I recently came across an article detailing an obscure, three-way circuit split over the standard of review that applies in cases involving the Secretary of Agriculture’s choice of penalties for food-stamp trafficking. The article, which was written by Cristopher D. Jones of Georgetown Law, is dated "February 26, 2009," but it was posted to SSRN just yesterday. Here is the author's abstract:
The Food Stamp Act allows retail stores and food wholesalers authorized by the Secretary of Agriculture to participate in the Food Stamp Program and accept food stamps as payment instead of cash for qualifying food products. If the Secretary finds that a food stamp merchant — or their employee — has trafficked in food stamps, the Secretary may permanently disqualify the merchant from accepting food stamps. But the Secretary also has “discretion” to impose a civil monetary penalty (CMP) of up to $54,000 in lieu of permanent disqualification if the Secretary finds “significant evidence” that the merchant had effective policies in place to prevent food stamp violations. The Act establishes a statutory right to judicial review of the Secretary’s decision to impose disqualification or a civil penalty, and according to the Act, that review is by “trial de novo . . . in which the court . . . determine[s] the validity of the questioned administrative action in issue . . . .”
In Affum v. United States, a food stamp merchant whose sole part-time employee exchanged food stamps for $30 cash was found by the Secretary to have trafficked in food stamps. Affum challenged the Secretary’s decision to permanently disqualify her rather than impose a fine, but the district court denied her request for injunctive relief and did not reach the merits of her claim after it held, in part, that she did not have standing to challenge the Secretary’s decision. Appealing that decision, Affum did not dispute whether her employee engaged in food stamp trafficking. Rather, she asserted, inter alia, that not only was the Secretary’s decision of whether to punish a merchant reviewable de novo, but the Secretary’s choice of punishments is also reviewable de novo.
The D.C. Circuit reversed the district court’s finding that Affum did not have standing and remanded the case for de novo review of the administrative proceeding. To guide the district court on which was the proper standard of review to apply, the circuit court found that “nothing in the Act suggest[s] that trials de novo relating to ‘administrative action[s] in issue’ are limited solely to review of determinations that a trafficking action occurred.” Nevertheless, it held that because Congress amended the Act in 1988 to give the Secretary “discretion” in choosing the appropriate penalty for trafficking, it “meant to impose different standards of review for a judicial action challenging the agency’s finding of a violation as opposed to a judicial action challenging the Secretary’s choice of penalty.” Thus, the D.C. Circuit held that though plaintiffs are entitled to de novo review of whether a violation occurred, the Secretary’s choice of penalties under 7 U.S.C. § 2021(b)(3)(B) is reviewable under an arbitrary and capricious standard.
In reaching this conclusion, the D.C. Circuit joined in the current three-way circuit split over which standard of judicial review should apply to the Secretary of Agriculture’s choice of penalties for food stamp merchants. The D.C. Circuit’s position — that the penalty is reviewable under an arbitrary and capricious standard — is consistent with that held by the Fourth and Ninth Circuits. The Eighth Circuit, however, holds that the Secretary’s choice of penalties is reviewable de novo, and the Sixth Circuit holds that the Secretary’s choice is not reviewable.
This comment examines the three-way circuit split, argues that the arbitrary and capricious standard is correct, and recommends that either the Supreme Court should adopt the majority rule or Congress should amend § 2023(a) to expressly provide that the Secretary’s choice of penalty is reviewable under the Administrative Procedure Act’s arbitrary and capricious standard of review. Section I reviews the Food Stamp Act and why Congress amended it to grant the Secretary discretion to impose a civil monetary penalty in lieu of permanent disqualification for trafficking offenses. Section II briefly reviews standards of review of administrative agency actions. Section III analyzes the circuit split at issue by examining cases from the Fourth, Sixth, Eighth, Ninth, and D.C. Circuits. Finally, Section IV suggests how the Supreme Court or Congress could mend the three-way circuit split over judicial review of the Secretary’s choice of penalties under § 2021.
You can download the full article here: Jones, Cristopher D., Affum v. United States: Expanding the Three-Way Circuit Split on Judicial Review of USDA’S Choice of Penalties for Food Stamp Trafficking (February 26, 2009). Available at SSRN: http://ssrn.com/abstract=2047781.