the House Ways and Means Committee as evidenced in its report: "This new exclusion does not apply to employee educational or training programs run by or for an employer or group of employers."

PART B.-PROVISIONS OF STATE LAWS

PROVISIONS REQUIRED TO BE INCLUDED IN STATE LAWS

Amendment.-Section 121 of the bill, page 9, line 19 through page 10, line 22, is amended to read as follows:

"SEC. 121. (a) Section 3304(a) of the Internal Revenue Code of 1954 is amended by inserting after paragraph (6) (added by section 104(a) of this Act) the following new paragraphs:

"(7) an individual who has received compensation during his benefit year is required to have had work since the beginning of such year in order to qualify for compensation in his next benefit year;

[(8) compensation shall not be denied to any individual by reason of cancellation of wage credits or total reduction of his benefit rights for any cause other than discharge for misconduct connected with his work, fraud in connection with a claim for compensation, or receipt of disqualifying income];

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'(8) (a) compensation may not be denied in such State to any otherwise eligible individual

(i) by reason of a State disqualification for a period in excess of 13 weeks following the week in which a disqualifying act occurred; or

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(ii) for any week of unemployment during his benefit year by reason of a cancellation of his wage credits or reduction of his benefit rights (other than a reduction because of earnings or disqualifying income) except that—

compensation may be denied in accordance with disqualification provisions of applicable State law for unemployment due to a labor dispute or for fraud in connection with his claim, without regard to the limitation of this subsection.

(b) Compensation paid to any individual (or a derivative of compensation) after he has been disqualified because he left work without good cause or was discharged for misconduct in connection with his work shall not be (1) charged against the experience rating account of the employer from whose employment he left or was discharged, or (2) otherwise reflected in such employer's experience on the basis of which his rate is determined as required by section 3303(a)(1).' ”

Explanation. The proposal would change the Federal standard with respect to disqualifications from that provided in H.R. 15119 by (1) providing a limitation on the period of disqualification, (2) prohibiting any reduction (instead of only total reduction) of benefits, and (3) prohibiting the charging to the separating employer's experience rating account of benefits paid following certain disqualifications. With certain specified exceptions, disqualifications must not exceed a denial of compensation for 13 weeks following the week in which the disqualifying act occurred. The language retains the prohibition in H.R. 15119 against cancellation of wage credits, and prohibits any reduction of the worker's earned monetary entitlement, as well as disqualifications which last for the duration of a period of unemployment.

The limitation to a 13-week denial does not apply to disqualifications imposed in cases of labor dispute or of fraud in connection with a claim. A State remains free to impose whatever disqualification it deems appropriate in such cases.

The proposal does not preclude a State from reducing an individual's weekly benefit amount because of his receipt of disqualifying income, such as earnings or pensions during a week claimed as a week of unemployment.

The proposal also prohibits a State from charging to the experience rating account of the separating employer any compensation paid after a worker has been disqualified because he left work without good cause or was discharged for misconduct in connection with this work. The proposal provides for the handling of the experience-rating problem in States which have experience-rating systems that do not charge compensation.

Amendment.-"(9) compensation shall not be denied to an individual for any week because he is in training with the approval of the State agency (or because of the application, to any such week in training, of State law provisions relating to availability for work, active search for work, or refusal to accept work);

"(10) compensation shall not be denied or reduced to an individual solely because he files a claim in another State or in Canada or because he resides in another State or in Canada at the time he files a claim for unemployment compensation;".

(b) The amendment made by subsection (a) shall take effect January 1, 1969, and shall apply to the taxable year 1969 and taxable years thereafter.

Explanation. The proposed change would include Canada in the requirement that State unemployment insurance systems refrain from discriminating against workers who earned benefit rights in the State but who file their claims from outside the State.

In 1942, the United States and Canada entered into an executive agreement authorizing the inclusion of Canada in the Interstate Benefit Payment Plan as if it were a State. All but four States (Alabama, Iowa, Maine, and New Hampshire) and Puerto Rico have subscribed to the reciprocal agreement with Canada. Failure of the two border States to do so puts a premium on the hiring of Canadian workers in preference to American workers; because separation of American workers could result in charges to the employers' experience-rating account whereas the separation of Canadian workers would not.

PART C-JUDICIAL REVIEW

Amendment.-Section 131 (a) of the bill, page 12, line 19 through page 15, line 22 should be amended to read as follows:

"Title III of the Social Security Act is amended by adding at the end thereof the following new section:

"'JUDICIAL REVIEW

""SEC. 304. (a) Whenever the Secretary of Labor—

""(1) finds that a State law does not include provisions of section 303 (a), or

"(2) makes a finding with respect to a State under subsection (b) or (c) of section 303,

such State may, within 60 days after the Governor of the State has been notified of such action, file with the United States court of appeals for the circuit in which such State is located or with the United States Court of Appeals for the District of Columbia a petition for review of such action. A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary of Labor. The Secretary of Labor thereupon shall file in the court the record of the proceedings on which he based his action as provided in section 2112 of title 28, United States Code.

"(b) The findings of fact by the Secretary of Labor, [unless contrary to the weight of the] if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary of Labor to take further evidence and the Secretary of Labor may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive [unless contrary to the weight of the] if supported by substantial evidence.

"(c) The court shall have jurisdiction to affirm the action of the Secretary of Labor or to set it aside, in whole or in part. The judgment of the court shall be subject to review by the Supreme Court of the United States upon certiorari or certification as provided in section 1254 of title 28, United States Code.

'(d)(1) The Secretary of Labor shall not withhold any certification for payment to any State under section 302 until the expiration of 60 days after the Governor of the State has been notified of the action referred to in paragraph (1) or (2) of subsection (a) or until the State has filed a petition for review of such action, whichever is earlier.

"(2) The commencement of judicial proceedings under this section shall not stay the Secretary's action, but the court may grant interim relief if warranted, including stay of the Secretary's action and including such relief as may be necessary to preserve status or rights.

"(e) Any judicial proceedings under this section shall be entitled to, and, upon request of the Secretary or the State, shall receive a preference and shall be heard and determined as expeditiously as possible.'"

(b)(1) Chapter 23 of the Internal Revenue Code of 1954 is amended by adding at the end thereof the following new section:

"SEC. 3311. JUDICIAL REVIEW.

"(a) IN GENERAL.-Whenever under section 3303(b) or section. 3304 (c) the Secretary of Labor makes a finding pursuant to which he is required to withhold a certification under such section, such State may, within 60 days after the Governor of the State has been notified of such action, file with the United States court of appeals for the circuit in which such State is located or with the United States Court of Appeals for the District of Columbia a petition for review of such A copy of the petition shall be forthwith transmitted by the clerk of the court to the Secretary of Labor. The Secretary of Labor thereupon shall file in the court the record of the proceedings on which he based his action as provided in section 2112 of title 28, United States Code.

"(b) FINDINGS OF FACT.-The findings of fact by the Secretary of Labor, [unless contrary to the weight of the] if supported by sub

stantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to the Secretary of Labor to take further evidence, and the Secretary of Labor may thereupon make new or modified findings of fact and may modify his previous action, and shall certify to the court the record of the further proceedings. Such new or modified findings of fact shall likewise be conclusive [unless contrary to the weight of the] if supported by substantial evidence." Explanation. These proposed changes are designed to provide that the Secretary's findings of fact shall be conclusive "if supported by substantial evidence" instead of "unless contrary to the weight of the evidence" as in H.R. 15119. The substantial evidence rule is generally applied in judicial review of administrative action. It is contained in, for example, section 10(y) of the Administrative Procedure Act, section 404 of the Social Security Act, section 217(b) of the Economic Opportunity Act of 1964, section 603 of the Civil Rights Act of 1964 (by reference to sec. 10 of the Administrative Procedure Act), and section 608(b) of the Hospital and Medical Facilities Amendments of 1964.

Amendment.-Section 131 (b) (2), page 16, lines 20 through page 17, line 19, of the bill should be amended to read as follows:

"(2) Subsection (c) of section 3304 of the Internal Revenue Code of 1954 is amended to read as follows:

"(c) CERTIFICATION. On October 31 of each taxable year the Secretary of Labor shall certify to the Secretary each State whose law he has previously approved, except that he shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Secretary of Labor finds has amended its law so that it no longer contains the provisions specified in subsection (a) or has with respect to the 12-month period ending on such October 31 failed to comply substantially with any such provision in such subsection. No finding of a failure to comply substantially with [the] any provision [in State law specified] in paragraph (5) of subsection (a) shall be based on an application or interpretation of State law with respect to which [further administrative or judicial review is provided for under the laws of the State.] the time for review provided under the laws of the State has not expired or further administrative or judicial review is pending. On October 31 of 1969 or of any taxable year thereafter, the Secretary shall not certify any State which, after reasonable notice and opportunity for hearing to the State agency, the Secretary of Labor finds has failed to amend its law so that it contains the provisions specified in subsection (a) added by the Unemployment Insurance Amendments of 1966, or has with respect to the 12-month period (10-month period in the case of October 31, 1969) ending on such October 31 failed to comply substantially with any such provision in such subsection."

Explanation. The proposed change to the first and last sentences of section 3304 (c) of the Federal Unemployment Tax Act as amended by H.R. 15119 is designed to clarify the reference to the provisions in subsection (a) of section 3304. It reflects no change in substance.

The proposed changes to the second sentence of section 3304 (c) are designed (1) to make it clear that the compliance referred to is with the provisions of section 3304 (a)(5), the so-called labor standards provision, and (2) to eliminate the present ambiguity as to whether the Secretary may act on a State's application or interpretation of the labor standards provision in State law that was not appealed to

the highest State court. The second change, however, assures that no action may be taken by the Secretary until an application or interpretation of State law is final. Thus the Secretary may not act while a case is pending review within the State or the period available to obtain such review has not yet expired.

PART D-ADMINISTRATION

ADMINISTR

AMOUNTS AVAILABLE FOR ADMINISTRATIVE EXPENDITURES

Amendment.-SEC. 141. [(a)] Section 901(c)(3) of the Social Security Act is amended

[(1)(a) by striking [out "the net receipts" each place it appears in the first sentence and inserting in lieu thereof "fivesixths of the net receipts"; and] paragraphs (A) and (B) and substituting therefor the following new paragraphs:

"(A) in the case of fiscal year 1967, an amount equal to 95 percent of the amount estimated and set forth in the Budget of the United Štates Government for such fiscal year as the net receipts during such year under the Federal Unemployment Tax Act;

"(B) in the case of fiscal year 1968, an amount equal to 95 percent of the amount estimated and set forth in the Budget of the United States Government for such fiscal year as five-sixths of the net receipts during such year under the Federal Unemployment Tax Act; and

"(C) in the case of any fiscal year thereafter, an amount equal to 95 percent of the amount estimated and set forth in the Budget of the United States Government for such fiscal year as eight-elevenths of the net receipts during such year under the Federal Unemployment Tax Act.

[2](b) by striking "0.4 percent" in the second sentence and inserting in lieu thereof "0.6 percent for calendar year 1968 and 0.55 for subsequent calendar years".

[(b) The amendments made by subsection (a) shall apply to fiscal years beginning after June 30, 1967.]

Explanation. This change is necessary to make the current limitation on the amount authorized as available for grants to the States for administration of the employment security program relate to the new tax rates provided in section 301 and the distribution of the tax receipts provided in section 207.

UNEMPLOYMENT COMPENSATION RESEARCH PROGRAM AND TRAINING GRANTS FOR UNEMPLOYMENT COMPENSATION PERSONNEL

Amendment.-Section 142 of the bill, page 18, line 19, through page 19, is amended to read as follows:

"SEC. 142. Title IX of the Social Security Act is amended by adding at the end thereof the following new sections:

"UNEMPLOYMENT COMPENSATION RESEARCH PROGRAM

"SEC. 906. (a) The Secretary of Labor shall

""(1) establish a continuing and comprehensive program of research to evaluate the unemployment compensation system. Such research shall include, but not be limited to, a program of factual studies covering the role of unemployment compensation