The new year promises no break in the stalemate over New York’s implementation of a sweeping new federal adoption law–even though the state could lose much of its federal child welfare money if it keeps stalling.

The federal Adoption and Safe Families Act (ASFA), which sailed through Congress in November, rewards states that make child protection a priority over reunifying kids with their birth parents.

But its New York impact depends on what Albany does. The state legislature was supposed to pass a companion law by January 1–or face a funding freeze. The federal government is giving states extra time, but New York Assembly and Senate sources say they are not even close to hatching an agreement.

Governor George Pataki plans to re-introduce a bill that would outdo ASFA by further speeding up the adoption process. Pataki’s bill-which passed the GOP- controlled state Senate last year-makes it easier to terminate parental rights. Under the measure, judges in neglect cases would be forced to remove children from all parents who already had a child removed.

The more family-friendly assembly bill, sponsored by Brooklyn Democrat Roger Green, includes incentives for family reunification and provisions that make it more difficult for the court to remove children from their birth parents. Negotiations over the law are slated to begin in the next few weeks.

Whichever bill passes, the federal law will apparently put Family Court cases on a tighter time-table. The law forces judges to terminate parental rights after a child spends 15 months in foster care; currently, birth parents have up to 22 months to prove they have improved before the courts consider taking kids away for good. “I think it’s going to put us under a certain amount of time and work pressure that doesn’t exist now,” said Manhattan Chief Judge Richard Ross.

But the law also has three big loopholes.

First, ASFA suspends the 15-month deadline in cases where children are placed with relatives. Second, the feds grant extensions to parents who can prove they haven’t had access to necessary services, like counseling, drug treatment or caseworker visits–very common problems.

Moreover, if the court finds that there is a “compelling reason” to keep a family together, it can keep foster care placements temporary for as long as necessary.

The feds leave the definition of “compelling” up to individual states. And there’s one sop to parents’ advocates: Neither the Pataki administration nor GOP senate leaders have sought to narrow any of those three loopholes.