(a) No, the State may not reduce or terminate assistance based on an individual's refusal to engage in required work if the individual is a single custodial parent caring for a child under age six who has a demonstrated inability to obtain needed child care, as specified at §261.56.

(b) A State that fails to comply with the penalty exception at section 407(e)(2) of the Act and the requirements at §261.56 may be subject to the State penalty specified at §261.57.