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

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 States 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

under varying patterns of unemployment, the relationship between the unemployment compensation and other social insurance programs, the effect of State eligibility and disqualification provisions, the personal characteristics, family situations, emplovment background and experience of claimants, with the results of such studies to be made public; and

"(2) establish a program of research to develop information (which shall be made public) as to the effect and impact of extending coverage to excluded groups.

"Authorization of Appropriations

"(b) [To assist in the establishment and provide for the continuation of the comprehensive research program relating to the unemployment compensation system, there] There are hereby authorized to be appropriated for the fiscal year ending June 30, 1967, and for each fiscal year thereafter such sums as may be necessary to carry out the purposes of this section. From the sums authorized to be appropriated by this subsection the Secretary may provide for the conduct of such research through grants or contracts.'

Explanation. The proposed change is a technical one to insure that the authorization of appropriations applies to both programs authorized by subsection (1) of section 906.

Amendment.-Title I of the bill, page 24, should be further amended by adding at the end thereof a new Part E-BENEFIT REQUIREMENTS, as follows:

"PART E-BENEFIT REQUIREMENTS

"SEC. 151. The Internal Revenue Code of 1954 is hereby further amended adding a new section 3312 as follows:

"SEC. 3312. (a) CERTIFICATION.-On October 31, 1968, and October 31 of each calendar year thereafter, the Secretary of Labor shall certify to the Secretary each State whose law he finds is in accord with the requirements of subsection (c) and has been in accord with such requirements for substantially all of the 12-month period ending on such October 31 (except that for 1968, it shall be the 4-month period ending on October 31) and that there has been substantial compliance with such State law requirements during such period. The Secretary of Labor shall not withhold his certification to the Secretary unless, after reasonable notice and opportunity for hearing to the State agency, he finds that the State law is not in accord with the requirements of subsection (c) or has not been in accord with such requirements for substantially all of the 12month period ending on such October 31 (except that for 1968, it shall be the 4-month period ending on October 31) or that there has been a failure to comply substantially with such State law requirements during such period. For any State which is not certified under this subsection on any October 31, the Secretary of Labor shall within 10 days thereafter notify the Secretary of the reduction in the credit allowable to taxpayers subject to the unemployment compensation law of such State pursuant to section 3302(c)(4).

"(b) NOTICE TO GOVERNOR OF NONCERTIFICATION.

'If at any time the Secretary of Labor has reason to believe that a State may not be certified under subsection (a) he shall promptly notify the Governor of such State.

""(c) REQUIREMENTS.

““(1) With RESPECT TO BENEFIT YEARS BEGINNING ON Or AFTER JULY 1, 1968.—

""(A) the State law shall not require that an individual have more than 20 weeks of employment (or the equivalent as provided in subsection (4)) in the base period to qualify for unemployment compensation;

"(B) the State law shall provide that the weekly benefit amount of any eligible individual for a week of total unemployment shall be (i) an amount equal to at least one-half of such individual's average weekly wage as determined by the Štate agency, or (ii) the State maximum weekly benefit amount (exclusive of allowances with respect to dependents) payable with respect to such week under such law, whichever is the lesser: "(C) the State law shall provide for an individual with 20 weeks of employment (or the equivalent) in the base period, benefits in a benefit year equal to at least 26 times his weekly benefit amount.

"Any weekly benefit amount payable under a State law may be rounded to an even dollar amount in accordance with such State law.

"(2) The State maximum weekly benefit amount (exclusive of allowances with respect to dependents) shall be no less than 66% percent of the Statewide average weekly wage most recently computed before the beginning of any benefit year, except that, for benefit years beginning between July 1, 1968, and June 30, 1970, such amount shall be no less than 50 percent of such Statewide average weekly wage, and for benefit years beginning between July 1, 1970, and June 30, 1972, such amount shall be no less than 60 percent of such Statewide average weekly wage.

"(3) In determining whether an individual has 20 weeks of employment, there must be counted as a week, any week in which the individual earned at least 25 percent of the Statewide average weekly wage.

"(4) For the purpose of subsections (c)(1)(A) and (C), the equivalent of 20 weeks of employment in a State which uses highquarter wages is total base period wages equal to five times the Statewide average weekly wage, and either one and one-half times the individual's high-quarter earnings or forty times his weekly benefit amount, whichever is appropriate under State law. (d) DEFINITIONS.

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'(1) "benefit year" means a period as defined in State law except that it shall not exceed one year beginning subsequent to the end of an individual's base period.

"(2) "base period" means a period as defined in State law but it shall be fifty-two consecutive weeks, one year, or four consecutive calendar quarters ending not earlier than six months prior to the beginning of an individual's benefit year.

"(3) "high-quarter wages" means the amount of wages for services performed in employment covered under the State law paid to an individual in that quarter of his base period in which such wages were highest, irrespective of the limitation on the amount of wages subject to contributions under such State law.

"(4) "individual's average weekly wage" means an amount computed equal to (A) one-thirteenth of an individual's high-quarter

wages, in a State which bases eligibility on high-quarter wages paid in the base period or (B) in any other State, the amount obtained by dividing the total amount of wages (irrespective of the limitation on the amount of wages subject to contributions under the State law) paid to such individual during his base period by the number of weeks in which he performed services in employment covered under such law during such period.

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'(5) "statewide average weekly wage" means the amount computed by the State agency at least once each year on the basis of the aggregate amount of wages, irrespective of the limitation on the amount of wages subject to contributions under such State law, reported by employers as paid for services covered under such State law during the first four of the last six completed calendar quarters prior to the effective date of the computation, divided by a figure representing fifty-two times the twelve-month average of the number of employees in the pay period which includes the twelfth day of each month during the same four calendar quarters, as reported by such employers.'

"LIMITATION ON CREDIT AGAINST TAX

"SEC. 152. (a) Section 3302 of the Internal Revenue Code of 1954 is amended by adding at the end of subsection (c) thereof a new paragraph (4) as follows:

"(4) If the unemployment compensation law of a State has not been certified for a twelve-month period ending on October 31 pursuant to section 3312(a), then the total credits (after applying subsections (a) and (b) ond paragraphs (1), (2), and (3) of this subsection) otherwise allowable under this section for the taxable year in which such October 31 occurs in the case of a taxpayer subject to the unemployment compensation law of such State shall be reduced by the amount by which 2.7 percent exceeds the four-year benefit cost rate applicable to such State for such taxable year in accordance with the notification of the Secretary of Labor pursuant to section 3312(a).' "(b) Subsection (c)(3)(C)(i) of section 3302 is amended by substituting the term '4-year' for the term '5-year'. "(c) The heading for paragraph (5) of subsection (d) of section 3302 is revised to read '4-year benefit cost rate', and the paragraph is amended to read:

"For purposes of subsection (c)(4) and subparagraph (C) of subsection (c)(3), the four-year benefit cost rate applicable to any State for any taxable year is that percentage obtained by dividing—

""(A) One-fourth of the total compensation paid under the State unemployment compensation law during the four-year period ending at the close of the first calendar year preceding such taxable year, by

"(B) The total of the remuneration subject to contributions under the State unemployment compensation law with respect to the first calendar year preceding such taxable year. "Remuneration" for the purpose of this subparagraph shall include the amount of wages for services covered under the State law irrespective of the limitation of the amount of wages subject to contribution under such State law paid to an individual by an employer during any calendar year beginning with 1968 up to $5,600, and beginning with 1971, up to $6,600; for States for which it is necessary, the Secretary of Labor shall estimate the