SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN.

SEC. 203. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN. (a) Definitions.—(1) Nutrition education.—Section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)) is amended by striking paragraph (7) and inserting the following: “(7) Nutrition education.—The term ‘nutrition education’ means individual and group sessions and the provision of material that are designed to improve health status and achieve positive change in dietary and physical activity habits, and that emphasize the relationship between nutrition, physical activity, and health, all in keeping with the personal and cultural preferences of the individual.”. (2) Supplemental foods.—Section 17(b)(14) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)(14)) is amended in the first sentence by inserting after “children” the following: “and foods that promote the health of the population served by the program authorized by this section, as indicated by relevant nutrition science, public health concerns, and cultural eating patterns”. (3) Other terms.—Section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)) is amended by adding at the end the following: “(22) Primary contract infant formula.—The term ‘primary contract infant formula’ means the specific infant formula for which manufacturers submit a bid to a State agency in response to a rebate solicitation under this section and for which a contract is awarded by the State agency as a result of that bid. “(23) State alliance.—The term ‘State alliance’ means 2 or more State agencies that join together for the purpose of procuring infant formula under the program by soliciting competitive bids for infant formula.”. (b) Eligibility.—(1) Certification period.—Section 17(d)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(3)) is amended—(A) by striking “(3)(A) Persons” and inserting the following: “(3) Certification.—“(A) Procedures.—“(i) In general.—Subject to clause (ii), a person”; and (B) by adding at the end of subparagraph (A) the following: “(ii) Breastfeeding women.—A State may elect to certify a breastfeeding woman for a period of 1 year postpartum or until a woman discontinues breastfeeding, whichever is earlier.”. (2) Physical presence.—Section 17(d)(3)(C)(ii) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(3)(C)(ii)) is amended—(A) in subclause (I)(bb), by striking “from a provider other than the local agency; or” and inserting a semicolon; (B) in subclause (II), by striking the period at the end and inserting “; and”; and (C) by adding at the end the following: “(III) an infant under 8 weeks of age—118 STAT. 772 “(aa) who cannot be present at certification for a reason determined appropriate by the local agency; and “(bb) for whom all necessary certification information is provided.”. (c) Administration.—(1) Processing vendor applications; participant access.—Section 17(f)(1)(C) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)(1)(C)) is amended—(A) in clause (i) by inserting “at any of the authorized retail stores under the program” after “the program”; (B) by redesignating clauses (ii) through (x) as clauses (iii) through (xi), respectively; and (C) by inserting after clause (i) the following: “(ii) procedures for accepting and processing vendor applications outside of the established timeframes if the State agency determines there will be inadequate access to the program, including in a case in which a previously authorized vendor sells a store under circumstances that do not permit timely notification to the State agency of the change in ownership;”. (2) Allowable use of funds.—(A) In general.—Section 17(f)(11) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)(11) is amended—(i) by striking “(11) The Secretary” and inserting the following:“(11) Supplemental foods.—“(A) In general.—The Secretary”;(ii) in the second sentence, by striking “To the degree” and inserting the following:“(B) Appropriate content.—To the degree”; and(iii) by adding at the end the following:“(C) Allowable use of funds.—Subject to the availability of funds, the Secretary shall award grants to not more than 10 local sites determined by the Secretary to be geographically and culturally representative of State, local, and Indian agencies, to evaluate the feasibility of including fresh, frozen, or canned fruits and vegetables (to be made available through private funds) as an addition to the supplemental foods prescribed under this section.“(D) Review of available supplemental foods.—As frequently as determined by the Secretary to be necessary to reflect the most recent scientific knowledge, the Secretary shall—“(i) conduct a scientific review of the supplemental foods available under the program; and “(ii) amend the supplemental foods available, as necessary, to reflect nutrition science, public health concerns, and cultural eating patterns.”.(B) Rulemaking.—Not later than 18 months after the date of receiving the review initiated by the National Academy of Sciences, Institute of Medicine in September 2003 of the supplemental foods available for the special supplemental nutrition program for women, infants, and children authorized under section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786), the Secretary shall promulgate a final rule updating the prescribed supplemental foods available through the program.118 STAT. 773(3) Use of claims from local agencies.—Section 17(f)(21) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)(21)) is amended—(A) in the paragraph heading, by striking “vendors” and inserting “local agencies, vendors,”; and (B) by striking “vendors” and inserting “local agencies, vendors,”. (4) Infant formula benefits.—(A) In general.—Section 17(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)) is amended by adding at the end the following: “(25) Infant formula benefits.—A State agency may round up to the next whole can of infant formula to allow all participants under the program to receive the full-authorized nutritional benefit specified by regulation.”.(B) Applicability.—The amendment made by subparagraph (A) applies to infant formula provided under a contract resulting from a bid solicitation issued on or after October 1, 2004.(5) Notification of violations.—Section 17(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)) (as amended by paragraph (4)) is amended by adding at the end the following: “(26) Notification of violations.—If a State agency finds that a vendor has committed a violation that requires a pattern of occurrences in order to impose a penalty or sanction, the State agency shall notify the vendor of the initial violation in writing prior to documentation of another violation, unless the State agency determines that notifying the vendor would compromise an investigation.”. (d) Reauthorization of WIC Program.—Section 17(g) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(g)) is amended by striking “(g)(1)” and all that follows through “As authorized” in paragraph (1) and inserting the following: “(g) Authorization of Appropriations.—“(1) In general.—“(A) Authorization.—There are authorized to be appropriated to carry out this section such sums as are necessary for each of fiscal years 2004 through 2009. “(B) Advance appropriations; availability.—As authorized”. (e) Nutrition Services and Administration Funds; Competitive Bidding; Retailers.—(1) In general.—Section 17(h)(2)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(2)(A)) is amended by striking “For each of the fiscal years 1995 through 2003, the” and inserting “The”. (2) Healthy people 2010 initiative.—Section 17(h)(4) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(4)) is amended—(A) in subparagraph (D), by striking “; and” and inserting a semicolon;(B) in subparagraph (E), by striking the period at the end and inserting “; and”; and(C) by adding at the end the following:“(F) partner with communities, State and local agencies, employers, health care professionals, and other entities in the private sector to build a supportive breastfeeding 118 STAT. 774 environment for women participating in the program under this section to support the breastfeeding goals of the Healthy People 2010 initiative.”.(3) Size of state alliances.—Section 17(h)(8)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)(A)) is amended by adding at the end the following: “(iv) Size of state alliances.—“(I) In general.—Except as provided in subclauses (II) through (IV), no State alliance may exist among States if the total number of infants served by States participating in the alliance as of October 1, 2003, or such subsequent date determined by the Secretary for which data is available, would exceed 100,000. “(II) Addition of infant participants.—In the case of a State alliance that exists on the date of enactment of this clause, the alliance may continue and may expand to serve more than 100,000 infants but, except as provided in subclause (III), may not expand to include any additional State agency. “(III) Addition of small state agencies and indian state agencies.—Any State alliance may expand to include any State agency that served less than 5,000 infant participants as of October 1, 2003, or such subsequent date determined by the Secretary for which data is available, or any Indian State agency, if the State agency or Indian State agency requests to join the State alliance. “(IV) Secretarial waiver.—The Secretary may waive the requirements of this clause not earlier than 30 days after submitting to the Committee on Education and the Workforce of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate a written report that describes the cost-containment and competitive benefits of the proposed waiver.”. (4) Primary contract infant formula.—(A) In general.—Section 17(h)(8)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(8)(A)) (as amended by paragraph (3)) is amended—(i) in clause (ii)(I), by striking “contract brand of” and inserting “primary contract”; (ii) in clause (iii), by inserting “for a specific infant formula for which manufacturers submit a bid” after “lowest net price”; and (iii) by adding at the end the following: “(v) First choice of issuance.—The State agency shall use the primary contract infant formula as the first choice of issuance (by formula type), with all other infant formulas issued as an alternative to the primary contract infant formula.”. (B) Applicability.—The amendments made by subparagraph (A) apply to a contract resulting from a bid solicitation issued on or after October 1, 2004. 118 STAT. 775(5) Rebate invoices.—Section 17(h)(8)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)(A)) (as amended by paragraph (4)(A)(iii)) is amended by adding at the end the following: “(vi) Rebate invoices.—Each State agency shall have a system to ensure that infant formula rebate invoices, under competitive bidding, provide a reasonable estimate or an actual count of the number of units sold to participants in the program under this section.”. (6) Uncoupling milk and soy bids.—(A) In general.—Section 17(h)(8)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)(A)) (as amended by paragraph (5)) is amended by adding at the end the following: “(vii) Separate solicitations.—In soliciting bids for infant formula under a competitive bidding system, any State agency, or State alliance, that served under the program a monthly average of more than 100,000 infants during the preceding 12-month period shall solicit bids from infant formula manufacturers under procedures that require that bids for rebates or discounts are solicited for milk-based and soy-based infant formula separately.”. (B) Applicability.—The amendment made by this paragraph applies to a bid solicitation issued on or after October 1, 2004. (7) Cent-for-cent adjustments.—(A) In general.—Section 17(h)(8)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)(A)) (as amended by paragraph (6)(A)) is amended by adding at the end the following: “(viii) Cent-for-cent adjustments.—A bid solicitation for infant formula under the program shall require the manufacturer to adjust for price changes subsequent to the opening of the bidding process in a manner that requires—“(I) a cent-for-cent increase in the rebate amounts if there is an increase in the lowest national wholesale price for a full truckload of the particular infant formula; and “(II) a cent-for-cent decrease in the rebate amounts if there is a decrease in the lowest national wholesale price for a full truckload of the particular infant formula.”. (B) Conforming amendment.—Section 17(h)(8)(A)(ii) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)(A)(ii)) is amended by striking “rise” and inserting “change”. (C) Applicability.—The amendments made by this paragraph apply to a bid solicitation issued on or after October 1, 2004. (8) List of infant formula wholesalers, distributors, retailers, and manufacturers.—Section 17(h)(8)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)(A)) (as amended by paragraph (7)(A)) is amended by adding at the end the following: 118 STAT. 776 “(ix) List of infant formula wholesalers, distributors, retailers, and manufacturers.—The State agency shall maintain a list of—“(I) infant formula wholesalers, distributors, and retailers licensed in the State in accordance with State law (including regulations); and “(II) infant formula manufacturers registered with the Food and Drug Administration that provide infant formula.“(x) Purchase requirement.—A vendor authorized to participate in the program under this section shall only purchase infant formula from the list described in clause (ix).”. (9) Funds for infrastructure, management information systems, and special nutrition education.—Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) is amended by striking paragraph (10) and inserting the following: “(10) Funds for infrastructure, management information systems, and special nutrition education.—“(A) In general.—For each of fiscal years 2006 through 2009, the Secretary shall use for the purposes specified in subparagraph (B), $64,000,000 or the amount of nutrition services and administration funds and supplemental food funds for the prior fiscal year that have not been obligated, whichever is less. “(B) Purposes.—Of the amount made available under subparagraph (A) for a fiscal year, not more than—“(i) $14,000,000 shall be used for—“(I) infrastructure for the program under this section; “(II) special projects to promote breastfeeding, including projects to assess the effectiveness of particular breastfeeding promotion strategies; and “(III) special State projects of regional or national significance to improve the services of the program; “(ii) $30,000,000 shall be used to establish, improve, or administer management information systems for the program, including changes necessary to meet new legislative or regulatory requirements of the program; and “(iii) $20,000,000 shall be used for special nutrition education such as breast feeding peer counselors and other related activities.“(C) Proportional distribution.—In a case in which less than $64,000,000 is available to carry out this paragraph, the Secretary shall make a proportional distribution of funds allocated under subparagraph (B).”. (10) Vendor cost containment.—(A) Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) is amended by striking paragraph (11) and inserting the following:“(11) Vendor cost containment.—“(A) Peer groups.—“(i) In general.—The State agency shall—“(I) establish a vendor peer group system;118 STAT. 777“(II) in accordance with subparagraphs (B) and (C), establish competitive price criteria and allowable reimbursement levels for each vendor peer group; and“(III) if the State agency elects to authorize any types of vendors described in subparagraph (D)(ii)(I)—“(aa) distinguish between vendors described in subparagraph (D)(ii)(I) and other vendors by establishing—“(AA) separate peer groups for vendors described in subparagraph (D)(ii)(I);or“(BB) distinct competitive price criteria and allowable reimbursement levels for vendors described in subparagraph (D)(ii)(I) within a peer group that contains both vendors described in subparagraph (D)(ii)(I) and other vendors; and“(bb) establish competitive price criteria and allowable reimbursement levels that comply with subparagraphs (B) and (C), respectively, and that do not result in higher food costs if program participants redeem supplemental food vouchers at vendors described in subparagraph (D)(ii)(I) rather than at vendors other than vendors described in subparagraph (D)(ii)(I).Nothing in this paragraph shall be construed to compel a State agency to achieve lower food costs if program participants redeem supplemental food vouchers at vendors described in subparagraph (D)(ii)(I) rather than at vendors other than vendors described in subparagraph (D)(ii)(I).“(ii) Exemptions.—The Secretary may exempt from the requirements of clause (i)—“(I) a State agency that elects not to authorize any types of vendors described in subparagraph (D)(ii)(I) and that demonstrates to the Secretary that—“(aa) compliance with clause (i) would be inconsistent with efficient and effective operation of the program administered by the State under this section; or“(bb) an alternative cost-containment system would be as effective as a vendor peer group system; or“(II) a State agency—“(aa) in which the sale of supplemental foods that are obtained with food instruments from vendors described in subparagraph (D)(ii)(I) constituted less than 5 percent of total sales of supplemental foods that were obtained with food instruments in the State in the year preceding a year in which the exemption is effective; and“(bb) that demonstrates to the Secretary that an alternative cost-containment system 118 STAT. 778 would be as effective as the vendor peer group system and would not result in higher food costs if program participants redeem supplemental food vouchers at vendors described in subparagraph (D)(ii)(I) rather than at vendors other than vendors described in subparagraph (D)(ii)(I).“(B) Competitive pricing.—“(i) In general.—The State agency shall establish competitive price criteria for each peer group for the selection of vendors for participation in the program that—“(I) ensure that the retail prices charged by vendor applicants for the program are competitive with the prices charged by other vendors; and“(II) consider—“(aa) the shelf prices of the vendor for all buyers; or“(bb) the prices that the vendor bid for supplemental foods, which shall not exceed the shelf prices of the vendor for all buyers.“(ii) Participant access.—In establishing competitive price criteria, the State agency shall consider participant access by geographic area.“(iii) Subsequent price increases.—The State agency shall establish procedures to ensure that a retail store selected for participation in the program does not, subsequent to selection, increase prices to levels that would make the store ineligible for selection to participate in the program.“(C) Allowable reimbursement levels.—“(i) In general.—The State agency shall establish allowable reimbursement levels for supplemental foods for each vendor peer group that ensure—“(I) that payments to vendors in the vendor peer group reflect competitive retail prices; and “(II) that the State agency does not reimburse a vendor for supplemental foods at a level that would make the vendor ineligible for authorization under the criteria established under subparagraph (B). “(ii) Price fluctuations.—The allowable reimbursement levels may include a factor to reflect fluctuations in wholesale prices.“(iii) Participant access.—In establishing allowable reimbursement levels, the State agency shall consider participant access in a geographic area.“(D) Exemptions.—The State agency may exempt from competitive price criteria and allowable reimbursement levels established under this paragraph—“(i) pharmacy vendors that supply only exempt infant formula or medical foods that are eligible under the program; and“(ii) vendors—“(I)(aa) for which more than 50 percent of the annual revenue of the vendor from the sale of food items consists of revenue from the sale 118 STAT. 779 of supplemental foods that are obtained with food instruments; or“(bb) who are new applicants likely to meet the criteria of item (aa) under criteria approved by the Secretary; and“(II) that are nonprofit.“(E) Cost containment.—If a State agency elects to authorize any types of vendors described in subparagraph (D)(ii)(I), the State agency shall demonstrate to the Secretary, and the Secretary shall certify, that the competitive price criteria and allowable reimbursement levels established under this paragraph for vendors described in subparagraph (D)(ii)(I) do not result in average payments per voucher to vendors described in subparagraph (D)(ii)(I) that are higher than average payments per voucher to comparable vendors other than vendors described in subparagraph (D)(ii)(I).“(F) Limitation on private rights of action.—Nothing in this paragraph may be construed as creating a private right of action.“(G) Implementation.—A State agency shall comply with this paragraph not later than 18 months after the date of enactment of this paragraph.”.(B) Conforming amendment.—Section 17(f)(1)(C)(i) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)(1)(C)(i)) is amended by inserting before the semicolon the following: “, including a description of the State agency’s vendor peer group system, competitive price criteria, and allowable reimbursement levels that demonstrate that the State is in compliance with the cost-containment provisions in subsection (h)(11).”.(11) Imposition of costs on retail stores.—Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) is amended by striking paragraph (12) and inserting the following: “(12) Imposition of costs on retail stores.—The Secretary may not impose, or allow a State agency to impose, the costs of any equipment, system, or processing required for electronic benefit transfers on any retail store authorized to transact food instruments, as a condition for authorization or participation in the program.”. (12) Universal product codes database.—Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) (as amended by paragraph (11)) is amended by adding at the end the following: “(13) Universal product codes database.—The Secretary shall—“(A) establish a national universal product code database for use by all State agencies in carrying out the program; and “(B) make available from appropriated funds such sums as are required for hosting, hardware and software configuration, and support of the database.”. (13) Incentive items.—Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) (as amended by paragraph (12)) is amended by adding at the end the following:“(14) Incentive items.—A State agency shall not authorize or make payments to a vendor described in paragraph 118 STAT. 780 (11)(D)(ii)(I) that provides incentive items or other free merchandise, except food or merchandise of nominal value (as determined by the Secretary), to program participants unless the vendor provides to the State agency proof that the vendor obtained the incentive items or merchandise at no cost.”. (f) Spend Forward Authority.—Section 17(i)(3)(A)(ii)(I) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(i)(3)(A)(ii)(I)) is amended by striking “1 percent” and inserting “3 percent”.(g) Migrant and Community Health Centers Initiative.—Section 17(j) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(j)) is amended—(1) by striking paragraph (4); and (2) by redesignating paragraph (5) as paragraph (4). (h) Farmers’ Market Nutrition Program.—(1) Roadside stands.—Section 17(m)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)(1)) is amended by inserting “and (at the option of a State) roadside stands” after “farmers’ markets”. (2) Matching funds.—Section 17(m)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)(3)) is amended by striking “total” both places it appears and inserting “administrative”. (3) Benefit value.—Section 17(m)(5)(C)(ii) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)(5)(C)(ii)) is amended by striking “$20” and inserting “$30”. (4) Reauthorization.—Section 17(m)(9)(A) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(m)(9)(A)) is amended by striking clause (i) and inserting the following: “(i) Authorization of appropriations.—There are authorized to be appropriated to carry out this subsection such sums as are necessary for each of fiscal years 2004 through 2009.”. (i) Demonstration Project Relating to Use of WIC Program for Identification and Enrollment of Children in Certain Health Programs.—(1) In general.—Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) is amended by striking subsection (r). (2) Conforming amendment.—Section 12 of the Richard B. Russell National School Lunch Act (42 U.S.C. 1760) is amended by striking subsection (p).