U.S. Department of Agriculture Food and Nutrition Service Administrative Review Alexandria, VA 22302 Chula Vista Ice Cream, Appellant, v. Case Number: C0168218 Retailer Operations Division, Respondent. FINAL AGENCY DECISION It is the decision of the U.S. Department of Agriculture (USDA, Food and Nutrition Service (FNS, that there is sufficient evidence to support a finding that the initial decision by the Retailer Operations Division (hereinafter ROD to withdraw the authorization of Chula Vista Ice Cream (hereinafter Chula Vista from participation in the Supplemental Nutrition Assistance Program (SNAP was properly imposed. Pursuant to 7 CFR 278.1(l(1(iii of the SNAP regulations, firms which have been withdrawn from participation on the basis of staple food deficiencies shall not be eligible to submit a new application for authorization in the program for a minimum period of six months from the effective date of the withdrawal. ISSUE The issue accepted for review is whether ROD took appropriate action, consistent with 7 CFR 278.1(l(1(iii, in its administration of the SNAP when it withdrew the authorization of Chula Vista on May 16, 2016. AUTHORITY 7 U.S.C. 2023 and its implementing regulations at 7 CFR 279.1 provide that [A] food retailer or wholesale food concern aggrieved by administrative action under 278.1, 278.6 or 278.7... may file a written request for review of the administrative action with FNS. 1
CASE CHRONOLOGY On April 29, 2016, as part of the periodic reauthorization process all stores must undergo, a store visit was conducted at Chula Vista to ascertain the store s continued eligibility to participate in the SNAP. During the visit, it was observed that, pursuant to 7 CFR 278.1(b(1, the store lacked variety and volume in the Dairy (the store carried ice cream only and the Meats/Poultry/Fish (the store carried canned fish only staple food categories. It was also determined that the store s staple food sales did not comprise more than 50 percent of its total gross retail sales based on information provided on the Appellant s SNAP application. In a letter dated May 16, 2016, the Retailer Operations Division informed the Appellant that Chula Vista was being withdrawn from participation as an authorized retailer in the SNAP because, in accordance with Criterions A and B of 7 CFR 278.1(l(iii, it did not offer for sale on a continuous basis a variety of foods in the Dairy and the Meats/Poultry/Fish categories of staple foods and its staple food sales were not more than 50 percent of its gross retail sales. The withdrawal action was based on information provided by the Appellant on his retailer application and observations made during the store visit on April 29, 2016 by representatives of USDA. In addition, because the Retailer Operations Division determined that Chula Vista failed to meet the eligibility criteria for continued participation, the Appellant was informed that he could not submit a new application to participate in the SNAP for a period of six months as provided in 7 CFR 278.1(k(2. In a letter postmarked May 24, 2016, the Appellant appealed ROD s decision and requested an administrative review of this action. The appeal was granted and implementation of the withdrawal was held in abeyance pending completion of this review. STANDARD OF REVIEW In appeals of adverse actions, an Appellant bears the burden of proving by a clear 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, might 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 and Nutrition Act of 2008, as amended, 7 U.S.C. 2018 and 278 of Title 7 of the Code of Federal Regulations (CFR. Part 278.1(l(1(iii establishes the authority upon which the authorization of any firm to participate in the SNAP may be withdrawn if it fails to meet established eligibility requirements. 7 USC 2018 (b(7(e 2
7 CFR 278.l(l(1(iii reads, in part, FNS shall withdraw the authorization of any firm if it fails to meet the requirements for eligibility under Criterion A or B, as specified in paragraph (b(1(i of this section... for the time period specified in paragraph (k(2 of this section. 7 CFR 278.l(b(1(ii(A provides, in relevant part, that in order for a retail store to qualify for authorization under Criterion A, it must Offer for sale and normally display in a public area, qualifying food items on a continuous basis (emphasis added evidenced by having, on any given day of operation, no fewer than three different varieties of food items in each of the four staple food categories. 7 CFR 278.l(b(1(ii(C clarifies variety of staple foods as meaning, in relevant part, different types of foods, such as apples, cabbage, tomatoes, and squash in the fruit or vegetable staple food category, or milk, cheese, butter and yogurt in the dairy category. Variety of foods is not to be interpreted as different brands, different nutrient values, different varieties of packaging, or different package sizes. Similar processed food items with varying ingredients such as, but not limited to, sausages, breakfast cereals, milk, sliced breads and cheeses, and similar unprocessed food items, such as, but not limited to, different varieties of apples, cabbage, tomatoes or squash, shall not each be considered as more than one staple food variety for the purpose of determining variety 7 CFR 271.2 defines staple foods as meaning, in relevant part, those food items intended for home preparation and consumption in each of the following food categories: meat, poultry or fish; bread or cereals; vegetables or fruits; and dairy products Hot foods are not eligible for purchase with (SNAP benefits and therefore do not qualify as staple foods for the purpose of determining eligibility Accessory food items including, but not limited to, coffee, tea, cocoa, carbonated and uncarbonated drinks, candy, condiments, and spices shall not be considered staple foods for the purpose of determining eligibility 7 CFR 278.l(b(1(iii provides, in relevant part, that in order for a retail store to qualify for authorization under Criterion B, it must have more than 50 percent of total gross retail sales in staple food sales. Total gross retail sales must include all retail sales of a firm, including food and non-food merchandise, as well as services APPELLANT S CONTENTIONS On review, the Appellant s contentions in this matter are essentially the following: Chula Vista meets the eligibility requirements for participation in the SNAP under Criterion A as the store stocks sufficient quantities of perishable foods in the Dairy staple food category; and Chula Vista also meets the eligibility requirements for participation in the SNAP under Criterion B as approximately 75 percent of the store s total gross retail sales are in staple food sales. 3
With regards to the Appellant s contention that Chula Vista meets the eligibility requirements for participation in the SNAP under Criterion A as the store stocks sufficient quantities of perishable foods in the Dairy staple food category, it is necessary to clarify for the record that the purpose of this review is to either validate or to invalidate the earlier decision of the Retailer Operations Division, and that it is limited to what circumstances existed at the time of the withdrawal action by the Retailer Operations Division. At the time of the withdrawal action, the contracted Reviewer indicated that Chula Vista did not offer for sale on a continuous basis a variety of staple foods in the Dairy and the Meats/Poultry/Fish staple food categories. The SNAP regulations at 278.l(b(1(ii is clear (with emphasis added that, under Criterion A, a firm shall offer for sale and normally display in a public area, qualifying staple food items on a continuous basis, evidenced by having, on any given day of operation, no fewer than three different varieties of food items in each of the four staple food categories. (Emphasis added. This means that retail stores must have qualifying staple food items displayed in a public area at the time of the store visit in order to qualify for SNAP authorization under Criterion A. The Reviewer indicated that Chula Vista was deficient in the Dairy (the store stocked ice cream only and the Meats/Poultry/Fish (the store stocked canned fish only staple food categories at the time of the store visit and, therefore, did not meet the requirements for SNAP authorization under Criterion A. The Appellant did not provide FNS with any vendor invoices/receipts, dated prior to the store visit date, that validate that Chula Vista normally stocks at least three different varieties of food items from the Dairy and the Meats/Poultry/Fish staple food categories and, therefore, the store met the SNAP eligibility requirements under Criterion A at the time of the store visit. 7 CFR 278.1(k(2 of the SNAP regulations is specific in its requirement that FNS shall deny/withdraw the application of any firm if it determines that the firm has failed to meet the eligibility requirements for authorization under Criterion A or Criterion B, as specified in paragraph (b(1(i of this section for a minimum period of six months from the effective date of the denial/withdrawal. Therefore, the Appellant s contention that Chula Vista meets the eligibility requirements for participation in the SNAP under Criterion A as the store stocks sufficient quantities of perishable foods in the Dairy staple food category does not provide any valid basis for dismissing or mitigating the adverse action imposed. The Appellant contends that Chula Vista also meets the eligibility requirements for participation in the SNAP under Criterion B as approximately 75 percent of the store s total gross retail sales are in staple food sales. 7 USC 2018 (b(7(e. In order to qualify for authorization under Criterion B, more than 50 percent of a retail store s total annual retail sales must come from sales of staple foods. The Appellant s SNAP application reflects that 40 percent of its annual retail sales come from the sale of staple foods. In addition to this documentation, the report summarizing the contracted Reviewer s April 29, 2016 visit to Chula Vista, along with accompanying photographs and sketch of the store s interior, reflects that Chula Vista does not carry sufficient items in two of the four staple food categories and that the firm s staple food sales represented less than 50 percent of the firm s total gross retail sales. A thorough review of the pictures taken during the April 4
29, 2016 store visit also indicates that approximately 15 to 20 percent of Chula Vista s staple food stock consists of accessory foods such as candy and gum, carbonated beverages, flavored beverages, hot sauce, sports drinks, bottled water, mayonnaise, salt, vegetable oil, coffee, vinegar, ketchup, etc. Per 7 CFR 271.2, accessory food items including, but not limited to, coffee, tea, cocoa, carbonated and uncarbonated drinks, candy, condiments, and spices shall not be considered staple foods for the purpose of determining SNAP eligibility of any firm. The store visit information also indicates that Chula Vista carries a good supply of ineligible items under the SNAP such as household cleaning supplies, paper products, grill lighters, towels, grill bricks, automotive supplies, etc. The Appellant did not provide any documentation or evidence, such as copies of purchase invoices, sales receipts, and actual sales records which would reveal that more than 50 percent of the store s total gross sales are in eligible staple foods. Under Criterion B, retail stores must have more than 50 percent of its total gross retail sales in staple food sales as required in 278.1(b(1(iii of the SNAP regulations. 7 CFR 278.1(l(1(iii of the SNAP regulations is specific in its requirement that Firms which have been withdrawn from participation on the basis of staple food deficiencies shall not be eligible to submit a new application for authorization in the program for a minimum period of six months from the effective date of the withdrawal. This means that a retail food store must continuously meet the eligibility requirements for authorization under Criterion A or B in order to remain authorized for participation in the SNAP. Therefore, the Retailer Operations Division s decision to withdraw the SNAP authorization of Chula Vista because it does not meet the requirements to be qualified for authorization under Criterion B remains in effect. CONCLUSION Based on the discussion above, the initial decision by the Retailer Operations Division to withdraw the authorization of Chula Vista Ice Cream to participate in the SNAP for a period of six months is sustained. RIGHTS AND REMEDIES In accordance with the Food and Nutrition Act of 2008 and the regulations issued pursuant thereto, this withdrawal action shall become effective 30 days after your receipt of this letter. Your attention is called to Section 14 of the Food and Nutrition Act (7 U.S.C. 2023 and to Section 279.7 of the Regulations (7 CFR 279.7 with respect to your right to a judicial review of this determination. Please note that if a judicial review is desired, the Complaint, naming the United States as the defendant, must be filed in the U.S. District Court for the district in which you reside or are engaged in business, or in any court of record of the State having competent jurisdiction. If any Complaint is filed, it must be filed within thirty (30 days of receipt of this Decision. 5
Under the Freedom of Information Act (FOIA, it may be necessary to release this document and related correspondence and records upon request. If we receive such a request, we will seek to protect, to the extent provided by law, personal information that if released, could constitute an unwarranted invasion of privacy. LORIE L. CONNEEN ADMINISTRATIVE REVIEW OFFICER December 2, 2016 DATE 6