Affum v. United States

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.
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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
 3

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.
 4

§ 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)).
 5

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
 6

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.
 7

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
 8

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.
 9

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).
 10

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,
 11

“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
 12

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
 13

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
 14

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
 15

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
 16

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.
 17

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,
 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 anti-
trafficking 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.”
 19

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
 20

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
 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
 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.
 23

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.
 24

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–
....
 25

(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.
 26

(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.