If the Secretary determines that a State is not eligible to receive part or all of the funds to which it is otherwise entitled for programs under section 2662(a) and (b) of this title because of a failure to comply with regulations issued by the Secretary under this subchapter, the facts and reasons therefor shall be reported to the President, and the amount involved shall be kept separate in the Treasury until the expiration of the Congress next succeeding the session of the legislature of the State from which funds have been withheld in order that the State may, if it should so desire, appeal to Congress from the determination of the Secretary. If the next Congress shall not direct such sum to be paid, it shall be covered into the Treasury. If any portion of the moneys that are received by the designated officers of any State for the support and maintenance of programs authorized under this subchapter shall by any action or contingency be diminished or lost, or be misapplied, it shall be replaced by the State.