Sana Ventures LLC d/b/a Space City Food Mart / A and K Food Store, DAB No. 3169 (2025)

FINAL DECISION ON REVIEW OF ADMINISTRATIVE LAW JUDGE DECISION

Sana Ventures LLC d/b/a Space City Food Mart / A and K Food Store (Respondent) appeals the Initial Decision of an Administrative Law Judge (ALJ).  Sana Ventures LLC d/b/a Space City Food Mart / A and K Food Store, DAB TB8467 (2024).  The ALJ imposed a $17,272 civil money penalty (CMP) on Respondent for receiving in interstate commerce, and offering for sale, an electronic nicotine delivery system (ENDS) product that lacked premarket authorization, in violation of the Federal Food, Drug, and Cosmetic Act (Act).  For the reasons explained below, we affirm the Initial Decision because it is supported by substantial evidence and is free of legal error.

Legal Background

To protect public health, the Act, 21 U.S.C. § 301 et seq., imposes restrictions on the sale, distribution, and use of tobacco products.  See 21 U.S.C. §§ 301, 331(b), 331(k), 387a(a)-(b), 387c(a)(7)(B), 387f(d).  The Act prohibits the “receipt in interstate commerce of any . . . tobacco product . . . that is adulterated or misbranded, and the delivery or proffered delivery thereof for pay or otherwise.”  Id. § 331(c).  A “tobacco product” means “any product made or derived from tobacco, or containing nicotine from any source, that is intended for human consumption, including any component, part, or accessory of a tobacco product.”  Id. § 321(rr).  The Act, as amended, extends to and imposes additional requirements for “new tobacco products,” that is, tobacco products that were not commercially marketed in the United States as of February 15, 2007.  See id. § 387j(a)(1) (defining “new tobacco product”).

A “new tobacco product” may not be introduced into interstate commerce without premarket authorization from the Food and Drug Administration (FDA).  21 U.S.C. § 387j(a)(2)(A).  FDA may grant such authorization in three ways.  First, based on FDA’s review of a premarket tobacco product application, FDA may issue an order finding that the marketing of the new tobacco product would be “appropriate for the protection of the

Page 2

public health.”  Id. § 387j(c)(1)(A)(i), (2)(A).¹   Second, based on FDA’s review of a substantial equivalence report (SE report), FDA may issue an order determining that the new tobacco product is “substantially equivalent” to a tobacco product commercially marketed in the United States as of February 15, 2007, or a tobacco product marketed after that date, but which FDA previously determined to be substantially equivalent.  Id. §§ 387j(a)(2)(A)(i), 387e(j).  Third, based on FDA’s review of an exemption request and “abbreviated report,” FDA may issue an order finding an exemption.  Id. 
§§ 387j(a)(2)(A)(ii), 387e(j)(1), (3)(A); 21 C.F.R. § 1107.1.

A new tobacco product is “adulterated” if it is required by 21 U.S.C. § 387j(a) to have premarket review and does not have a Marketing Granted Order (MGO) permitting marketing of the new tobacco product in effect under 21 U.S.C. § 387j(c)(1)(A)(i).  Id. § 387b(6)(A).  A new tobacco product is “misbranded” if a report required under section 387e(j) (i.e., an SE report or abbreviated report) for that product was not submitted to FDA.  Id. § 387c(a)(6). 

The Act authorizes the imposition of CMPs against “any person who violates a requirement of [the Act] which relates to tobacco products.”  21 U.S.C. § 333(f)(9)(A).  The implementing regulations concerning CMPs, in 21 C.F.R. Part 17 and 45 C.F.R. § 102.3, establish a schedule of maximum CMP amounts.  See 21 C.F.R. § 17.2 (citing 45 C.F.R. § 102.3 (table)).  For penalties authorized by 21 U.S.C. § 333(f)(9)(A), the schedule applied here, as in effect from March 17, 2022 through October 5, 2023, provided for a maximum CMP of $19,192 for each violation.  See 45 C.F.R. § 102.3 (Mar. 17, 2022).

To impose a CMP, FDA’s Center for Tobacco Products (CTP) serves an administrative complaint on the “respondent” (the person or entity alleged to have committed the pertinent violation(s)), and files a copy of the complaint with FDA’s Division of Dockets Management.  See 21 C.F.R. §§ 17.3(b), 17.5, 17.7.  The respondent may then request a hearing before an ALJ by filing an answer to the complaint.  Id. § 17.9(a).  The ALJ issues an “initial decision” based on the record developed before the ALJ.  Id. § 17.45(a).   

A respondent “may appeal an initial decision” by filing a notice of appeal with the Board.  21 C.F.R.§ 17.47(a).  A notice of appeal “must identify specific exceptions to the initial decision, must support each exception with citations to the record, and must explain the basis for each exception.”  Id. § 17.47(c).  The notice also “shall be accompanied by a written brief.”  Id.  The Board “will consider only those issues raised before the [ALJ], except that the [respondent] may make any argument based on the record in support of the initial decision or decision granting summary decision.”  Id. § 17.47(g).  The Board “may decline to review the case, affirm . . . or reverse the initial decision . . . , or increase,

Page 3

reduce, reverse, or remand any civil money penalty determined by the [ALJ] in the initial decision.”  Id. § 17.47(j).

Case Background²

1. The Complaint

By warning letter dated June 8, 2023, CTP informed Respondent that a May 17, 2023 inspection of Respondent’s establishment found the establishment in violation of the Act because it offered for sale ENDS products, including, specifically, Elfbar Sour Apple, that were adulterated and misbranded because they lacked the required FDA marketing authorization.  CTP Ex. 7, at 1-2; Initial Decision at 2; CTP Complaint (Compl.) ¶ 20.  The letter also stated that if Respondent failed to correct the violation, regulatory action by FDA or a CMP action could occur and that it was Respondent’s responsibility to comply with the law.  CTP Ex. 7, at 3-4; Compl. ¶ 21. 

On November 24, 2023, CTP served on Respondent a Complaint seeking to impose a CMP of $19,192 for allegedly violating 21 U.S.C. § 331(c) by receiving an adulterated and misbranded ENDS product in interstate commerce and offering that product for sale.  Initial Decision at 1-2; Compl. ¶¶ 12, 16-19.  CTP alleged that, on August 15, 2023, an FDA-commissioned inspector conducted a compliance inspection of Respondent’s establishment and observed the Elfbar Sour Apple ENDS product for sale.  Compl. ¶ 15.  Respondent allegedly sold a “new tobacco product” because the Elfbar Sour Apple ENDS product was not commercially marketed in the United States as of February 15, 2007.  Id. ¶¶ 15-16.  CTP further alleged that Respondent’s ENDS product is “adulterated” under 21 U.S.C. § 387b(6)(A) because it did not have an MGO in effect, and that the product is “misbranded” under 21 U.S.C. § 387c(a)(6) because neither an SE report nor an abbreviated report had been submitted for the ENDS product.  Id. ¶¶ 17-18.

On December 22, 2023, Respondent filed an answer, denying the allegations, requesting a hearing, and arguing the CMP is too high.  Initial Decision at 2; Answer at 1-2.

On December 27, 2023, the ALJ issued an acknowledgment and pre-hearing order, which informed the parties of the opportunity to submit evidence in the form of exhibits.  Pre-Hr’g Order at 4-7.

On March 15, 2024, CTP filed a pre-hearing exchange, including an Informal Brief, List of Proposed Witnesses and Exhibits, and Exhibits 1-7.  Initial Decision at 2.  These exhibits included the declaration of two witnesses:  1) J.B., Deputy Division Director for the Division of Enforcement and Manufacturing in the Office of Compliance and

Page 4

Enforcement, CTP, FDA, and 2) Inspector R.B., FDA-commissioned officer with the state of Texas.  Id. (citing CTP Exs. 1-2).  After reviewing FDA’s search of databases, J.B. confirmed that the Elfbar Sour Apple ENDS product was “not commercially marketed in the United States as of February 15, 2007.”  CTP Ex. 1 ¶ 12.  J.B. found “no record” of the FDA marketing granted order; the SE order; the manufacturer’s submission of a report requesting an SE order; the found-exempt order; or the manufacturer’s submission of an abbreviated report requesting a found-exempt order.  Id. ¶¶ 13-14.  Inspector R.B. described the August 15, 2023 compliance check inspection, and attested that he observed the Elfbar Sour Apple ENDS tobacco product and photographed the store, signage, and tobacco products displayed for sale.  CTP Ex. 2 ¶¶ 5-7; see also CTP Exs. 3 (narrative report), 4 (Tobacco Inspection Management System (TIMS) report), 5 (photographs).

On April 8, 2024, Respondent’s owner filed a one-page pre-hearing brief, but did not file any exhibits.  The brief acknowledged the May 17, 2023 inspection, but asserted that the inspector did not personally inform the owner that the ENDS product was “banned.”  Resp. Pre-Hr’g Br.  The owner, who reportedly visits the establishment only “once a month to check on it,” claimed to be unaware of the contents of the warning letter because Respondent’s employee signed to confirm receipt of that letter but did not “tell” him about it, and the letter “was nowhere to be found.”  Id.  The owner maintained that he would have “taken” the ENDS product “off the shelves and thrown it away” had he known it was “banned.”  Id.  The owner stated that “the fine amount is absurd” considering that this was Respondent’s “first time [being] fined” for any violation “in [its] line of business,” and that the “business is not performing well.”  Id.

On April 24, 2024, the ALJ held a prehearing conference during which Respondent indicated it did not intend to cross examine either of CTP’s witnesses and agreed to a decision based on the written record alone.  Initial Decision at 3; April 25, 2024 Order at 2.  CTP did not object to the ALJ’s determination to issue a decision based on the written submissions.  Initial Decision at 3; April 25, 2024 Order at 2.

On June 26, 2024, both parties submitted final briefs, reiterating their prior arguments.  Initial Decision at 3; CTP Final Br.; Resp. Final Br.

2. The Initial Decision

On September 4, 2024, the ALJ issued the Initial Decision.   The ALJ found “Respondent violated the provisions of 21 U.S.C. § 331(c)” and concluded “that a CMP of $17,272 is appropriate.”  Initial Decision at 1.  The ALJ found that “Respondent appears to admit the Respondent was in possession of the unauthorized ENDS product on August 15, 2023,” noting Respondent’s statement that it “would have happily taken [the product] off the shelves and thrown it away.”  Id. at 4.  The ALJ further noted that Respondent did not object to CTP’s witness declarations or wish to cross-examine the witnesses; therefore,

Page 5

the ALJ found both declarations credible.  Id. at 5.  The ALJ thus concluded Respondent possessed the Elfbar Sour Apple ENDS product on August 15, 2023, and “violated the prohibition against receiving and offering for sale a new tobacco product that was adulterated and misbranded” because the ENDS product “lacked the required FDA marketing order, substantially equivalent order, or a found exempt order.”  Id. at 5-6. 

Addressing the CMP, the ALJ considered “any aggravating or mitigating circumstances and the factors listed in the Act.”  Initial Decision at 6 (citing 21 C.F.R. § 17.34(a)-(b)).  Regarding the nature, circumstances, extent and gravity of the violation, the ALJ found that, despite having been warned “about possible enforcement action for offering Elfbar Sour Apple ENDS products for sale,” Respondent continued to market and sell the products, which “demonstrates Respondent did not comply with federal tobacco law.”  Id. at 6-7.  The ALJ found the violation “serious in nature” and thus warranting “a proportional CMP amount.”  Id. at 7.  Regarding Respondent’s ability to pay the CMP and the CMP’s effect on Respondent’s ability to continue to do business, the ALJ stated, “Having no specifics of Respondent’s financial situation, I cannot find Respondent has established an inability to pay.”  Id.  Regarding Respondent’s history of prior violations, the ALJ found “no indication in the record of any prior violations of Section 331(c) resulting in a CMP” and noted “Respondent argues that it makes efforts to ensure that it follows the proper regulations.”  Id.  Regarding Respondent’s degree of culpability, the ALJ found that Respondent continued to market and sell the same unauthorized products several months after the May 17, 2023 inspection, but noted Respondent’s position that the ALJ should consider reducing the CMP since Respondent was not previously cited for a violation.  Id.  The ALJ imposed a reduced CMP of $17,272.  Id.

3. Respondent’s Appeal to the Board; the Parties’ Arguments

On October 3, 2024, Respondent timely requested an extension of time to appeal the Initial Decision, stating that its owner was “trying to gather financial document . . . for the appeal process.”  Request for Extension.  By notice dated October 4, 2024, the Board granted an extension of time until October 18, 2024.  See Board Notice at 2 (citing 21 C.F.R. § 17.47(b)(1), (2)).

On October 18, 2024, Respondent filed a “Brief for Appeal” (Notice of Appeal) and a profit and loss statement for its retail establishment showing a net loss in 2022 and a net income in 2023.³  

Before the Board, Respondent appears to be asserting that the reduced CMP of $17,272 is still too high and is seeking a further reduction.  Referring to its profit and loss statement, Respondent states that its “business has been down for the last [two] years.”  Notice of

Page 6

Appeal.  Respondent also informs the Board that Respondent is still struggling to recover from losses sustained when it ceased operation for nine days after a “hurricane/windstorm hit Houston” in July 2024, resulting in a city-wide power loss.  Id.  Furthermore, Respondent states that on October 13, 2024, thieves broke into its establishment, stole cash and inventory, and did “a lot of damage.”  Id.  Respondent “will have an official police report sometime next week.”  Id.  Respondent states that it “need[s] the fine to be lower” because it is “struggling financially to pay [the] fine.”  Id. 

On November 15, 2024, CTP filed a memorandum in opposition to Respondent’s appeal.  CTP Mem. in Opp’n to Resp’t Appeal.  CTP states that although it “disagrees with the ALJ’s decision that a reduced [CMP] of $17,272 is appropriate in this matter, CTP is not appealing” the reduction of the CMP.  Id. at 2.  CTP asks the Board to either decline review of the ALJ’s decision or, if the Board decides to review the ALJ’s decision, affirm it.  Id. at 4, 6.   

Standard of Review

The Board’s standard of review on a disputed issue of fact is whether the initial decision is supported by substantial evidence on the whole record.  21 C.F.R. § 17.47(k).  The standard of review on a disputed issue of law is whether the initial decision is erroneous.  Id. 

Analysis

1. Respondent violated 21 U.S.C. § 331(c) by receiving in interstate commerce, and offering for sale, an adulterated and misbranded ENDS product (that is, the product lacked FDA premarket authorization).

The ALJ determined that Respondent violated 21 U.S.C. § 331(c) by receiving in interstate commerce, and offering for sale, an adulterated and misbranded ENDS product (meaning it lacked FDA premarket authorization) and, accordingly, the ALJ was authorized to impose a CMP in accordance with 21 U.S.C. § 333(f)(9)(A) of the Act.  See Initial Decision at 4-6; id. at 7 (concluding that Respondent violated section 331(c) of the Act “by receiving via interstate commerce adulterated and misbranded tobacco products and offering the products for sale in its establishment”).    

In an appeal of an ALJ’s initial decision to the Board, respondent must file a brief identifying specific exceptions to the initial decision.  See 21 C.F.R. § 17.47(c); Guidelines – Appellate Review of Administrative Law Judges in Food and Drug

Page 7

Administration Tobacco Products Cases, “Starting the Review Process” ¶ (d) (provided to Respondent with the Initial Decision)⁴ ; Board Notice at 2 (citing 21 C.F.R. § 17.47(c)). 

In its Notice of Appeal, Respondent did not identify any specific exceptions to that portion of the Initial Decision in which the ALJ concluded that Respondent violated section 331(c) of the Act and, accordingly, the ALJ could lawfully impose a CMP on Respondent for that violation.  As noted earlier, Respondent takes exception only to the ALJ’s reduction of the CMP from $19,192 to $17,272, not the ALJ’s authority to impose a CMP if the ALJ finds, as the ALJ did here, a violation of section 331(c).  In the absence of any specific exception by Respondent as to the existence of a violation, we summarily affirm the ALJ’s determination that Respondent violated section 331(c) of the Act.  See Cape Tobacco Inc., DAB No. 3091, at 6 (2023) (“In the absence of any argument challenging the ALJ’s findings and conclusion, we summarily affirm them . . . .”); Leung’s, Inc., DAB No. 3025, at 9 (2020) (summarily affirming the ALJ’s factual finding concerning violations when the respondent did not provide any dispute or objection).   

2. Respondent submitted new evidence to the Board without any explanation of why the new evidence is relevant and material and why Respondent has reasonable grounds for failing to submit it earlier to the ALJ and, thus, failed to comply with 21 C.F.R. § 17.47(i).

As noted, Respondent’s owner asked the Board for time to “gather” a “financial document.”  Request for Extension.  This would be new evidence introduced initially in the administrative appeal proceedings since, as noted, Respondent offered no evidence to the ALJ.  Considering Respondent’s expression of intent to submit such new evidence, the Board notified Respondent as follows in the notice granting the extension:

The regulation in 21 C.F.R. § 17.47(i) requires that any party submitting “additional evidence not presented at the hearing” must demonstrate to the satisfaction of the Board that the evidence “is relevant and material and that there were reasonable grounds for the failure to” produce such evidence at the hearing before the ALJ.  If the Board is satisfied in this regard, it may then remand the case to the ALJ for consideration of the additional evidence.  Id.  In accordance with section 17.47(i), if [Respondent] presents to the Board new documents that were not presented to the ALJ, then [Respondent’s] submission (due on October 18, 2024) must be accompanied by an explanation of why [Respondent] has “reasonable grounds” for not having presented them to the ALJ.

Page 8

Board Notice at 2; see also Guidelines, “Completion of the Review Process” ¶ (b); Leung’s, Inc. at 9-10.

As also noted, Respondent subsequently submitted to the Board a profit and loss statement for years 2022 and 2023.  Because the document is new evidence, Respondent must explain why it believes the new evidence is relevant and material and why Respondent had “reasonable grounds” for not submitting it earlier to the ALJ. 

Despite the Board’s express notice to Respondent of its obligation under 21 C.F.R. § 17.47(i), nowhere in its Notice of Appeal does Respondent attempt to explain why the contents of the profit and loss statement are relevant and material.  Even if we were to infer that Respondent is attempting to show lack of means to pay the CMP, the attempt is late without apparent excuse.  Respondent offers no explanation for not submitting the profit and loss statement to the ALJ as an exhibit as part of its pre-hearing exchange despite having been given an opportunity to do so.  See Pre-Hr’g Order at 4 (citing 21 C.F.R. § 17.33(c) (Respondent “must prove any affirmative defenses and mitigating factors by a preponderance of the evidence.”); id. at 4-7 (providing the parties an opportunity to submit supporting evidence, in the form of exhibits, as part of their pre-hearing exchanges).  In the absence of any explanation or showing otherwise, it is reasonable for us to presume that information about Respondent’s profit and losses for years 2022 and 2023 was available for submission to the ALJ on April 8, 2024, when Respondent’s prehearing exchange was due.  See Pre-Hr’g Order ¶ 6b.⁵   Nevertheless, Respondent failed to submit any evidence, regardless of form, to the ALJ; Respondent only argued that the CMP was too high.

3. The Board has no obligation to remand the case to the ALJ to consider the new evidence.

In general, the Board bases its decision on the evidence developed before the ALJ.  See Madison-Food-Mart-Inc., DAB No. 3058, at 5 (2022) (explaining that, in accordance with the standard of review in 21 C.F.R. § 17.47(k), the Board does not reassess the ALJ’s evidence, but determines whether the ALJ’s assessment of the evidence is supported by substantial evidence); Station Management Consultants Inc., DAB No. 2996, at 7 (2020) (finding the “ALJ’s findings and conclusions are supported by

Page 9

substantial evidence” after a review of “all the evidence in the record” before the ALJ), aff’d, 2021 WL 2103607 (3d Cir. May 25, 2021).  If, however, a party offers new evidence to the Board, then the Board must determine that the evidence is relevant and material and that the proponent of the new evidence had reasonable grounds for not submitting it earlier to the ALJ.  21 C.F.R. § 17.47(i).  Only then the Board “may” remand the case to the ALJ for consideration of the new evidence.  Id.

Where, as here, a respondent submitted new evidence (or merely alluded to the existence of such evidence but failed to produce it) without explanation of why it failed to produce the evidence earlier in compliance with 21 C.F.R. § 17.47(i), the Board is not obliged to consider a remand to the ALJ.  See Dina Monster, Inc., DAB No. 2810, at 2 n.1 (2017) (acknowledging the submission of new evidence to the Board, but declining to remand for consideration of the new evidence because respondent “failed to demonstrate that there were reasonable grounds for its failure to adduce this evidence at the ALJ level” in accordance with 21 C.F.R. § 17.47(i)); Leung’s, Inc. at 9-10 (finding that even if additional evidence respondent alluded to on appeal but never produced during the ALJ or Board proceedings actually exists and is relevant and material, “Respondent is not entitled to further proceedings because it has stated no grounds, much less reasonable grounds, for its failure to provide that evidence to the ALJ”).⁶

We note that, considering Respondent’s statements in its Notice of Appeal about the challenges it has faced in trying to run a profitable business, Respondent presumably believes the profit and loss statement is relevant to its claim that it would have difficulty paying the CMP.  See Initial Decision at 7.  While we accept the proposition that a profit and loss statement of the type Respondent presented is, generally speaking, evidence relevant to assessing a retailer’s financial picture, Respondent’s failure to explain why, specifically, it believes the evidence is material despite being given express notice of its obligations under section 17.47(i) is another factor that weighs against remand.⁷  See

Page 10

Elder-Quintana at 13 (2023) (declining to remand case for ALJ to consider new evidence based on a failure “to demonstrate that the additional evidence is relevant and material” to applicable regulatory provisions).

4. Respondent’s remaining statements raise no legally permissible grounds for disturbing the Initial Decision.

As noted earlier, Respondent indicated that it sustained losses following, and as a result of, two events:  a “hurricane/windstorm” in July 2024, after which Respondent could not operate for nine days; and a robbery on October 13, 2024.  Notice of Appeal.  Respondent, however, did not submit any evidence substantiating its bare statements about the “hurricane/windstorm” and the robbery or the impact of these events on Respondent, which the Board could have considered to determine whether any such evidence could be relevant and material to the question of Respondent’s ability to pay the CMP and the effect the imposition of the CMP could have on Respondent’s ability to continue doing business.  See Western Spirits, Inc., DAB No. 2844, at 7 (2018) (rejecting respondent’s “bald assertions” as to what the record evidence supposedly showed because it failed to produce any such evidence).

We note, moreover, that Respondent stated in its Notice of Appeal filed on October 18, 2024, that it expected to have “an official police report sometime next week.”  Notice of Appeal.  Presumably, the police report would have been available for submission during the 10-day period the Board provided Respondent to submit a reply brief after CTP filed its brief on November 15, 2024.  See Board Notice at 2.  Respondent did not use its opportunity to submit a reply brief and any additional evidence.  Nor did Respondent ask the Board for additional time to submit the reply brief or any additional evidence.

Lastly, to the extent Respondent’s statements about the “hurricane/windstorm” and the robbery could be viewed as a request for an equitable reduction of the CMP, the ALJ and the Board are not empowered to grant a request for equitable relief.  See Carolina Cigar of Delray, LLC, DAB No. 3134, at 10 (2024) (“[N]either the ALJ nor the Board can grant” “a request for equitable relief.”); see also Kwik Gas Inc., DAB No. 2852, at 7 (2018) (The Board, “like the ALJ, cannot ignore binding regulations on equitable grounds.”).

Page 11

Conclusion

We affirm the Initial Decision.

Endnotes

¹  In making this determination, FDA must consider “the risks and benefits to the population as a whole,” “taking into account” both the “likelihood that existing users of tobacco products will stop using such products” and the “likelihood that those who do not use tobacco products will start using such products.”  21 U.S.C. § 387j(c)(4).

²  The facts stated here are taken from the Initial Decision and the administrative record.  We make no new findings of fact, and the facts stated are undisputed unless we indicate otherwise.

³  The profit and loss statement is titled “Sana Ventures LLC Profit & Loss January through December 2023.”  However, it contains figures for two years, 2022 and 2023.  On the upper left corner of the statement is a date, “08/23/24.” 

⁴  The Guidelines are publicly available at https://www.hhs.gov/about/agencies/dab/different-appeals-at-dab/appeals-to-board/guidelines/fda-tobacco-decision-review/index.html?language=en.

⁵  As noted earlier, in the upper left corner of the profit and loss statement is the date, “08/23/24.”  Respondent has not explained what the reference to this date means.  We do not know whether the profit and loss statement was first created on August 23, 2024, a date which fell after April 8, 2024, when Respondent’s pre-hearing exchange was due.  In any event, even assuming the profit and loss statement itself was not created until August 2024, the profit and loss information used to prepare the statement presumably was available; yet Respondent did not avail itself of the opportunity to present such information to the ALJ.  We note, moreover, that in CTP’s brief before the ALJ, CTP stated, “In response to CTP’s Request for Production of Documents, Respondent sent their 2022 tax return, 2022 Profit and Loss Statement, and 2022 Balance Sheet Statement.”  CTP Informal Br. at 9.  Thus, Respondent apparently possessed, earlier, documents relevant to its financial status other than the profit and loss statement submitted initially to the Board.  Nevertheless, Respondent did not submit any of these records to the ALJ. 

⁶  The procedural regulations in 42 C.F.R. Part 1005, which govern Inspector General decisions to exclude individuals from participation in federal health care programs pursuant to the Social Security Act, contain a provision comparable to the regulation in 21 C.F.R. § 17.47(i).  See 42 C.F.R. § 1005.21(f) (“If any party demonstrates to the satisfaction of the [Board] that additional evidence not presented at [the ALJ] hearing is relevant and material and that there were reasonable grounds for the failure to adduce such evidence at such hearing, the [Board] may remand the matter to the ALJ for consideration of such additional evidence.”).  We have applied that regulation similarly.  See, e.g., Gracia L. Mayard, M.D., DAB No. 2767, at 7-8 (2017) (declining to remand for consideration of new evidence where the excluded individual did “not allege any grounds, much less ‘reasonable’ ones, for his failure to submit these materials to the ALJ”); William Frank Elder-Quintana, DAB No. 3082, at 12 (2023) (declining to remand for consideration of new evidence where the excluded individual had not “demonstrated reasonable grounds for not presenting the evidence to the ALJ” such as claiming “that the evidence was unavailable, or could not have been obtained with reasonable effort, when the ALJ case was pending”).

⁷  We need not and do not determine here whether the profit and loss statement alone is sufficient to establish any mitigating factor.  We note, however, that the statement shows Respondent had a net loss in 2022 and a net income in 2023.  Respondent’s owner represented to the ALJ that he visited the establishment only once a month to check on it.  See Resp. Pre-Hr’g Br.; Resp. Final Br. at 2.  It is not known whether Respondent’s owner has other gainful employment or other source(s) of income – information that could bear on the question of Respondent’s ability to pay the CMP.