Disqualification by State agency

Section 12 of the Food and Nutrition Act of 2008 (7 U.S.C. 2021) is amended by adding at the end the following: (j) Disqualification by State agency (1) In general Except as provided in paragraph (4), a State agency shall permanently disqualify from participation in the supplemental nutrition assistance program an approved retail food store or wholesale food concern convicted of— (A) trafficking in food instruments (including any voucher, draft, check, or access device (including an electronic benefit transfer card or personal identification number) issued in lieu of a food instrument under this Act); or (B) selling firearms, ammunition, explosives, or controlled substances (as defined in section 102 of the Controlled Substances Act (21 U.S.C. 802)) in exchange for food instruments (including any item described in subparagraph (A) issued in lieu of a food instrument under this Act). (2) Notice of disqualification The State agency shall— (A) provide the approved retail food store or wholesale food concern with notification of the disqualification; and (B) make the disqualification effective on the date of receipt of the notice of disqualification. (3) Prohibition of receipt of lost revenues A retail food store or wholesale food concern shall not be entitled to receive any compensation for revenues lost as a result of disqualification under this subsection. (4) Exceptions in lieu of disqualification (A) In general A State agency may permit a retail food store or wholesale food concern that, but for this paragraph, would be disqualified under paragraph (1), to continue to participate in the supplemental nutrition assistance program if the State agency determines, in its sole discretion, that— (i) disqualification of the retail food store or wholesale food concern, as applicable, would cause hardship to participants in the supplemental nutrition assistance program; or (ii) (I) the retail food store or wholesale food concern had, at the time of the violation under paragraph (1), an effective policy and program in effect to prevent violations described in paragraph (1); and (II) the ownership of the retail food store or wholesale food concern was not aware of, did not approve of, and was not involved in the conduct of the violation. (B) Civil penalty If a State agency under subparagraph (A) permits a retail food store or wholesale food concern to continue to participate in the supplemental nutrition assistance program in lieu of disqualification, the State agency shall assess a civil penalty in an amount determined by the State agency, except that— (i) the amount of the civil penalty shall not exceed $10,000 for each violation; and (ii) the amount of civil penalties imposed for violations investigated as part of a single investigation may not exceed $40,000. (C) Reporting (i) To the Secretary If a State agency under subparagraph (A) permits a retail food store or wholesale food concern to continue to participate in the supplemental nutrition assistance program in lieu of disqualification, the State agency shall annually submit to the Secretary a report describing the justification of the State agency for that action. (ii) To Congress The Secretary shall annually submit to Congress a report compiling the information contained in reports submitted to the Secretary under clause (i)..