Funds paid pursuant to this subchapter to any public or private agency, organization, or institution, or to any individual (either directly or through a State planning agency) may be used for—

(1) planning, developing, or operating the program designed to carry out this subchapter; and

(2) not more than 50 per centum of the cost of the construction of any innovative community-based facility for fewer than 20 persons which, in the judgment of the Administrator, is necessary to carry out this subchapter.

Except as provided in subsection (a), no funds paid to any public or private agency, or institution or to any individual under this subchapter (either directly or through a State agency or local agency) may be used for construction.

No funds may be paid under this subchapter to a residential program (excluding a program in a private residence) unless—

(1) there is in effect in the State in which such placement or care is provided, a requirement that the provider of such placement or such care may be licensed only after satisfying, at a minimum, explicit standards of discipline that prohibit neglect, and physical and mental abuse, as defined by State law;

(2) such provider is licensed as described in paragraph (1) by the State in which such placement or care is provided; and

in a case involving a provider located in a State that is different from the State where the order for placement originates, the chief administrative officer of the public agency or the officer of the court placing the juvenile certifies that such provider—

(A) satisfies the originating State’s explicit licensing standards of discipline that prohibit neglect, physical and mental abuse, and standards for education and health care as defined by that State’s law; and

(B) otherwise complies with the Interstate Compact on the Placement of Children as entered into by such other State.

(Pub. L. 93–415, title II, § 299C, formerly § 294, as added Pub. L. 100–690, title VII, § 7266(4), Nov. 18, 1988, 102 Stat. 4449; renumbered § 299C, Pub. L. 102–586, § 2(i)(1)(B), Nov. 4, 1992, 106 Stat. 5006; Pub. L. 107–273, div. C, title II, § 12215, Nov. 2, 2002, 116 Stat. 1892.)