
From the U.S. Code Online via GPO Access
[wais.access.gpo.gov]
[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 42USC609]

 
                 TITLE 42--THE PUBLIC HEALTH AND WELFARE
 
                       CHAPTER 7--SOCIAL SECURITY
 
 SUBCHAPTER IV--GRANTS TO STATES FOR AID AND SERVICES TO NEEDY FAMILIES 
              WITH CHILDREN AND FOR CHILD-WELFARE SERVICES
 
   Part A--Block Grants to States for Temporary Assistance for Needy 
                                Families
 
Sec. 609. Penalties


(a) In general

    Subject to this section:

             (1) Use of grant in violation of this part

        (A) General penalty

            If an audit conducted under chapter 75 of title 31 finds 
        that an amount paid to a State under section 603 of this title 
        for a fiscal year has been used in violation of this part, the 
        Secretary shall reduce the grant payable to the State under 
        section 603(a)(1) of this title for the immediately succeeding 
        fiscal year quarter by the amount so used.

        (B) Enhanced penalty for intentional violations

            If the State does not prove to the satisfaction of the 
        Secretary that the State did not intend to use the amount in 
        violation of this part, the Secretary shall further reduce the 
        grant payable to the State under section 603(a)(1) of this title 
        for the immediately succeeding fiscal year quarter by an amount 
        equal to 5 percent of the State family assistance grant.

        (C) Penalty for misuse of competitive welfare-to-work funds

            If the Secretary of Labor finds that an amount paid to an 
        entity under section 603(a)(5)(B) of this title has been used in 
        violation of subparagraph (B) or (C) of section 603(a)(5) of 
        this title, the entity shall remit to the Secretary of Labor an 
        amount equal to the amount so used.

                (2) Failure to submit required report

        (A) In general

            If the Secretary determines that a State has not, within 45 
        days after the end of a fiscal quarter, submitted the report 
        required by section 611(a) of this title for the quarter, the 
        Secretary shall reduce the grant payable to the State under 
        section 603(a)(1) of this title for the immediately succeeding 
        fiscal year by an amount equal to 4 percent of the State family 
        assistance grant.

        (B) Rescission of penalty

            The Secretary shall rescind a penalty imposed on a State 
        under subparagraph (A) with respect to a report if the State 
        submits the report before the end of the fiscal quarter that 
        immediately succeeds the fiscal quarter for which the report was 
        required.

         (3) Failure to satisfy minimum participation rates

        (A) In general

            If the Secretary determines that a State to which a grant is 
        made under section 603 of this title for a fiscal year has 
        failed to comply with section 607(a) of this title for the 
        fiscal year, the Secretary shall reduce the grant payable to the 
        State under section 603(a)(1) of this title for the immediately 
        succeeding fiscal year by an amount equal to the applicable 
        percentage of the State family assistance grant.

        (B) ``Applicable percentage'' defined

            As used in subparagraph (A), the term ``applicable 
        percentage'' means, with respect to a State--
                (i) if a penalty was not imposed on the State under 
            subparagraph (A) for the immediately preceding fiscal year, 
            5 percent; or
                (ii) if a penalty was imposed on the State under 
            subparagraph (A) for the immediately preceding fiscal year, 
            the lesser of--
                    (I) the percentage by which the grant payable to the 
                State under section 603(a)(1) of this title was reduced 
                for such preceding fiscal year, increased by 2 
                percentage points; or
                    (II) 21 percent.

        (C) Penalty based on severity of failure

            The Secretary shall impose reductions under subparagraph (A) 
        with respect to a fiscal year based on the degree of 
        noncompliance, and may reduce the penalty if the noncompliance 
        is due to circumstances that caused the State to become a needy 
        State (as defined in section 603(b)(6) of this title) during the 
        fiscal year or if the noncompliance is due to extraordinary 
        circumstances such as a natural disaster or regional recession. 
        The Secretary shall provide a written report to Congress to 
        justify any waiver or penalty reduction due to such 
        extraordinary circumstances.

      (4) Failure to participate in the income and eligibility 
                             verification system

        If the Secretary determines that a State program funded under 
    this part is not participating during a fiscal year in the income 
    and eligibility verification system required by section 1320b-7 of 
    this title, the Secretary shall reduce the grant payable to the 
    State under section 603(a)(1) of this title for the immediately 
    succeeding fiscal year by an amount equal to not more than 2 percent 
    of the State family assistance grant.

    (5) Failure to comply with paternity establishment and child 
                support enforcement requirements under part D

        Notwithstanding any other provision of this chapter, if the 
    Secretary determines that the State agency that administers a 
    program funded under this part does not enforce the penalties 
    requested by the agency administering part D of this subchapter 
    against recipients of assistance under the State program who fail to 
    cooperate in establishing paternity or in establishing, modifying, 
    or enforcing a child support order in accordance with such part and 
    who do not qualify for any good cause or other exception established 
    by the State under section 654(29) of this title, the Secretary 
    shall reduce the grant payable to the State under section 603(a)(1) 
    of this title for the immediately succeeding fiscal year (without 
    regard to this section) by not more than 5 percent.

     (6) Failure to timely repay a Federal Loan Fund for State 
                              Welfare Programs

        If the Secretary determines that a State has failed to repay any 
    amount borrowed from the Federal Loan Fund for State Welfare 
    Programs established under section 606 of this title within the 
    period of maturity applicable to the loan, plus any interest owed on 
    the loan, the Secretary shall reduce the grant payable to the State 
    under section 603(a)(1) of this title for the immediately succeeding 
    fiscal year quarter (without regard to this section) by the 
    outstanding loan amount, plus the interest owed on the outstanding 
    amount. The Secretary shall not forgive any outstanding loan amount 
    or interest owed on the outstanding amount.

       (7) Failure of any State to maintain certain level of 
                               historic effort

        (A) In general

            The Secretary shall reduce the grant payable to the State 
        under section 603(a)(1) of this title for fiscal year 1998, 
        1999, 2000, 2001, 2002, or 2003 by the amount (if any) by which 
        qualified State expenditures for the then immediately preceding 
        fiscal year are less than the applicable percentage of historic 
        State expenditures with respect to such preceding fiscal year.

        (B) Definitions

            As used in this paragraph:
            (i) Qualified State expenditures

                (I) In general

                    The term ``qualified State expenditures'' means, 
                with respect to a State and a fiscal year, the total 
                expenditures by the State during the fiscal year, under 
                all State programs, for any of the following with 
                respect to eligible families:
                        (aa) Cash assistance, including any amount 
                    collected by the State as support pursuant to a plan 
                    approved under part D of this subchapter, on behalf 
                    of a family receiving assistance under the State 
                    program funded under this part, that is distributed 
                    to the family under section 657(a)(1)(B) of this 
                    title and disregarded in determining the eligibility 
                    of the family for, and the amount of, such 
                    assistance.
                        (bb) Child care assistance.
                        (cc) Educational activities designed to increase 
                    self-sufficiency, job training, and work, excluding 
                    any expenditure for public education in the State 
                    except expenditures which involve the provision of 
                    services or assistance to a member of an eligible 
                    family which is not generally available to persons 
                    who are not members of an eligible family.
                        (dd) Administrative costs in connection with the 
                    matters described in items (aa), (bb), (cc), and 
                    (ee), but only to the extent that such costs do not 
                    exceed 15 percent of the total amount of qualified 
                    State expenditures for the fiscal year.
                        (ee) Any other use of funds allowable under 
                    section 604(a)(1) of this title.
                (II) Exclusion of transfers from other State and 
                        local programs

                    Such term does not include expenditures under any 
                State or local program during a fiscal year, except to 
                the extent that--
                        (aa) the expenditures exceed the amount expended 
                    under the State or local program in the fiscal year 
                    most recently ending before August 22, 1996; or
                        (bb) the State is entitled to a payment under 
                    former section 603 of this title (as in effect 
                    immediately before August 22, 1996) with respect to 
                    the expenditures.
                (III) Exclusion of amounts expended to replace 
                        penalty grant reductions

                    Such term does not include any amount expended in 
                order to comply with paragraph (12).
                (IV) Eligible families

                    As used in subclause (I), the term ``eligible 
                families'' means families eligible for assistance under 
                the State program funded under this part, families that 
                would be eligible for such assistance but for the 
                application of section 608(a)(7) of this title, and 
                families of aliens lawfully present in the United States 
                that would be eligible for such assistance but for the 
                application of title IV of the Personal Responsibility 
                and Work Opportunity Reconciliation Act of 1996.
            (ii) Applicable percentage

                The term ``applicable percentage'' means for fiscal 
            years 1997 through 2002, 80 percent (or, if the State meets 
            the requirements of section 607(a) of this title for the 
            fiscal year, 75 percent).
            (iii) Historic State expenditures

                The term ``historic State expenditures'' means, with 
            respect to a State, the lesser of--
                    (I) the expenditures by the State under parts A and 
                F of this subchapter (as in effect during fiscal year 
                1994) for fiscal year 1994; or
                    (II) the amount which bears the same ratio to the 
                amount described in subclause (I) as--
                        (aa) the State family assistance grant, plus the 
                    total amount required to be paid to the State under 
                    former section 603 of this title for fiscal year 
                    1994 with respect to amounts expended by the State 
                    for child care under subsection (g) or (i) of 
                    section 602 of this title (as in effect during 
                    fiscal year 1994); bears to
                        (bb) the total amount required to be paid to the 
                    State under former section 603 of this title (as in 
                    effect during fiscal year 1994) for fiscal year 
                    1994.

          Such term does not include any expenditures under the State 
            plan approved under part A of this subchapter (as so in 
            effect) on behalf of individuals covered by a tribal family 
            assistance plan approved under section 612 of this title, as 
            determined by the Secretary.
            (iv) Expenditures by the State

                The term ``expenditures by the State'' does not 
            include--
                    (I) any expenditure from amounts made available by 
                the Federal Government;
                    (II) any State funds expended for the medicaid 
                program under subchapter XIX of this chapter;
                    (III) any State funds which are used to match 
                Federal funds provided under section 603(a)(5) of this 
                title; or
                    (IV) any State funds which are expended as a 
                condition of receiving Federal funds other than under 
                this part.

          Notwithstanding subclause (IV) of the preceding sentence, such 
            term includes expenditures by a State for child care in a 
            fiscal year to the extent that the total amount of the 
            expenditures does not exceed the amount of State 
            expenditures in fiscal year 1994 or 1995 (whichever is the 
            greater) that equal the non-Federal share for the programs 
            described in section 618(a)(1)(A) of this title.
            (v) Source of data

                In determining expenditures by a State for fiscal years 
            1994 and 1995, the Secretary shall use information which was 
            reported by the State on ACF Form 231 or (in the case of 
            expenditures under part F of this subchapter) ACF Form 331, 
            available as of the dates specified in clauses (ii) and 
            (iii) of section 603(a)(1)(D) of this title.

    (8) Noncompliance of State child support enforcement program 
                         with requirements of part D

        (A) In general

            If the Secretary finds, with respect to a State's program 
        under part D of this subchapter, in a fiscal year beginning on 
        or after October 1, 1997--
                (i)(I) on the basis of data submitted by a State 
            pursuant to section 654(15)(B) of this title, or on the 
            basis of the results of a review conducted under section 
            652(a)(4) of this title, that the State program failed to 
            achieve the paternity establishment percentages (as defined 
            in section 652(g)(2) of this title), or to meet other 
            performance measures that may be established by the 
            Secretary;
                (II) on the basis of the results of an audit or audits 
            conducted under section 652(a)(4)(C)(i) of this title that 
            the State data submitted pursuant to section 654(15)(B) of 
            this title is incomplete or unreliable; or
                (III) on the basis of the results of an audit or audits 
            conducted under section 652(a)(4)(C) of this title that a 
            State failed to substantially comply with 1 or more of the 
            requirements of part D of this subchapter (other than 
            paragraph (24), or subparagraph (A) or (B)(i) of paragraph 
            (27), of section 654 of this title); and
                (ii) that, with respect to the succeeding fiscal year--
                    (I) the State failed to take sufficient corrective 
                action to achieve the appropriate performance levels or 
                compliance as described in subparagraph (A)(i); or
                    (II) the data submitted by the State pursuant to 
                section 654(15)(B) of this title is incomplete or 
                unreliable;

        the amounts otherwise payable to the State under this part for 
        quarters following the end of such succeeding fiscal year, prior 
        to quarters following the end of the first quarter throughout 
        which the State program has achieved the paternity establishment 
        percentages or other performance measures as described in 
        subparagraph (A)(i)(I), or is in substantial compliance with 1 
        or more of the requirements of part D of this subchapter as 
        described in subparagraph (A)(i)(III), as appropriate, shall be 
        reduced by the percentage specified in subparagraph (B).

        (B) Amount of reductions

            The reductions required under subparagraph (A) shall be--
                (i) not less than 1 nor more than 2 percent;
                (ii) not less than 2 nor more than 3 percent, if the 
            finding is the 2nd consecutive finding made pursuant to 
            subparagraph (A); or
                (iii) not less than 3 nor more than 5 percent, if the 
            finding is the 3rd or a subsequent consecutive such finding.

        (C) Disregard of noncompliance which is of a technical nature

            For purposes of this section and section 652(a)(4) of this 
        title, a State determined as a result of an audit--
                (i) to have failed to have substantially complied with 1 
            or more of the requirements of part D of this subchapter 
            shall be determined to have achieved substantial compliance 
            only if the Secretary determines that the extent of the 
            noncompliance is of a technical nature which does not 
            adversely affect the performance of the State's program 
            under part D of this subchapter; or
                (ii) to have submitted incomplete or unreliable data 
            pursuant to section 654(15)(B) of this title shall be 
            determined to have submitted adequate data only if the 
            Secretary determines that the extent of the incompleteness 
            or unreliability of the data is of a technical nature which 
            does not adversely affect the determination of the level of 
            the State's paternity establishment percentages (as defined 
            under section 652(g)(2) of this title) or other performance 
            measures that may be established by the Secretary.

        (9) Failure to comply with 5-year limit on assistance

        If the Secretary determines that a State has not complied with 
    section 608(a)(7) of this title during a fiscal year, the Secretary 
    shall reduce the grant payable to the State under section 603(a)(1) 
    of this title for the immediately succeeding fiscal year by an 
    amount equal to 5 percent of the State family assistance grant.

      (10) Failure of State receiving amounts from Contingency 
               Fund to maintain 100 percent of historic effort

        If, at the end of any fiscal year during which amounts from the 
    Contingency Fund for State Welfare Programs have been paid to a 
    State, the Secretary finds that the qualified State expenditures (as 
    defined in paragraph (7)(B)(i) (other than the expenditures 
    described in subclause (I)(bb) of that paragraph)) under the State 
    program funded under this part for the fiscal year are less than 100 
    percent of historic State expenditures (as defined in paragraph 
    (7)(B)(iii) of this subsection), excluding any amount expended by 
    the State for child care under subsection (g) or (i) of section 602 
    of this title (as in effect during fiscal year 1994) for fiscal year 
    1994, the Secretary shall reduce the grant payable to the State 
    under section 603(a)(1) of this title for the immediately succeeding 
    fiscal year by the total of the amounts so paid to the State that 
    the State has not remitted under section 603(b)(6) of this title.

        (11) Failure to maintain assistance to adult single 
             custodial parent who cannot obtain child care for 
                              child under age 6

        (A) In general

            If the Secretary determines that a State to which a grant is 
        made under section 603 of this title for a fiscal year has 
        violated section 607(e)(2) of this title during the fiscal year, 
        the Secretary shall reduce the grant payable to the State under 
        section 603(a)(1) of this title for the immediately succeeding 
        fiscal year by an amount equal to not more than 5 percent of the 
        State family assistance grant.

        (B) Penalty based on severity of failure

            The Secretary shall impose reductions under subparagraph (A) 
        with respect to a fiscal year based on the degree of 
        noncompliance.

    (12) Requirement to expend additional State funds to replace 
               grant reductions; penalty for failure to do so

        If the grant payable to a State under section 603(a)(1) of this 
    title for a fiscal year is reduced by reason of this subsection, the 
    State shall, during the immediately succeeding fiscal year, expend 
    under the State program funded under this part an amount equal to 
    the total amount of such reductions. If the State fails during such 
    succeeding fiscal year to make the expenditure required by the 
    preceding sentence from its own funds, the Secretary may reduce the 
    grant payable to the State under section 603(a)(1) of this title for 
    the fiscal year that follows such succeeding fiscal year by an 
    amount equal to the sum of--
            (A) not more than 2 percent of the State family assistance 
        grant; and
            (B) the amount of the expenditure required by the preceding 
        sentence.

       (13) Penalty for failure of State to maintain historic 
            effort during year in which welfare-to-work grant is 
                                  received

        If a grant is made to a State under section 603(a)(5)(A) of this 
    title for a fiscal year and paragraph (7) of this subsection 
    requires the grant payable to the State under section 603(a)(1) of 
    this title to be reduced for the immediately succeeding fiscal year, 
    then the Secretary shall reduce the grant payable to the State under 
    section 603(a)(1) of this title for such succeeding fiscal year by 
    the amount of the grant made to the State under section 603(a)(5)(A) 
    of this title for the fiscal year.

    (14) Penalty for failure to reduce assistance for recipients 
                     refusing without good cause to work

        (A) In general

            If the Secretary determines that a State to which a grant is 
        made under section 603 of this title in a fiscal year has 
        violated section 607(e) of this title during the fiscal year, 
        the Secretary shall reduce the grant payable to the State under 
        section 603(a)(1) of this title for the immediately succeeding 
        fiscal year by an amount equal to not less than 1 percent and 
        not more than 5 percent of the State family assistance grant.

        (B) Penalty based on severity of failure

            The Secretary shall impose reductions under subparagraph (A) 
        with respect to a fiscal year based on the degree of 
        noncompliance.

(b) Reasonable cause exception

                           (1) In general

        The Secretary may not impose a penalty on a State under 
    subsection (a) of this section with respect to a requirement if the 
    Secretary determines that the State has reasonable cause for failing 
    to comply with the requirement.

                            (2) Exception

        Paragraph (1) of this subsection shall not apply to any penalty 
    under paragraph (6), (7), (8), (10), (12), or (13) of subsection (a) 
    of this section.

(c) Corrective compliance plan

                           (1) In general

        (A) Notification of violation

            Before imposing a penalty against a State under subsection 
        (a) of this section with respect to a violation of this part, 
        the Secretary shall notify the State of the violation and allow 
        the State the opportunity to enter into a corrective compliance 
        plan in accordance with this subsection which outlines how the 
        State will correct or discontinue, as appropriate, the violation 
        and how the State will insure continuing compliance with this 
        part.

        (B) 60-day period to propose a corrective compliance plan

            During the 60-day period that begins on the date the State 
        receives a notice provided under subparagraph (A) with respect 
        to a violation, the State may submit to the Federal Government a 
        corrective compliance plan to correct or discontinue, as 
        appropriate, the violation.

        (C) Consultation about modifications

            During the 60-day period that begins with the date the 
        Secretary receives a corrective compliance plan submitted by a 
        State in accordance with subparagraph (B), the Secretary may 
        consult with the State on modifications to the plan.

        (D) Acceptance of plan

            A corrective compliance plan submitted by a State in 
        accordance with subparagraph (B) is deemed to be accepted by the 
        Secretary if the Secretary does not accept or reject the plan 
        during 60-day period that begins on the date the plan is 
        submitted.

         (2) Effect of correcting or discontinuing violation

        The Secretary may not impose any penalty under subsection (a) of 
    this section with respect to any violation covered by a State 
    corrective compliance plan accepted by the Secretary if the State 
    corrects or discontinues, as appropriate \1\ the violation pursuant 
    to the plan.
---------------------------------------------------------------------------
    \1\ So in original. Probably should be followed by a comma.
---------------------------------------------------------------------------

      (3) Effect of failing to correct or discontinue violation

        The Secretary shall assess some or all of a penalty imposed on a 
    State under subsection (a) of this section with respect to a 
    violation if the State does not, in a timely manner, correct or 
    discontinue, as appropriate, the violation pursuant to a State 
    corrective compliance plan accepted by the Secretary.

              (4) Inapplicability to certain penalties

        This subsection shall not apply to the imposition of a penalty 
    against a State under paragraph (6), (7), (8), (10), (12), or (13) 
    of subsection (a) of this section.

(d) Limitation on amount of penalties

                           (1) In general

        In imposing the penalties described in subsection (a) of this 
    section, the Secretary shall not reduce any quarterly payment to a 
    State by more than 25 percent.

              (2) Carryforward of unrecovered penalties

        To the extent that paragraph (1) of this subsection prevents the 
    Secretary from recovering during a fiscal year the full amount of 
    penalties imposed on a State under subsection (a) of this section 
    for a prior fiscal year, the Secretary shall apply any remaining 
    amount of such penalties to the grant payable to the State under 
    section 603(a)(1) of this title for the immediately succeeding 
    fiscal year.

(Aug. 14, 1935, ch. 531, title IV, Sec. 409, as added Pub. L. 104-193, 
title I, Sec. 103(a)(1), Aug. 22, 1996, 110 Stat. 2142; amended Pub. L. 
105-33, title V, Secs. 5001(a)(2), (g), 5004(a), 5506, 5514(c), Aug. 5, 
1997, 111 Stat. 589, 592, 594, 613, 620; Pub. L. 105-200, title I, 
Sec. 101(b), July 16, 1998, 112 Stat. 647; Pub. L. 106-113, div. B, 
Sec. 1000(a)(4) [title VIII, Sec. 807(b)], Nov. 29, 1999, 113 Stat. 
1535, 1501A-287; Pub. L. 106-169, title IV, Sec. 401(b), Dec. 14, 1999, 
113 Stat. 1858.)

                       References in Text

    Part D of this subchapter, referred to in subsec. (a)(5), 
(7)(B)(i)(I)(aa), (8), is classified to section 651 et seq. of this 
title.
    Title IV of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, referred to in subsec. (a)(7)(B)(i)(IV), is 
title IV (Sec. 400 et seq.) of Pub. L. 104-193, Aug. 22, 1996, 110 Stat. 
2260. For complete classification of title IV to the Code, see Tables.
    Part F of this subchapter, referred to in subsec. (a)(7)(B)(iii)(I), 
(v), was classified to section 681 et seq. of this title, prior to 
repeal by Pub. L. 104-193, title I, Sec. 108(e), Aug. 22, 1996, 110 
Stat. 2167.


                            Prior Provisions

    A prior section 609, act Aug. 14, 1935, ch. 531, title IV, Sec. 409, 
as added Nov. 5, 1990, Pub. L. 101-508, title V, Sec. 5052(a), 104 Stat. 
1388-228, related to exclusion from AFDC unit of child for whom Federal, 
State, or local foster care maintenance or adoption assistance payments 
were made, prior to repeal by Pub. L. 104-193, Sec. 103(a)(1), as 
amended by Pub. L. 105-33, title V, Sec. 5514(c), Aug. 5, 1997, 111 
Stat. 620.
    Another prior section 609, act Aug. 14, 1935, ch. 531, title IV, 
Sec. 409, as added and amended July 25, 1962, Pub. L. 87-543, title I, 
Secs. 101(b)(2)(E), 105(a), 76 Stat. 180, 186; Aug. 13, 1981, Pub. L. 
97-35, title XXIII, Sec. 2307(a), 95 Stat. 846; Sept. 3, 1982, Pub. L. 
97-248, title I, Sec. 154(c), 96 Stat. 397; July 18, 1984, Pub. L. 98-
369, div. B, title VI, Secs. 2627, 2641(a), 2663(c)(5), 98 Stat. 1136, 
1146, 1166, related to community work experience programs, prior to 
repeal by Pub. L. 100-485, title II, Secs. 202(b)(12), 204(a), 
(b)(1)(A), Oct. 13, 1988, 102 Stat. 2378, 2381, effective Oct. 1, 1990, 
with provision for earlier effective dates in case of States making 
certain changes in their State plans and formally notifying the 
Secretary of Health and Human Services of their desire to become subject 
to the amendments by title II of Pub. L. 100-485 at such earlier 
effective dates.


                               Amendments

    1999--Subsec. (a)(7)(B)(i)(II). Pub. L. 106-169 made technical 
amendment to reference in original act which appears in text as 
reference to August 22, 1996.
    Subsec. (a)(8)(A)(i)(III). Pub. L. 106-113 substituted ``paragraph 
(24), or subparagraph (A) or (B)(i) of paragraph (27), of section 654 of 
this title'' for ``section 654(24) of this title''.
    1998--Subsec. (a)(8)(A)(i)(III). Pub. L. 105-200 inserted ``(other 
than section 654(24) of this title)'' before semicolon.
    1997--Pub. L. 105-33, Sec. 5514(c), made technical amendment to 
directory language of Pub. L. 104-193, Sec. 103(a)(1), which enacted 
this section.
    Subsec. (a)(1)(C). Pub. L. 105-33, Sec. 5001(g)(2), added subpar. 
(C).
    Subsec. (a)(2)(A). Pub. L. 105-33, Sec. 5506(a), substituted ``45 
days'' for ``1 month''.
    Subsec. (a)(3)(A). Pub. L. 105-33, Sec. 5506(n)(1), struck out ``not 
more than'' after ``an amount equal to''.
    Subsec. (a)(3)(C). Pub. L. 105-33, Sec. 5506(n)(2), inserted before 
period at end ``or if the noncompliance is due to extraordinary 
circumstances such as a natural disaster or regional recession. The 
Secretary shall provide a written report to Congress to justify any 
waiver or penalty reduction due to such extraordinary circumstances''.
    Subsec. (a)(7)(B)(i)(I)(aa). Pub. L. 105-33, Sec. 5506(b), inserted 
before period at end ``, including any amount collected by the State as 
support pursuant to a plan approved under part D of this subchapter, on 
behalf of a family receiving assistance under the State program funded 
under this part, that is distributed to the family under section 
657(a)(1)(B) of this title and disregarded in determining the 
eligibility of the family for, and the amount of, such assistance''.
    Subsec. (a)(7)(B)(i)(III). Pub. L. 105-33, Sec. 5506(c), added 
subcl. (III). Former subcl. (III) redesignated (IV).
    Subsec. (a)(7)(B)(i)(IV). Pub. L. 105-33, Sec. 5506(d), substituted 
``this part, families'' for ``this part, and families'' and ``section 
608(a)(7) of this title, and families of aliens lawfully present in the 
United States that would be eligible for such assistance but for the 
application of title IV of the Personal Responsibility and Work 
Opportunity Reconciliation Act of 1996'' for ``section 608(a)(7) of this 
title or section 1612 of title 8''.
    Pub. L. 105-33, Sec. 5506(c), redesignated subcl. (III) as (IV).
    Subsec. (a)(7)(B)(ii). Pub. L. 105-33, Sec. 5506(e), struck out 
``reduced (if appropriate) in accordance with subparagraph (C)(ii)'' 
after ``75 percent)''.
    Subsec. (a)(7)(B)(iv). Pub. L. 105-33, Sec. 5001(a)(2), amended 
heading and text of cl. (iv) generally. Prior to amendment, text read as 
follows: ``The term `expenditures by the State' does not include--
        ``(I) any expenditures from amounts made available by the 
    Federal Government;
        ``(II) any State funds expended for the medicaid program under 
    subchapter XIX of this chapter;
        ``(III) any State funds which are used to match Federal funds; 
    or
        ``(IV) any State funds which are expended as a condition of 
    receiving Federal funds under Federal programs other than under this 
    part.
Notwithstanding subclause (IV) of the preceding sentence, such term 
includes expenditures by a State for child care in a fiscal year to the 
extent that the total amount of such expenditures does not exceed an 
amount equal to the amount of State expenditures in fiscal year 1994 or 
1995 (whichever is greater) that equal the non-Federal share for the 
programs described in section 618(a)(1)(A) of this title.''
    Subsec. (a)(7)(B)(v). Pub. L. 105-33, Sec. 5506(f), added cl. (v).
    Subsec. (a)(8). Pub. L. 105-33, Sec. 5506(g), amended heading and 
text of par. (8) generally. Prior to amendment, par. (8) provided that 
if a State program operated under part D of this subchapter was found to 
not have complied substantially with the requirements of such part for 
any quarter, and was not complying substantially with such requirements 
at the time of the finding, the Secretary was to reduce the grant 
payable to the State under section 603(a)(1) of this title for certain 
quarters until the program was found to be in substantial compliance 
with such requirements.
    Subsec. (a)(9). Pub. L. 105-33, Sec. 5506(h), substituted 
``608(a)(7)'' for ``608(a)(1)(B)''.
    Subsec. (a)(10). Pub. L. 105-33, Sec. 5506(i), substituted ``the 
qualified State expenditures (as defined in paragraph (7)(B)(i) (other 
than the expenditures described in subclause (I)(bb) of that paragraph)) 
under the State program funded under this part for the fiscal year'' for 
``the expenditures under the State program funded under this part for 
the fiscal year (excluding any amounts made available by the Federal 
Government)'', inserted ``excluding any amount expended by the State for 
child care under subsection (g) or (i) of section 602 of this title (as 
in effect during fiscal year 1994) for fiscal year 1994,'' after ``(as 
defined in paragraph (7)(B)(iii) of this subsection),'', and inserted 
before period at end ``that the State has not remitted under section 
603(b)(6) of this title''.
    Subsec. (a)(12). Pub. L. 105-33, Sec. 5506(j), in heading 
substituted ``Requirement'' for ``Failure'' and ``reductions; penalty 
for failure to do so'' for ``reductions'' and in text inserted at end 
``If the State fails during such succeeding fiscal year to make the 
expenditure required by the preceding sentence from its own funds, the 
Secretary may reduce the grant payable to the State under section 
603(a)(1) of this title for the fiscal year that follows such succeeding 
fiscal year by an amount equal to the sum of--
        ``(A) not more than 2 percent of the State family assistance 
    grant; and
        ``(B) the amount of the expenditure required by the preceding 
    sentence.''
    Subsec. (a)(13). Pub. L. 105-33, Sec. 5001(g)(1)(A), added par. 
(13).
    Subsec. (a)(14). Pub. L. 105-33, Sec. 5004(a), added par. (14).
    Subsec. (b)(2). Pub. L. 105-33, Sec. 5506(k), substituted ``(6), 
(7), (8), (10), or (12)'' for ``(7) or (8)''.
    Pub. L. 105-33, Sec. 5001(g)(1)(B), substituted ``(12), or (13)'' 
for ``or (12)''.
    Subsec. (c)(1)(A), (B). Pub. L. 105-33, Sec. 5506(l)(1), inserted 
``or discontinue, as appropriate,'' after ``correct''.
    Subsec. (c)(2). Pub. L. 105-33, Sec. 5506(l)(2), inserted ``or 
discontinuing'' after ``correcting'' in heading and ``or discontinues, 
as appropriate'' after ``corrects'' in text.
    Subsec. (c)(3). Pub. L. 105-33, Sec. 5506(l)(3), inserted ``or 
discontinue'' after ``correct'' in heading and ``or discontinue, as 
appropriate,'' before ``the violation'' in text.
    Subsec. (c)(4). Pub. L. 105-33, Sec. 5506(m), amended heading and 
text of par. (4) generally. Prior to amendment, text read as follows: 
``This subsection shall not apply to the imposition of a penalty against 
a State under subsection (a)(6) of this section.''
    Pub. L. 105-33, Sec. 5001(g)(1)(C), substituted ``(12), or (13)'' 
for ``or (12)''.


                    Effective Date of 1999 Amendments

    Amendment by Pub. L. 106-169 effective as if included in the 
enactment of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, Pub. L. 104-193, see section 401(q) of Pub. 
L. 106-169, set out as a note under section 602 of this title.
    Pub. L. 106-113, div. B, Sec. 1000(a)(4) [title VIII, Sec. 807(c)], 
Nov. 29, 1999, 113 Stat. 1535, 1501A-287, provided that: ``The 
amendments made by this section [amending this section and section 655 
of this title] shall take effect on October 1, 1999.''


                    Effective Date of 1997 Amendment

    Section 5004(b) of Pub. L. 105-33 provided that: ``The amendment 
made by subsection (a) of this section [amending this section] shall 
take effect as if included in the enactment of section 103(a) of the 
Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
[Pub. L. 104-193].''
    Amendment by section 5506 of Pub. L. 105-33 effective as if included 
in section 103(a) of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996, Pub. L. 104-193, at the time such section 
103(a) became law, see section 5518(a) of Pub. L. 105-33, set out as a 
note under section 602 of this title.
    Amendment by section 5514(c) of Pub. L. 105-33 effective as if 
included in the provision of Pub. L. 104-193 amended at the time the 
provision became law, see section 5518(d) of Pub. L. 105-33, set out as 
a note under section 862a of Title 21, Food and Drugs.


                             Effective Date

    Section effective July 1, 1997, with delayed effective date for 
subsec. (a)(2)-(5), (8), (10) of this section, and with transition rules 
relating to State options to accelerate such date, rules relating to 
claims, actions, and proceedings commenced before such date, rules 
relating to closing out of accounts for terminated or substantially 
modified programs and continuance in office of Assistant Secretary for 
Family Support, and provisions relating to termination of entitlement 
under AFDC program, see section 116 of Pub. L. 104-193, as amended, set 
out as a note under section 601 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 603, 606, 610, 612, 652, 
1308, 9858i of this title; title 7 section 2025.
