the method for calculating a HCMP as follows: (1) Determine the firm s average monthly redemptions of coupons for the 12- month period ending with the month immediately preceding that month during which the firm was charged with violations. (2) Multiply the average monthly redemption figure by 10 percent. (3) Multiply the product arrived at in the paragraph (g)(2) by the number of months for which the firm would have been disqualified under paragraph (e) of this section. The civil money penalty may not exceed an amount specified in 3.91(b)(3)(i) of this title for each violation. 7 CFR 3.91(b)(3)(i) establishes initial minimum and maximum amounts of civil money penalties pertinent to the statutory provisions of 7 CFR 278 and is evaluated and adjusted accordingly every four years for inflation: A civil penalty for hardship in lieu of disqualification codified at 7 U.S.C. 2021(a), has a maximum of $11,000 per violation. 7 CFR 278.6(h) states, inter alia: A firm has 15 days from the date the FNS...office notifies the firm in writing in which to pay the civil money penalty. The firm must present to FNS a collateral bond as specified in 278.1(b)(4), within the same 15-day period. (1) Disqualify the firm for the period determined to be appropriate under paragraph (e) of this section if the firm refuses to pay any of the civil money penalty; (2) Disqualify the firm for a period corresponding to the unpaid part of the civil money penalty if the firm does not pay the penalty in full or (3) Disqualify the firm for the prescribed period if the firm does not present a collateral bond within the required 15 days. 7 CFR Part 278.1(b)(4) states, inter alia: If the applicant firm has been sanctioned for violations of this part, by withdrawal or disqualification for a period of more than six months, or by a civil money penalty in lieu of a disqualification period of more than six months, or if the applicant firm has been previously sanctioned for violations and incurs a subsequent sanction, regardless of the disqualification period, FNS shall, as a condition of future authorization, require the applicant to present a collateral bond or irrevocable letter of credit 3

4 7 CFR Part 278.1(b)(4)(D) states, inter alia: The collateral bond or irrevocable letter of credit must have a face value of $1000 or an amount equal to ten percent of the average monthly SNAP redemption volume of the applicant firm for the immediate twelve months prior to the effective date of the most recent sanction which necessitated the collateral bond or irrevocable letter of credit, whichever amount is greater. APPELLANT S CONTENTIONS In its written request for review dated July 19, 2016 Appellant provided information in which it was argued that: Appellant previously requested a civil money penalty in lieu of a disqualification; the request was erroneously denied by the ROD Office. The firm sells specialty items to the Middle Eastern and Spanish communities and the disqualification will cause a hardship to these food stamp communities. Appellant provides photographs of food products in support thereof. The food is packaged with Arabic, Spanish and English labels; the dual languages used in the packaging provide those in the community who are not fluent in English the opportunity to buy this food because they understand it. Additionally, Appellant provides a delivery service to customers purchasing over $60 in merchandise. Appellant is the only firm in the community that provides delivery service. Appellant has traveled around the neighborhood and found that no other store provides the specialty products noted above. ANALYSIS AND FINDINGS Other than to ensure that the firm was notified of the reciprocal disqualification provisions by the WIC state agency, that a signed copy of the WIC disqualification notice was present in the record, that the SNAP disqualification period was the same as that imposed by the WIC agency and that the firm was disqualified from WIC for any violation described under 7 CFR 278.6(e)(8)(i)(A)-(F), the only latitude left the ROD Office was to determine if the firm qualified for a hardship civil money penalty in lieu of a disqualification. The sanction determination of the WIC state agency, and the imposition of a reciprocal SNAP sanction, are therefore beyond the scope of this review and not appealable by means of same. With regard to Appellant s contentions above, Appellant asserts that its firm is the only store in the area that sells food products with dual-language packaging (Spanish/English) marketed toward Hispanic and Middle Eastern customers. However, no evidence that the firm maintains inventory marketed toward Middle Easterners was presented; none of the photos appear to contain any Middle Eastern products or labels in Arabic. The photos Appellant provided were primarily of canned and packaged goods produced by Goya, which is a brand marketed using Spanish/English packaging. The Appellant firm was visited in August 2013; the photos obtained as a result of that visit reflect inventory that contained most of the products shown in the photos provided by Appellant 4

5 in support of its review request, which tends to indicate that the firm s staple food inventory is very similar to that found in It is added for the record that agency information reflects that the store operates primarily as a party/general store with a large amount of retail space devoted to non-food items. Outdoor signage advertises party supplies, health and beauty items, gifts, kitchenware, ceramics and school supplies. Firms typically devote the greater floor/shelf space to the items that produce the most sales; a store layout diagram from the earlier visit to the Appellant firm reflects that non- food items comprised approximately 75% of the firm s available retail space. The firm s most recent application/reauthorization to participate in the SNAP indicated that the majority of the firm s sales were in hot or non-food items. Thus agency documentation reflects that the firm s primary focus was not upon the sale of SNAP-eligible or staple food items. Moreover, as such, there are many firms in the area/community whose primary focus is upon the sale of SNAP-eligible foods, many of which are staple food items; there are numerous firms within a one-mile radius whose staple food sales exceed 65% of gross sales. Store visit documentation from at least four nearby stores less than one-quarter mile from the Appellant firm reflects inventory comparable or superior to that of the Appellant firm, including dual-language packaged goods marketed to Hispanic customers. All of these firms had: a wellstocked deli area, in fact better stocked than the Appellant firm; a well- stocked canned and packaged good section containing numerous Goya brand dual- language labelled products, including spices, as well as other brands marketed to Hispanic customers. Most stocked a superior selection of fresh fruits and vegetables. One firm stocked a vastly superior selection of fresh and frozen meat and seafood items, and also offered bulk/discount quantities. The latter firm s outdoor marquee/billboard advertised its inventory in general food categories and in both Spanish and English. It is clear that Philadelphia has a substantial Hispanic population by virtue of the numerous stores selling Hispanic food products in the area. The ROD Office noted that, at the time of the sanction decision, there were at least six supermarkets and super stores within a one-mile radius of the Appellant firm. Agency records indicate that there are currently 135 other SNAPauthorized firms within a one-mile radius of the Appellant firm, including one super store (at just over one-quarter mile from the Appellant store), three supermarkets (two at just under one-fifth mile and just under one-quarter mile), one large grocery store, two medium grocery stores, 88 small grocery stores (24 from just over 200 feet to just under one-half mile), eight combination grocery other stores, one bakery specialty store, two meat specialty stores, two seafood specialty stores and 25 other convenience stores (from just under one-quarter mile to just over one-half mile). Thus there is no indication in the record that the disqualification would work hardship upon SNAP customers due to loss of access to ethnic foods, due to physical barriers or conditions that would make travel difficult or would restrict normal travel to comparable firms or due to the impending closure of a nearby comparable firm. In accordance with the regulatory guidance referenced in the foregoing, the ROD Office s determination that Appellant does not qualify for a civil money penalty in lieu of a one-year disqualification is affirmed as correct and appropriate. Appellant asserts that the firm offers a delivery service and that other stores do not; however, the statute and regulations contain no provision allowing or requiring consideration of the presence, or absence, of delivery services in hardship civil money penalty analyses. Lastly, the ROD 5

6 Office determined that Appellant must provide a collateral bond or letter-of-credit in an amount and maintained for a duration in accordance with the regulations at 7 CFR Part 278.1(b)(4), as a condition of further participation in the SNAP, in the event Appellant reapplies following the disqualification period; such is hereby affirmed as correct and appropriate. CONCLUSION In view of the above, the decision of the ROD Office to disqualify Rising Sun Dollar Plus, Inc. for a period of one-year from participation in the SNAP is hereby sustained and will become effective upon the 30 th day following your firm s receipt of this document. Appellant may reapply for authorization to participate in the SNAP up to 10 days prior to the end of the threeyear disqualification period. 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 April 7, 2017 Administrative Review Officer 6