[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]
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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.
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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]
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