Cite as: 507 U. S. 529 (1993)
Opinion of the Court
7 U. S. C. § 2011 et seq. Under that program, the Food and Nutrition Service (FNS) of the United States Department of Agriculture provides food stamp coupons to participating States, and the States then distribute the coupons to qualified individuals and households. §§ 2013(a), 2014. Regulations implementing the Food Stamp Program permit participating States to distribute the coupons either over the counter or through the mail. 7 CFR § 274.3(a) (1986); 7 CFR § 274.3(a)(3) (1992). While mail issuance generally is cheaper and more convenient, States that choose to use that distribution method must reimburse the Federal Government for a portion of the replacement cost for any lost or stolen coupons. 7 U. S. C. § 2016(f). Specifically, a State must reimburse the Government for all such losses above a "tolerance level" set by regulation.1
Texas, through its Department of Human Services, contractually bound itself to comply with all federal regulations governing the program. See 7 CFR §§ 272.2(a)(2), 272.2(b)(1) (1986).2 Texas incurred substantial mail issuance
1 The regulatory tolerance level in place for the mail issuance losses in this case was 0.5% of each reporting area's total mail issuances for each calendar quarter. 7 CFR § 274.3(c)(4)(i) (1986).
2 Title 7 CFR § 272.2(a)(2) (1992) provides in pertinent part: "The basic components of the State Plan of Operation are the Federal/ State Agreement, the Budget Projection Statement, and the Program Activity Statement. . . . The Federal/State Agreement is the legal agreement between the State and the Department of Agriculture. This Agreement is the means by which the State elects to operate the Food Stamp Program and to administer the program in accordance with the Food Stamp Act of 1977, as amended, regulations issued pursuant to the Act and the FNS-approved State Plan of Operations."
Subsection (b)(1) sets out the exact wording of the preprinted Federal/ State Agreement. The provisions relevant to this dispute are as follows:
"The State of --- and the Food and Nutrition Service (FNS), U. S. Department of Agriculture (USDA), hereby agree to act in accordance with the provisions of the Food Stamp Act of 1977, as amended, implementing regulations and the FNS-approved State Plan of Operation. The State
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