This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

11291 

Vol. 72, No. 48 

Tuesday, March 13, 2007 

DEPARTMENT OF AGRICULTURE 

Food and Nutrition Service 

7 CFR Parts 278 and 279 

RIN 0584–AD44 

Food Stamp Program: Revisions to 

Bonding Requirements for Violating 

Retail and Wholesale Food Concerns 

AGENCY: Food and Nutrition Service 

(FNS), USDA. 

ACTION: Proposed rule. 

SUMMARY: This action proposes to revise 

the current bonding requirements 

imposed against participating retailers 

and wholesalers who have violated the 

Food Stamp Program rules and 

regulations. Currently, all violating 

retailers and wholesalers that are 

disqualified for a specified period of 

time or have a civil money penalty 

imposed in lieu of a disqualification for 

a specified period of time are required 

to submit a valid collateral bond usually 

on an annual basis if they wish to 

continue to participate in the Food 

Stamp Program. Over the years, securing 

a collateral bond has become 

increasingly more difficult for retailers 

and wholesalers to obtain. Thus, the 

intent of this proposed rule is to revise 

the current requirement in order to help 

alleviate the financial burden to those 

retailers and wholesalers who are 

required to submit such a bond and also 

to reduce the recordkeeping burden 

with respect to the FNS field offices 

which have to keep track of the 

expirations and renewals of these 

bonds. 

This proposed rule would also place 

in the Food Stamp Program regulations 

the longstanding policy FNS has 

adopted to accept irrevocable letters of 

credit in lieu of collateral bonds. Lastly, 

this rule would establish a specified 

period of time for retailers and 

wholesalers to be removed from the 

program for accepting food stamp 

benefits in payment for eligible food on 

credit, a violation of the Food Stamp 

Program regulations. 

DATES: Comments must be received on 

or before May 14, 2007 to be assured of 

consideration. 

ADDRESSES: The Food and Nutrition 

Service invites interested persons to 

submit comments on the proposed rule. 

Comments may be sent to Andrea 

Gordon, Chief, Retailer Management 

Branch, Benefit Redemption Division, 

Food and Nutrition Service, U.S. 

Department of Agriculture, 3101 Park 

Center Drive, Room 406, Alexandria, VA 

22302; FAX number (703) 305–1863; Email: BRDHQ-WEB@fns.usda.gov. 

Comments may also be sent through the 

Federal e-Rulemaking Portal by going to 

http://www.regulations.gov. Follow the 

online instructions for submitting 

comments. All submitted comments 

should refer to the title of this proposal. 

Read Comments: All written 

comments will be open for public 

inspection at the office of the Food and 

Nutrition Service during business hours 

(8:30 a.m. to 5 p.m., Monday through 

Friday) at 3101 Park Center Drive, Room 

406, Alexandria, Virginia. 

FOR FURTHER INFORMATION CONTACT: 

Andrea Gordon at (703) 305–2456. 

SUPPLEMENTARY INFORMATION: 

Executive Order 12866 

This proposed rule has been 

determined to be significant and was 

reviewed by the Office of Management 

and Budget in conformance with 

Executive Order 12866. 

Regulatory Impact Analysis 

Need for Action 

The proposed regulation would 

reduce and better target the current 

bonding and letter of credit (LOC) 

requirements that are imposed on 

authorized retailers and wholesalers 

who violate Food Stamp Program rules. 

It would: (1) Eliminate the bond 

requirements for retailers who have 

never previously been disqualified and 

who are disqualified for six months or 

incur a civil money penalty in lieu of a 

six month disqualification; and, (2) limit 

the bond requirement to five years for 

retailers whose disqualification or civil 

money penalty exceeds six months. 

Retailers who have previously been 

disqualified for any length of time or 

been issued a civil money penalty and 

who subsequently become disqualified 

again will be subject to the five year 

bonding requirement, even if the 

subsequent disqualification is for a 

period of six months or less or the civil 

money penalty imposed is in lieu of a 

disqualification for six months or less. 

Benefits 

Currently, a retailer who is sanctioned 

as a result of violations is required to 

submit a bond or LOC in order to 

continue to participate in the Food 

Stamp Program regardless of the type 

and extent of those violations. In this 

proposed rule, however, retailers who 

commit less egregious violations would 

be exempt from the bonding 

requirement. The cost of securing and 

maintaining a bond has increased 

significantly over the years; this change 

would alleviate the financial burden on 

retailers who have committed relatively 

minor violations as well as those who 

have served their program sanction. The 

agency would also realize a reduced 

burden in that the implementation of 

this rule would eliminate the labor 

associated with monitoring the bonds 

and letters of credit. The rule would 

also have a modest effect on the revenue 

FNS collects from retailers who commit 

violations. No impacts on household 

food stamp participation or associated 

benefit costs are expected. 

Costs 

These provisions are expected to 

produce a small dollar loss to the 

Government of $14,793 in FY 2006 and 

less than $75,000 over the five-year 

period FY 2006 through FY 2010. 

While the reduction in labor hours for 

monitoring bonds and letters of credit 

cannot be counted as a direct savings to 

the Government, the time made 

available has significant value. It can be 

used to enhance FNS’ capacity to 

manage the authorization and 

monitoring of food stamp retailers. 

When food stamp retailers who have 

secured bonds or letters of credit 

commit a subsequent violation, the 

Government may recover its losses 

against the bonds. Historically, such 

draw downs have been very infrequent, 

less than one percent of all bonds. 

The proposed rule change would 

eliminate the need for bonds and letters 

of credit among retailers who are 

disqualified for six months or who pay 

a civil money penalty in lieu of a six 

month disqualification. Approximately 

44 percent of retailer violations are 

associated with a six month period of 

disqualification. A majority of these 

involve bonds with a face value of 


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11292 Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Proposed Rules 

$1,000. Based on an average of 10.8 

bond or letter of credit forfeitures per 

year among this group, the potential loss 

of revenue to the Government over five 

years is $74,000, determined as follows: 

• 44% of 3,070 retailers currently in 

the Program who have prior violations 

that are associated with a 6 month 

disqualification period, been reinstated 

and submitted a bond or LOC = 1,351 

retailers. 

• <1% (.008) of 1,351 retailers = 10.8 

who commit a second violation that 

results in bond forfeiture or letter of 

credit draw down. 

• 86.5% of 10.8 = 9.35 retailers with 

bonds/LOCs that have a face value of 

$1,000 and 13.5% = 1.45 with bonds/ 

LOCs that have an average face value of 

$3,754. 

• The annual forfeiture amount is 

equal to (9.35 × $1000) $9350 + (1.45 × 

$3754) $5,443 or $14,793. 

• $14,793 × 5 years = $73,965. 

The estimates of revenue forfeited are 

reasonably certain as they are based on 

averages created from historical 

information from the Government’s 

administrative files on food stamp 

retailer disqualifications and civil 

money penalties. 

The financial benefit for all food 

retailers (regardless of when they are 

authorized, both new and current 

participants) is substantially larger than 

the cost to the Federal Government. The 

proposed rule would eliminate the cost 

of bonds/letters of credit and associated 

processing fees for retailers disqualified 

for six months or who pay a civil money 

penalty in lieu of a six month 

disqualification: 

• 386 is the average number of 

retailers who are disqualified for six 

months or pay a civil money penalty in 

lieu of a six month disqualification per 

year. 

• These 386 retailers pay an average 

cost of $668 per bond or LOC = 

$257,848 each year; 

• $257,848 per year × five years = 

$1,289,240. 

When effective, the proposed rule 

would also eliminate the expense of 

maintaining a bond indefinitely to 

retailers who have been previously 

disqualified and reinstated or paid a 

civil money penalty in lieu of a 

disqualification and required to post a 

bond/LOC: 

• 3,070 retailers who previously have 

been disqualified or paid a civil money 

penalty in lieu of disqualification and 

been reinstated. 

• 3,070 retailers who pay an 

estimated annual renewal fee for bond/ 

LOC of $100 = $307,000 for first year 

(2006); 

• 3,070 retailers × 6.1% = 187 stores 

who will withdraw or otherwise leave 

the Program. In 2007, 3070 stores ¥187 

stores = 2,883 stores who pay $100 

renewal fee = $288,300. 

• In 2008, 2,883 ¥187 stores = 2,696 

retailers × $100 renewal fee = $269,600. 

• In 2009, 2,696 ¥187 stores = 2,509 

retailers × $100 renewal fee = $250,900. 

• In 2010, 2,509 ¥187 stores = 2,322 

retailers × $100 renewal fee = $232,200. 

• Cost over five years = $307,000 + 

$288,300 + $269,600 + $250,900 + 

$232,200 = $1,348,000. 

Finally, retailers who, during 2005, 

(1) Have a previous disqualification(s) 

or civil money penalty in lieu of 

disqualification and receive an 

additional disqualification penalty of 

any length or (2) are disqualified for 

more than six months or pay a civil 

money penalty in lieu of a 

disqualification period of more than six 

months will have fulfilled their bond/ 

LOC requirement in 2010. During this 

five year period they will continue to 

pay the fees associated with the annual 

renewal of such bonds/LOCs. For each 

year beyond 2010, the number of 

retailers who no longer pay renewal fees 

should increase by the number of stores 

who fit into one of the two categories 

described above and remains in the 

Food Stamp Program. For example: 

In 2011, 2,040 + 491 retailers ¥6.1% 

of them who leave the Program OR 2377 

retailers will no longer incur the average 

$100 cost of bond renewal fees. The 

total cost associated with this change in 

2011 is $237,700. 

Since 1969, more than 75% of the 

stores that have been disqualified or 

subject to a civil money penalty are 

convenience stores and medium or 

small grocers. 

From 1998 to 2005, 2,065 stores were 

facing a permanent disqualification 

from participation in the Food Stamp 

Program because of indications that 

trafficking violations were occurring in 

those establishments. Two hundred 

forty-four of those stores provided 

documentation proving that in fact 

credit violations were taking place. That 

is equal to an average of 30.5 stores per 

year or 11.8% of all the stores facing a 

permanent disqualification each year 

between 1998 and 2005. 

Under the proposed regulation, these 

stores would instead be given a one year 

disqualification and required to submit 

a bond or letter of credit for five years, 

upon return to the Food Stamp Program. 

Based on historical data, there would 

be an average out-of-pocket cost to each 

of these retailers of $668. Total cost to 

retailers for this provision is projected 

to be $20,374 per year and $101,870 

over five years. 

This out-of-pocket cost is, however, 

offset by the opportunity for these 

businesses to resume the food stamp 

portion of their sales after the one year 

disqualification period. 

Regulatory Flexibility Act 

This rule has been reviewed with 

regard to the requirements of the 

Regulatory Flexibility Act of 1980 (5 

U.S.C. 601–612). Nancy Montanez 

Johner, Under Secretary, of the Food, 

Nutrition and Consumer Services has 

certified that this rule will not have a 

significant economic impact on a 

substantial number of small entities. 

This rule will impact FNS field offices 

and all participating retailers and 

wholesalers who have violated the Food 

Stamp Program rules. Currently, all 

violating retailers and wholesalers who 

have been imposed a specified period of 

time to be removed from the program or 

assessed a civil money penalty in lieu 

of such removal are required to submit 

a collateral bond or irrevocable letter of 

credit as condition of continued 

participation in the Food Stamp 

Program. The collateral bond or 

irrevocable letter of credit must be 

periodically renewed and valid at all 

times during the period in which the 

firm is authorized to participate in the 

program. This rule will limit the 

requirement to five years, benefiting the 

retailers and wholesalers who are 

affected by this requirement. Also, in 

this rule, a one year removal from 

participation in the program will be 

imposed against retailers and 

wholesalers that accept food stamp 

benefits in payment for items sold to a 

household on credit. It is estimated that 

an average of 30.5 stores per year or 

11.8% of all the stores facing a 

permanent disqualification will be 

imposed a one year disqualification 

because of committing credit violations. 

Unfunded Mandates Reform Act 

Title II of the Unfunded Mandates 

Reform Act of 1995 (UMRA), Public 

Law 104–4, establishes requirements for 

Federal agencies to assess the effects of 

their regulatory actions on State, local, 

and tribal governments and the private 

sector. Under Section 202 of the UMRA, 

the Department generally must prepare 

a written statement, including a cost/ 

benefit analysis, for proposed and final 

rules with Federal mandates that may 

result in expenditures to State, local, or 

tribal governments, in the aggregate, or 

to the private sector, of $100 million or 

more in any one year. When such a 

statement is needed for a rule, section 

205 of the UMRA generally requires the 

Department to identify and consider a 

reasonable number of regulatory 


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Federal Register / Vol. 72, No. 48 / Tuesday, March 13, 2007 / Proposed Rules 11293 

alternatives and adopt the least costly, 

more cost-effective or least burdensome 

alternative that achieves the objectives 

of the rule. This rule contains no 

Federal mandates (under the regulatory 

provisions of Title II of the UMRA) that 

impose costs on State, local, or tribal 

governments or to the private sector of 

$100 million or more in any one year. 

This rule is, therefore, not subject to the 

requirements of sections 202 and 205 of 

the UMRA. 

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 in 7 

CFR part 3015, subpart V and related 

Notice (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. 

Executive Order 13132, Federalism 

Executive Order 13132 requires 

Federal agencies to consider the impact 

of their regulatory actions on State and 

local governments. Where such actions 

have federalism implications, agencies 

are directed to provide a statement for 

inclusion in the preamble to the 

regulations describing the agency’s 

considerations in terms of the three 

categories called for under section 

(6)(b)(2)(B) of Executive Order 13132. 

The Food and Nutrition Service (FNS) 

has considered the impact of this rule 

on State and local governments and has 

determined that this rule does not have 

federalism implications. This rule does 

not impose substantial or direct 

compliance costs on State and local 

governments. Therefore, under section 

6(b) of the Executive Order, a federalism 

summary impact statement is not 

required. 

Executive Order 12988 

This rule has been reviewed under 

Executive Order 12988, 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 specified in the DATES

section of the final rule. Prior to any 

judicial challenge to the provisions of 

this rule or the application of its 

provisions, all applicable administrative 

procedures must be exhausted. 

Civil Rights Impact Analysis 

FNS has reviewed this proposed rule 

in accordance with Departmental 

Regulations 4300–4, ‘‘Civil Rights 

Impact Analysis’’, and 1512–1, 

‘‘Regulatory Decision Making 

Requirements.’’ After a careful review of 

the rule’s intent and provisions, FNS 

has determined that this proposed rule 

will not in any way limit or reduce the 

ability of protected classes of 

individuals to receive food stamp 

benefits on the basis of their race, color, 

national origin, sex, age, disability, 

religion or political belief nor will it 

have a differential impact on minority 

owned or operated business 

establishments, and woman owned or 

operated business establishments that 

participate in the Food Stamp Program. 

The proposed changes in this 

regulation do not apply to the food 

stamp recipients participating in the 

Food Stamp Program. The regulation 

affects or may potentially affect the 

retail food stores and wholesale food 

concerns that participate (accept or 

redeem food stamp benefits) in the Food 

Stamp Program. The only retail food 

stores and wholesale food concerns that 

will be directly affected, however, are 

those firms that violate the Food Stamp 

Program rules and regulations. 

FNS does not collect data from retail 

food stores or wholesale food concerns 

regarding any of the protected classes 

under Civil Rights. As long as a retail 

food store or wholesale food concern 

meets the eligibility criteria stipulated 

in the section 3 of the Food Stamp Act 

and 7 CFR 278.1 of the Food Stamp 

Program regulations they can participate 

in the Food Stamp Program. Also, FNS 

specifically prohibits retailers and 

wholesalers that participate in the Food 

Stamp Program to engage in actions that 

discriminate based on race, color, 

national origin, sex, age, disability, 

religion or political belief. FNS has 

performed many outreach efforts to 

increase the participation of individuals 

eligible to receive food stamp benefits. 

This rule will not change any 

requirements related to the eligibility or 

participation of protected classes or 

individuals, minority owned or 

operated business establishments, or 

woman owned or operated business 

establishments in the Food Stamp 

Program. As a result, this rule will have 

no differential impact on protected 

classes of individuals, minority owned 

or operated business establishments, or 

woman owned or operated business 

establishments. 

Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 

(44 U.S.C. Chap. 35; see 5 CFR 1320) 

requires that the Office of Management 

and Budget (OMB) approve all 

collections of information by a Federal 

agency before they can be implemented. 

Respondents are not required to respond 

to any collection of information unless 

it displays a current valid OMB control 

number. This rule does not contain 

information collection requirements 

subject to approval by OMB under the 

Paperwork Reduction Act of 1995. 

E-Government Act Compliance 

The Food and Nutrition Service is 

committed to complying with the EGovernment Act, to promote the use of 

the Internet and other information 

technologies to provide increased 

opportunities for citizen access to 

Government information and services, 

and for other purposes. 

Background 

On July 12, 1984, the Department 

published a rule entitled, Bonding of 

Authorized Firms, that required all 

violating retailers and wholesalers that 

have been disqualified for a specified 

period of time or imposed a civil money 

penalty to submit a collateral bond if 

they wish to continue to participate in 

the Food Stamp Program after satisfying 

their penalty. The rule became effective 

on August 13, 1984. The bonding 

requirements are set forth in Section 

12(d) of the Food Stamp Act of 1977, 

(Act), and Parts 278 and 279 of the Food 

Stamp Program regulations. Essentially, 

the bond covers the value of the food 

stamp benefits which the authorized 

firm may in the future accept and 

redeem in violation of the Act. The 

minimum face value of a bond is $1,000. 

The vast majority of the bonds, when 

calculated, have a face value of $1,000. 

Currently, the regulations require that 

the bond be valid at all times during the 

period which the firm is authorized to 

participate in the program. Retailers and 

wholesalers are required to renew their 

bond through a bonding agent or 

financial institution on a periodic basis. 

Most bonds are renewed on an annual 

basis. The renewal fee for a bond can 

range from $50 to $1,000, which does 

not include the accountant and lawyer 

fees that can range from $75 to more 

than $200. Firms have expressed to the 

Food and Nutrition Service (FNS) on 

numerous occasions their concern about 

the costs of renewing a collateral bond 

being exorbitant. 

Several other problems have arisen 

since the inception of the current 

bonding requirement. Namely, we found 

that collateral bonds from some 

companies do not meet the 

requirements set forth in the rules, 

collateral bonds are not available in 

some areas, and collateral bonds are not 

always available in the required 

increments. As a result, we established 


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written policy to allow firms to submit 

irrevocable letters of credit in lieu of 

collateral bonds. 

In accordance with Section 12(d) of 

the Act, the Secretary has the authority 

to prescribe the amount, terms, and 

conditions of this statutory requirement. 

Thus, the proposed rule would do the 

following: (1) Amend the regulation to 

provide for irrevocable letters of credit 

as an acceptable instrument in lieu of 

collateral bonds; (2) Eliminate the bond 

requirement for retailers who have 

never previously been disqualified and 

who are disqualified for a period of six 

months or have a civil money penalty 

imposed in lieu of a six month 

disqualification period; and (3) Limit 

the bonding requirement to five years 

for retailers who are disqualified for a 

specified period of time greater than six 

months or imposed a civil money 

penalty in lieu of a specified period of 

time greater than six months. Retailers 

who have previously been disqualified 

for any length of time or been issued a 

civil money penalty and who 

subsequently become disqualified again 

will be subject to the five year bonding 

requirement, even if the subsequent 

disqualification is for a period of six 

months or less or the civil money 

penalty imposed is in lieu of a 

disqualification for six months or less. 

Lastly, the proposed rule would also 

establish a specified period of time for 

firms to be removed from the program 

(i.e., one year) for accepting food stamp 

benefits in payment for items on credit. 

Section 278.2(f) of the Food Stamp 

Program regulations stipulates that retail 

food stores may not accept food stamp 

benefits in payment for any eligible food 

sold to food stamp households on 

credit. We have seen an increase in this 

type of violative activity since the 

implementation of the electronic benefit 

transfer (EBT) system. As a result, we 

issued clarification of FNS’ policy 

regarding such activity (Benefit 

Redemption Division Policy 

Memorandum #98–01, entitled, 

Handling Electronic Benefit Transfer 

Cases Involving Retailers Who Admit to 

Accepting Food Stamp Benefits for 

Payment on Credit Accounts). We are 

now proposing to establish by 

regulation a specific one year 

disqualification for stores that engage in 

credit transactions. 

List of Subjects 

7 CFR Part 278 

Food Stamps, Grant programs—social 

programs, Penalties. 

7 CFR Part 279 

Administrative practice and 

procedure, Food Stamps, Grant 

programs—social programs. 

Accordingly, 7 CFR parts 278 and 279 

are proposed to be amended as follows: 

1. The authority citation for parts 278 

and 279 continues to read as follows: 

Authority: 7 U.S.C. 2011–2036. 

PART 278—PARTICIPATION OF 

RETAIL FOOD STORES, WHOLESALE 

FOOD CONCERNS AND INSURED 

FINANCIAL INSTITUTIONS 

2. In § 278.1, revise paragraph (b)(4) to 

read as follows: 

§ 278.1 Approval of retail food stores and 

wholesale food concerns. 

* * * * * 

(b) * * * 

(4) The submission of collateral bonds 

or irrevocable letters of credit for firms 

with previous sanctions. 

(i) If the applicant firm has been 

sanctioned for violations of this part, by 

withdrawal, or disqualification for a 

period of more than six months, or by 

a civil money penalty in lieu of a 

disqualification period of more than six 

months, or if the applicant firm has 

been previously sanctioned for a 

violation and incurs a subsequent 

sanction regardless of the length of the 

disqualification period, the FNS officerin-charge shall, as a condition of future 

authorization, require the applicant to 

present a collateral bond or irrevocable 

letter of credit that meets the following 

conditions: 

(A) The collateral bond must be 

issued by a bonding agent/company 

recognized under the law of the State in 

which the applicant is conducting 

business and which is represented by a 

negotiable certificate only. The 

irrevocable letter of credit must be 

issued by a commercial bank; 

(B) The collateral bond or irrevocable 

letter of credit must be made payable to 

the Food and Nutrition Service, U.S. 

Department of Agriculture; 

(C) The collateral bond cannot be 

canceled by the bonding agent/company 

for non-payment of the premium by the 

applicant. The irrevocable letter of 

credit cannot be canceled by the 

commercial bank for non-payment by 

the applicant; 

(D) The collateral bond or irrevocable 

letter of credit must have a face value 

of $1,000 or an amount equal to ten 

percent of the average monthly food 

stamp benefit redemption volume of the 

applicant for the immediate twelve 

months prior to the effective date of the 

most recent sanction which necessitated 

the collateral bond or irrevocable letter 

of credit whichever amount is greater; 

(E) The applicant is required to 

submit a collateral bond or irrevocable 

letter of credit that is valid for a period 

of five years when re-entering the 

program; and 

(F) The collateral bond or irrevocable 

letter of credit shall remain in the 

custody of the Officer-in-Charge unless 

released to the applicant as a result of 

the withdrawal of the applicant’s 

authorization, without a fiscal claim 

established against the applicant by 

FNS. 

(ii) Furnishing a collateral bond or 

irrevocable letter of credit shall not 

eliminate or reduce a firm’s obligation 

to pay in full any civil money penalty 

or previously determined fiscal claim 

which may have been assessed against 

the firm by FNS prior to the time the 

bond or letter of credit was required by 

FNS, and furnished by the firm. A firm 

which has been assessed a civil money 

penalty shall pay FNS as required, any 

subsequent fiscal claim asserted by FNS. 

In such cases a collateral bond or 

irrevocable letter of credit shall be 

furnished to FNS with the payment, or 

a schedule of intended payments, of the 

civil money penalty. A buyer or 

transferee shall not, as a result of the 

transfer or purchase of a disqualified 

firm, be required to furnish a bond or 

letter of credit prior to authorization. 

* * * * * 

3. In § 278.2, revise paragraph (f) to 

read as follows: 

§ 278.2 Participation of retail food stores. 

* * * * * 

(f) Paying credit accounts. Food stamp 

benefits shall not be accepted by 

authorized retail food store in payment 

of items previously sold to a household 

on credit. A firm that commits such 

violations shall be disqualified from 

participation in the Food Stamp 

Program for a period of one year. 

* * * * * 

4. In § 278.6: 

a. Revise paragraph (e)(4); and 

b. Amend paragraph (h) by adding the 

words ‘‘or irrevocable letter of credit’’

after the word ‘‘bond’’ wherever it 

appears. 

The revision reads as follows: 

§ 278.6 Disqualification of retail food 

stores and wholesale food concerns, and 

imposition of civil money penalties in lieu 

of disqualifications. 

* * * * * 

(e) * * * 

(4) Disqualify the firm for 1 year if: 

(i) It is to be the first sanction for the 

firm and the ownership or management 

personnel of the firm have committed 


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violations such as the sale of common 

nonfood items in amounts normally 

found in a shopping basket, and FNS 

had not previously advised the firm of 

the possibility that violations were 

occurring and of the possible 

consequences of violating the 

regulations; or 

(ii) The firm has accepted food stamp 

benefits in payment for items sold to a 

household on credit. 

* * * * * 

5. In § 278.7, revise paragraph (b) to 

read as follows: 

§ 278.7 Determination and disposition of 

claims—retail food stores and wholesale 

food concerns. 

* * * * * 

(b) Forfeiture of a collateral bond or 

draw down on an irrevocable letter of 

credit. If FNS establishes a claim against 

an authorized firm which has 

previously been sanctioned, collection 

of the claim may be through total or 

partial forfeiture of the collateral bond 

or draw down of the irrevocable letter 

of credit. If FNS determines that 

forfeiture or a draw down is required for 

collection of the claim, FNS shall take 

one or more of the following actions, as 

appropriate. 

(1) Determine the amount of the bond 

to be forfeited or irrevocable letter of 

credit drawn down on the basis of the 

loss to the Government through 

violations of the Act, and this Part, as 

detailed in a letter of charges to the firm; 

(2) Send written notification by 

method of proof of delivery to the firm 

and the bonding agent or commercial 

bank of FNS’ determination regarding 

forfeiture or draw down of all or a 

specified part of the collateral bond or 

irrevocable letter of credit and the 

reasons for the forfeiture or draw down 

action; 

(3) Advise the firm and the bonding 

agent or commercial bank of the firm’s 

right to administrative review of the 

claim determination; 

(4) Advise the firm and the bonding 

agent or commercial bank that if 

payment of the current claim is not 

received directly from the firm, FNS 

shall obtain full payment through 

forfeiture of the bond or draw down of 

the irrevocable letter of credit; 

(5) Proceed with collection on the 

bond or irrevocable letter of credit on 

the amount forfeited or drawn down if 

a request for review is not filed by the 

firm within the period established in 

§ 279.5 of this chapter, or if such review 

is unsuccessful; and 

(6) Upon the expiration of time 

permitted for the filing of a request for 

administrative and/or judicial review, 

deposit the bond or irrevocable letter of 

credit in a Federal Reserve Bank 

account or in the Treasury Account, 

General. If FNS requires only a portion 

of the face value of the bond or 

irrevocable letter of credit to satisfy a 

claim, the entire bond or irrevocable 

letter of credit will be negotiated, and 

the remaining amount returned to the 

firm. 

* * * * * 

PART 279—ADMINISTRATIVE AND 

JUDICIAL REVIEW—FOOD RETAILERS 

AND FOOD WHOLESALERS 

6. In § 279.1, revise paragraph (a)(6) to 

read as follows: 

§ 279.1 Jurisdiction and authority. 

* * * * * 

(a) * * * 

(6) Forfeiture of part or all of a 

collateral bond or a draw down of part 

or all of a letter of credit under § 278.1 

of this chapter, if the request for review 

is made by the authorized firm. FNS 

shall not accept requests for review 

made by a bonding company or agent or 

commercial bank. 

* * * * * 

7. In § 279.4, revise the last sentence 

in paragraph (a) to read as follows: 

§ 279.4 Action upon receipt of a request 

for review. 

(a) * * * If the administrative action 

in question involves the denial of a 

claim brought by a firm against FNS, or 

the forfeiture of a collateral bond or the 

draw down on a irrevocable letter of 

credit, the designated reviewer shall 

direct the firm not be approved for 

participation, not be paid any part of the 

disputed claim, or not be reimbursed for 

any bond forfeiture or irrevocable letter 

of credit withdrawal, as appropriate 

until the designated reviewer has made 

a determination. 

* * * * * 

Dated: March 1, 2007. 

Nancy Montanez Johner, 

Under Secretary, Food, Nutrition, and 

Consumer Services. 

[FR Doc. E7–4520 Filed 3–12–07; 8:45 am] 

BILLING CODE 3410–30–P 

DEPARTMENT OF TRANSPORTATION 

Federal Aviation Administration 

14 CFR Part 39 

[Docket No. FAA–2007–27496; Directorate 

Identifier 2005–SW–37–AD] 

RIN 2120–AA64 

Airworthiness Directives; Bell 

Helicopter Textron, Inc. Model 205A, 

205A–1, 205B, 212, 412, 412CF, and 

412EP Helicopters 

AGENCY: Federal Aviation 

Administration, DOT. 

ACTION: Notice of proposed rulemaking 

(NPRM). 

SUMMARY: This document proposes 

superseding an existing airworthiness 

directive (AD) for the specified Bell 

Helicopter Textron, Inc. (Bell) 

helicopters. That AD currently requires 

inspecting each affected tail rotor blade 

(blade) forward tip weight retention 

block (tip block) and the aft tip closure 

(tip closure) for adhesive bond voids, 

and removing any blade with an 

excessive void from service. That AD 

also requires modifying certain blades 

by installing shear pins and tip closure 

rivets. This action would contain the 

same requirements but would expand 

the applicability to include other part 

and serial-numbered blades. This AD 

would also clarify the requirement to reidentify the modified blade by adding 

‘‘FM’’ after the part number and would 

require dynamically balancing the tail 

rotor. The existing AD was prompted by 

five occurrences of missing tip blocks or 

tip closures resulting in minor to 

substantial damage. This proposal was 

prompted by the determination that the 

AD should apply to other affected part 

and serial-numbered blades. The actions 

specified by this proposed AD are 

intended to prevent loss of a tip block 

or tip closure, loss of a blade, and 

subsequent loss of control of the 

helicopter. 

DATES: Comments must be received on 

or before May 14, 2007. 

ADDRESSES: Use one of the following 

addresses to submit comments on this 

proposed AD: 

• DOT Docket Web site: Go to 

http://dms.dot.gov and follow the 

instructions for sending your comments 

electronically; 

• Government-wide rulemaking Web 

site: Go to http://www.regulations.gov 

and follow the instructions for sending 

your comments electronically; 

• Mail: Docket Management Facility; 

U.S. Department of Transportation, 400 


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