[Federal Register Volume 59, Number 195 (Tuesday, October 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25008]


[[Page Unknown]]

[Federal Register: October 11, 1994]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF AGRICULTURE

Food and Nutrition Service

7 CFR Part 271

 

Food Stamp Program: Forfeiture and Denial of Property Rights

AGENCIES: Office of Inspector General and Food and Nutrition Service, 
Department of Agriculture.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This rule implements section 15(g) of the Food Stamp Act of 
1977, as amended by Section 124 of the Food Stamp Act Amendments of 
1980, Pub. L. 96-249, which authorizes the Secretary of Agriculture to 
subject to forfeiture and denial of property rights any nonfood items, 
moneys, negotiable instruments, securities, or other things of value 
that are furnished or intended to be furnished by any person in 
exchange for food coupons, authorization cards, or other program 
benefit instruments or access devices in any manner not authorized by 
the Food Stamp Act or regulations issued pursuant to the Food Stamp 
Act, 7 U.S.C. 2024(g). The rule establishes procedures to be followed 
by the Inspector General and other Federal law enforcement officials 
who conduct investigations of alleged violations of the Food Stamp Act 
and who may, during the course of those investigations, acquire 
property subject to forfeiture and denial of property rights.

EFFECTIVE DATE: November 10, 1994.

FOR FURTHER INFORMATION CONTACT:
Brian L. Haaser, Director, Program Investigations Division, Office of 
Inspector General, United States Department of Agriculture, 14th Street 
and Independence Avenue SW, Washington, DC 20250-2318. Phone: (202) 
720-6701.

SUPPLEMENTARY INFORMATION: 

Classification

Executive Order 12866

    This rule has been determined to be not significant for purposes of 
Executive Order 12866 and, therefore, has not been reviewed by the 
Office of Management and Budget.

Executive Order 12372

    The Food Stamp Program is listed in the Catalog of Federal Domestic 
Assistance under No. 10.551. For the reasons set forth in the final 
rule and related Notice(s) to 7 CFR Part 3015, subpart V (48 FR 29115, 
June 24, 1983), this program is excluded from the scope of Executive 
Order 12372, which requires intergovernmental consultation with State 
and local officials.

Paperwork Reduction Act

    This final rule does not contain reporting or recordkeeping 
requirements subject to approval by the Office of Management and Budget 
under the Paperwork Reduction Act of 1980 (44 U.S.C. 3507).

Regulatory Flexibility Act

    This action has been reviewed with regard to the requirements of 
the Regulatory Flexibility Act of 1980 (Pub. L. No. 96-354, 94 Stat. 
1164, September 19, 1980). Charles R. Gillum, Acting Inspector General, 
USDA, has certified that this rule does not have a significant economic 
impact on a substantial number of small entities.

Executive Order 12778

    This final rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. This rule is intended to have preemptive effect 
with respect to any state or local laws, regulations or policies which 
conflict with its provisions or which would otherwise impede its full 
implementation. This rule is not intended to have retroactive effect 
unless so specified in the Effective Date paragraph of this preamble. 
Prior to any judicial challenge to the provisions of this rule or the 
application of this rule, all applicable administrative procedures must 
be exhausted. The administrative review requirements relating to 
forfeiture of property pursuant to the Food Stamp Act of 1977, as 
amended, are set out in this rule.

Background

    This rule recognizes that the Office of Inspector General (OIG), 
USDA, conducts the majority of criminal investigations that result in 
Federal criminal prosecution under the Food Stamp Act; that such 
investigations involve the acquisition of valuable property by 
investigators in exchange for food coupons, authorization cards, or 
other program benefit instruments or access devices; and that Congress 
granted to USDA the power to subject such property to forfeiture. It 
should be noted that the Act defines ``coupon'' to include any ``* * * 
type of certificate issued pursuant to the provisions of this Act'' (7 
U.S.C. 2012(d)). Thus, this rulemaking subjects to forfeiture property 
offered in exchange for any program benefit instrument or access 
device.
    In addition to OIG, other Federal law enforcement agencies, 
including the United States Secret Service and the United States Postal 
Inspection Service, also conduct criminal investigations involving the 
acquisition of property in exchange for food coupons, authorization 
cards, or other program benefit instruments or access devices. Finally, 
in some instances food coupons and other benefit instruments are 
provided to other Federal law enforcement agencies for use in 
investigations involving program related activities under memoranda of 
understanding with OIG. This rule applies as well to seizures related 
to the Act which are made by those agencies. However, this rule 
specifically provides that the forfeiture provisions shall not apply to 
those items exchanged during the course of internal investigations by 
retail firms, investigations conducted by State and local law 
enforcement agencies, or FNS Compliance Branch investigations.
    For a more detailed explanation of the provisions of this rule, the 
reader should refer to the preamble of the proposed rule cited below.
    The proposed rule was published in the Federal Register on December 
6, 1993, 58 FR 64172, with a 60 day comment period ending February 4, 
1994. We received only one letter with comments. The commenter 
suggested that the rule should clarify that property not acquired by 
investigation is not subject to the rule, that the property belongs to 
USDA and disposal must be approved by USDA, and that any moneys 
obtained from sale of property or by forfeiture belongs to USDA and 
shall be deposited with USDA.
    We did not make any changes as a result of the comments because we 
believe the rule already adequately addresses the commenter's concerns. 
The provisions of 7 CFR 271.5(e)(1)(ii) of the rule state that the 
forfeiture and denial of property rights provisions shall apply to 
property exchanged or offered in exchange during investigations by the 
Inspector General, USDA, and by other authorized Federal law 
enforcement agencies. We believe this is clear enough without adding 
that it does not cover other property. Section 271.5(e)(2) clearly 
states that the property is deemed forfeited to USDA, and 
Sec. 271.5(e)(2)(v) provides custodians guidance on property disposal 
and refers to the applicable regulations which would be those of USDA 
and/or GSA. Finally, while any moneys exchanged or collected are deemed 
forfeited to USDA just like other property, section 7 CFR 
271.5(e)(2)(vi) provides that such moneys shall be deposited into the 
general fund of the United States Treasury. The moneys are deposited to 
the general fund because OIG does not have the legal authority needed 
to deposit them with USDA.

List of Subjects in 7 CFR Part 271

    Administrative practice and procedure, Claims, Food stamps, 
Penalties.

    Accordingly, 7 CFR part 271 is amended as follows:

PART 271--GENERAL INFORMATION AND DEFINITIONS

    1. The authority citation for part 271 continues to read as 
follows:

    Authority: 7 U.S.C. 2011-2032.

    2. Section 271.5 is amended by adding a new paragraph (e), as 
follows:


Sec. 271.5  Coupons as obligations of the United States, crimes and 
offenses, forfeiture and denial of property rights.

* * * * *
    (e) Forfeiture and denial of property rights.
    (1) General.
    (i) Any nonfood items, moneys, negotiable instruments, securities, 
or other things of value furnished or intended to be furnished by any 
person in exchange for food coupons, authorization cards, or other 
program benefit instruments or access devices in any manner not 
authorized by the Food Stamp Act or regulations issued pursuant to the 
Act, shall be subject to forfeiture and denial of property rights. Such 
property is deemed forfeited to the United States Department of 
Agriculture (USDA) at the time it is either exchanged or offered in 
exchange.
    (ii) These forfeiture and denial of property rights provisions 
shall apply to property exchanged or offered in exchange during 
investigations conducted by the Inspector General, USDA, and by other 
authorized Federal law enforcement agencies.
    (iii) These forfeiture and denial of property rights provisions 
shall not apply to property exchanged or intended to be exchanged 
during the course of internal investigations by retail firms, during 
investigations conducted solely by State and local law enforcement 
agencies and without the participation of an authorized Federal law 
enforcement agency, or during compliance investigations conducted by 
the Food and Nutrition Service.
    (2) Custodians and their responsibilities.
    (i) The Inspector General, USDA, the Inspector General's designee, 
and other authorized Federal law enforcement officials shall be 
custodians of property acquired during investigations.
    (ii) Upon receiving property subject to forfeiture the custodian 
shall:
    (A) Place the property in an appropriate location for storage and 
safekeeping, or
    (B) Request that the General Services Administration (GSA) take 
possession of the property and remove it to an appropriate location for 
storage and safekeeping.
    (iii) The custodian shall store property received at a location in 
the judicial district where the property was acquired unless good cause 
exists to store the property elsewhere.
    (iv) Custodians shall not dispose of property prior to the 
fulfillment of the notice requirements set out in paragraph 3, or prior 
to the conclusion of any related administrative, civil, or criminal 
proceeding, without reasonable cause. Reasonable cause to dispense with 
notice requirements might exist, for example, where explosive materials 
are being stored which may present a danger to persons or property.
    (v) Custodians may dispose of any property in accordance with 
applicable statutes or regulations relative to disposition. The 
custodian may:
    (A) Retain the property for official use;
    (B) Donate the property to Federal, State, or local government 
facilities such as hospitals or to any nonprofit charitable 
organizations recognized as such under section 501(c)(3) of the 
Internal Revenue Code; or
    (C) Request that GSA take custody of the property and remove it for 
disposition or sale.
    (vi) Proceeds from the sale of forfeited property and any moneys 
forfeited shall be used to pay all proper expenses of the proceedings 
for forfeiture and sale including expenses of seizure, maintenance of 
custody, transportation costs, and any recording fees. Moneys remaining 
after payment of such expenses shall be deposited into the general fund 
of the United States Treasury.
    (3) Notice requirements.
    (i) The custodian shall make reasonable efforts to notify the 
actual or apparent owner(s) of or person(s) with possessory interests 
in the property subject to forfeiture except for the good cause 
exception if the owner cannot be notified.
    (ii) The notice shall:
    (A) Include a brief description of the property;
    (B) Inform the actual or apparent owner(s) of or person(s) with 
possessory interests in the property subject to forfeiture of the 
opportunity to request an administrative review of the forfeiture;
    (C) Inform the actual or apparent owner(s) of or person(s) with 
possessory interests in the property subject to forfeiture of the 
requirements for requesting administrative review of the forfeiture; 
and
    (D) State the title and address of the official to whom a request 
for administrative review of the forfeiture may be addressed.
    (iii) Except as provided in paragraphs (e)(3) (iv) and (v) of this 
section, notice shall be given within 45 days from the date the United 
States convicts, acquits, or declines to act against the person who 
exchanged the property.
    (iv) Notice may be delayed if it is determined that such action is 
likely to endanger the safety of a law enforcement official or 
compromise another ongoing criminal investigation conducted by OIG, the 
United States Secret Service, the United States Postal Inspection 
Service, or other authorized Federal law enforcement agency.
    (v) Notice need not be given to the general public.
    (4) Administrative review.
    (i) The actual or apparent owner(s) of or person(s) with possessory 
interests in the property shall have 30 days from the date of the 
delivery of the notice of forfeiture to make a request for an 
administrative review of the forfeiture.
    (ii) The request shall be made in writing to the Assistant 
Inspector General for Investigations, Office of Inspector General, 
USDA, or to his/her designee, hereinafter referred to as the reviewing 
official.
    (iii) A request for an administrative review of the forfeiture of 
property shall include the following:
    (A) A complete description of the property, including serial 
numbers, if any;
    (B) Proof of the person's property interest in the property; and,
    (C) The reason(s) the property should not be forfeited.
    (iv) The requestor may, at the time of his/her written request for 
administrative review, also request an oral hearing of the reasons the 
property should not be forfeited.
    (v) The burden of proof will rest upon the requestor, who shall be 
required to demonstrate, by a preponderance of the evidence, that the 
property should not be forfeited.
    (vi) Should the administrative determination be in their favor, the 
actual or apparent owner(s) of or person(s) with possessory interests 
in the property subject to forfeiture may request that forfeited items 
be returned or that compensation be made if the custodian has already 
disposed of the property.
    (vii) The reviewing official shall not remit or mitigate a 
forfeiture unless the requestor:
    (A) Establishes a valid, good faith property interest in the 
property as owner or otherwise; and
    (B) Establishes that the requestor at no time had any knowledge or 
reason to believe that the property was being or would be used in 
violation of the law; and
    (C) Establishes that the requestor at no time had any knowledge or 
reason to believe that the owner had any record or reputation for 
violating laws of the United States or of any State for related crimes.
    (viii) The reviewing official may postpone any decision until the 
conclusion of any related administrative, civil, or criminal 
proceeding.
    (ix) The decision of the reviewing official as to the disposition 
of the property shall be the final agency determination for purposes of 
judicial review.

    Done at Washington, D.C. this 28th day of September 1994.
Mike Espy,
Secretary of Agriculture.
[FR Doc. 94-25008 Filed 10-7-94; 8:45 am]
BILLING CODE 3410-23-M