No Waivers for Fraud Act of 2026
Introduced on 2/26/26
Overview
The No Waivers for Fraud Act represents a targeted amendment to the Child Care and Development Block Grant Act of 1990 that fundamentally alters the federal government's enforcement posture toward noncompliant states. The bill's central purpose is to eliminate the Secretary's discretionary authority to waive sanctions imposed on states that fail to meet their obligations under the child care block grant program. By removing waiver provisions throughout the statutory framework, the legislation establishes a mandatory and inflexible sanctions regime that requires full enforcement of penalties against states found to be noncompliant with program requirements. This represents a significant shift from the current framework, which provides administrative flexibility to consider state circumstances and grant relief from sanctions when appropriate. The bill reflects a policy judgment that strict enforcement without exceptions is necessary to ensure state compliance with federal child care program standards and to prevent fraud or mismanagement of federal funds.
Legal References
- Child Care and Development Block Grant Act of 1990
- 42 U.S.C. 9858 et seq.
Core Provisions
The bill makes surgical amendments to Section 658I(c) of the Child Care and Development Block Grant Act of 1990, systematically removing all references to the Secretary's authority to waive sanctions. The amendments strike language in paragraph one that previously allowed the Secretary to waive sanctions imposed upon a state in accordance with subsection (b)(2). Additional conforming amendments remove the phrase 'sanction or' from subparagraphs (A) and (B) of paragraph two, ensuring that only the noncompliance determination process remains without the accompanying waiver authority. Further technical corrections strike similar language from paragraphs three and seven, eliminating references to 'sanction or' and 'sanction(s) or' respectively. These changes work in concert to create a comprehensive removal of waiver authority while preserving the underlying sanctions framework and the Secretary's ability to make noncompliance determinations. The amendments do not alter the substantive grounds for imposing sanctions or the types of sanctions available, but rather eliminate the safety valve that previously allowed for discretionary relief from those penalties.
Key Points
- Strikes waiver authority for sanctions from paragraph (1) of Section 658I(c)
- Removes 'sanction or' language from subparagraphs (A) and (B) of paragraph (2)
- Eliminates 'sanction or' references from paragraph (3)
- Strikes 'sanction(s) or' language from paragraph (7)
- Preserves underlying sanctions framework while removing discretionary relief mechanisms
Legal References
- 42 U.S.C. 9858lg(c)
- Section 658I(c) of the Child Care and Development Block Grant Act of 1990
Implementation
Implementation responsibility falls primarily to the Secretary of Health and Human Services, who administers the Child Care and Development Block Grant program through the Administration for Children and Families. The amendments become effective upon enactment and apply immediately to any pending waiver requests or sanctions proceedings. The Secretary must enforce sanctions against noncompliant states without the discretionary authority to grant waivers based on state circumstances, corrective action plans, or other mitigating factors. State agencies responsible for administering child care block grant funds will face a more rigid enforcement environment with no avenue for administrative relief from sanctions once imposed. The bill does not establish new reporting requirements or compliance measures beyond those already existing in the Child Care and Development Block Grant Act, but it fundamentally alters the enforcement landscape by making sanctions mandatory and non-waivable. Federal administrators will need to adjust their enforcement protocols and guidance to states to reflect the elimination of waiver authority, potentially requiring updates to regulations, policy manuals, and state plan requirements.
Legal References
- Administration for Children and Families
- Department of Health and Human Services
Impact
The bill's impact falls most heavily on state governments that administer child care block grant programs, particularly those that may face compliance challenges due to administrative capacity, resource constraints, or complex state-specific circumstances. States will lose the ability to seek waivers from sanctions, potentially facing significant financial penalties and program restrictions without recourse to administrative relief. This creates heightened stakes for state compliance and may incentivize more conservative program administration to avoid any risk of noncompliance findings. Low-income families who rely on child care subsidies funded through the block grant program could experience indirect impacts if states reduce program scope or enrollment to minimize compliance risks, or if sanctioned states face reduced federal funding that diminishes service availability. The administrative burden on states increases as they must maintain perfect compliance without the safety net of potential waivers, potentially requiring additional state resources for compliance monitoring and documentation. Federal administrators face reduced flexibility in managing state relationships and addressing compliance issues, potentially leading to more adversarial federal-state dynamics. The bill contains no sunset provision, making these changes permanent absent future legislative action.
Key Points
- States lose discretionary relief from sanctions for noncompliance
- Increased compliance pressure on state child care agencies
- Potential indirect impacts on low-income families accessing child care subsidies
- Higher administrative burden on states to maintain perfect compliance
- Reduced federal flexibility in managing state compliance issues
- No sunset provision; changes are permanent
Legal Framework
The bill operates within the constitutional framework of Congress's spending power under Article I, Section 8, which authorizes federal grants to states with attached conditions. The Child Care and Development Block Grant Act itself represents a cooperative federalism program where states voluntarily accept federal funds subject to compliance with federal requirements. The elimination of waiver authority does not alter the voluntary nature of state participation but does modify the terms and conditions attached to federal funding. The amendments do not raise novel constitutional issues, as Congress possesses clear authority to establish and modify the conditions attached to federal grant programs. The bill does not preempt state law but rather establishes federal requirements that states must meet to receive federal child care funding. States retain sovereignty over whether to participate in the program, but participation requires adherence to federal standards without the possibility of sanction waivers. The Administrative Procedure Act governs any regulatory changes the Secretary must undertake to implement the amendments, and states retain the right to judicial review of sanction determinations under existing administrative law principles. However, the elimination of waiver authority removes one layer of administrative discretion that previously provided an additional avenue for state relief before resorting to litigation.
Legal References
- U.S. Constitution, Article I, Section 8 (Spending Clause)
- Administrative Procedure Act, 5 U.S.C. 551 et seq.
- 42 U.S.C. 9858 et seq. (Child Care and Development Block Grant Act of 1990)
Critical Issues
The bill's elimination of waiver authority raises significant concerns about administrative inflexibility and the potential for disproportionate impacts on states facing genuine compliance challenges. Critics may argue that removing all discretionary relief mechanisms prevents the Secretary from considering legitimate mitigating circumstances, such as natural disasters, economic crises, or good-faith administrative errors that do not reflect systemic noncompliance or fraud. The mandatory nature of sanctions without waiver authority could lead to harsh outcomes where states face severe penalties despite substantial compliance efforts or circumstances beyond their control. Implementation challenges include the potential for increased litigation as states, lacking administrative relief options, turn to federal courts to challenge sanction determinations, potentially overwhelming judicial resources and creating inconsistent outcomes across circuits. The bill's title, 'No Waivers for Fraud Act,' suggests a focus on preventing fraudulent conduct, but the statutory amendments apply broadly to all sanctions regardless of whether fraud is involved, potentially creating a mismatch between the bill's stated purpose and its actual scope. States may respond by reducing program participation or adopting overly conservative interpretations of federal requirements to avoid any risk of sanctions, potentially undermining the block grant program's goals of expanding child care access. The lack of any exception mechanism could also raise questions about whether the inflexible sanctions regime serves the best interests of the low-income children and families the underlying program is designed to serve, particularly if sanctions reduce state capacity to provide services.
Key Points
- Eliminates administrative flexibility to address legitimate mitigating circumstances
- May lead to disproportionate penalties for technical or good-faith compliance errors
- Potential increase in federal litigation as states lose administrative relief options
- Mismatch between bill title focusing on fraud and broad application to all sanctions
- Risk of reduced state program participation or overly conservative administration
- Possible negative impacts on low-income families if sanctions reduce service capacity
- No exception mechanism for extraordinary circumstances beyond state control
From the Legislature
To amend the Child Care and Development Block Grant Act of 1990 to sustain sanctions against noncompliant State under such Act.
Sponsors
Calendar
Mar 5
10:15 AM