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‘‘(D) CODE-BASED AREAS; LIMITATION ON
INCREASE IN GRANT .—
‘‘(i) IN GENERAL.—For each of the fis-
cal years 2007 through 2009, if code-based
reporting (within the meaning of subpara-
graph (C)(vi)) applies in an eligible area or
any portion thereof as of the beginning of
the fiscal year involved, then notwith-
standing any other provision of this para-
graph, the amount of the grant pursuant to
this paragraph for such area for such fiscal
year may not—
‘‘(I) for fiscal year 2007, exceed
by more than 5 percent the amount of
the grant for the area that would have
been made pursuant to this paragraph
and paragraph (4) for fiscal year 2006
(as such paragraphs were in effect for
such fiscal year) if paragraph (2) (as
so in effect) had been applied by sub-
stituting ‘662⁄3 percent’ for ‘50 per-
cent’; and
‘‘(II) for each of the fiscal years
2008 and 2009, exceed by more than 5
percent the amount of the grant pursu-
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ant to this paragraph and paragraph
(4) for the area for the preceding fiscal
year.
‘‘(ii) USE OF AMOUNTS INVOLVED.—
For each of the fiscal years 2007 through
2009, amounts available as a result of the
limitation under clause (i) shall be made
available by the Secretary as additional
amounts for grants pursuant to subsection
(b) for the fiscal year involved, subject to
paragraph (4) and section 2610(d)(2).’’.
(d) HOLD HARMLESS.—Section 2603(a) of the Public
Health Service Act (42 U.S.C. 300ff–13(a)) is amended—
(1) in paragraph (3)(A)—
(A) in clause (ii), by striking the period at
the end and inserting a semicolon; and
(B) by inserting after and below clause (ii)
the following:
‘‘which product shall then, as applicable, be in-
creased under paragraph (4).’’.
(2) by amending paragraph (4) to read as fol-
lows:
‘‘(4) INCREASES IN GRANT.—
‘‘(A) IN GENERAL.—For each eligible area
that received a grant pursuant to this subsection
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for fiscal year 2006, the Secretary shall, for each
of the fiscal years 2007 through 2009, increase
the amount of the grant made pursuant to para-
graph (3) for the area to ensure that the amount
of the grant for the fiscal year involved is not
less than the following amount, as applicable to
such fiscal year:
‘‘(i) For fiscal year 2007, an amount
equal to 95 percent of the amount of the
grant that would have been made pursuant
to paragraph (3) and this paragraph for
fiscal year 2006 (as such paragraphs were
in effect for such fiscal year) if paragraph
(2) (as so in effect) had been applied by
substituting ‘662⁄3 percent’ for ‘50 percent’.
‘‘(ii) For each of the fiscal years 2008
and 2009, an amount equal to 100 percent
of the amount of the grant made pursuant
to paragraph (3) and this paragraph for
fiscal year 2007.
‘‘(B) SOURCE OF FUNDS FOR INCREASE.—
‘‘(i) IN GENERAL.—From the amounts
available for carrying out the single pro-
gram referred to in section 2609(d)(2)(C)
for a fiscal year (relating to supplemental
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grants), the Secretary shall make available
such amounts as may be necessary to com-
ply with subparagraph (A), subject to sec-
tion 2610(d)(2).
‘‘(ii) PRO
RATA
REDUCTION.—If the
amounts referred to in clause (i) for a fiscal
year are insufficient to fully comply with
subparagraph (A) for the year, the Sec-
retary, in order to provide the additional
funds necessary for such compliance, shall
reduce on a pro rata basis the amount of
each grant pursuant to this subsection for
the fiscal year, other than grants for eligible
areas for which increases under subpara-
graph (A) apply. A reduction under the
preceding sentence may not be made in an
amount that would result in the eligible
area involved becoming eligible for such an
increase.
‘‘(C) LIMITATION.—This paragraph may
not be construed as having any applicability
after fiscal year 2009.’’.
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SEC. 103. TYPE AND DISTRIBUTION OF GRANTS; SUPPLE-
MENTAL GRANTS.
Section 2603(b) of the Public Health Service Act (42
U.S.C. 300ff–13(b)) is amended—
(1) in paragraph (1)—
(A) in the matter preceding subparagraph
(A), by striking ‘‘Not later than’’ and all that
follows through ‘‘the Secretary shall’’ and insert-
ing 
the 
following: 
‘‘Subject 
to 
subsection
(a)(4)(B)(i) and section 2610(d), the Secretary
shall’’;
(B) in subparagraph (B), by striking ‘‘dem-
onstrates the severe need in such area’’ and in-
serting ‘‘demonstrates the need in such area, on
an objective and quantified basis,’’;
(C) by striking subparagraph (F) and in-
serting the following:
‘‘(F) demonstrates the inclusiveness of af-
fected communities and individuals with HIV/
AIDS;’’;
(D) in subparagraph (G), by striking the
period and inserting ‘‘; and’’; and
(E) by adding at the end the following:
‘‘(H) demonstrates the ability of the appli-
cant to expend funds efficiently by not having
had, for the most recent grant year under sub-