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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4453
<br /> violation of paragraph(a) of this section under paragraph(b) of this section. To 602(d)(1) of the Social Security Act that
<br /> is equal to the lesser of: request reconsideration of any amounts is less than two percentage points above
<br /> (1)The reduction in net tax revenue subject to recoupment, a recipient must its unemployment rate in February
<br /> of the State or Territory for the reporting submit to the Secretary a written request 2020,the Secretary will withhold 50
<br /> year,measured as the difference that includes: percent of the amount of funds allocated
<br /> between the State's or Territory's (1)An explanation of why the under section 602(b) of the Social
<br /> baseline and its actual tax revenue,each recipient believes all or some of the Security Act to such State or territory
<br /> measured as of the end of the reporting amount should not be subject to until at least May 10, 2022 and not more
<br /> year;and, recoupment; and than twelve months from the date such
<br /> (2)The aggregate amount of the (2)A discussion of supporting initial certification is provided to the
<br /> reductions in tax revenues caused by reasons,along with any additional Secretary.
<br /> covered changes identified in paragraph information. (b)Payment of withheld amount.In
<br /> (b)(1) of this section,minus the sum of (e)Final amount subject to order to receive the amount withheld
<br /> the amounts in identified in paragraphs recoupment.Unless the Secretary under paragraph(a) of this section,the
<br /> (b)(4)(i)and(ii) of this section. extends or accelerates the time period, State or Territory must submit to the
<br /> within 60 calendar days of receipt of the Secretary the following information:
<br /> §35.9 Compliance with applicable laws. recipient's request for reconsideration (1)A certification,in the form
<br /> A recipient must comply with all provided pursuant to paragraph(d) of provided by the Secretary,that such
<br /> other applicable Federal statutes, this section or the expiration of the State or Territory requires the payment
<br /> regulations, and executive orders,and a period for requesting reconsideration to carry out the activities specified in
<br /> recipient shall provide for compliance provided under paragraph(d),the section 602(c) of the Social Security Act
<br /> with the American Rescue Plan Act,this recipient will be notified of the and will use the payment in compliance
<br /> subpart, and any interpretive guidance Secretary's decision to affirm,withdraw, with section 602(c) of the Social
<br /> by other parties in any agreements it or modify the notice of recoupment. Security Act; and
<br /> enters into with other parties relating to Such notification will include an (2)Any reports required to be filed by
<br /> these funds. explanation of the decision,including that date pursuant to this part that have
<br /> §35.10 Recoupment. responses to the recipient's supporting not yet been filed.
<br /> reasons and consideration of additional
<br /> (a)Identification of violations—(1)In information provided.A recipient must §35.12 Distributions to nonentitlement
<br /> general.Any amount used in violation invoke and exhaust the procedures units of local government and units of
<br /> of§35.5, 35.6,or 35.7 may be identified available under this subpart prior to general local government.
<br /> at any time prior to December 31, 2026. seeking judicial review of a decision (a)Nonentitlement units of local
<br /> (2)Annual reporting of amounts of under§35.10. government.Each State or Territory that
<br /> violations. On an annual basis,a (f)Repayment of funds. Unless the
<br /> receives a payment from the Secretary
<br /> recipient that is a State or territory must Secretary extends or accelerates the time pursuant to section 603(b)(2)(B) of the
<br /> calculate and report any amounts used period,a recipient shall repay to the Social Security Act shall distribute the
<br /> in violation of§35.8. Secretary any amounts subject to amount of the payment to
<br /> (b) Calculation of amounts subject to recoupment in accordance with nonentitlement units of local
<br /> recoupment—(1)In general.Except as instructions provided by the Secretary: government in such State or Territory in
<br /> provided in paragraph(b)(2) of this (1)Within 120 calendar days of accordance with the requirements set
<br /> section,the Secretary will calculate any receipt of the notice of recoupment forth in section 603(b)(2)(C) of the
<br /> amounts subject to recoupment provided under paragraph(c) of this Social Security Act and without
<br /> resulting from a violation of§35.5, 35.6 section,in the case of a recipient that offsetting any debt owed by such
<br /> or 35.7 as the amounts used in violation does not submit a request for nonentitlement units of local
<br /> of such restrictions. reconsideration in accordance with the governments against such payments.
<br /> (2) Violations of§35.8.The Secretary requirements of paragraph(d) of this (b)Budget cap.A State or Territory
<br /> will calculate any amounts subject to section; or may not make a payment to a
<br /> recoupment resulting from a violation of (2)Within 120 calendar days of nonentitlement unit of local government
<br /> §35.8,equal to the lesser of: receipt of the Secretary's decision under pursuant to section 603 2 C of the
<br /> (i) The amount set forth in§35.8(c); paragraph(e) of this section,in the case Social Security Act and paragraph (a) of
<br /> and, of a recipient that submits a request for this section in excess of the amount
<br /> (ii) The amount of funds received by reconsideration in accordance with the equal to 75 percent of the most recent
<br /> such recipient. requirements of paragraph(d) of this budget for the nonentitlement unit of
<br /> (c)Initial notice.If the Secretary section. local government as of January 27, 2020.
<br /> calculates an amount subject to (g) Other remedial actions.Prior to For purposes of this section 35.12, a
<br /> recoupment under paragraph(b) of this seeking recoupment or taking other nonentitlement unit of local
<br /> section,Treasury will provide the appropriate action pursuant to government's most recent budget shall
<br /> recipient an initial written notice of the paragraph(c), (d), (e),or(f) of this mean the nonentitlement unit of local
<br /> amount subject to recoupment along section,the Secretary may notify the government's total annual budget,
<br /> with an explanation of such amounts. recipient of potential violations and including both operating and capital
<br /> (d)Request for reconsideration. provide the recipient an opportunity for expenditure budgets,in effect as of
<br /> Unless the Secretary extends or informal consultation and remediation. January 27, 2020.A State or Territory
<br /> accelerates the time period,within 60 shall permit a nonentitlement unit of
<br /> calendar days of receipt of an initial §35.11 Payments to States. local government without a formal
<br /> notice of recoupment provided under (a)In general.With respect to any budget as of January 27, 2020,to
<br /> paragraph(c) of this section, a recipient State or Territory that has an provide a certification from an
<br /> may submit a written request to the unemployment rate as of the date that authorized officer of the nonentitlement
<br /> Secretary requesting reconsideration of it submits an initial certification for unit of local government of its most
<br /> any amounts subject to recoupment payment of funds pursuant to section recent annual expenditures as of
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