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183 Bronx Deli Grocery Corp v. United States of America

June 18, 2012

183 BRONX DELI GROCERY CORP.,
PLAINTIFF,
v.
UNITED STATES OF AMERICA,
DEFENDANT.



The opinion of the court was delivered by: Paul G. Gardephe, U.S.D.J.:

MEMORANDUM OPINION & ORDER

In this action, Plaintiff 183 Bronx Deli Grocery Corp. ("Bronx Deli"), pursuant to the Food and Nutrition Act of 2008 ("FNA"), challenges an administrative decision of the United States Department of Agriculture ("USDA") disqualifying Bronx Deli from participating in the Supplemental Nutrition Assistance Program ("SNAP")*fn1 for one year. (See Cmplt. ¶ 23)

The parties have cross-moved for summary judgment. (Dkt. Nos. 8, 11) Bronx Deli admits that it violated USDA's regulations by accepting SNAP benefits in payment for items sold on credit, but challenges the penalty imposed by USDA as "arbitrary and capricious." The Government argues that the USDA's decision to impose a one-year suspension on Bronx Deli was mandated by the relevant regulations and, in any event, was not arbitrary and capricious. For the reasons stated below, the Government's motion for summary judgment will be granted, and Bronx Deli's motion for summary judgment will be denied.

BACKGROUND

I.STATUTORY AND REGULATORY BACKGROUND

USDA operates the SNAP program, which provides benefits to eligible Americans to increase their food purchasing power. These benefits are distributed through Electronic Benefits Transfer ("EBT') cards, and are used to purchase eligible food items at participating retail food stores. The Government then pays those food stores the full face value of the purchased items. 7 U.S.C. § 2013.

Pursuant to its authority under the FNA, the USDA has promulgated regulations that govern SNAP. The Food and Nutrition Service of USDA ("FNS") is authorized to disqualify any retail food store that fails to comply with the FNA or USDA's implementing regulations. 7 C.F.R. § 278.6(a). Alternatively, FNS may impose a civil money penalty in lieu of disqualification if it "determines that a disqualification would cause hardship" to households receiving SNAP benefits. (Id.)

USDA regulations prohibit retail food stores from accepting benefits in payment for items sold on credit, even if the debt relates to SNAP-eligible food items. 7 C.F.R. § 278.2(f) provides:

Food stamp benefits shall not be accepted by an authorized retail food store in payment for items sold to a household on credit. A firm that commits such violations shall be disqualified from participation in the [FNA] for a period of one year.

7 C.F.R. § 278.2(f); see also 7 C.F.R. § 278.6(e)(4)(ii) ("The FNS regional office shall . . .

[d]isqualify the firm for 1 year if . . . [t]he firm has accepted food stamp benefits in payment for items sold to a household on credit.").

The USDA may impose a civil monetary penalty as a sanction in lieu of disqualification only if it "determines that a disqualification would cause hardship to participating households." 7 C.F.R. 278.6(a). Such a hardship exists where "the firm subject to a disqualification is selling a substantial variety of staple food items[] and . . . there is no other authorized retail food store in the area selling as large a variety of staple food items at comparable prices." 7 C.F.R. § 278.6(f).

II.FACTUAL BACKGROUND

Bronx Deli is a grocery store located at 19 West 183rd Street, Bronx, New York. (Def. Rule 56.1 Stmt. ¶ 1)*fn2 Bronx Deli has been a participant in the SNAP program since November 2009. (Administrative Record ("AR") 32) There are at least 40 other grocery stores and supermarkets that accept food stamps ...


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