Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-08-05189/USCOURTS-caDC-08-05189-0/pdf.json

Nature of Suit Code: 891
Nature of Suit: Agricultural Acts
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 20, 2009 Decided May 26, 2009

No. 08-5189

PHILOMENA AFFUM,

DOING BUSINESS AS ASAFO MARKET,

APPELLANT

v.

UNITED STATES OF AMERICA AND 

THOMAS J. VILSACK, SECRETARY OF AGRICULTURE,

APPELLEES

Appeal from the United States District Court

for the District of Columbia

(No. 1:08-cv-00300)

Charles B. Wayne argued the cause and filed the briefs for

appellant.

R. Craig Lawrence, Assistant U.S. Attorney, argued the

cause for appellees. With him on the brief were Jeffrey A.

Taylor, U.S. Attorney, and Harry B. Roback, Assistant U.S.

Attorney.

Before: SENTELLE, Chief Judge, KAVANAUGH, Circuit

Judge, and EDWARDS, Senior Circuit Judge.

USCA Case #08-5189 Document #1182138 Filed: 05/26/2009 Page 1 of 26
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Opinion for the Court filed by Senior Circuit Judge

EDWARDS.

EDWARDS, Senior Circuit Judge: The Food Stamp Act

(“Act”) prohibits retail stores from “trafficking” in food stamp

benefits, or exchanging these benefits for cash. See 7 U.S.C.

§ 2021(b)(3)(B). The penalty for a first-time trafficking offense

is permanent disqualification from the food stamp program.

However, under the Act, the Secretary of Agriculture

(“Secretary”) has the discretion to impose a civil money penalty

in lieu of disqualification when an offending store produces

“substantial evidence” that it had an “effective policy and

program” to prevent the trafficking violations. Id. Regulations

promulgated by the Secretary set forth criteria for eligibility for

a civil money penalty in lieu of permanent disqualification for

trafficking. See 7 C.F.R. § 278.6(i).

In early 2007, a part-time employee working alone at

appellant Philomena Affum’s store exchanged a total of $30 in

cash for $30 in electronic food stamp benefits offered by an

undercover agent. The Department of Agriculture’s Food and

Nutrition Service (“FNS”) then charged Affum with illegal

trafficking. Affum requested that she be assessed a civil money

penalty in lieu of permanent disqualification from the program.

In November 2007, the FNS determined that Affum did not

meet the regulatory criteria for the civil money penalty and

permanently disqualified her store from the program. Affum

then filed suit in the District Court, challenging the validity of

the applicable regulations and seeking a “trial de novo” of the

Secretary’s penalty determination. See 7 U.S.C. § 2023(a)(15)

(“The suit in the United States district court . . . shall be a trial

de novo by the court in which the court shall determine the

validity of the questioned administrative action in issue.”).

Affum submitted an affidavit affirming that her “store employee

had been trained and that the employee knew that it was

prohibited to . . . exchange cash for food stamp benefits,” Affum

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v. United States, 550 F. Supp. 2d 63, 67 (D.D.C. 2008), and

sought a preliminary injunction to bar the permanent

disqualification. In May 2008, the District Court denied

Affum’s request for injunctive relief on the ground that her

“affidavit alone cannot be sufficient under the statute” to require

the Secretary to impose a civil money penalty in lieu of

disqualification. Id. The District Court further held that Affum

lacked Article III standing to challenge the regulations. Id. at

68. At the parties’ request, the District Court converted its

denial of the injunction to a final judgment in the Secretary’s

favor. Affum then appealed. 

We hold that the District Court was mistaken in its ruling

that Affum lacked standing. The Secretary explicitly relied on

the regulations to disqualify Affum from the food stamp

program and to deny her request for the lesser civil money

penalty. Therefore, Affum plainly has standing to challenge the

regulations and their application to her case. Accordingly, we

vacate the District Court’s judgment and remand the case for

further proceedings. The District Court must conduct a trial de

novo on Affum’s claim that the Secretary abused his discretion

in denying her request for a civil money penalty in lieu of

disqualification. 

I. BACKGROUND

A. Statutory and Regulatory Framework

Congress created the food stamp program in 1964 to

“permit those households with low incomes to receive a greater

share of the Nation’s food abundance.” The Food Stamp Act of

1964, Pub. L. No. 88-525, § 2, 78 Stat. 703, 703. Retail stores

authorized to participate in the program may accept food stamp

benefits instead of cash for designated food items. 7 U.S.C.

§ 2013(a). The stores then redeem these benefits with the

government for face value. Id. Today, the government delivers

food stamp benefits via electronic benefit transfer cards. Id.

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§ 2016(h). In 2008, Congress amended the Food Stamp Act,

renaming it the Food and Nutrition Act and renaming the “food

stamp program” the “supplemental nutrition assistance

program,” but it did not substantively change the statutory

provisions at issue in this case. Food, Conservation, and Energy

Act of 2008, Pub. L. No. 110-246, § 4001, 122 Stat. 1651, 1853.

We use the terms that the parties used in briefing this case. 

Congress prohibits participating retail stores from

“trafficking” in food stamp benefits, or trading these benefits for

cash. Prior to 1988, the Act mandated permanent

disqualification even for first-time trafficking offenders. See 7

U.S.C. § 2021(b)(3) (1982). Because of the severity of the

sanction, the courts divided over whether “innocent” store

owners could be held liable when their employees committed

trafficking violations without their knowledge. See Ghattas v.

United States, 40 F.3d 281, 283 (8th Cir. 1994) (describing

circuit split). In 1988, Congress amended the Act to give the

Secretary “the discretion to impose a civil money penalty” in

lieu of permanent disqualification if the Secretary determined

that there was “substantial evidence” that the store had “an

effective policy and program in effect to prevent violations of

the Act and the regulations.” Hunger Prevention Act of 1988,

Pub. L. No. 100-435, § 344, 102 Stat. 1645, 1664 (codified as

amended at 7 U.S.C. § 2021(b)(3)(B)); see also H.R. REP. NO.

100-828, pt. 1, at 28 (1988) (noting that “[u]nder current law, no

discretion is provided to the Secretary of Agriculture to evaluate

a store’s actions to prevent [trafficking] violations” and the

amended Act “provides this discretion”). In 1990, Congress

amended the Act again to permit the Secretary to consider

evidence that the store’s ownership was not in any way involved

in the trafficking. Food, Agriculture, Conservation, and Trade

Act of 1990, Pub. L. No. 101-624, § 1743, 104 Stat. 3359, 3795

(codified as amended at 7 U.S.C. § 2021(b)(3)(B)). 

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With these and other amendments, § 2021(b)(3)(B) of the

Act now provides for permanent disqualification upon the first

instance of trafficking, “except that the Secretary shall have the

discretion to impose a civil penalty” in lieu of disqualification

in appropriate circumstances. 7 U.S.C. § 2021(b)(3)(B) (the

statutory provision is reprinted in a Statutory Appendix at the

end of this opinion). The Act further mandates that a store

owner who sells a store that was previously disqualified by the

Secretary will remain personally disqualified from the program.

Id. § 2021(e)(1). Finally, the Act permits a store owner who is

aggrieved by the Secretary’s decision in a food stamp trafficking

case to file suit in district court. Id. § 2023(a)(13). The statute

provides that such a suit “shall be a trial de novo by the court in

which the court shall determine the validity of the questioned

administrative action in issue.” Id. § 2023(a)(15); see also id.

§ 2021(c)(2) (“The action of disqualification or the imposition

of a civil penalty shall be subject to review as provided in

section 2023 of this title.”).

The Act gives the Secretary the authority to “issue such

regulations . . . as . . . deem[ed] necessary or appropriate for the

effective and efficient administration” of the food stamp

program. 7 U.S.C. § 2013(c); see also id. § 2021(a)(2).

Pursuant to this directive, the Secretary has promulgated

regulations that amplify the Act’s requirements and penalties

relating to trafficking violations. See 7 C.F.R. § 278.6. The

current regulations contain four criteria that the FNS considers

in determining whether to impose a civil money penalty in lieu

of permanent disqualification. See id. § 278.6(i). First, the store

“shall have developed an effective compliance policy.” Id.

Second, the store “shall establish that both its compliance policy

and program were in operation at the location where the

violation(s) occurred prior to the occurrence of violations cited

in the charge letter sent to the firm.” Id. Third, the store must

show that it “had developed and instituted an effective personnel

training program.” Id. Fourth, the store’s ownership must show

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that it was “not aware of, did not approve, did not benefit from,

or was not in any way involved in the conduct or approval of”

the trafficking violations. Id. The regulations state that, to

qualify for the alternative civil money penalty, a store “shall, at

a minimum, establish by substantial evidence its fulfillment of”

each criterion. Id.

The regulations also specify that, “in determining whether

a firm has established an effective policy to prevent violations,

FNS shall consider written and dated statements of firm policy

which reflect a commitment to ensure that the firm is operated

in a manner consistent” with the regulations. Id. § 278.6(i)(1).

The regulations further direct that a store “shall document its

training activity by submitting to FNS its dated training

curricula and records of dates training sessions were conducted.”

Id. § 278.6(i)(2). “In addition, in evaluating the effectiveness of

the firm’s policy and program to ensure FSP [Food Stamp

Program] compliance and to prevent FSP [Food Stamp Program]

violations, FNS may consider . . . [a]ny other information the

firm may present to FNS for consideration.” Id.

§ 278.6(i)(1)(vi). 

B. Facts and Proceedings Below

From 2006 to 2008, Affum owned and operated the Asafo

Market, a small grocery store located in Northeast Washington,

D.C. She ran the store with the help of one part-time employee.

In August 2006, the FNS authorized the Asafo Market to accept

food stamp benefits. See Store Contact Record, reprinted in

Joint Appendix (“J.A.”) 126-27. At the time of the

authorization, the FNS advised Affum that trafficking was

prohibited and provided her with a training brochure for

participating retailers as well as 70 pages from the Code of

Federal Regulations that described the rules of the food stamp

program. See id.; see also Affum Aff. ¶¶ 6-7 (Mar. 20, 2008),

J.A. 70-71. 

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On October 10, 2007, the FNS sent Affum a letter charging

her with trafficking in food stamp benefits. Letter from Sarah

Duncan, Officer-in-Charge, Towson Field Office, to Philomena

Affum 1 (Oct. 10, 2007) [hereinafter Charge Letter], J.A. 72.

The Charge Letter and the enclosed investigative report stated

that on two occasions between February and April 2007, an FNS

investigator entered the Asafo Market and exchanged a total of

$30 in electronic food stamp benefits for $30 in cash. Id.; see

also Report of Positive Investigation (Apr. 30, 2007), J.A. 76.

The Charge Letter also warned Affum that the penalty for this

conduct was permanent disqualification from the food stamp

program or, if appropriate, a civil money penalty. Charge Letter

at 1-2, J.A. 72-73. Referencing § 278.6(i) of the regulations, the

Charge Letter further informed Affum that she had 10 days in

which to request the lesser sanction and that she “must meet

each of the four (04) criteria listed [in § 278.6(i)] and . . .

provide the documentation as specified” in order to be eligible

for the civil money penalty. Id. at 2, J.A. 73. 

On November 5, 2007, Affum met with Sarah Duncan, the

Officer-in-Charge in the FNS’s Towson Field Office, to discuss

the charges. Affum explained that her employee had conducted

the prohibited transactions without her knowledge and “knew

this was against the rules.” Memorandum from Sally Duncan,

Officer-in-Charge, Towson Field Office, to File (Nov. 5, 2007),

J.A. 175. 

On November 14, 2007, the FNS informed Affum by letter

of its finding that the trafficking violations had occurred. Letter

from Sarah Duncan, Officer-in-Charge, Towson Field Office, to

Philomena Affum 1 (Nov. 14, 2007) [hereinafter Decision

Letter], J.A. 112. The Decision Letter further stated that Affum

was ineligible for the alternative civil money penalty under

§ 278.6(i) of the regulations, because she “failed to submit

sufficient evidence to demonstrate that [her] firm had

established and implemented an effective compliance policy and

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program to prevent violations of the Food Stamp Program.” Id.

Pursuant to this finding, the FNS permanently disqualified the

Asafo Market from the program. Id. (citing 7 C.F.R. § 278.6(c),

(e)(1)). 

Affum sought review of the disqualification decision and

advised the agency’s Administrative Review Branch that the

employee “who was responsible for this great error was

informed from the very beginning that [electronic food stamp

benefits were] strictly for use with food items only and nothing

else.” Letter from Philomena Affum to Jerry A. Masefield,

FNS, Administrative Review Branch 1 (Dec. 26, 2007), J.A.

116. On January 22, 2008, an Administrative Review Officer

within the FNS concluded that the “violations at issue did, in

fact, occur as charged” and “sustained” the permanent

disqualification. Asafo Market v. Towson, Md. Field Office,

Case No. C0113519 at 4 (Jan. 22, 2008) [hereinafter Final

Agency Decision], J.A. 122. The Final Agency Decision did not

specifically address Affum’s request for a civil money penalty

in lieu of disqualification, so the Decision Letter is the agency’s

last word on this issue.

On February 21, 2008, Affum filed suit in the District Court

against the Secretary and the United States. She did not dispute

that the trafficking violations occurred, but she requested a “trial

de novo” of the Secretary’s penalty determination pursuant to

§ 2023(a)(15) of the Act. Compl. ¶¶ 33, 40. In addition, she

argued that the permanent disqualification should be overturned

because the Secretary failed to give her and other small store

owners fair notice of his interpretation of the eligibility criteria

for the civil money penalty contained in § 278.6(i) of the

regulations and because these regulations are contrary to the

language of the Act, arbitrary and capricious, and violative of

her Fifth Amendment substantive due process rights. Id. ¶¶ 43-

45. 

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On March 20, 2008, Affum filed a motion for a preliminary

injunction to bar the permanent disqualification. She attached

an affidavit to her motion affirming that she had told the FNS

Officer-in-Charge that the employee who committed the

trafficking “had been trained and that the employee knew that it

was prohibited to . . . exchange cash for food stamp benefits.”

Affum Aff. ¶ 4 (Mar. 20, 2008), J.A. 70. 

On May 7, 2008, the District Court denied Affum’s request

for injunctive relief. Affum, 550 F. Supp. 2d at 64. The District

Court found that Affum could not succeed on the merits of her

suit because she had not submitted “substantial evidence” of an

effective anti-trafficking program as required by

§ 2021(b)(3)(B) of the Act. Id. at 67-68. On this point, the

District Court concluded that Affum’s “affidavit alone cannot be

sufficient under the statute because [s]tore owners cannot simply

attest to having effective antifraud programs; rather they must

prove it.” Id. at 67 (alteration in original) (internal quotation

marks and citation omitted).

The District Court then went on to hold that Affum had no

standing to challenge the regulations, because the statute was the

cause of her injury. Id. at 68. The District Court explained that,

[a]ssuming arguendo that the regulations did suffer from

one or more of th[e] deficiencies [alleged by Affum],

plaintiff would have no standing to challenge them because

they inflict no redressable injury upon her. Regardless of

whether the regulations are enforceable, the statute itself,

which plaintiff does not challenge, inflicts the injury upon

plaintiff of which she complains. Hence, plaintiff has no

standing to assert her challenge to the Secretary’s

regulations and she has virtually no likelihood of success on

the merits of such a claim.

Id. (internal citations and footnote omitted). 

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Following the District Court’s denial of Affum’s motion for

a preliminary injunction, the parties jointly moved to have the

District Court convert its May 7 opinion into a final judgment.

On June 12, 2008, the District Court granted the parties’ joint

motion. Affum v. United States, No. 1:08-cv-00300 (D.D.C.

June 12, 2008) (Order), J.A. 41. 

Affum appealed the District Court’s judgment on June 19,

2008. Shortly thereafter, she closed the Asafo Market due to

loss of revenue from the food stamp program. Affum Aff. ¶ 3

(Nov. 22, 2008). The case is not moot, however, because the

Government maintains that Affum remains personally

disqualified from the food stamp program. See Appellees’ Br.

at 12 n.2. 

II. ANALYSIS

Affum raises several challenges to the District Court’s

decision. She argues first that the District Court erred in holding

that she had no Article III standing to challenge the Secretary’s

regulations and their application to her case. In addition, she

contends that she should not face permanent disqualification

from the program because (1) her affidavit was “substantial

evidence” of the anti-trafficking program at the Asafo Market;

(2) the Secretary did not give fair notice to her and other small

store owners of his construction of the eligibility criteria in the

regulations governing the imposition of a civil money penalty in

lieu of disqualification; and (3) § 278.6(i) of the regulations is

contrary to the Act, arbitrary and capricious, and violative of her

Fifth Amendment substantive due process rights. 

A. Standing

In its brief, the Government urged this court to affirm the

District Court’s decision that Affum lacked Article III standing

to challenge the Secretary’s regulations. Appellees’ Br. at 26;

Affum, 550 F. Supp. 2d at 68. However, when pressed on this

issue at oral argument, counsel for the Government stated,

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“That’s not the argument we’re advancing here today.”

Recording of Oral Argument 20:37-20:40 (Feb. 20, 2009). The

Government’s change in position was hardly surprising, because

Affum plainly has standing to pursue her challenge to the

disputed regulations and their application to her case. 

We review de novo the District Court’s decision on

standing. See Tooley v. Napolitano, 556 F.3d 836, 838-39 (D.C.

Cir. 2009). The “irreducible constitutional minimum of standing

contains three elements”: (1) injury-in-fact; (2) causation; and

(3) redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555,

560-61 (1992). As we explained in Sierra Club v. EPA, 292

F.3d 895 (D.C. Cir. 2002), “[i]n many if not most cases the

petitioner’s standing to seek review of administrative action is

self-evident,” particularly where “the complainant is ‘an object

of the action (or forgone action) at issue.’” Id. at 899-900

(quoting Defenders of Wildlife, 504 U.S. at 561). Affum’s

standing to challenge the regulations is self-evident in this case.

By relying on § 278.6(i) to disqualify the Asafo Market from the

revenue-producing food stamp program, the Secretary inflicted

a concrete injury on Affum that could be remedied by an

invalidation of the regulations and a reduction in penalty to the

alternative civil money sanction. See Decision Letter at 1 (citing

7 C.F.R. § 278.6(i) to conclude that Affum was not “e[l]igible

for the CMP [Civil Money Penalty] because [she] failed to

submit sufficient evidence that [her] firm had established and

implemented an effective compliance policy and program”), J.A.

112.

When an agency enforces its regulations to disqualify an

individual from a government program, it is commonplace that

the agency’s enforcement action gives rise to an Article III

injury sufficient to permit the regulated party to challenge the

regulations at issue. See, e.g., Gorman v. NTSB, 558 F.3d 580,

587-91 (D.C. Cir. 2009) (reviewing challenge to regulations

relied on by the National Transportation Safety Board and the

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Federal Aviation Administration to revoke petitioner’s

commercial pilot certificate); PMD Produce Brokerage Corp. v.

USDA, 234 F.3d 48, 50, 51-54 (D.C. Cir. 2000) (reviewing fair

notice challenge to procedural regulations relied on by the

Secretary to revoke petitioner’s license as a dealer of perishable

agricultural products). Affum likewise has standing to pursue

her challenge to the regulations at issue here and to the

Secretary’s application of them to permanently disqualify her

from the food stamp program.

B. The District Court’s Judgment Must Be Vacated and the

Case Remanded for a Trial De Novo 

When the District Court ruled that Affum lacked standing

to challenge the Secretary’s regulatory scheme, it foreclosed

Affum’s statutory right to have “a trial de novo by the court in

which the court shall determine the validity of the questioned

administrative action in issue.” 7 U.S.C. § 2023(a)(15). The

District Court made two mistakes. First, the court decided that

Affum was entitled to no relief because she failed to comply

with “the statutory language governing eligibility for a civil

monetary penalty.” Affum, 550 F. Supp. 2d at 67 (emphasis

added). As noted above, however, the agency rested on the

Secretary’s regulations in declining to impose a civil money

penalty in lieu of disqualification. The agency’s Decision Letter

specifically stated that Affum was ineligible for the alternative

civil money penalty because she failed to comply with § 278.6(i)

of the regulations. Decision Letter at 1, J.A. 112. The District

Court was required to “judge the propriety of [the agency’s]

action solely by the grounds invoked by the agency.” SEC v.

Chenery Corp., 332 U.S. 194, 196 (1947). Second, the statute

plainly says that a claimant is entitled to a “trial de novo” on

“the validity of the questioned administrative action in issue.”

7 U.S.C. § 2023(a)(15). The District Court never conducted the

required trial de novo once it ruled that Affum lacked standing.

The District Court simply ruled that Affum had no claim on the

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merits because, in the trial court’s view, her “affidavit alone

cannot be sufficient under the statute” to avoid permanent

disqualification. Affum, 550 F. Supp. 2d at 67 (emphasis added).

However, this ruling does not join with the regulatory challenges

raised by Affum. 

Because of its mistaken view on standing, the District Court

never addressed the principal issues in this case which concern

the Secretary’s regulations and their disputed application to

Affum. Accordingly, we must vacate the District Court’s

judgment and remand the case for the District Court to consider

the propriety of the Secretary’s choice of sanction and to permit

Affum to pursue her challenges to the validity of the regulations

as applied to her. 

C. Issues on Remand

The parties have raised several additional issues – relating

to the applicable standard controlling the trial court’s review of

the agency’s action, the substantial evidence requirement, and

fair notice – all of which must be addressed by the District Court

on remand. “Although we recognize that factual determinations

must be made by the District Court, ‘we can provide some

guidance for the task to be tackled on remand.’” Berry v.

District of Columbia, 833 F.2d 1031, 1034 (D.C. Cir. 1987)

(quoting Nat’l Fed’n of Fed. Employees v. Weinberger, 818 F.2d

935, 942 (D.C. Cir. 1987)). We address these additional issues

only to ensure that the District Court will “apply the correct

legal standard[s] in its factfinding on remand.” In re Sealed

Case, 552 F.3d 841, 845 (D.C. Cir. 2009).

1. The Applicable Standards Governing Judicial Review

of the Secretary’s Actions

The relevant statutory provisions governing judicial review

of actions taken by the Secretary are both unusual and

complicated. The controlling provisions, which are reprinted in

the attached Statutory Appendix, are found in 7 U.S.C. § 2021

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and 7 U.S.C. § 2023. The Government contends that, under the

relevant provisions of the Act, the Secretary’s determination

whether to impose permanent disqualification or a civil money

penalty is subject to only limited review under the deferential

arbitrary and capricious standard. Appellees’ Br. at 12-16; see

also Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins.

Co., 463 U.S. 29, 43 (1983) (explaining arbitrary and capricious

review). 

As can be seen from the terms of the statute reprinted in the

Statutory Appendix, when the District Court reviews actions

taken by the Secretary in a trafficking case, there “shall be a trial

de novo by the court in which the court shall determine the

validity of the questioned administrative action in issue.” 7

U.S.C. § 2023(a)(15). However, the statute also provides that

the Secretary “shall have the discretion to impose a civil penalty

. . . in lieu of disqualification . . . if the Secretary determines that

there is substantial evidence that such store or food concern had

an effective policy and program in effect to prevent violations

of the chapter and the regulations.” Id. § 2021(b)(3)(B). The

question here is whether the trial de novo provided for by

§ 2023(a)(15) applies only to the Secretary’s conclusion that a

trafficking violation occurred, or whether it applies as well to

the Secretary’s choice of the appropriate penalty for that

violation. 

Reading the statute as a whole, it is inescapable that the trial

court is required to conduct a trial de novo in all regulatory

enforcement cases involving charges of trafficking violations.

Section 2021(c) is entitled “Civil penalty and review of

disqualification and penalty determinations,” and it states that

judicial review may address either “[t]he action of

disqualification or the imposition of a civil penalty . . . as

provided in section 2023.” Id. § 2021(c)(2). Section

2023(a)(15), in turn, states that “[t]he suit in the United States

district court . . . shall be a trial de novo by the court in which

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the court shall determine the validity of the questioned

administrative action in issue.” Id. § 2023(a)(15). There is

nothing in the Act to suggest that trials de novo relating to

“administrative action[s] in issue” are limited solely to review

of determinations that a trafficking violation occurred. 

“A trial de novo is a trial which is not limited to the

administrative record – the plaintiff ‘may offer any relevant

evidence available to support his case, whether or not it has been

previously submitted to the agency.’” Kim v. United States, 121

F.3d 1269, 1272 (9th Cir. 1997) (quoting Redmond v. United

States, 507 F.2d 1007, 1011-12 (5th Cir. 1975)); see also

Freedman v. USDA, 926 F.2d 252, 261 (3d Cir. 1991) (“The

court must reach its own factual and legal conclusions and is not

limited to matters considered in the administrative

proceedings.”). The trial de novo provision of the Act “is

clearly broader than the review standard provided for under the

Administrative Procedure Act. It requires the district court to

examine the entire range of issues raised, and not merely to

determine whether the administrative findings are supported by

substantial evidence.” Modica v. United States, 518 F.2d 374,

376 (5th Cir. 1975). However, the statutory requirement of a

trial de novo “is compatible with a summary judgment

disposition if there are no material facts in dispute.” Freedman,

926 F.2d at 261. 

There is a question here as to whether “trial de novo” under

§ 2023(a)(15) always means “de novo review.” We think not.

Reading § 2021(b)(3)(B), § 2021(c)(2), and § 2023(a)(15)

together, and considering the statutory scheme as a whole, we

think that Congress 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. It seems clear under the statute

that Congress intended district courts to conduct a trial de novo

and engage in de novo review to determine whether a trafficking

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violation occurred. The parties do not dispute this point. But

the situation is different when an aggrieved party challenges the

Secretary’s failure to impose a civil money penalty in lieu of

disqualification. In this latter situation, the trial court must still

conduct a trial de novo as required by § 2023(a)(15) to

determine the facts on which the sanction was predicated.

However, the terms of the Act indicate that a trial court may

only overturn the agency’s choice of penalty if, on the de novo

factual record, it is determined that the Secretary abused his

discretion in declining to impose a civil money penalty in lieu of

disqualification. 

As noted above, Congress amended the Act in 1988 to give

the Secretary “the discretion to impose a civil money penalty”

on certain store owners innocent of their employees’ trafficking

offenses. Hunger Prevention Act of 1988, Pub. L. No. 100-435,

§ 344, 102 Stat. 1645, 1664 (codified as amended at 7 U.S.C.

§ 2021(b)(3)(B)); see also H.R. REP. NO. 100-828, pt. 1, at 28

(1988). Because we must presume that “[w]hen Congress acts

to amend a statute, . . . it intends its amendment to have real and

substantial effect,” Stone v. INS, 514 U.S. 386, 397 (1995),

Congress’ insertion of the “discretion” provision into § 2021(b)

indicates that it intended for trial courts to assess whether the

Secretary abused this “discretion” in selecting the appropriate

penalty. Had Congress intended instead for trial courts to

choose anew an appropriate penalty in trafficking cases, it would

have made little sense for it to amend the Act to place this

decision within the Secretary’s discretion. To give full effect to

§ 2021(b)(3)(B), we hold that review of the Secretary’s choice

of penalty is subject to the abuse of discretion standard. A

complaining party is still entitled to a trial de novo to create a

factual record on the Secretary’s determination not to a impose

a civil money penalty in lieu of disqualification, and judicial

review of the Secretary’s choice of penalty is based on that de

novo record. But the controlling standard of review is abuse of

discretion.

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Under the applicable standard of review, the Secretary

abuses his discretion in his choice of a penalty if his decision is

either “unwarranted in law” or “without justification in fact,”

Coosemans Specialties, Inc. v. USDA, 482 F.3d 560, 566 (D.C.

Cir. 2007) (quoting Butz v. Glover Livestock Comm’n Co., 411

U.S. 182, 185-86 (1973)) (other citation omitted), or is

“arbitrary” or “capricious,” see Norinsberg Corp. v. USDA, 47

F.3d 1224, 1228 (D.C. Cir. 1995). A court will not lightly

disturb an agency’s choice of penalty under a statute committed

to its enforcement. See, e.g., Kleiman & Hochberg, Inc. v.

USDA, 497 F.3d 681, 690 (D.C. Cir. 2007) (explaining that a

court must respect the agency’s superior knowledge of the

industry that it regulates). However, an agency’s choice of

sanction will not survive review even under a deferential

arbitrary and capricious or abuse of discretion standard if it is

not justified. See, e.g., Morall v. DEA, 412 F.3d 165, 181-84

(D.C. Cir. 2005). Thus, in a case such as this, the District Court

obviously must consider, inter alia, whether the Secretary

reasonably weighed the statutory factors listed in

§ 2021(b)(3)(B), (B)(i), (B)(ii)(I), and (B)(ii)(II) and reasonably

applied any lawful regulations adopted pursuant to § 2013(c)

and § 2021(a)(2) (“[r]egulations promulgated under this chapter

shall provide criteria for the finding of a violation of, the

suspension or disqualification of and the assessment of a civil

penalty against a retail food store”) in denying Affum’s request

for a civil money penalty in lieu of disqualification. 

In reviewing challenges under the Act, a number of our

sister circuits also distinguish between challenges to a finding of

a violation and challenges to the severity of the penalty. These

circuits subscribe to the view that we have enunciated here, i.e.,

that judicial review of the agency’s choice of penalty is focused

on whether the Secretary has abused his discretion. See, e.g.,

Cross v. United States, 512 F.2d 1212, 1218 (4th Cir. 1975) (en

banc) (holding that “only in those instances in which it may be

fairly said on the de novo record as a whole that the Secretary,

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18

acting through his designates, has abused his discretion by

acting arbitrarily or capriciously, would the district court be

warranted in exercising its authority to modify the penalty”); see

also Vasudeva v. United States, 214 F.3d 1155, 1159-61 (9th

Cir. 2000); Corder v. United States, 107 F.3d 595, 598 (8th Cir.

1997); Carlson v. United States, 879 F.2d 261, 263 (7th Cir.

1989); Wong v. United States, 859 F.2d 129, 132 (9th Cir. 1988).

But see Bakal Bros., Inc. v. United States, 105 F.3d 1085, 1089

(6th Cir. 1997) (suggesting that the agency’s determination of

the appropriate sanction is not open to judicial review). It

appears that only the Eighth Circuit has held that the Secretary’s

choice of sanction is subject to de novo review. Ghattas, 40

F.3d at 286-87. In Ghattas, however, the Eighth Circuit based

its analysis exclusively on § 2023(a)(15) and thus gave no effect

to the language added to § 2021(b) by the 1988 amendment that

vested the Secretary with the “discretion to impose a civil

money penalty.” Hunger Prevention Act of 1988, Pub. L. No.

100-435, § 344, 102 Stat. 1645, 1664 (codified as amended at 7

U.S.C. § 2021(b)(3)(B)); Ghattas, 40 F.3d at 286-87. But

reading the provisions together, as we must, makes clear that

§ 2021(b)(3)(B) is best understood as reflecting Congress’

expectation that, after conducting a trial de novo, trial courts

would assess whether the Secretary abused this “discretion” in

selecting the appropriate sanction. 

2. The Substantial Evidence Requirement and Fair Notice

Affum contends that the District Court erred in holding that

her affidavit was not “substantial evidence” of an effective antitrafficking program under § 2021(b)(3)(B) of the Act. We agree

that the District Court appears to have rested its analysis on a

misconception of the term “substantial evidence.”

The District Court held that Affum’s “affidavit alone” was

not substantial evidence of an effective anti-trafficking program

“under the statute because [s]tore owners cannot simply attest to

having effective antifraud programs; rather they must prove it.”

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Affum, 550 F. Supp. 2d at 67 (alteration in original) (internal

quotation marks and citation omitted). The District Court went

on to explain that an affidavit could not qualify as sufficient

evidence of an effective program because “then all store owners

would simply declare that they had told their employees that

trafficking was prohibited, and all owners would be eligible for

a civil money penalty.” Id. In other words, the District Court

was apparently of the view that a store owner’s affidavit,

without “any additional proof,” could never amount to

substantial evidence of an effective anti-trafficking program. Id.

The problem with this analysis is that it confuses the form of

evidence necessary to show an effective compliance program

with the content of that evidence. 

As we have explained, “[s]ubstantial evidence is ‘such

relevant evidence as a reasonable mind might accept as adequate

to support a conclusion.’” Butler v. Barnhart, 353 F.3d 992, 999

(D.C. Cir. 2004) (quoting Richardson v. Perales, 402 U.S. 389,

401 (1971)). The term “means more than a ‘scintilla,’ but less

than a preponderance of the evidence.” Wis. Power & Light Co.

v. FERC, 363 F.3d 453, 461 (D.C. Cir. 2004) (quoting Burns v.

Dir., Office of Workers’ Comp. Programs, 41 F.3d 1555, 1562

n.10 (D.C. Cir. 1994)). In its common usage, the term

“substantial evidence” in § 2021(b)(3)(B) thus says nothing

about the particular forms of evidence that a store owner may

use to demonstrate her eligibility for a civil money penalty. 

Furthermore, as counsel for the Government conceded at

oral argument, the regulations implementing the statute are

“flexibl[e]” and similarly do not limit a store owner in the forms

of evidence that she may submit to the agency. Recording of

Oral Argument 28:27; see also id. at 28:29-28:39 (“[The

regulations] are not so rigid that unless you file . . . something

that is explicitly one, two, three, four, and no variance, you

lose.”); id. at 33:54-33:58 (“I don’t think, for example, that the

program has to be written.”). A store owner such as Affum may

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thus attempt to show that she qualifies for the alternative

sanction via an affidavit, oral testimony, documents, or other

forms of evidence as may be appropriate in a given case. 

As to the content of the evidence, the heart of Affum’s

claim is that, because the Secretary failed to give her and other

small store owners fair notice of his interpretation of the

eligibility criteria in § 278.6(i) of the regulations, she had no

reason to assume that she was required to maintain a written

policy and contemporaneous written documentation of her

training. We have held that “‘[t]raditional concepts of due

process incorporated into administrative law preclude an agency

from penalizing a private party for violating a rule without first

providing adequate notice of the substance of the rule.’” PMD

Produce Brokerage Corp., 234 F.3d at 52 (quoting Satellite

Broad. Co., Inc. v. FCC, 824 F.2d 1, 3 (D.C. Cir. 1987)). We

“thus ask whether ‘by reviewing the regulations and other public

statements issued by the agency, a regulated party acting in good

faith would be able to identify, with ascertainable certainty, the

standards with which the agency expects parties to conform.’”

Trinity Broad. of Fla., Inc. v. FCC, 211 F.3d 618, 628 (D.C. Cir.

2000) (quoting Gen. Elec. Co. v. EPA, 53 F.3d 1324, 1329 (D.C.

Cir. 1995)). Here, the question is whether the Secretary’s

regulations and other statements about the rules of the food

stamp program gave Affum fair warning that she was required

to submit any further evidence than her letter, Letter from

Philomena Affum to Jerry A. Masefield, FNS, Administrative

Review Branch 1 (Dec. 26, 2007), J.A. 116, and affidavit

affirming that her “employee had been trained and that the

employee knew that it was prohibited to . . . exchange cash for

food stamp benefits,” Affum Aff. ¶ 4 (Mar. 20, 2008), J.A. 70.

We leave the resolution of the fair notice issue to the District

Court in the first instance. We note, however, that the existing

record raises serious issues as to the adequacy of the notice

provided to Affum. The Government argued in its brief that the

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21

regulations require that store owners maintain a written policy

and contemporaneous written documentation of training given to

employees. Appellees’ Br. at 26-30. But the regulations do not

appear to support these assertions, for they do not say that store

owners must have a written policy or maintain contemporaneous

written documentation of training activity. And the agency’s

training brochure provided to store owners does not say that a

written policy or contemporaneous written documentation of a

training program is required. The brochure simply instructs

owners that “[i]t is a good idea to document the training you

provide for your employees.” FOOD & NUTRITION SERV., U.S.

DEP’T OF AGRIC., THE FOOD STAMP PROGRAM: TRAINING GUIDE

FOR RETAILERS 8 (2005), J.A. 91. Moreover, at oral argument,

counsel for the Government acknowledged that the regulations

are “flexibl[e]” and do not require owners to maintain “written”

materials. Recording of Oral Argument 28:27, 33:54-33:58. 

The Government suggests that allowing a store owner to

obtain the civil money penalty without a written policy or

contemporaneous written documentation of training activity

might lead to abuse by regulated parties. Even if this is true, it

does not justify the agency’s failure to give notice to regulated

parties that a written policy and contemporaneous written

documentation are required. The agency’s confused and poorly

drafted regulations do not appear to give such notice.

Furthermore, the agency need not accept a store owner’s claim

that it had an oral policy and training if, for example, the agency

reasonably concludes that a store owner is not telling the truth.

Here, if the agency had concluded that Affum was lying about

having instructed her store clerk not to exchange cash for food

stamp benefits, there would be little basis for finding that the

agency abused its discretion in denying her the civil money

penalty.

As this case illustrates, it is surely better as a practical matter

for a store owner to maintain a written policy and written

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22

documentation of training. A written policy will strengthen an

owner’s evidentiary presentation and allow her to more

convincingly argue for a civil money penalty instead of

disqualification. Indeed, the regulations appear to create

something of a safe harbor for store owners with a written policy

and contemporaneous written documentation of training activity.

See 7 C.F.R. § 278.6(i)(1), (2). But the Government has pointed

to nothing in the existing regulations that require those steps as

a necessary condition for obtaining a civil money penalty.

To be sure, in one place the regulations say that the store

owner “shall document” its training activity by submitting to the

FNS a record of the employee’s dates of employment and the

dates of training. Id. § 278.6(i)(2). But contrary to the

Government’s argument, this regulation merely requires a store

owner’s creation of a written document during the agency’s

inquiry into a possible violation, not contemporaneously with

any training. And Affum of course produced such a written

document in the form of a letter to the agency and later an

affidavit to the District Court. See Letter from Philomena Affum

to Jerry A. Masefield, FNS, Administrative Review Branch 1

(Dec. 26, 2007), J.A. 116; Affum Aff. (Mar. 20, 2008), J.A. 69-

71. 

We do not mean to suggest that the Secretary cannot impose

rigorous requirements on store owners seeking a civil money

penalty. Indeed, as one of our sister circuits has noted:

That Congress amended the Act in 1988 to provide for

sanctions less severe than permanent disqualification for

innocent store owners who have in place an effective policy

to prevent trafficking violations leads ineluctably to the

conclusion that innocent store owners whose stores lack

such a policy remain subject to permanent disqualification.

Every court that has addressed the issue has so held.

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Kim, 121 F.3d at 1273. But Affum does not contest that innocent

store owners whose stores lack an effective compliance policy

and training program remain subject to permanent

disqualification. Rather, she has made one principal argument

in this case. She says she expressly told the store clerk from the

beginning that it was impermissible to exchange cash for food

stamp benefits. She submitted a written letter to the agency (and

later an affidavit to the District Court) setting forth this account.

If Affum’s account is truthful, then it would appear that she

maintained an effective policy and training program as required

by the existing regulations. The Government has never

suggested that Affum’s account is false. Rather, the

Government’s argument rests on the ground that Affum did not

maintain a written policy or contemporaneous written

documentation of training activity – requirements that the

regulations do not appear to impose. 

On remand, the District Court must conduct the required

trial de novo. The District Court must then determine whether,

on the basis of the de novo factual record, the agency’s

disqualification of Affum was an abuse of discretion. In

deciding this issue, the District Court must determine whether

the regulations gave Affum fair notice that she was required to

maintain a written policy and contemporaneous written

documentation of her training, and, if not, whether the agency

offered any legitimate alternative ground for denying Affum the

civil money penalty instead of disqualification. 

III. CONCLUSION

The District Court’s judgment is vacated and the case is

remanded for further proceedings consistent with this opinion. 

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STATUTORY APPENDIX

7 U.S.C. § 2021

(a) Disqualification

(1) In general 

An approved retail food store or wholesale food

concern that violates a provision of this chapter or a

regulation under this chapter may be–

(A) disqualified for a specified period of time from

further participation in the supplemental nutrition

assistance program;

(B) assessed a civil penalty of up to $100,000 for each

violation; or 

(C) both. 

(2) Regulations

Regulations promulgated under this chapter shall

provide criteria for the finding of a violation of, the

suspension or disqualification of and the assessment of

a civil penalty against a retail food store or wholesale

food concern on the basis of evidence that may include

facts established through on-site investigations,

inconsistent redemption data, or evidence obtained

through a transaction report under an electronic benefit

transfer system.

(b) Period of disqualification

. . . a disqualification under subsection (a) of this section

shall be–

. . . .

(3) permanent upon– 

. . . .

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(B) the first occasion or any subsequent occasion of a

disqualification based on the purchase of coupons

or trafficking in coupons or authorization cards by

a retail food store or wholesale food concern or a

finding of the unauthorized redemption, use,

transfer, acquisition, alteration, or possession of

EBT cards, except that the Secretary shall have the

discretion to impose a civil penalty of up to

$20,000 for each violation . . . in lieu of

disqualification . . . if the Secretary determines

that there is substantial evidence that such store or

food concern had an effective policy and program

in effect to prevent violations of the chapter and

the regulations, including evidence that– 

(i) the ownership of the store or food concern

was not aware of, did not approve of, did not

benefit from, and was not involved in the

conduct of the violation; and 

(ii) (I) the management of the store or

food concern was not aware of, did

not approve of, did not benefit

from, and was not involved in the

conduct of the violation; or 

(II) the management was aware of,

approved of, benefited from, or was

involved in the conduct of no more

than 1 previous violation by the

store or food concern; . . .

. . . .

(c) Civil penalty and review of disqualification and penalty

determinations

(1) Civil penalty 

In addition to a disqualification under this section, the

Secretary may assess a civil penalty in an amount not to

exceed $100,000 for each violation. 

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(2) Review 

The action of disqualification or the imposition of a

civil penalty shall be subject to review as provided in

section 2023 of this title. 

7 U.S.C. § 2023

(a)(1) Whenever . . . a retail food store or wholesale food

concern is disqualified or subjected to a civil money

penalty under the provisions of section 2021 of this

title . . . .

. . . .

 (13) If the store . . . feels aggrieved by such final

determination, it may obtain judicial review thereof by

filing a complaint against the United States in the

United States court for the district in which it resides or

is engaged in business . . . .

. . . .

 (15) The suit in the United States district court or State court

shall be a trial de novo by the court in which the court

shall determine the validity of the questioned

administrative action in issue, except that judicial

review of determinations regarding claims made

pursuant to section 2025(c) of this title shall be a review

on the administrative record.

 (16) If the court determines that such administrative action

is invalid, it shall enter such judgment or order as it

determines is in accordance with the law and the

evidence.

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