§806. Rescission of funds declined by States, territories, or other governmental entities
(a) Rescission
(1) In general
Subject to paragraphs (2) and (3), if a State, territory, or other governmental entity provides notice to the Secretary of the Treasury in the manner provided by the Secretary of the Treasury that the State, territory, or other governmental entity intends to decline all or a portion of the amounts that are to be awarded to the State, territory, or other governmental entity from funds appropriated under this subchapter, an amount equal to the unaccepted amounts or portion of such amounts allocated by the Secretary of the Treasury as of the date of such notice that would have been awarded to the State, territory, or other governmental entity shall be rescinded from the applicable appropriation account.
(2) Exclusion
Paragraph (1) shall not apply with respect to funds that are to be paid to a State under section 803 of this title for distribution to nonentitlement units of local government.
(3) Rules of construction
Paragraph (1) shall not be construed as-
(A) preventing a sub-State governmental entity, including a nonentitlement unit of local government, from notifying the Secretary of the Treasury that the sub-State governmental entity intends to decline all or a portion of the amounts that a State may distribute to the entity from funds appropriated under this subchapter; or
(B) allowing a State to prohibit or otherwise prevent a sub-State governmental entity from providing such a notice.
(b) Use for deficit reduction
Amounts rescinded under subsection (a) shall be deposited in the general fund of the Treasury for the sole purpose of deficit reduction.
(c) State or other governmental entity defined
In this section, the term "State, territory, or other governmental entity" means any entity to which a payment may be made directly to the entity under this subchapter other than a Tribal government, as defined in sections 801(g), 802(g), and 804(d) of this title, and an eligible Tribal government, as defined in section 805(f) of this title.
(Aug. 14, 1935, ch. 531, title VI, §606, as added