SNAP State Agency Liability and Federal Sanctions — How USDA Holds States Accountable for Food Stamp Program Losses and Violations
Legal Authority
- 7 U.S.C. § 2011 — Food and Nutrition Act of 2008; establishes SNAP and authorizes USDA FNS to set rules governing state agency administration, impose accountability requirements, and sanction state agencies that mismanage program funds or violate program requirements
- 7 CFR Part 276 — FNS implementing regulations governing state agency liability for benefit losses, negligence and fraud claims, suspension/disallowance of administrative funds, injunctive relief, and state appeal procedures
Key Mechanics
7 CFR Part 276 is the federal accountability framework FNS uses when state SNAP agencies fail to protect benefits or violate program rules. States administer SNAP under agreements with FNS but are strictly liable for all benefit losses, thefts, unaccounted shortages, and EBT system errors from the moment issuance records are created (§ 276.2) — "the vendor made an error" or "we were robbed" does not excuse state liability; the state must pay FNS and pursue its own remedies against responsible third parties. FNS has four enforcement tools: (1) strict liability claims — for benefit issuance losses including theft, embezzlement, cashier errors, undocumented issuances, issuances to uncertified households, and EBT system failures; for mail issuances, states choose among three annual liability thresholds (0.5%/0.35%/0.30% of quarterly mail issuance); unpaid claims are collected by withholding from the state's Letter of Credit; (2) negligence or fraud repayment (§ 276.3) — FNS may bill states for losses caused by using unapproved certification procedures, ignoring program rules, or violating the state's FNS-approved Plan; FNS can calculate losses by actual documentation or statistically valid sampling (95% one-sided confidence interval); (3) suspension/disallowance of administrative funds (§ 276.4) — FNS may temporarily suspend or permanently disallow federal administrative reimbursements; requires written advance notice and 30-day opportunity to correct before action; (4) injunctive relief (§ 276.5) — FNS may seek a federal court order requiring compliance; must notify and give opportunity to cure before referral to the Attorney General. Good cause (§ 276.6): FNS may excuse noncompliance for natural disasters, civil unrest, strikes, or major program disruptions beyond state control. Appeals (§ 276.7): states may appeal FNS claims to the State Food Stamp Appeals Board within 10 days of service of the claim (no extension); timely appeal stays collection; judicial review available within 30 days of the board's final decision.
Current Rule (2026)
| Parameter | Value |
|---|---|
| Citation | 7 CFR Part 276 |
| Issuing agency | USDA Food and Nutrition Service (FNS) |
| Statutory authority | 7 U.S.C. § 2011 (Food and Nutrition Act of 2008) |
| Last major amendment | No recent Federal Register amendments |
What This Rule Does
State agencies administer the Supplemental Nutrition Assistance Program (SNAP) under agreements with FNS, but administering a federal program with billions of dollars in benefits creates real opportunities for loss through theft, carelessness, fraud, and systems errors. When those losses happen, Part 276 answers the question: who pays, and what else can FNS do?
Seven CFR Part 276 establishes the legal accountability framework that FNS uses when state SNAP agencies fail to properly safeguard benefits, commit negligence or fraud in certifying households, or violate program rules. It sets out four main tools FNS can deploy — strict liability claims for benefit losses, negligence and fraud repayment demands, suspension or disallowance of federal administrative funds, and injunctive relief through the courts — and the due-process procedures states have to contest these actions.
Key Provisions
- § 276.1 — Responsibilities and rights: state agencies are responsible for keeping EBT benefits and any remaining paper coupons secure; FNS holds states strictly liable for all losses, thefts, and unaccounted shortages during issuance regardless of cause; FNS may seek court orders requiring compliance and may suspend or deny federal administrative funds; states may appeal FNS claims through an administrative review board and may seek judicial review of final decisions
- § 276.2 — State agency liabilities: states must document all benefit issuances and provide original records (or verifiable backup records) to FNS; states are strictly liable for shortages and losses including theft, embezzlement, cashier errors, undocumented issuances, issuances to uncertified households, EBT system errors, and unexplained shortages; for mail issuances, states choose one of three liability thresholds annually (0.5% of quarterly mail issuance at the county level, 0.35% at mid-level, or 0.30% statewide); if FNS bills a state and it does not pay, FNS withholds the debt from the state's Letter of Credit
- § 276.3 — Negligence or fraud: if FNS finds that a state certified households using unapproved procedures, ignored program rules, or violated its FNS-approved State Plan in a way that caused improper issuances, FNS can bill the state for the value of those coupons; FNS may calculate the loss from actual documentation or from statistically valid sampling methods using a 95 percent one-sided confidence interval; "fraud" means knowingly obtaining or distributing benefits through misrepresentation or concealment
- § 276.4 — Suspension/disallowance of administrative funds: FNS can temporarily suspend or permanently disallow federal administrative reimbursements to a state if the state mismanages SNAP or violates program requirements; FNS provides written advance notice and an opportunity to correct problems before acting; the state has 30 days after a formal warning to demonstrate corrective action; if problems persist, FNS issues a disallowance letter by certified mail or personal service
- § 276.5 — Injunctive relief: FNS may ask a federal court to order a state to comply with program requirements; before going to court, FNS must notify the state of the violation and give time to fix it; if the state does not comply, the Secretary may refer the case to the Attorney General
- § 276.6 — Good cause: FNS may excuse noncompliance if the state had good cause — natural disasters, civil unrest, strikes by state employees, or major program disruptions beyond the state's control; good-cause findings prevent suspension, disallowance, and injunctive proceedings
- § 276.7 — Administrative review: states may appeal FNS claims to an administrative review board (the State Food Stamp Appeals Board under the Secretary); the state must file within 10 days of service of the claim (no extension); filing a timely appeal generally stays collection while the appeal is pending; the board issues a final decision within 30 days of the hearing; states may sue in federal court for de novo review within 30 days of the final decision
How It Affects You
State SNAP administrators operate under strict liability for any benefit losses that occur once issuance records are created. "We were robbed" or "the EBT vendor made an error" does not release the state from liability — the state must pay FNS and then pursue its own remedies against the responsible party. States should maintain tight internal controls, rigorous documentation of all issuances, and immediate reporting to FNS (and law enforcement) when thefts or losses occur, because unreported losses are more likely to be characterized as negligence.
EBT system operators and state IT vendors whose errors cause overissuances create state liability. State contract officers should ensure that EBT service agreements include indemnification provisions and accurate error reporting, because FNS will bill the state for system-error overissuances.
Counties and local offices that issue benefits must understand that issuance begins when the record generating that month's benefits is created — not when the card is swiped. Losses that occur after that point are the state's strict liability. Undocumented issuances and issuances to uncertified households are automatically the state's responsibility regardless of how they happened.
State budget officers should track FNS compliance reviews, quality control findings, and audit results. FNS uses all of these — including OIG investigation reports — when deciding whether to bring negligence or fraud claims. Corrective action plans that are specific, timely, and actually implemented are the most reliable way to prevent escalation to fund suspension or disallowance.
Appeals are time-limited. The 10-day window to appeal a SNAP claim runs from the date of service of the bill — not from when the state becomes aware of it through informal channels. State legal teams should have a protocol for immediately escalating any FNS billing to the appeal process.
Statutory Authority
This rule implements:
- 7 U.S.C. § 2011 — Food and Nutrition Act of 2008; establishes SNAP and authorizes USDA to set rules governing state agency administration of the program; provides the framework within which FNS imposes accountability requirements and sanctions on state agencies that mismanage program funds or violate program requirements
Recent Rulemakings
No major Federal Register amendments. The liability and sanctions framework reflects longstanding FNS enforcement practice.