(i) by striking subparagraphs (C)
through (G); and
(ii) by redesignating subparagraph
(H) as subparagraph (C).
(k) FARMERS MARKET NUTRITION PROGRAM.—
(1) MATCHING FUND REQUIREMENT.—Section
17(m)(3) of such Act (42 U.S.C. 1786(m)(3)) is
amended in both the first and second sentences by
striking ‘‘total’’ each place it appears and inserting
‘‘administrative’’.
(2) RANKING CRITERIA FOR STATE PLANS.—
Section 
17(m)(6) 
of 
such 
Act 
(42 
U.S.C.
1786(m)(6)) is amended—
(A) by striking subparagraph (F); and
(B) by redesignating subparagraph (G) as
subparagraph (F).
(3) REAUTHORIZATION OF PROGRAM.—Section
17(m)(9)(A) of such Act (42 U.S.C. 1786(m)(9)(A))
is amended by striking ‘‘1996 through 1998’’ and
inserting ‘‘1999 through 2003’’.
(l) DISQUALIFICATION OF CERTAIN VENDORS.—
(1) IN GENERAL.—Section 17 of such Act (42
U.S.C. 1786) is amended by adding at the end the
following:
‘‘(o) DISQUALIFICATION OF VENDORS CONVICTED OF
TRAFFICKING OR ILLEGAL SALES.—
‘‘(1) IN GENERAL.—Except as provided in para-
graph (5), the State agency shall permanently dis-
qualify a vendor convicted of trafficking in food in-
struments (including any voucher, draft, check, or
access device, including an electronic benefit transfer
card or personal identification number, issued in lieu
of a food instrument pursuant to the provisions of
this section), or selling firearms, ammunition, explo-
sives, or controlled substances (as defined in section
102 of the Controlled Substances Act) in exchange
for food instruments.
‘‘(2) 
NOTICE
OF
DISQUALIFICATION.—The
State agency shall provide the vendor with notifica-
tion of the disqualification and shall make such dis-
qualification effective on the date of receipt of the
notice of disqualification.
‘‘(3) PROHIBITION ON RECEIPT OF LOST REVE-
NUES.—A vendor shall not be entitled to receive any
compensation for revenues lost as a result of the dis-
qualification under this subsection.
‘‘(4) HARDSHIP EXCEPTION IN LIEU OF DIS-
QUALIFICATION.—
‘‘(A) IN GENERAL.— A State agency may
permit a vendor that would otherwise be dis-
qualified under paragraph (1) to continue to re-
deem food instruments or otherwise provide
supplemental foods to participants if the State
agency determines, in its sole discretion accord-
ing to criteria established by the Secretary, dis-
qualification of the vendor would cause hard-
ship to participants in the program authorized
under this section.
‘‘(B) CIVIL MONEY PENALTY.—Whenever a
State agency authorizes a vendor that would
otherwise be disqualified to redeem food instru-
ments or provide supplemental foods in accord-
ance with subparagraph (A), the State agency
shall assess the vendor a civil money penalty in
lieu of a disqualification.
‘‘(C) AMOUNT.— The State agency shall
determine the amount of the civil penalty ac-
cording to criteria established by the Sec-
retary.’’.
(2) REGULATIONS.—The provisions of this sub-
section shall not take effect until the Secretary
issues final regulations that include the criteria for
determining the amount of civil money penalties in
lieu of disqualification and for making hardship de-
terminations.
(m) STUDY AND REPORT BY ECONOMIC RESEARCH
SERVICE.—Section 17 of such Act (42 U.S.C. 1786), as
amended by this Act, is further amended by adding at the
end the following:
‘‘(p) STUDY AND REPORT BY ECONOMIC RESEARCH
SERVICE.—
‘‘(1) STUDY.—The Secretary, acting through
the Administrator of the Economic Research Service,
shall conduct a study on the effect of cost contain-
ment practices established by States under the pro-
gram for the selection of vendors and approved food
items (other than infant formula) on the following:
‘‘(A) Program participation.
‘‘(B) Access and availability of prescribed
foods.
‘‘(C) Voucher redemption rates and actual
food selections by participants.
‘‘(D) Participants on special diets or with
specific food allergies.
‘‘(E) Participant use and satisfaction of
prescribed foods.
‘‘(F) Achievement of positive health out-
comes.
‘‘(G) Program costs.
‘‘(2) REPORT.—Not later than 3 years after the
date of the enactment of the WIC Reauthorization
Amendments of 1998, the Administrator shall sub-
mit to the Secretary of Agriculture, the Committee
on Education and the Workforce of the House of
Representatives, and the Committee on Agriculture,
Nutrition, and Forestry of the Senate a report con-
taining the results of the study conducted under
paragraph (1).’’.
(n) COLLECTION AND USE OF PENALTIES FROM
VENDOR AND RECIPIENT FRAUD AND ABUSE.—Section
17 of such Act (42 U.S.C. 1786), as amended by this Act,
is further amended by adding at the end the following:
‘‘(q) USE OF PENALTIES FROM VENDOR AND RECIP-
IENT FRAUD AND ABUSE.—
‘‘(1) IN
GENERAL.—Amounts collected from
penalties from vendors and recipients relating to vio-
lations of any provision of this section (including any
regulation established to carry out this section) for
fraud and abuse under the program may be used for
nutrition services and administration and food bene-
fits only for the 1-year period beginning on the date
on which amounts under the penalty are received.’’.