[Federal Register Volume 71, Number 155 (Friday, August 11, 2006)]
[Rules and Regulations]
[Pages 46103-46105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-13153]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 59

RIN 2900-AM42


Priority for Partial Grants to States for Construction or 
Acquisition of State Home Facilities

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: This document amends the Department of Veterans Affairs (VA) 
regulations regarding grants to States for construction or acquisition 
of State homes. This amendment is necessary to ensure that projects 
designed to remedy conditions at an existing State home that have been 
cited as threatening to the lives or safety of the residents receive 
priority for receiving VA grants in the future (including in fiscal 
year 2007).

DATES: Effective Date: This interim final rule is effective August 11, 
2006. Comments must be received on or before October 10, 2006.

ADDRESSES: Written comments may be submitted by: mail or hand-delivery 
to Director, Regulations Management (00REG1), Department of Veterans 
Affairs, 810 Vermont Ave., NW., Room 1068, Washington, DC 20042; fax to 
(202) 273-9026; or e-mail through http://www.Regulations.gov. Comments 
should indicate that they are submitted in response to ``RIN 2900-
AM42.'' All comments received will be available for public inspection 
in the Office of Regulations Management, Room 1063B, between the hours 
of 8 a.m. and 4:30 p.m., Monday through Friday (except holidays). 
Please call (202) 273-9515 for an appointment.

FOR FURTHER INFORMATION CONTACT: Frank Salvas, Chief, State Home 
Construction Grant Program (114), Veterans Health Administration, 
Department of Veterans Affairs, 810 Vermont Ave., NW., Washington, DC 
20420, 202-273-8534.

SUPPLEMENTARY INFORMATION: Congress has authorized VA to provide grants 
to States for the construction and acquisition of State homes for the 
care of veterans. See 38 U.S.C. 8131-8137. The law mandates that VA use 
certain priorities in establishing a list of approved projects to 
receive funding. VA has used these priorities to establish the priority 
and subpriority groups that are set forth in 38 CFR 59.50. For 
instance, the top priority group is for projects from States that have 
made sufficient funds available for their projects. That group is 
divided into six sub-groups, which are (in order of priority): (1) 
Projects to remedy conditions found to threaten the lives or safety of 
patients (i.e., life safety projects that may include, for example, 
seismic concerns, egress, smoke barriers and fire walls, fire alarm and 
detection, or asbestos and other hazardous materials), (2) projects 
from States that have not previously applied for the construction or 
acquisition of a State nursing home, (3) projects from States that have 
a great need for new State home beds, (4) other projects for the 
renovation of a State home, (5) projects from States that have a 
significant need for new State home beds, and (6) projects from States 
that have a limited need for new State home beds.
    Sometimes, States with higher-ranking applications within the top 
priority group deplete the available funding to the extent that VA is 
able to offer the State with the lowest-ranking application (for which 
grant funds are available) only a partial grant. Currently, 38 CFR 
59.50(b) provides that if a State accepts a partial grant in a given 
fiscal year, that State's project will have the highest priority for 
funding in the next fiscal year. This provision was promulgated 
originally because States were hesitant to accept a partial grant if 
there was uncertainty of receiving sufficient grant funding in the next 
fiscal year. The existing regulation encourages States to accept a 
partial grant by giving them the highest priority for appropriated 
grant funds in the subsequent fiscal year. Without receiving the 
highest priority for appropriated grant funds, States offered a partial 
grant would likely turn it down, and the money would go to lower-
priority projects.
    VA foresees that the regulatory provision granting the highest 
priority for appropriated funds in the subsequent fiscal year to States 
accepting partial grants may render VA unable to meet its statutory 
obligations for prioritizing grant applications, especially for giving 
top priority to life safety projects. A revision is needed immediately 
due to the pendency of one large construction project from a State with 
``great'' need which is in line to receive a partial grant this year 
and which would otherwise then consume all the funding expected for 
grants during fiscal year (FY) 2007. This would result in no available 
funds for grants for life safety projects during FY 2007, contrary to 
the statutory priority that is to be given those projects.
    This rule changes the priority that a project receiving a partial 
grant may receive during the next fiscal year. Rather than receiving 
highest priority in the next fiscal year, a project receiving a partial 
grant would receive highest priority only with respect to 30 percent of 
the funds actually appropriated for grants. In other words, such a 
project would qualify to receive no more than 30 percent of the funds 
appropriated for this purpose. The partial-grant project could receive 
more funding but would have to compete for it without the advantage of 
any special priority. For example, a State seeking a grant for $160 
million that has received a partial grant of $70 million in the 2006 
fiscal year would qualify to receive up to 30 percent of the funds 
available to VA for the award of State home grants during FY 2007. If 
VA has $85 million available for State home grants for FY 2007, the 
partial-grant State would receive 30 percent of that amount ($25.5 
million)

[[Page 46104]]

because of its highest priority as a partial-grant recipient. If the 
partial-grant recipient also ranks number 15 on the priority list with 
respect to the rest of the 70 percent of available funds, and the 
higher-ranked applicants seek only $45.5 million, the partial-grant 
recipient would be awarded an additional $14 million for a total of 
$39.5 million. This rule provides VA with the flexibility to set aside 
at least 70 percent of the grant funds for life safety projects 
consistent with the priority for such projects mandated by Congress. 
Based on past experience and our best estimates, we anticipate a 70-
percent allocation would provide sufficient funds to cover anticipated 
life safety projects in FY 2007 and subsequent years. Life safety 
projects used 10 percent of available funds in FY 2004 and 5 percent of 
available funds in FY 2005, and will use about 34 percent of available 
funds in FY 2006. However, based on existing and recent life safety 
applications, and indications from States that more such applications 
will be submitted, we estimate that the demand for life safety projects 
in FY 2007 may require up to 70 percent of the available funds. At the 
same time, we believe a 30-percent allocation to partial-grant 
recipients in the following year will provide some incentive for States 
to accept a partial grant.
    It is possible that there may be more than one partial-grant 
recipient in a given fiscal year. In the above example, another higher-
priority applicant seeking a $25 million grant could receive the 
remaining $14 million from the 70 percent of the funds as a partial 
grant. Under this regulation, this partial-grant recipient would also 
receive priority over all other applicants for up to 30 percent of the 
funding that would be set aside for partial-grant recipients during the 
next fiscal year. To address this possibility, this regulation further 
prioritizes the partial-grant recipients on the priority list for the 
next fiscal year based on the date that VA first awarded a partial 
grant for the projects (the earlier the grant was awarded, the higher 
the priority given).

Administrative Procedure Act

    In accordance with 5 U.S.C. 553(b)(3)(B), the Secretary of Veterans 
Affairs finds that there is good cause to dispense with the opportunity 
for prior comment with respect to this rule. The Secretary finds that 
it is impracticable, unnecessary, and contrary to the public interest 
to delay this regulation for the purpose of soliciting prior public 
comment. This action is consistent with the priorities established by 
Congress and is needed on an expedited basis because the current 
regulation may preclude VA from funding life safety projects during FY 
2007. While it is important to give States receiving partial grants 
priority for continued funding, these regulations need to recognize the 
other priorities for awarding State home grants including the top 
priority for projects that protect the lives and safety of veterans 
residing in existing State homes. For the foregoing reasons, the 
Secretary of Veterans Affairs is issuing this rule as an interim final 
rule.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in an expenditure by 
the State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any given year. This amendment would have no such effect 
on State, local, and tribal governments, or on the private sector.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Order 
classifies a rule as a significant regulatory action requiring review 
by the Office of Management and Budget if it meets any one of a number 
of specified conditions, including having an annual effect on the 
economy of $100 million or more; creating a serious inconsistency or 
interfering with an action of another agency; materially altering the 
budgetary impact of entitlements or the rights of entitlement 
recipients, or raising novel legal or policy issues. VA has examined 
the economic, legal, and policy implications of this interim final rule 
and has concluded that it is a significant regulatory action because it 
raises novel policy issues.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601-612. The rule will affect grants to States and will not 
directly affect small entities. Therefore, pursuant to 5 U.S.C. 605(b), 
this amendment is exempt from the initial and final regulatory 
flexibility analyses requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance program number and title 
for this rule are as follows: 64.005, Grants to States for Construction 
of State Home Facilities.

List of Subjects in 38 CFR Part 59

    Administrative practice and procedure; Alcohol abuse; Alcoholism; 
Claims; Day care; Dental health; Drug abuse; Foreign relations; 
Government contracts; Grant programs-health; Grant programs-veterans; 
Health care; Health facilities; Health professions; Health records; 
Homeless; Medical and dental schools; Medical devices; Medical 
research; Mental health programs; Nursing homes; Reporting and 
Recordkeeping requirements; Travel and transportation expenses, 
Veterans.

    Approved: June 23, 2006
R. James Nicholson,
Secretary of Veterans Affairs.

0
For the reasons stated above, the Department of Veterans Affairs amends 
38 CFR part 59 as follows:

PART 59--GRANTS TO STATES FOR CONSTRUCTION OR ACQUISITION OF STATE 
HOMES

0
1. The authority citation for part 59 continues to read as follows:

    Authority: 38 U.S.C. 101, 501, 1710, 1742, 8105, 8131-8137.


0
2. Amend Sec.  59.50 by revising paragraph (b) to read as follows:


Sec.  59.50  Priority List.

* * * * *
    (b)(1) If a State accepts a partial grant for a project under Sec.  
59.80(a)(2), VA will give that project the highest priority for the 
next fiscal year within the priority group to which it is assigned 
(without further prioritization of that priority group) to receive up 
to 30 percent of the funds available for that year. Funds available do 
not include funds conditionally obligated in the previous fiscal year 
under Sec.  59.70(a)(2).
    (2) If, in a given fiscal year, more than one State previously 
accepted a partial grant under Sec.  59.80(a)(2), these partial-grant 
recipients will be further prioritized on the priority list for that 
fiscal year based on the date that VA

[[Page 46105]]

first awarded a partial grant for the project (the earlier the grant 
was awarded, the higher the priority given). The partial-grant 
recipients, in aggregate, may receive up to 30 percent of the funds 
available for that year that would be set aside for partial-grant 
recipients.
* * * * *

 [FR Doc. E6-13153 Filed 8-10-06; 8:45 am]
BILLING CODE 8320-01-P