PENALTIES.

SEC. 5506. PENALTIES. (a) States Given More Time to File Quarterly Reports.—Section 409(a)(2)(A) (42 U.S.C. 609(a)(2)(A)) is amended by striking “1 month” and inserting “45 days”. (b) Treatment of Support Payments Passed Through to Families as Qualified State Expenditures.—Section 409(a)(7)(B)(i)(I)(aa) (42 U.S.C. 609(a)(7)(B)(i)(I)(aa)) is amended by inserting “, including any amount collected by the State as support pursuant to a plan approved under part D, on behalf of a family receiving assistance under the State program funded under this part, that is distributed to the family under section 457(a)(1)(B) and disregarded in determining the eligibility of the family for, and the amount of, such assistance” before the period. (c) Disregard of Expenditures Made to Replace Penalty Grant Reductions.—Section 409(a)(7)(B)(i) (42 U.S.C. 609(a)(7)(B)(i)) is amended by redesignating subclause (III) as subclause (IV) and by inserting after subclause (II) the following: “(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).”. (d) Treatment of Families of Certain Aliens as Eligible Families.—Section 409(a)(7)(B)(i)(IV) (42 U.S.C. 609(a)(7)(B)(i)(IV)), as so redesignated by subsection (c) of this section, is amended— (1) by striking “and families” and inserting “families”; and (2) by striking “Act or section 402” and inserting “Act, and families of aliens lawfully present in the United States that would be eligible for such assistance but for the application of title IV”.111 STAT. 614 (e) Elimination of Meaningless Language.—Section 409(a)(7)(B)(ii) (42 U.S.C. 609(a)(7)(B)(ii)) is amended by striking “reduced (if appropriate) in accordance with subparagraph (C)(ii)”. (f) Clarification of Source of Data to be Used in Determining Historic State Expenditures.—Section 409(a)(7)(B) (42 U.S.C. 609(a)(7)(B)) is amended by adding at the end the following: “(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) ACF Form 331, available as of the dates specified in clauses (ii) and (iii) of section 403(a)(1)(D).”. (g) Conforming Title IV–A Penalties to Title IV–D Performance-Based Standards.—Section 409(a)(8) (42 U.S.C. 609(a)(8)) is amended to read as follows: “(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, 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 454(15)(B), or on the basis of the results of a review conducted under section 452(a)(4), that the State program failed to achieve the paternity establishment percentages (as defined in section 452(g)(2)), 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 452(a)(4)(C)(i) that the State data submitted pursuant to section 454(15)(B) is incomplete or unreliable; or “(III) on the basis of the results of an audit or audits conducted under section 452(a)(4)(C) that a State failed to substantially comply with 1 or more of the requirements of part D; 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 454(15)(B) 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 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;111 STAT. 615 “(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 452(a)(4), 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 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; or “(ii) to have submitted incomplete or unreliable data pursuant to section 454(15)(B) 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 452(g)(2)) or other performance measures that may be established by the Secretary.”. (h) Correction of Reference to 5-Year Limit on Assistance.—Section 409(a)(9) (42 U.S.C. 609(a)(9)) is amended by striking “408(a)(1)(B)” and inserting “408(a)(7)”. (i) Correction of Errors in Penalty for Failure to Meet Maintenance of Effort Requirement Applicable to the Contingency Fund.—Section 409(a)(10) (42 U.S.C. 609(a)(10)) is amended— (1) by striking “the expenditures under the State program funded under this part for the fiscal year (excluding any amounts made available by the Federal Government)” and inserting “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”; (2) by inserting “excluding any amount expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994,” after “(as defined in paragraph (7)(B)(iii) of this subsection),”; and (3) by inserting “that the State has not remitted under section 403(b)(6)” before the period. (j) Penalty for State Failure to Expend Additional State Funds to Replace Grant Reductions.—Section 409(a)(12) (42 U.S.C. 609(a)(12)) is amended— (1) in the heading— (A) by striking “Failure” and inserting “Requirement”; and (B) by striking “reductions” and inserting “Reductions; penalty for failure to do so”; and (2) by adding at the end the following: “If the State fails during such succeeding fiscal year to make the expenditure 111 STAT. 616required by the preceding sentence from its own funds, the Secretary may reduce the grant payable to the State under section 403(a)(1) 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.”. (k) Elimination of Certain Reasonable Cause Exceptions.—Section 409(b)(2) (42 U.S.C. 609(b)(2)) is amended by striking “(7) or (8)” and inserting “(6), (7), (8), (10), or (12)”. (l) Clarification of What It Means to Correct a Violation.—Section 409(c) (42 U.S.C. 609(c)) is amended— (1) in each of subparagraphs (A) and (B) of paragraph (1), by inserting “or discontinue, as appropriate,” after “correct”; (2) in paragraph (2)— (A) in the heading, by inserting “or discontinuing” after “correcting”; and (B) by inserting “or discontinues, as appropriate” after “corrects”; and (3) in paragraph (3)— (A) in the heading, by inserting “or discontinue” after “correct”; and (B) by inserting “or discontinue, as appropriate,” before “the violation”. (m) Certain Penalties Not Avoidable Through Corrective Compliance Plans.—Section 409(c)(4) (42 U.S.C. 609(c)(4)) is amended to read as follows: “(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), or (12) of subsection (a)”. (n) Failure to Satisfy Minimum Participation Rates.—Section 409(a)(3) (42 U.S.C. 609(a)(3)) is amended— (1) in subparagraph (A), by striking “not more than”; and (2) in subparagraph (C), by inserting before the period the following: “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”.