Title 42, The Public Health and WelfareRelease 119-110

§300x–55 Failure to Comply with Agreements

Title 42 › CHAPTER 6A — PUBLIC HEALTH SERVICE › SUBCHAPTER XVII — BLOCK GRANTS › Part B — Block Grants Regarding Mental Health and Substance Use › subpart iii — general provisions › § 300x–55

Last updated Sep 22, 2026|Official source

Summary

The Secretary can stop, cut off, or end federal grant payments to a State if the State does not follow the grant rules. The Secretary can also make the State pay back money with interest that was not spent the right way. If the State does not pay back, the Secretary can take the amount out of future payments. The Secretary can hold back payments until the State shows it will follow the rules, and must stop holding back money once there are reasonable assurances the State will comply. For some specific grant conditions in the programs under sections 300x and 300x–21, the special penalty rules in those other sections (including sections 300x–1(d), 300x–4(b), 300x–26, and 300x–30) apply instead of these rules. Before doing any of these things, the Secretary must give the State notice and a chance for a hearing. If a complaint looks like it has reasonable evidence, the Secretary must quickly hold a hearing. If the Secretary finds the State is not following the rules, the Secretary must take appropriate action to make the State comply. Starting in fiscal year 1994 and every year after, the Secretary must investigate spending in at least 10 States to check compliance. States and any groups getting the funds must give records and documents to the Secretary or the Comptroller General when reasonably asked. The Secretary cannot start withholding payments under the holding-back rule unless a qualified, in-State investigation has been done.

Full Legal Text

Title 42, §300x–55

The Public Health and Welfare, Source: USLM XML via OLRC

(a)Suspension or termination of payments

Subject to subsection (e), if the Secretary determines that a State has materially failed to comply with the agreements or other conditions required for the receipt of a grant under the program involved, the Secretary may in whole or in part suspend payments under the grant, terminate the grant for cause, or employ such other remedies (including the remedies provided for in subsections (b) and (c)) as may be legally available and appropriate in the circumstances involved.

(b)Repayment of payments

(1)In general

Subject to subsection (e), the Secretary may require a State to repay with interest any payments received by the State under section 300x or 300x–21 of this title that the Secretary determines were not expended by the State in accordance with the agreements required under the program involved.

(2)Offset against payments

If a State fails to make a repayment required in paragraph (1), the Secretary may offset the amount of the repayment against the amount of any payment due to be paid to the State under the program involved.

(c)Withholding of payments

(1)In general

Subject to subsections (e) and (g)(3), the Secretary may withhold payments due under section 300x or 300x–21 of this title if the Secretary determines that the State involved is not expending amounts received under the program involved in accordance with the agreements required under the program.

(2)Termination of withholding

The Secretary shall cease withholding payments from a State under paragraph (1) if the Secretary determines that there are reasonable assurances that the State will expend amounts received under the program involved in accordance with the agreements required under the program.

(d)Applicability of remedies to certain violations

(1)In general

With respect to agreements or other conditions for receiving a grant under the program involved, in the case of the failure of a State to maintain material compliance with a condition referred to in paragraph (2), the provisions for noncompliance with the condition that are provided in the section establishing the condition shall apply in lieu of subsections (a) through (c) of this section.

(2)Relevant conditions

For purposes of paragraph (1):

(A)In the case of the program established in section 300x of this title, a condition referred to in this paragraph is the condition established in section 300x–1(d) of this title and the condition established in section 300x–4(b) of this title.

(B)In the case of the program established in section 300x–21 of this title, a condition referred to in this paragraph is the condition established in section 300x–26 of this title and the condition established in section 300x–30 of this title.

(e)Opportunity for hearing

Before taking action against a State under any of subsections (a) through (c) (or under a section referred to in subsection (d)(2), as the case may be), the Secretary shall provide to the State involved adequate notice and an opportunity for a hearing.

(f)Requirement of hearing in certain circumstances

(1)In general

If the Secretary receives a complaint that a State has failed to maintain material compliance with the agreements or other conditions required for receiving a grant under the program involved (including any condition referred to for purposes of subsection (d)), and there appears to be reasonable evidence to support the complaint, the Secretary shall promptly conduct a hearing with respect to the complaint.

(2)Finding of material noncompliance

If in a hearing under paragraph (1) the Secretary finds that the State involved has failed to maintain material compliance with the agreement or other condition involved, the Secretary shall take such action under this section as may be appropriate to ensure that material compliance is so maintained, or such action as may be required in a section referred to in subsection (d)(2), as the case may be.

(g)Certain investigations

(1)Requirement regarding Secretary

The Secretary shall in fiscal year 1994 and each subsequent fiscal year conduct in not less than 10 States investigations of the expenditure of grants received by the States under section 300x or 300x–21 of this title in order to evaluate compliance with the agreements required under the program involved.

(2)Provision of records, etc., upon request

Each State receiving a grant under section 300x or 300x–21 of this title, and each entity receiving funds from the grant, shall make appropriate books, documents, papers, and records available to the Secretary or the Comptroller General, or any of their duly authorized representatives, for examination, copying, or mechanical reproduction on or off the premises of the appropriate entity upon a reasonable request therefor.

(3)Limitations on authority

The Secretary may not institute proceedings under subsection (c) unless the Secretary has conducted an investigation concerning whether the State has expended payments under the program involved in accordance with the agreements required under the program. Any such investigation shall be conducted within the State by qualified investigators.

Reference

Citations & Metadata

Citation

42 U.S.C. § 300x–55

Title 42, The Public Health and Welfare

Last Updated

Sep 22, 2026

Release point: 119-110