It is painful to read, mostly because it is written in bureaucratese. But from what I can gather, it looks like some members of Congress really tried to put into law different controls to ensure that US funds do not go towards terrorist groups - and other members (or the White House) pushed back to have veto power over almost every one of these controls.
So for example, in the first section quoted here, there are lots of limitations on funding any "State of Palestine" - and then there is a waiver for the President to determine that national security trumps it all.
(This may be standard with all foreign policy issues, but still...it seems to be, for example, the official reason why the US embassy is not moved to Jerusalem every year despite Congress passing the law mandating it.)
It looks like many of the controls are riddled with similar loopholes. For example, at the very end it seems to say that the US will not fund the PLO, This is silly because the PA reports to the PLO, even though it is not "part" of the PLO.
At the end there is a very interesting section on reducing aid by the amount that it is determined that the PA is paying terrorists in prison (or employees before they were killed while trying to kill Israelis.) But even that seems to have lots of wiggle room.
Anyway, here it is:
PALESTINIAN STATEHOOD
2 SEC. 7036. (a) LIMITATION ON ASSISTANCE.—None
3 of the funds appropriated under titles III through VI of
4 this Act may be provided to support a Palestinian state
5 unless the Secretary of State determines and certifies to
6 the appropriate congressional committees that—
7 (1) the governing entity of a new Palestinian
8 state—
9 (A) has demonstrated a firm commitment
10 to peaceful co-existence with the State of Israel;
11 and
12 (B) is taking appropriate measures to
13 counter terrorism and terrorist financing in the
14 West Bank and Gaza, including the dismantling
15 of terrorist infrastructures, and is cooperating
16 with appropriate Israeli and other appropriate
17 security organizations; and
18 (2) the Palestinian Authority (or the governing
19 entity of a new Palestinian state) is working with
20 other countries in the region to vigorously pursue ef-
21 forts to establish a just, lasting, and comprehensive
22 peace in the Middle East that will enable Israel and
23 an independent Palestinian state to exist within the
24 context of full and normal relationships, which
25 should include—
1 (A) termination of all claims or states of
2 belligerency;
3 (B) respect for and acknowledgment of the
4 sovereignty, territorial integrity, and political
5 independence of every state in the area through
6 measures including the establishment of demili-
7 tarized zones;
8 (C) their right to live in peace within se-
9 cure and recognized boundaries free from
10 threats or acts of force;
11 (D) freedom of navigation through inter-
12 national waterways in the area; and
13 (E) a framework for achieving a just set-
14 tlement of the refugee problem.
15 (b) SENSE OF CONGRESS.—It is the sense of Con-
16 gress that the governing entity should enact a constitution
17 assuring the rule of law, an independent judiciary, and
18 respect for human rights for its citizens, and should enact
19 other laws and regulations assuring transparent and ac-
20 countable governance.
21 (c) WAIVER.—The President may waive subsection
22 (a) if the President determines that it is important to the
23 national security interest of the United States to do so.
Lots more....