[Federal Register Volume 75, Number 12 (Wednesday, January 20, 2010)]
[Rules and Regulations]
[Pages 3168-3170]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-882]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 21

RIN 2900-AN31


Vocational Rehabilitation and Employment Program--Self-Employment

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: This document amends the vocational rehabilitation and 
employment regulations of the Department of Veterans Affairs (VA) 
concerning self-employment for individuals with qualifying 
disabilities. We are making changes to conform VA's regulations for 
self-employment programs for veterans, and for servicemembers awaiting 
discharge, to statutory provisions, including provisions limiting 
eligibility for certain supplies, equipment, stock, and license fees to 
individuals with the most severe service-connected disabilities. We are 
also making related changes in VA's regulations affecting eligibility 
for such assistance for certain veterans' children with birth defects 
in self-employment programs. In addition, we are amending our 
regulations regarding the approval authority for self-employment plans 
to make certain requirements less restrictive and less burdensome, to 
remove a vague and overly broad requirement, to make changes to reflect 
longstanding VA policy, and to make nonsubstantive clarifying changes.

DATES: Effective Date: This final rule is effective February 19, 2010.
    Applicability Dates: Except as noted in the Supplementary 
Information section, this final rule applies to claims pending on or 
after February 19, 2010.

FOR FURTHER INFORMATION CONTACT: Alvin Bauman, Senior Policy Analyst, 
Vocational Rehabilitation and Employment Service (28), Veterans 
Benefits Administration, Department of Veterans Affairs, 810 Vermont 
Ave., NW., Washington, DC 20420, (202) 461-9613 (not a toll-free 
number).

SUPPLEMENTARY INFORMATION: In a document published in the Federal 
Register on April 28, 2009 (74 FR 19164), we proposed to amend VA's 
regulations concerning self-employment in 38 CFR part 21 that are 
applicable to benefits and services under 38 U.S.C. chapter 31, 
Training and Rehabilitation for Veterans with Service-Connected 
Disabilities, and 38 U.S.C. chapter 18, Benefits for Children of 
Vietnam Veterans and Certain Other Veterans. We provided a 60-day 
comment period that ended on June 29, 2009. We received comments from 
one individual in support of the proposed changes. Consequently, we 
make no changes based on the commenter's submission.
    The Veterans' Benefits Act of 1996, Public Law 104-275 (enacted 
October 9, 1996), amended 38 U.S.C. 3104(a)(12) regarding the special 
assistance and supplies that VA can provide for individuals pursuing 
self-employment programs. Prior to the enactment of Public Law 104-275, 
only ``the most severely disabled'' individuals who required self-
employment were, under 38 CFR 21.258, entitled to the special supplies, 
equipment, stock, and license fees described in 38 CFR 21.214(e). 
Public Law 104-275 amended 3104(a)(12) by restricting the provision of 
those special supplies, equipment, stock, and license fees to 
individuals ``with the most severe service-connected disabilities who 
require homebound training or self employment.'' VA implemented the 
statutory amendments upon enactment but until this rulemaking did not 
incorporate them in VA's regulations. This rule conforms VA's 
regulations to the statutory provisions and prescribes (in Sec.  21.257 
rather than current Sec.  21.258) criteria for providing such special 
supplies, equipment, stock, and license fees for individuals who 
require self-employment.
    We are revising some of the requirements under Sec.  21.254 
pertaining to a service-disabled veteran trained for self-employment 
under a State rehabilitation agency. We are eliminating the burdensome 
and restrictive requirement under Sec.  21.254 for certification by an 
official of the State rehabilitation agency with responsibility for 
administration of self-employment programs. Instead, we are listing the 
conditions under which an individual who has trained for self-
employment under a State rehabilitation agency may be provided special 
supplies, equipment, stock, and license fees if there is a VA 
determination that the qualifying criteria are met.
    In addition, we are eliminating the requirement currently in Sec.  
21.254 that, prior to authorization of any supplies, the Director, 
Vocational Rehabilitation and Education (VR&E) Service, must approve 
the request if the cost of supplies is more than $2,500.
    We are amending the criteria for approval of self-employment as a 
vocational goal for an individual. Current Sec.  21.257(a) is overly 
restrictive because it maintains that self-employment is only available 
to an individual if access to the normal channels for suitable 
employment is limited by his or her disability(ies). Current Sec.  
21.257(b) is vague because it does not specify what other circumstances 
in the individual's situation warrant consideration of self-employment. 
Self-employment as a mode of employment is authorized for all program 
participants for whom it is deemed appropriate for achieving 
rehabilitation. We are revising Sec.  21.257 to remove the above-
referenced restriction on authorizing self-employment as a suitable 
vocational goal and to limit consistent with the amendment to section 
3104(a)(12) the self-employment special assistance under 38 CFR 
21.214(e) to ``individuals with the most severe service-connected 
disability(ies) who require self-employment.''
    The approval requirement of costs related to self-employment 
programs is in accordance with 38 U.S.C. 3104(a)(12). We are amending 
Sec.  21.258 to reflect existing VA policy that requires approval of 
costs of the provision of special supplies, equipment, stock, and 
license fees for self-employment programs. Section 21.258 will require 
that a self-employment plan having an actual or estimated cost of 
$25,000 or more must be approved by the Director, VR&E Service.
    Many of the amendments to 38 CFR part 21, subpart A, in this final 
rule are

[[Page 3169]]

also applicable to the vocational rehabilitation program under 38 
U.S.C. chapter 18 regarding benefits for children of Vietnam veterans 
and certain other veterans (see 38 CFR part 21, subpart M). In subpart 
M, Sec. Sec.  21.8020, 21.8210, and 21.8380 provide for the 
applicability of Sec. Sec.  21.214, 21.254, 21.256, 21.257, 21.258, and 
21.430 in a manner comparable to their application for a veteran under 
the chapter 31 program. Accordingly, we are amending Sec.  21.8020 to 
clarify how we will apply Sec.  21.257 to the provision of services and 
assistance under subpart M in a manner that we consider to be 
comparable to its application for a veteran under the 38 U.S.C. chapter 
31 program. Under Sec.  21.8020, an individual who has been determined 
to have limitations affecting employability arising from the effects of 
the individual's spina bifida or other covered birth defects, which are 
so severe as to necessitate selection of self-employment as the only 
reasonably feasible vocational goal for the individual, will also be 
deemed to have met the requirements for application of Sec.  
21.257(e)(1) and (2). We are making a related clarifying change in 
Sec.  21.8020(d), intended to remove the possible implication that 
self-employment is not among the employment options for a participant's 
program under subpart M.
    This final rule conforms VA's regulations to the provisions of 38 
U.S.C. 3104(a)(12), as amended, and regarding those provisions is 
applicable to claims pending on or after the effective date of the 
amendments, October 9, 1996.
    For the reasons stated above and in the notice of proposed 
rulemaking, the proposed rule is adopted as a final rule without 
change.

Paperwork Reduction Act of 1995

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

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 the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any year. This rule will 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 Executive 
Order classifies a regulatory action as a ``significant regulatory 
action,'' requiring review by the Office of Management and Budget (OMB) 
unless OMB waives such review, if it is a regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this final rule have been examined and it has been 
determined not to be a significant regulatory action under Executive 
Order 12866.

Regulatory Flexibility Act

    The Secretary hereby certifies that this final rule 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. This final rule will not directly affect any small entities. Only 
individuals will be directly affected. Therefore, pursuant to 5 U.S.C. 
605(b), this final rule is exempt from the initial and final regulatory 
flexibility analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs that will be affected by this final rule are 64.116, 
Vocational Rehabilitation for Disabled Veterans; and 64.128, Vocational 
Training and Rehabilitation for Vietnam Veterans' Children with Spina 
Bifida or Other Covered Defects.

List of Subjects in 38 CFR Part 21

    Administrative practice and procedure, Armed forces, Civil rights, 
Claims, Colleges and universities, Conflict of interests, Education, 
Employment, Grant programs--education, Grant programs--veterans, Health 
care, Loan programs--education, Loan programs-veterans, Manpower 
training programs, Reporting and recordkeeping requirements, Schools, 
Travel and transportation expenses, Veterans, Vocational education, 
Vocational rehabilitation.

    Approved: December 30, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.

0
For the reasons set forth in the preamble, VA amends 38 CFR part 21 
(subparts A and M) as follows:

PART 21--VOCATIONAL REHABILITATION AND EDUCATION

Subpart A--Vocational Rehabilitation and Employment Under 38 U.S.C. 
Chapter 31

0
1. Revise the authority citation for part 21, subpart A to read as 
follows:

    Authority:  38 U.S.C. 501(a), chs. 18, 31, and as noted in 
specific sections.


0
2. Revise the subpart A heading as set forth above.


0
3. Amend Sec.  21.214 by:
0
a. In paragraph (e) introductory text, removing ``services'' and 
adding, in its place, ``related assistance'' and removing ``Sec.  
21.258'' and adding, in its place, ``Sec. Sec.  21.257 and 21.258''.
0
b. In paragraph (e)(3), removing ``incidental services'' and adding, in 
its place, ``related assistance''.
0
c. Revising the authority citation for paragraph (e).
    The revision reads as follows:


Sec.  21.214  Furnishing supplies for special programs.

* * * * *

(Authority: 38 U.S.C. 3104(a)(12))

* * * * *


0
4. In Sec.  21.254, revise paragraph (c) to read as follows:


Sec.  21.254  Supportive services.

* * * * *
    (c) Individuals with service-connected disability(ies) trained for 
self-employment under a State rehabilitation agency. An individual with 
service-connected disability(ies) who has trained for self-employment 
under a State rehabilitation agency may be provided supplemental 
equipment and initial stocks and supplies similar

[[Page 3170]]

to the materials supplied under 38 U.S.C. chapter 31 to individuals 
with the most severe service-connected disability(ies) who require 
self-employment as defined in Sec.  21.257(b) if VA determines that the 
following conditions are met:
    (1) The individual is eligible for employment assistance under the 
provisions of Sec.  21.47;
    (2) Evidence of record indicates that the individual has 
successfully completed training for a self-employment program under a 
State rehabilitation agency;
    (3) No other non-VA sources of assistance are known to be available 
for the individual to complete his or her self-employment program; and
    (4) The individual meets the requirements of the definition in 
Sec.  21.257(b).

(Authority: 38 U.S.C. 3104, 3117(b)(2))



0
5. Revise Sec.  21.257 to read as follows:


Sec.  21.257  Self-employment.

    (a) Approval of self-employment as a vocational goal. A program of 
vocational rehabilitation benefits and services may include self-
employment for an individual if VA determines that such an objective is 
a suitable vocational goal. VA will make this determination based on--
    (1) The results of the individual's initial evaluation conducted in 
accordance with the provisions of Sec.  21.50; and
    (2) The provisions of this section.

(Authority: 38 U.S.C. 3104(a))


    (b) Definition. For purposes of this subpart, individuals with the 
most severe service-connected disability(ies) who require self-
employment means individuals who have been determined by VA to have 
limitations affecting employability arising from the effects of each 
individual's service-connected disability(ies), which are so severe as 
to necessitate selection of self-employment as the only reasonably 
feasible vocational goal for the individuals.

(Authority: 38 U.S.C. 3104)


    (c) Scope of self-employment benefits and services.
    (1) VA may provide the self-employment services listed in paragraph 
(d) of this section to program participants who are pursuing the 
vocational goal of self-employment.
    (2) VA may provide the more extensive services listed in paragraph 
(e) of this section to individuals with the most severe service-
connected disability(ies) who require self-employment.

(Authority: 38 U.S.C. 3104(a))


    (d) Assistance for other individuals in self-employment. Subject to 
the provisions of Sec.  21.258, VA may provide the following assistance 
to any individual for whom self-employment is determined to be a 
suitable vocational goal--
    (1) Vocational training;
    (2) Incidental training in the management of a business;
    (3) License or other fees required for self-employment;
    (4) Necessary tools and supplies for the occupation; and
    (5) Services described in Sec.  21.252.


(Authority: 38 U.S.C. 3104(a))


    (e) Special self-employment services for individuals with the most 
severe service-connected disability(ies) who require self-employment. 
Individuals described in paragraph (b) of this section who are in a 
self-employment program may receive--
    (1) The services described in paragraph (d) of this section; and
    (2) The assistance described in Sec.  21.214.

(Authority: 38 U.S.C. 3104, 3116, 3117)


    (f) Feasibility analysis of a proposed self-employment business 
plan. VA will conduct a comprehensive review and analysis of the 
feasibility of a proposed business plan, as submitted by the individual 
or developed with VA's assistance, prior to authorizing a 
rehabilitation plan leading to self-employment (a ``self-employment 
plan''). The feasibility analysis must include--
    (1) An analysis of the economic viability of the proposed business;
    (2) A cost analysis specifying the amount and types of assistance 
that VA will provide;
    (3) A market analysis for the individual's proposed services or 
products;
    (4) Availability of financing from non-VA sources, including the 
individual's personal resources, local banks, and other sources;
    (5) Evidence of coordination with the Small Business Administration 
to secure special consideration under section 8 of the Small Business 
Act, as amended;
    (6) The location of the site for the proposed business and the cost 
of the site, if any; and
    (7) A training plan to operate a successful business.

(Authority: 38 U.S.C. 3104)



0
6. Section 21.258 is revised to read as follows:


Sec.  21.258  Cost limitations on approval of self-employment plans.

    A self-employment plan with an estimated or actual cost of less 
than $25,000 may be approved by the VR&E Officer with jurisdiction. Any 
self-employment plan with an estimated or actual cost of $25,000 or 
more must be approved by the Director, VR&E Service.

(Authority: 38 U.S.C. 3104)

Subpart M--Vocational Training and Rehabilitation for Certain 
Children of Vietnam Veterans--Spina Bifida and Covered Birth 
Defects

0
7. The authority citation for part 21, subpart M continues to read as 
follows:

    Authority:  38 U.S.C. 101, 501, 512, 1151 note, ch. 18, 5112, 
and as noted in specific sections.


0
8. Amend Sec.  21.8020 by:
0
a. Revising paragraph (b).
0
b. In paragraph (d), removing ``obtains a suitable job'' and adding, in 
its place, ``becomes suitably employed''.
    The revision reads as follows:


Sec.  21.8020  Entitlement to vocational training and employment 
assistance.

* * * * *
    (b) Services and assistance. An eligible child may receive the 
services and assistance described in Sec.  21.8050(a).
    (1) The following sections in subpart A of this part apply to the 
provision of these services and assistance in a manner comparable to 
their application for a veteran under the 38 U.S.C. chapter 31 program:
    (i) Section 21.250(a) and (b)(2);
    (ii) Section 21.252;
    (iii) Section 21.254;
    (iv) Section 21.256 (not including paragraph (e)(2));
    (v) Section 21.257; and
    (vi) Section 21.258.
    (2) For purposes of this subpart, the requirements for application 
of Sec.  21.257(e)(1) and (2) are deemed met for an individual in a 
self-employment program regardless of whether the individual is 
described in Sec.  21.257(b), if the individual has been determined by 
VA to have limitations affecting employability arising from the effects 
of the individual's spina bifida and/or other covered birth defect(s) 
which are so severe as to necessitate selection of self-employment as 
the only reasonably feasible vocational goal for the individual.

(Authority: 38 U.S.C. 1804, 1814)

* * * * *

[FR Doc. 2010-882 Filed 1-19-10; 8:45 am]
BILLING CODE 8320-01-P