ALTERNATIVE PENALTY PROCEDURE.

SEC. 101. ALTERNATIVE PENALTY PROCEDURE. (a) In General.—Section 455(a) of the Social Security Act (42 U.S.C. 655(a)) is amended by adding at the end the following: “(4)(A)(i) If— “(I) the Secretary determines that a State plan under section 454 would (in the absence of this paragraph) be disapproved for the failure of the State to comply with a particular subparagraph of section 454(24), and that the State has made and is continuing to make a good faith effort to so comply; and “(II) the State has submitted to the Secretary a corrective compliance plan that describes how, by when, and at what cost the State will achieve such compliance, which has been approved by the Secretary, then the Secretary shall not disapprove the State plan under section 454, and the Secretary shall reduce the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the fiscal year by the penalty amount. “(ii) All failures of a State during a fiscal year to comply with any of the requirements referred to in the same subparagraph of section 454(24) shall be considered a single failure of the State to comply with that subparagraph during the fiscal year for purposes of this paragraph. “(B) In this paragraph: “(i) The term ‘penalty amount’ means, with respect to a failure of a State to comply with a subparagraph of section 454(24)— “(I) 4 percent of the penalty base, in the case of the first fiscal year in which such a failure by the State occurs (regardless of whether a penalty is imposed under this paragraph with respect to the failure); “(II) 8 percent of the penalty base, in the case of the second such fiscal year; “(III) 16 percent of the penalty base, in the case of the third such fiscal year; “(IV) 25 percent of the penalty base, in the case of the fourth such fiscal year; or “(V) 30 percent of the penalty base, in the case of the fifth or any subsequent such fiscal year. “(ii) The term ‘penalty base’ means, with respect to a failure of a State to comply with a subparagraph of section 454(24) during a fiscal year, the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the preceding fiscal year. “(C)(i) The Secretary shall waive a penalty under this paragraph for any failure of a State to comply with section 454(24)(A) during fiscal year 1998 if— “(I) on or before August 1, 1998, the State has submitted to the Secretary a request that the Secretary certify the State as having met the requirements of such section; “(II) the Secretary subsequently provides the certification as a result of a timely review conducted pursuant to the request; and 112 STAT. 647 “(III) the State has not failed such a review. “(ii) If a State with respect to which a reduction is made under this paragraph for a fiscal year with respect to a failure to comply with a subparagraph of section 454(24) achieves compliance with such subparagraph by the beginning of the succeeding fiscal year, the Secretary shall increase the amount otherwise payable to the State under paragraph (1)(A) of this subsection for the succeeding fiscal year by an amount equal to 90 percent of the reduction for the fiscal year. “(D) The Secretary may not impose a penalty under this paragraph against a State with respect to a failure to comply with section 454(24)(B) for a fiscal year if the Secretary is required to impose a penalty under this paragraph against the State with respect to a failure to comply with section 454(24)(A) for the fiscal year.”. (b) Inapplicability of Penalty Under TANF Program.—Section 409(a)(8)(A)(i)(III) of such Act (42 U.S.C. 609(a)(8)(A)(i)(III)) is amended by inserting “(other than section 454(24))” before the semicolon.