USDA’s Food and Nutrition Service (FNS) has oversight over the Supplemental Nutrition Assistance Program (SNAP). The agency’s responsibilities include the licensing of more than 250,000 SNAP-authorized retail food stores. FNS also is authorized to bring administrative enforcement proceedings, including trafficking charges, against SNAP retailers to prevent fraud and other problem violations.
FNS publishes annual data compilations, including summaries and annual reports, on its website for nearly ten years. The agency’s year-end summaries provide valuable insight into what the agency is doing. Unfortunately, more than five months into the Federal Government’s fiscal year, FNS has still not released its FY19 Year End Summary. Unlike last year, when the issuance of the summary was delayed due to the lengthy federal government shutdown, FNS does not appear to have a justification for its continuing delays related to the posting of its FY19 report. Multiple efforts to ascertain from FNS leadership when last year’s summary will be posted have been met with silence.
The 2018 Year End Summary, while somewhat dated, provides some indication regarding what the agency has been up to on the SNAP retailer front. For example, the number of SNAP-authorized firms has been remarkably stable during the past five years, decreasing a little over 2% from a peak of 263,105 firms during FY 2017. While nearly 50% of all SNAP-authorized firms are convenience stores, those stores redeem only a little more than 5% of all SNAP benefits. On the other hand, superstores comprise only 7.7% of all SNAP-authorized entities but redeem more than half of all SNAP benefits. Not surprisingly, California led the way with more than $6.3 billion in SNAP benefits redeemed at more than 26,000 SNAP-authorized stores in the Golden State.
The most interesting part of FNS’s 2018 Year End Summary addressed retailer sanctions. FNS’s administrative process is unique amongst USDA regulatory agencies because the agency does not use Administrative Law Judges to determine whether to disqualify retailers from participation in SNAP. Instead, FNS relies on non-lawyer employees known as Administrative Review Officers (AROs) to preside over SNAP administrative proceedings. Unlike federal court, where the rules of evidence apply, and unlike the National Appeals Division and other USDA administrative settings where witnesses may be called to testify, SNAP administrative proceedings are limited to unilateral paper submissions that are reviewed by AROs who issue written Final Agency Decisions. FNS’s SNAP retailer administrative process is also unique among USDA agencies – and perhaps the entire federal government, because FNS AROs make final agency decisions based, in part, upon a review of records that are not produced to SNAP retailers or their counsel. SNAP practitioners have described FNS’s administrative process as akin to a Star Chamber and Kafkaesque.
FNS also requires SNAP retailers to use the Freedom of Information Act (FOIA) to obtain any underlying information about the charges the agency is bringing against their stores. Unfortunately for retailers, FNS aggressively asserts FOIA exemptions in order to withhold information that the agency uses in making administrative decisions that frequently result in the permanent disqualification of retailers from participation in SNAP. Amazingly, FNS is attempting to make things even harder for SNAP retailers charged with trafficking and other program violations. During February 2019, the agency proposed a rule that would effectively bifurcate FOIA proceedings from SNAP administrative proceedings, thereby depriving retailers from discovering any information about the charges that FNS has brought against them.
Review of FNS’s published data reveals that its enforcement efforts were directed primarily towards small retailers, especially convenience stores. More than 60% of all permanent disqualification determinations involved convenience stores. And most of the other stores permanently disqualified by FNS were small grocers. It is also important to note that FNS issued only three civil monetary penalties (CMP) in lieu of permanent disqualification for trafficking to SNAP retailers during all of Fiscal Year 2018. FNS’s actions ignore clear Congressional intent that SNAP retailers have the option of paying a civil monetary penalty in lieu of permanent disqualification for trafficking. During 2018, SNAP retailers fared little better on administrative review. FNS reversed 1.47% of the nearly 1,700 administrative reviews filed by SNAP retailers and modified only three other initial determinations.
Last year, FNS stopped publicly posting certain SNAP trafficking statistics that it previously published for years. It is believed that FNS ceased doing so because those statistics didn’t paint FNS’s aggressive efforts to disqualify SNAP retailers without regard to whether they actually engaged in trafficking. For example, the data demonstrated that FNS disqualified a higher percentage of retailers it charged with trafficking based on circumstantial evidence -- a computer program that flagged patterns of “suspicious” transactions, than it charged with trafficking based on undercover investigations by USDA officials. Undercover investigations should result in a much higher disqualification rate than proceedings triggered by a computerized analysis unsupported by direct evidence. Unfortunately, that has not been true for many years, perhaps because FNS typically ignored affidavits from store owners and customers and because the agency improperly shifts the burden on retailers to disprove trafficking and other violations with register receipts. This is virtually impossible for most SNAP retailers to do because a majority do not have sophisticated point-of-sale registers and due to FNS’s failure to promulgated regulations that require SNAP retailers to keep register receipts. And while FNS recently amended its SNAP Retailer Training Guide to note that retailers should keep register receipts for one year, the agency failed to publicize these changes and declined to send copies to SNAP retailers despite having the ability to do so.
It is clear that FNS is continuing its effort to make things as difficult as possible for small SNAP retailers charged with trafficking and other program violations. At the same time, the agency is continuing its efforts to prevent SNAP retailers and the public from learning what the agency is up to, both on a broad scale, as well as on a store-specific level. SNAP retailers and beneficiaries would be well advised to contact their elected federal representation to voice their concerns about FNS’s inequitable and undemocratic actions.
Stewart D. Fried represents SNAP retailers before FNS, the federal courts, and the legislative branch.