[Federal Register Volume 78, Number 63 (Tuesday, April 2, 2013)]
[Rules and Regulations]
[Pages 19586-19596]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07636]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 17

RIN 2900-AO01


Grants for Transportation of Veterans in Highly Rural Areas

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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SUMMARY: The Department of Veterans Affairs (VA) amends its regulations 
to establish a new program to provide grants to eligible entities to 
assist veterans in highly rural areas through innovative transportation 
services to travel to VA medical centers, and to otherwise assist in 
providing transportation services in connection with the provision of 
VA medical care to these veterans, in compliance with section 307 of 
title III of the Caregivers and Veterans Omnibus Health Services Act of 
2010. This final rule establishes procedures for evaluating grant 
applications under the new grant program, and otherwise administering 
the new grant program.

DATES: Effective date: This rule is effective May 2, 2013.

FOR FURTHER INFORMATION CONTACT: David Riley, Director, Veterans 
Transportation Service, Chief Business Office (10NB), Veterans Health 
Administration, Department of Veterans Affairs, 2957 Clairmont Road, 
Atlanta, GA 30329, (404) 828-5601. (This is not a toll-free number.)

SUPPLEMENTARY INFORMATION: On December 30, 2011, VA published in the 
Federal Register (76 FR 82212) a proposal to amend VA regulations to 
establish a grant program to provide innovative transportation options 
to veterans in highly rural areas, to comply with section 307 of title 
III of the Caregivers and Veterans Omnibus Health Services Act of 2010, 
Public Law 111-163. Subsection (a) of section 307 mandates that VA 
award grants to only State veterans service agencies (SVSAs) and 
Veterans Service Organization (VSOs) to assist veterans in highly rural 
areas to travel to VA medical centers, and to otherwise assist in 
providing transportation in connection with the provision of VA medical 
care to these veterans. This final rule establishes the grant program 
in accordance with subsection (a) of section 307, and establishes 
procedures for evaluating grant applications and otherwise 
administering the grant program in accordance with subsection (b) of 
section 307.
    Interested persons were invited to submit comments to the proposed 
rule on or before February 28, 2012, and we received 17 comments. All 
of the issues raised by the commenters can be grouped together by 
similar topic, and we have organized our discussion of the comments 
accordingly. For the reasons set forth in the proposed rule and below, 
we are adopting the proposed rule as final, with changes to Sec. Sec.  
17.701, 17.703, 17.705, 17.715, and 17.725 and the authority citations 
following the regulations in this rulemaking.

Comments Regarding the Limitation on Entities That Are Eligible To 
Receive Grants

    Multiple commenters objected to the proposed rule's limitation that 
only VSOs and SVSAs may receive grants. These commenters contended that 
this limitation would block many existing transportation providers from 
receiving grants to expand current veterans' transportation services, 
to the detriment of veterans generally. Commenters asserted that making 
grants available to any existing transportation provider would ensure 
that grants would be used more effectively because VSOs and SVSAs that 
receive grants would only be duplicating transportation services 
already offered to veterans by existing providers, and because VSOs and 
SVSAs do not have the expertise of existing transportation providers to 
access a particular area or transport that area's veterans. We make no 
changes to the rule based on these comments, because grantees are 
limited by section 307 to VSOs and SVSAs. Subsection (a)(2) of section 
307 identifies as eligible grant recipients ``State veterans service 
agencies'' and ``Veterans service organizations.'' Subsection (a)(3) of 
section 307 further states that ``[a] State veterans service agency or 
veterans service organization'' may use grant funds for specified 
purposes. We interpret this statutory language to bar VA from awarding 
grants to any entity other than a VSO or SVSA.
    To more specifically address commenter concerns regarding 
duplicated services and lack of grantee expertise, we note that most 
commenters seemed to assume that VSOs and SVSAs that receive grants 
would not themselves be existing transportation providers. However, we 
know of several VSOs and SVSAs that provide transportation services. 
Moreover, the rule contains scoring criteria to reward coordination 
between grantees and other transportation providers (including existing 
providers that may not qualify to receive grants), and rewarding this 
type of coordination assists in addressing the general concerns of 
duplicated services and lack of grantee expertise. See Sec.  
17.705(a)(3). Discussion of these coordination criteria, as well as 
discussion of why VSOs and SVSAs would not merely be duplicating 
existing transportation services, are provided in greater detail in the 
next section of this document. Generally, grantees may use grants to 
expand or augment the transportation services offered by transportation 
providers that may not qualify as grantees under the rule, or otherwise 
may use such entities to provide the transportation assistance that is 
established in a grantee's program, as long as all other criteria of 
the rule are met.
    One commenter specifically asserted that section 307 could be 
interpreted in an ``innovative'' manner to allow a grant award to an 
organization such as a county-level agency within a State that is 
delegated responsibilities to serve veterans by an SVSA, based on the 
following language from section 307: ``The Secretary of Veterans 
Affairs shall establish a grant program to provide innovative 
transportation options to veterans in highly rural areas.'' Public Law 
111-163, sec. 307(a)(1). We interpret the term ``innovative'' in 
section 307(a)(1), however, only as a modifier to describe the types of 
transportation options that may be provided to veterans in highly rural 
areas. We do not interpret the term as having any effect regarding the 
two defined eligible entities that may receive grants under section 
307. The plain meaning of a ``State veterans service agency'' considers 
only State-level entities, and not a county agency within a State. 
However, under the same rationale provided above, this rule does not 
prevent an SVSA from using grant funds to administer transportation 
assistance through a county-level agency to carry out the objectives of 
the SVSA's grant application.

[[Page 19587]]

    One commenter additionally stated that the rule should specifically 
permit non-profit organizations to apply for and receive grants. We 
reiterate that only VSOs and SVSAs may apply for and receive grants 
under section 307, but note that a majority of VSOs function as non-
profit entities.

Comments Regarding Permitting Grantee Coordination With Entities That 
Are Not Eligible To Receive Grants

    In conjunction with the comments objecting to limiting the grant 
recipients to VSOs and SVSAs, several commenters stated that the rule 
should permit, or even mandate, grantee coordination with entities that 
are not eligible to receive grants, primarily coordination with 
existing community transportation providers. Commenters argued that 
such coordination would prevent duplication of transportation services 
and ensure that experienced existing providers would be utilized, 
thereby maximizing the efficient provision of transportation services 
to veterans. As discussed above, nothing in the rule prevents a grantee 
from coordinating services with entities that are not eligible to 
receive grants, including other transportation providers. Generally, 
grantees may use grants to expand or augment the transportation 
services offered by entities that do not qualify as grantees under the 
rule, or otherwise may use such entities to provide the transportation 
assistance that is established in a grantee's program, as long as all 
other criteria of the rule are met. In fact, scoring criteria in Sec.  
17.705(a)(3) encourage and reward coordination with existing 
transportation providers, by permitting up to 20 additional points to 
be awarded for an application that shows such coordination.
    Although the proposed rule did not prohibit grantees from using 
grant funds to administer grant programs through other entity types, we 
recognize that several commenters seemed to misunderstand this point. 
Therefore, we make clarifying changes to Sec. Sec.  17.701, 17.703, 
17.705, and 17.715. First, we are adding to Sec.  17.701 a definition 
of ``subrecipient'' to refer to ``an entity that receives grant funds 
from a grantee to perform work for the grantee in the administration of 
all or part of the grantee's program.'' We believe ``subrecipient'' 
clearly covers all entity types that are not eligible to receive grants 
but that nonetheless may receive grant funds from grantees to 
administer all or part of the grantees' programs. One commenter noted 
that this rule should permit ``subcontracting'' relationships to 
achieve this same end; the revision to include consideration of 
``subrecipient'' relationships covers subcontracted relationships 
between grantees and other entities.
    Second, Sec. Sec.  17.703, 17.705, and 17.715 are revised to 
clarify that subrecipients as defined in Sec.  17.701 may receive grant 
funds from grantees; to ensure that subrecipients are identified in 
grant applications and grant agreements as applicable for application 
scoring and grant award purposes; and to make any identified 
subrecipients subject to the same standards as a grantee under this 
rule. We note that under applicable regulations that control grant 
agreements between VA and other entities, subrecipients of grant funds 
may be subject to certain standards under 38 CFR parts 43 and 49. See 
38 CFR 43.37 and 38 CFR 49.5. A new paragraph (d) is added to Sec.  
17.703 as proposed to permit grantees to provide grant funds to other 
entities, if such entities are identified as subrecipients in grant 
applications to perform work for grantees in the administration of all 
or part of grantees' programs. The language ``or identified 
subrecipient'' is added to paragraphs (a)(1)(i), (c)(1)(i), (c)(1)(ii), 
and (c)(2)(i) of Sec.  17.705, related to grant application scoring and 
grant selection procedures. Paragraph (a)(2) of Sec.  17.715 as 
proposed is redesignated to paragraph (a)(3), and a new paragraph 
(a)(2) is added to Sec.  17.715 as proposed to ensure that if a 
subrecipient is identified in the grant application, such subrecipient 
must operate the program in accordance with the provisions of this 
section and the grant application. The language ``or identified 
subrecipient'' is added to Sec.  17.715(a)(3)(i) and (ii), related to 
specific requirements when grant funds are used to procure or operate 
vehicles. The language ``and identified subrecipients'' is added to 
paragraphs (b), (b)(1), and (b)(2) of Sec.  17.715 as proposed, related 
to additional requirements for VA grants.

Comments Regarding Mandating Grantee Coordination With Entities That 
Are Not Eligible To Receive Grants

    We generally agree with commenters that asserted that coordination 
between grantees and other transportation providers may create more 
efficient programs. For instance, a grantee partnering with an existing 
transportation provider to augment or expand the services of that 
provider could allow for the relatively small amount of funds issued 
per grant to be used as effectively as possible. As an example, such 
partnering may preclude the need for a grantee to acquire a fleet of 
vehicles. Additionally, grantee coordination with existing 
transportation providers may assist grantees in developing relevant 
expertise in the provision of transportation services to a particular 
area and for that area's veterans, if grantees do not already have such 
experience. However, we do not believe the rule should mandate grantee 
coordination with any other transportation provider because such a 
mandate could also ultimately restrict grantees in the planning and 
administration of their own programs in accordance with the criteria of 
section 307. For instance, grantee programs under section 307 must be 
focused on the provision of transportation assistance to veterans in 
connection with the receipt of medical care, and forced coordination 
between a grantee and an existing transportation provider could divert 
grant resources to the transportation of non-veterans or for purposes 
other than the receipt of medical care. For example, some of the 
existing transportation providers described by commenters regularly 
provide transportation services in a broader context and to a broader 
population of participants than permitted under section 307.
    A primary reason put forth by commenters in support of mandatory 
coordination was that VSOs and SVSAs might use grant funds to duplicate 
services that already exist, and mandatory coordination would maximize 
efficiency of such existing programs instead of creating new, 
potentially redundant programs. We believe this assertion as advanced 
by commenters assumes that all VSOs and SVSAs seeking grant funds would 
not themselves already be transportation providers. However, as stated 
above, we know of several VSOs and SVSAs that offer transportation 
services, so mandatory coordination with other transportation providers 
would not be necessary for these grantees. In addition, commenters' 
insistence on mandatory coordination could apply only in areas that 
already receive transportation services. The rule's very restrictive 
population requirement for ``highly rural areas,'' however, ensures 
that only the most sparsely populated areas may receive grants. By 
virtue of their lower population rate, these areas tend to have the 
least developed community resources, and therefore are not likely 
serviced by existing transportation providers. To this point, 
commenters who offered examples of existing

[[Page 19588]]

transportation services that would be duplicated by VSOs and SVSAs did 
not assert that such duplication would occur in areas consisting of a 
county or counties with less than seven people per square mile, as 
required by section 307 and this rule. Instead, commenters offered many 
examples of merely rural but not ``highly'' rural areas where 
duplication would occur if VSOs and SVSAs were to provide additional 
transportation services via grants awarded under this rule.
    It should also not be assumed that VSOs and SVSAs will merely 
duplicate the services of existing transportation providers because 
VSOs and SVSAs will be required to provide transportation for the 
specific, restricted purpose of increasing veteran access to medical 
care, and not for the more general purpose of improving the access of a 
community at large to services that may include medical care. Indeed, 
commenters who asserted that existing transportation services would be 
duplicated by VSOs and SVSAs did not also assert that these existing 
services were only for veterans and only in connection with the 
provision of VA medical care; rather, these commenters provided 
examples of existing transportation providers that transported non-
veterans as well as veterans, and for purposes other than to receive 
medical care.
    Some commenters argued that grantee coordination with existing 
transportation groups should be mandatory because such coordination is 
required under Executive Order 13330, Human Service Transportation 
Coordination. Executive Order 13330 mandates coordination efforts 
between certain Federal agencies, including VA, and community 
transportation systems ``to enhance access to transportation to improve 
mobility, employment opportunities, and access to community services 
for persons who are transportation-disadvantaged.'' 69 FR 9185 (Feb. 
26, 2004). One commenter provided a copy of a VA Information Letter 10-
2007-006, dated March 2, 2007, which states that pursuant to Executive 
Order 13330, VA, as part of a Federal Interagency Transportation 
Coordinating Council on Access and Mobility, adopted a policy statement 
that resolved as follows:

    Federally-assisted grantees that have significant involvement in 
providing resources and engage in transportation delivery should 
participate in a local coordinated human services transportation 
planning process and develop plans to achieve the objectives to 
reduce duplication, increase service efficiency and expand access 
for the transportation-disadvantaged populations as stated in 
Executive Order 13330.

Although we recognize the enforceability of an Executive Order as law, 
as well as VA's resolution to follow Executive Order 13330 as 
referenced above, this rulemaking is controlled by section 307, which 
is a separate legislative mandate to which Executive Order 13330, which 
establishes an interagency coordinating council on transportation 
issues, does not apply. Additionally, the purposes of Executive Order 
13330 and section 307 are so dissimilar that Executive Order 13330 
should not be interpreted as relevant to the implementation of section 
307. For instance, Executive Order 13330 seeks to ``improve mobility, 
employment opportunities, and access to community services'' for 
certain persons, which is a much different scope for transportation 
services than to provide transportation assistance for veterans living 
in highly rural areas to receive VA medical care, as authorized by 
section 307. See Public Law 111-163, Sec.  307(a)(3) (setting forth 
that grant funds are to be used to ``assist veterans in highly rural 
areas to travel to Department of Veterans Affairs medical centers'' and 
``otherwise assist in providing transportation in connection with the 
provision of medical care to veterans in highly rural areas''). The 
population of individuals to be assisted by Executive Order 13330 is 
also different than the specific veteran population intended to be 
assisted by section 307, as Executive Order 13330 mandates coordination 
to support ``persons who qualify for Federally conducted or Federally 
assisted transportation-related programs or services due to disability, 
income, or advanced age.'' 69 FR 9185 (Feb. 26, 2004). Assuming for the 
sake of argument the applicability of Executive Order 13330 to this 
grant program, the Executive Order could be read to apply irrelevant 
criteria, requiring veteran participants to have a disability, have a 
lower income, or be of an advanced age. Nothing in section 307 imposes 
any such requirements on veteran-participants. For these reasons, we do 
not find Executive Order 13330 relevant to this rulemaking and do not 
make any changes based on these comments.

Comments Regarding Use of Grants Exclusively To Augment or Expand 
Existing Transportation Services

    Multiple commenters noted that grant funds would be best used if 
they were only permitted to supplement or augment the services offered 
by existing transportation providers, and that grant funds should not 
be used to create any new transportation services. We reiterate that 
while coordination with existing transportation providers is 
encouraged, grants may only be awarded to VSOs and SVSAs, and the rule 
will not restrict any grantee from using grant funds to initiate 
transportation services in accordance with the rule's criteria.
    In particular, one commenter stated that grant funds would be best 
used to increase the use of technology to make existing transportation 
services more easily accessible for veterans, and to ensure these 
services were provided as efficiently as possible. One example of such 
technology as provided by the commenter was using grant funds to 
establish a ``one call'' center to centralize transportation requests 
and dispatch transportation services of existing providers. We make no 
changes based on this comment. Grants may be used to supplement or 
expand existing technology or create new technology that assists with 
the delivery of transportation services, versus actually transporting 
veterans. We reiterate from the proposed rule that section 307 supports 
awarding grants for programs that may not directly transport veterans, 
as subsections (a)(3)(A) and (a)(3)(B) of section 307 make clear that 
an eligible entity may use grant funds to ``assist'' veterans to travel 
to obtain VA medical care, or to otherwise ``assist'' in providing 
transportation in connection with the provision of care to a veteran. 
Accordingly, the rule defines ``transportation services'' to mean ``the 
direct provision of transportation, or assistance with providing 
transportation, to travel to VA medical centers and other VA or non-VA 
facilities in connection with the provision of VA medical care.''
    A few commenters asserted that the money that is authorized to be 
appropriated in subsection (d) of section 307 for VA to administer this 
grant program should be utilized instead to supplement or expand 
existing VA transportation programs. Specifically, one commenter stated 
that no data existed to support using funds for this grant program 
rather than supplementing other existing VA programs, and called on VA 
to use funds designated in subsection (d) of section 307 to increase 
fleet vehicles and staffing levels in the Veterans Transportation 
Service (VTS), and to supplement monetary benefits certain veterans may 
receive under the VA Beneficiary Travel Program. We make no changes 
based on these comments, as the grant program objectives have been 
defined by Congress and VA is not an authorized recipient of grant 
funds

[[Page 19589]]

under section 307. In response to another commenter, it is for this 
same reason that VA may not use funds to be appropriated under section 
307 to expand transportation-specific needs in non-transportation VA 
programs, such as VA transitional housing programs.

Comments in Support of Using Vehicles Purchased With Grant Funds To 
Transport Non-veterans, or for Purposes Other Than in Connection With 
Receiving Medical Care.

    One commenter stated that the rule should permit vehicles purchased 
with grant funds to be used to transport individuals, including non-
veterans, in connection with activities other than receiving medical 
care, during the vehicle's idle time or when the vehicle has unused 
capacity. This commenter contended that such use of vehicles purchased 
with grant funds would maximize vehicle effectiveness for the benefit 
of a highly rural area's community at large, and further was required 
by Executive Order 13330.
    As noted above, Executive Order 13330 does not--and should not--
control our implementation of section 307. We also note, however, that 
under applicable regulations that govern grant agreements between VA 
and other entities, grantees may be required to make equipment procured 
with grant funds available for use on other projects. See 38 CFR 
43.32(c)(2) and 38 CFR 49.34(d) (requiring grantees to make equipment 
acquired under a grant available for use on other projects or programs 
supported by the Federal government, provided such use will not 
interfere with the project or program for which the equipment was 
originally acquired). This rule already mandates this alternate use 
requirement for grantees, and subjects SVSAs and VSOs to all other 
applicable provisions in 38 CFR parts 43 and 49, in Sec.  17.715(b)(1) 
and (b)(2). See Sec.  17.715(b)(1)-(b)(2) (applying administrative 
grant requirements under 38 CFR part 43 to SVSAs, and requirements 
under 38 CFR part 49 to VSOs). The opportunity for grantees to use 
vehicles procured with grant funds for other programs, in line with 
these other controlling regulations regarding grant agreements, is 
therefore covered in the rule and no changes are necessary pursuant to 
this comment.
    Although we note that other applicable regulations may permit the 
use of certain grantee vehicles for other programs, section 307 is 
clear that grant funds are to be used to ``assist veterans in highly 
rural areas to travel to Department of Veterans Affairs medical 
centers'' and ``otherwise assist in providing transportation in 
connection with the provision of medical care to veterans in highly 
rural areas.'' Public Law 111-163, sec. 307(a)(3). However, unlike 
Executive Order 13330, 38 CFR parts 43 and 49 are directly applicable 
to the grant program mandated by section 307, and as such the rule 
makes grantees subject to these applicable regulations.
    In addition to the general comment concerning vehicles procured 
with grant funds, one commenter stated that the rule should 
specifically permit grant funds to be used to transport veterans in 
connection with employment activities (e.g., job seeking, commuting). 
We make no changes to the rule based on this comment, but reiterate 
that 38 CFR parts 43 and 49 permit certain equipment purchased with 
grants funds to be used to support other Federal programs, in line with 
the criteria in these other applicable regulations. To the extent such 
other Federal programs may be related to veteran employment activities, 
it is possible that vehicles procured with grants under this rule may 
be used as the commenter suggested, in accordance with 38 CFR parts 43 
and 49.

Comment Regarding Transporting Non-veterans

    In addition to comments that requested that grants be used to 
support existing transportation programs for the benefit of communities 
at large and comments related to the use of vehicles specifically for 
the community at large, one commenter specifically requested 
clarification on whether the rule permits a grantee to transport a non-
veteran. We reiterate our discussion above that while we generally do 
not believe Congress intended these funds to be used to transport non-
veterans, there may be instances where certain vehicles procured with 
grant funds could be used to support other Federal programs, 
potentially to transport non-veterans. This particular comment 
highlighted the fact that there is no definition of ``veteran'' in the 
rule. We therefore amend Sec.  17.701 to include a definition of 
``veteran'' to mean ``a person who served in the active military, 
naval, or air service, and who was discharged or released therefrom 
under conditions other than dishonorable.'' This definition is 
consistent with 38 U.S.C. 101(2) and other VA regulations, and we 
believe it is commonly understood among VSOs, SVSAs, and veterans who 
would be seeking transportation. We also amend Sec.  17.701 to clarify 
that the definitions therein apply to all of the sections establishing 
this grant program.

Comments Regarding the Rule's Criteria for a ``Highly Rural Area''

    Multiple commenters contended that the rule's criteria regarding a 
``highly rural area'' failed to account for all areas in need of 
transportation services, or the extent to which such areas may need 
transportation services. Commenters asserted that these criteria should 
be revised, and we address below specific suggestions for revisions. 
Generally, we make no changes based on these comments, as many of the 
suggested revisions are contrary to section 307.
    A majority of commenters argued that the definition of a ``highly 
rural area'' was too restrictive because factors other than population 
density can contribute to veterans' difficulty obtaining 
transportation, or can create a greater need for such transportation. 
The factors cited by commenters included areas in which there is 
widespread low economic status or financial need; high concentrations 
of residing veterans; older age or other characteristics, such as 
physical disabilities, which can make accessing transportation 
difficult; and geographic barriers to transportation such as land 
formations or bodies of water. Although we do not disagree that these 
factors may create a need for transportation services in an area that 
does not meet the highly rural definition in the rule, under section 
307 Congress mandated that only areas that consist of a county or 
counties having a population of less than seven persons per square mile 
may be serviced by grantees. See Public Law 111-163, sec. 307(c)(1).
    Other commenters did not necessarily contend that the rule should 
permit VA to award grants to service areas that do not meet the 
definition of ``highly rural,'' but maintained that the rule's criteria 
did not assess the need for transportation services even among 
communities that meet the regulatory definition of a highly rural area. 
These commenters urged that certain factors such as the number of 
veterans in any given highly rural area, and such veterans' actual need 
for VA medical care, should be determinative for purposes of 
application scoring and awarding of grants. We interpret these comments 
to argue that greater weight should be given to these factors so that 
grants could be maximized for only those areas where the most veterans 
actually reside, and for those areas where the most medical need 
exists. We make no changes based on these comments. First, nothing in 
the plain language or legislative history of section 307 compels VA to 
prioritize awarding grants in this manner. Although it may

[[Page 19590]]

be argued that the most efficient use of government resources would be 
to focus grant awards to areas with the most concentrated need, we 
believe that the language of section 307 that specifically defines 
``highly rural'' as fewer than seven persons per square mile seeks to 
ensure that any veteran in any highly rural area can receive 
transportation assistance to receive VA medical care, without regard to 
how many other veterans may be residing in the area, or the relative 
medical need of any other veteran. The restrictive population 
requirement of less than seven persons per square mile indicates that 
section 307 was not intended to require devotion of grant resources to 
areas with a high concentration of people, or a high concentration of 
veterans. Additionally, although section 307 requires that veterans be 
transported in connection with the provision of medical care, it does 
not specify any medical need-based criteria. Therefore, we implement 
section 307 in a manner that will increase access to VA medical care 
for any veteran in a highly rural area, without regard to that 
veteran's proximity to other veterans or medical need in relation to 
the needs of other veterans.
    One commenter argued that the rule should consider the relative 
difficulty of establishing transportation services or transportation 
programs in certain highly rural areas, and factor such difficulty into 
the scoring criteria and the amount of grant funds awarded. The 
commenter stated that the current scoring criteria favored those areas 
where transportation services can be planned and delivered more 
``easily,'' and that certain highly rural areas that are more remote or 
more difficult to access should be given additional scoring 
considerations and should receive greater funding. To the extent that 
the commenter believes that any highly rural area as defined in the 
rule is easily accessible for purposes of planning or establishing 
transportation services, we disagree. We believe the narrow definition 
of a highly rural area creates a presumption that no such qualified 
area is necessarily easily accessible, because the extremely sparse 
population requirement likely means that such an area does not have 
well-developed community resources, to include transportation services. 
In essence, we believe many of these highly rural areas will be in 
equivalent standing with regards to accessibility, because many of 
these areas do not have well-developed transportation services, and in 
turn are generally not easily accessible by transportation 
thoroughfares.
    However, if certain highly rural areas may be more remote or more 
difficult to access than others, we believe that the rule considers 
such relative difficulty with planning and delivering transportation 
services in Sec.  17.705(a)(4). For instance, Sec.  17.705(a)(4) 
provides for up to 10 points to be awarded on a grantee application 
based on the innovative aspects of a program, such as the grantee's use 
of alternative transportation resources. This particular scoring 
criterion would be advantageous to any grantee that may in fact need to 
use non-conventional and alternative transportation methods, 
specifically because of an area's remoteness or difficulty to access. 
For instance, taking from examples provided by this commenter, if 
certain highly rural areas could only be accessed by planes or boats, 
the need for these non-conventional transportation methods (non-
conventional in the context of public transportation), as stated in the 
application, would allow the grantee to actually score additional 
points over those areas that may be considered more ``easily'' 
accessible (i.e., already accessible by transportation thoroughfares).
    The current scoring criteria do not give an undue advantage to any 
highly rural area over another, because any program that is well 
planned and proposes to provide transportation services effectively 
will score well. To address the portion of the comment related to the 
amount of grant funding an area should receive relative to how 
``easily'' transportation services may be established, we assume that 
grantees will be requesting varying amounts up to and including the 
maximum $50,000 amount based on their individual program's needs. VA 
will not be administering $50,000 as a blanket amount for all grants. 
The grant application requests a detailed explanation of the program's 
budget and how the requested amount of funds will be sufficient to 
completely implement the program, as required under Sec.  
17.705(a)(1)(ii) in this rule. We do not make any changes based on this 
comment.

Comments Regarding the Types of Facilities to Which Veterans May Be 
Transported in Connection With the Receipt of Medical Care

    A few commenters stated that the rule should not limit 
transportation services only to or from VA facilities, but should 
permit transportation to and from non-VA facilities that provide care 
for which VA contracts. We agree with commenters that necessary and 
preapproved care that is furnished in non-VA facilities may be 
essential for some veterans in certain rural areas where the nearest VA 
facility is inaccessible. The definition of ``transportation services'' 
in the rule does not limit transportation only to VA facilities, but 
rather indicates that the care to be received must be VA medical care. 
See Sec.  17.701. However, we only referred to ``VA facilities'' in the 
explanatory portion of the proposed rulemaking, and we understand how 
this could lead the public to conclude that transportation services may 
be provided only to VA facilities. To clarify, our intent is to include 
medical care that is authorized by VA, regardless of whether it is 
furnished in a VA facility. Accordingly, we clarify the definition of 
``transportation services'' in Sec.  17.701 to mean ``the direct 
provision of transportation, or assistance with providing 
transportation, to travel to VA medical centers and other VA or non-VA 
facilities in connection with the provision of VA medical care.'' We 
additionally clarify that under the rule, transportation may be 
provided to and from any VA health care facility (such as a VA 
Community Based Outpatient Clinic) and is not limited to VA medical 
centers. Further, such facilities need not be within the same state 
that a veteran resides, as there is nothing in section 307 that could 
be interpreted to restrict transportation in this way.
    We agree with the commenter that the rule can more clearly state 
that for purposes of this rule ``VA'' medical care includes not only 
that which VA provides directly but also that which VA authorizes to be 
furnished in non-VA facilities. Therefore, we revise the definition of 
the phrase ``[p]rovision of VA medical care'' in Sec.  17.701 to 
include reference to sections 1703 and 8153 of title 38, United States 
Code, which are the statutes that permit VA to contract to furnish 
specified care to eligible veterans at non-VA facilities. The revision 
will read as follows: ``[p]rovision of VA medical care means the 
provision of hospital or medical services authorized under sections 
1710, 1703, and 8153 of title 38, United States Code.''
    One commenter requested clarification on whether grantees may 
provide vouchers for veterans to travel to the ``nearest health care 
center,'' and provided examples of VA and non-VA facilities as the 
nearest health care centers. We interpret this comment to be asking 
both about the types of facilities to which veterans may be 
transported, and also whether grants may be used to

[[Page 19591]]

administer transportation programs that provide vouchers or other types 
of payment directly to veterans. To address the portion of the comment 
related to the types of facilities to which veterans may be 
transported, we (1) clarified the definition of ``transportation 
services'' in Sec.  17.701 to provide that under the rule medical care 
that VA authorizes to be furnished in non-VA facilities is also 
considered to be ``VA'' medical care, and (2) underscore that grantees 
should only provide transportation in connection with VA medical care 
as defined in this rule. To address the portion of the comment related 
to whether grants may be used to provide vouchers or other types of 
payment directly to veterans to pay for transportation, we make no 
changes to the rule, as we believe direct payment to veterans through 
vouchers to obtain transportation is not the intent of section 307. 
Vouchers or other forms of direct payment to veterans to obtain 
transportation services in highly rural areas would require that 
adequate transportation services already exist in such areas to accept 
payment, which we reiterate is not likely due to the very sparse 
population requirement imposed by section 307. Additionally, providing 
vouchers or other direct payment to veterans to obtain transportation 
would be basing transportation assistance on a veteran's relative 
ability to pay for transportation services generally, although section 
307 does not contain any criteria related to a veteran's ability to pay 
for transportation--for instance, there is no income requirement in 
section 307.
    Section 307 instead bases transportation assistance on the relative 
remoteness of a geographic area, and consequently assumes due to this 
remoteness that veterans will need assistance accessing medical care. 
Finally, we note that VA already assists eligible veterans with the 
cost of transportation associated with their obtaining VA care under 
VA's Beneficiary Travel Program. See 38 CFR part 70. We recognize that 
not all veterans are eligible for beneficiary travel benefits. However, 
we still make no changes to the rule because the use of grant funds for 
monetary travel assistance would be duplicative of existing VA 
programs.
    We also received a comment regarding whether transportation 
assistance under this rule is only available to ``low-income people.'' 
We clarify that transportation assistance is not limited to veterans 
with a low income. Although we note that this rule specifically 
prevents a veteran from being charged for transportation assistance 
provided by grantees, the prohibition on veterans being charged is not 
based on a veteran's relative ability to pay for transportation, but 
rather ensures that veterans can have as much access to services 
provided by grantees as feasible regardless of their ability to pay. We 
make no changes based on this comment.

Comments Regarding the Need To Monitor Grantees and the Use of Grant 
Funds

    Multiple commenters expressed concern that the rule must provide a 
means to monitor the use of grant funds and allow recoupment of such 
funds, as well as a means to monitor the efficacy of grantee programs, 
to ensure that funds are used appropriately and that veterans have 
adequate access to transportation services. We agree, and the rule 
prescribes multiple oversight mechanisms to ensure grant funds are used 
effectively to transport veterans in accordance with section 307. 
Section 17.725 as proposed required grantees to provide VA with 
quarterly fiscal reports on grant funds usage, and annual reports on 
program efficiency. These reports would provide VA with information 
necessary to analyze the performance of a grantee's program, and to 
ensure that grant funds are used appropriately and as specified in the 
grant agreement. VA's receipt of this and other information required to 
be reported in Sec.  17.725 would indicate deficient and ineffective 
use of grant funds. Section 17.725(d) allows VA to request additional 
information, which would allow VA to conduct additional monitoring as 
necessary.
    In response to commenters' concerns regarding the insufficiency of 
the monitoring criteria, however, we have revised Sec.  17.725 to 
require quarterly, in addition to annual, reports to VA related to 
program efficacy to ensure more stringent monitoring of program 
efficacy and appropriate use of grant funds. We also revise the heading 
in Sec.  17.725(a) so that it clearly refers to ``program efficacy 
reports,'' versus only an ``annual report.'' These revisions will 
assist VA in monitoring program effectiveness more consistently to 
ensure the efficient and effective use of grant funds so that veterans 
have access to and are satisfied with transportation services provided 
under this rule.
    In the event that grant funds are not used in accordance with the 
requirements of the rule and as stated in grant agreements, Sec.  
17.730 allows VA to recover grant funds, and further prevents a grantee 
that misused funds from being issued a grant in the future. We believe 
the reporting requirements in Sec.  17.725, in conjunction with VA's 
authority to recover grant funds and prevent the future awards of 
grants in Sec.  17.730, create a means of monitoring grantees that 
ensures grant funds will be used effectively to provide veterans with 
access to transportation services.
    One commenter objected that the proposed rule did not set forth the 
yearly funding limitations for this grant program as indicated in 
subsection (d) of section 307, and expressed concern that this lack of 
information in the rule was suspect, and created a risk of excess 
expenditures to the detriment of the program. The omission of funding 
limitations from the regulation text was intentional. These 
restrictions have no bearing on the actual amounts that are authorized 
to be appropriated for this program under subsection (d) of section 
307. See Public Law 111-163, sec. 307(d). As stated in the proposed 
rule, not including the funding limitation or the limited funding years 
prevents this rule from appearing to be restricted or ceased beyond 
fiscal year 2014. Section 307 is not designated by Congress to be a 
pilot program, and the law does not otherwise contain a provision that 
it will cease to have effect after a specific date unless extended. If 
funding is not available to extend the program beyond 2014, we will not 
publish a subsequent Notice of Fund Availability in the Federal 
Register for that following fiscal year, and we will amend our 
regulations to remove the rule from the Code of Federal Regulations if 
it is clear that additional grant funds will not be provided at any 
future date.

Comments Regarding the Award of Only One Grant per Highly Rural Area, 
per Fiscal Year

    One commenter objected to the criterion in Sec.  17.702(a) that 
only one grant may be awarded per highly rural area to be serviced by a 
grantee. This commenter stated that allowing only one grantee to 
service a highly rural area essentially permits a grantee to monopolize 
the transportation services for veterans in that area, and that this 
creates the potential for the delivery of substandard services. We 
disagree, as we believe the reporting requirements and ability to 
recover grant funds that are authorized by Sec. Sec.  17.725 and 17.730 
would prevent any grantee from continuously providing poor service. We 
reiterate from the proposed rule that we instituted the limitation to 
one grant per highly rural area to ensure that as many areas are 
serviced as possible, for the benefit of all veterans that live in 
these areas across the country.
    One commenter contended that grants should be awarded for more than 
one

[[Page 19592]]

year at a time, although this commenter did not provide a reason for 
expanding individual grants beyond a one-year duration. In response we 
restate from the proposed rule that grants are funded for one year to 
ensure that grant funds are awarded only as funding is available, in 
accordance with subsection (d) of section 307. See Public Law 111-163, 
sec. 307(d) (indicating that there is authorized to be appropriated 
only a limited amount of funds per fiscal year). Provided funding is 
available, grantees may reapply for grant funds under Sec.  17.705(c) 
and (d), which permit renewal grant applications and selections for 
grantees to provide transportation services to veterans continuously in 
successive years.

Comments Related to Grantee Compliance With the Americans With 
Disabilities Act and Department of Transportation Regulations

    One commenter noted that the rule failed to articulate the 
responsibilities of grantees under the Americans with Disabilities Act 
(ADA) and implementing Department of Transportation (DOT) regulations. 
We recognize that grantees and subrecipients may be subject to DOT 
regulations that implement certain transit requirements under the ADA, 
and agree with the commenter that this rule should articulate the 
applicability of these requirements. We revise Sec.  17.715(a)(3), 
which addresses the specific responsibilities of grantees who procure 
or operate vehicles with grant funds, to add a new clause (v) to 
mandate that such vehicles be operated in accordance with applicable 
DOT regulations concerning transit requirements under the ADA. We note 
that although VA has no authority to enforce compliance with these 
other laws and regulations, this revision will permit VA to take action 
against a grantee for noncompliance with a grant agreement.

Revisions to Correct Inconsistent Use of Paragraph Headings

    Paragraph (a)(2) in Sec.  17.715 as proposed was designated by the 
heading ``[p]rocurement and operation of vehicles.'' A descriptive 
heading such as this may be used in paragraphs within regulations to 
emphasize or organize information, but should be used consistently to 
ensure clarity for the reader. However, paragraph (a)(1) of Sec.  
17.715 as proposed did not contain such a heading. Therefore, to ensure 
consistent use of paragraph headings in Sec.  17.715(a), we amend Sec.  
17.715(a)(2) as proposed to remove the heading ``[p]rocurement and 
operation of vehicles.'' We restate that Sec.  17.715(a)(2) as proposed 
is also redesignated as paragraph (a)(3) because we have added a new 
paragraph (a)(2) to address subrecipients. Removing the heading from 
Sec.  17.715(a)(2) as proposed does not substantively affect the 
obligation of grantees to ensure certain conditions are met if funds 
are used to procure or operate vehicles. Additionally, because 
redesigated paragraph (a)(3) retains the phrase ``procure or operate 
vehicles,'' it remains very clear what type of information is contained 
in the paragraph.
    Paragraphs (a), (b), and (c) of Sec.  17.725 as proposed were all 
designated by headings; however, paragraph (d) was not so designated. 
Under the same rationale expressed above, we amend Sec.  17.725(d) as 
proposed to add the heading ``Additional reporting.''

Revisions To Correct Non-parallel Structure

    In order to establish a parallel structure between paragraphs 
(a)(1), (a)(2), and (a)(3) in Sec.  17.715, we have removed the phrase 
``the grantee agrees to'' in the last sentence of paragraph (a) which 
leads into paragraphs (a)(1), (a)(2), and (a)(3). The removal of the 
phrase ``the grantee agrees to'' in Sec.  17.715(a) will have no 
substantive effect on any of the further obligations under the 
proceeding paragraphs under Sec.  17.715(a). We also revise the 
beginning of paragraph (a)(1) in Sec.  17.715 as proposed to add the 
phrase ``[t]he grantee must,'' so that the subject of Sec.  
17.715(a)(1) remains the grantee.
    Paragraphs (a)(1) through (a)(2) of Sec.  17.715 as proposed were 
intended to be items in a series, in the same part of speech or the 
same type of phrase, and therefore should have been drafted in parallel 
structure. To reiterate, proposed Sec.  17.715(a)(2) is redesignated in 
this rule as Sec.  17.715(a)(3). To maintain parallel structure in the 
rule, we revise redesignated Sec.  17.715(a)(3) to make sense with 
revised Sec.  17.715(a), and to be parallel with new Sec.  
17.715(a)(2), so that it is clear that each paragraph under Sec.  
17.715(a) consistently and clearly refers to obligations of a grantee 
or subrecipient. Redesignated Sec.  17.715(a)(3) will require that 
``[i]f a grantee's application identified that funds will be used to 
procure or operate vehicles to directly provide transportation 
services,'' certain specified requirements must be met. The listed 
requirements are set forth in Sec.  17.715(a)(3)(i) through (v). To 
maintain parallel structure, we also revise paragraphs (ii) and (iv) of 
redesignated Sec.  17.715(a)(3) to consistently use the word ``must'' 
instead of the words ``shall'' and ``will,'' respectively.

Non-significant Changes to Sec. Sec.  17.700, 17.701, and 17.703

    Section 17.700 as proposed stated that ``[t]his section establishes 
the Grants for Veterans Service Organizations for Transportation of 
Veterans in Highly Rural Areas program,'' which misidentified VSOs as 
the only entities for which grants would be administered. We revise 
Sec.  17.700 to remove the phrase ``for Veterans Service 
Organizations.'' This is not a significant change because the proposed 
rule was clear that grants could be administered to both VSOs and SVSAs 
in accordance with section 307.
    Sections 17.701 and 17.703 mistakenly pluralized VSOs and SVSAs 
when describing them within the meaning of the singular subject 
``eligible entity.'' We revise Sec. Sec.  17.701 and 17.703 to refer to 
``[a] Veterans Service Organization'' and ``[a] State veterans service 
agency'' with no substantive change. We note that more than one single 
VSO and one single SVSA may receive a grant under this program per 
year, as contemplated in and consistent with the proposed rule.
    We also clarified the authority citations for the regulations in 
this rulemaking by specifying section 307 of Public Law 111-163.
    For all the reasons noted above, VA is adopting the rule as final 
with changes as noted to Sec. Sec.  17.701, 17.703, 17.705, 17.715, and 
17.725.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as revised by this 
final rulemaking, represents VA's implementation of its legal authority 
on this subject. Other than future amendments to this regulation or 
governing statutes, no contrary guidance or procedures are authorized. 
All existing or subsequent VA guidance must be read to conform with 
this rulemaking if possible or, if not possible, such guidance is 
superseded by this rulemaking.

Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (44 U.S.C. 3507) requires that 
VA consider the impact of paperwork and other information collection 
burdens imposed on the public. According to the 1995 amendments to the 
Paperwork Reduction Act, an agency may not collect or sponsor the 
collection of information, nor may it impose an information collection 
requirement unless it displays a currently valid Office of Management 
and Budget (OMB) control number.

[[Page 19593]]

    This final rule will impose new information collection requirements 
in the form of an application to receive grant funds, and reporting 
requirements to retain grant funds to include surveys for completion by 
veteran participants. On December 30, 2011, in a proposed rule 
published in the Federal Register, we requested public comments on the 
new collections of information. We received one comment in response to 
this notice, which advocated that VA should enforce more stringent 
monitoring of program efficacy and appropriate use of grant funds. The 
response, as also stated in the preamble to this final rule, is that we 
agree and have increased the frequency of efficacy reporting 
requirements in Sec.  17.725(a) to be quarterly, as well as annually. 
As required by the Paperwork Reduction Act of 1995, VA has submitted 
these information collections to OMB for its review. OMB approved these 
new information collection requirements associated with the final rule 
and assigned OMB control numbers 2900-0790, and 2900-0770

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. We do not believe that many small entities such as independently 
owned taxi cab services or other small transportation businesses 
frequently or routinely access highly rural areas as defined in the 
rule, or that such access is often for the express purpose of 
transporting veterans to VA medical centers or transporting veterans in 
connection with receiving VA medical care. We believe that veterans in 
these highly rural areas who must pay for transportation services to 
receive medical care would seek more conveniently located non-VA care, 
versus VA care that may require traveling greater distances. There will 
be no economic impact on any of the eligible entities, as they are not 
required to provide matching funds to obtain a grant as stated in 
section 307. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is 
exempt from the initial and final regulatory flexibility analysis 
requirements of sections 603 and 604.

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
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 effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action'' requiring review by OMB as ``any 
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 this Executive Order.''
    The economic, interagency, budgetary, legal, and policy 
implications of this regulatory action have been examined, and it has 
been determined not to be a significant regulatory action under 
Executive Order 12866.

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 one year. This final rule will have no such effect on 
State, local, and tribal governments, or on the private sector.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance numbers and titles for 
the programs affected by this document are 64.009, Veterans Medical 
Care Benefits; 64.011, Veterans Dental Care; 64.012, Veterans 
Prescription Service; 64.013, Veterans Prosthetic Appliances; 64.014, 
Veterans State Domiciliary Care; and 64.035, Veterans Transportation 
Program.

Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this 
document and authorized the undersigned to sign and submit the document 
to the Office of the Federal Register for publication electronically as 
an official document of the Department of Veterans Affairs. John R. 
Gingrich, Chief of Staff, Department of Veterans Affairs, approved this 
document on January 28, 2013, for publication.

List of Subjects in 38 CFR Part 17

    Administrative practice and procedure, Grant programs-health, Grant 
programs-veterans, Health care, Health facilities, Medical devices, 
Mental health programs, Reporting and recordkeeping requirements, 
Travel and transportation expenses, Veterans.

    Dated: March 28, 2013.
Robert C. McFetridge,
Director of Regulations Policy and Management, Office of the General 
Counsel, Department of Veterans Affairs.
    For the reasons stated in the preamble, VA amends 38 CFR part 17 as 
follows:

PART 17--MEDICAL

0
1. The authority citation for part 17 continues to read as follows:

    Authority:  38 U.S.C. 501, and as noted in specific sections.


0
2. Amend part 17 by adding the undesignated center heading ``GRANTS FOR 
TRANSPORTATION OF VETERANS IN HIGHLY RURAL AREAS'' and Sec. Sec.  
17.700 through 17.730 to read as follows:
GRANTS FOR TRANSPORTATION OF VETERANS IN HIGHLY RURAL AREAS
Sec.
17.700 Purpose and scope.
17.701 Definitions.
17.702 Grants--general.
17.703 Eligibility and application.
17.705 Scoring criteria and selection.
17.710 Notice of Fund Availability.
17.715 Grant agreements.
17.720 Payments under the grant.
17.725 Grantee reporting requirements.


Sec.  17.730  Recovery of funds by VA.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501 and as noted in 
specific sections)

Sec.  17.700  Purpose and scope.

    This section establishes the Grants for Transportation of Veterans 
in Highly Rural Areas program. Under this program, the Department of 
Veterans Affairs (VA) provides grants to eligible entities to assist 
veterans in highly rural areas through innovative transportation 
services to travel to VA medical centers,

[[Page 19594]]

and to otherwise assist in providing transportation services in 
connection with the provision of VA medical care to these veterans.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.  17.701  Definitions.

    For the purposes of Sec. Sec.  17.700-17.730 and any Notice of Fund 
Availability issued pursuant to such sections:
    Applicant means an eligible entity that submits an application for 
a grant announced in a Notice of Fund Availability.
    Eligible entity means:
    (1) A Veterans Service Organization, or
    (2) A State veterans service agency.
    Grantee means an applicant that is awarded a grant under this 
section.
    Highly rural area means an area consisting of a county or counties 
having a population of less than seven persons per square mile.
    Notice of Fund Availability means a Notice of Fund Availability 
published in the Federal Register in accordance with Sec.  17.710.
    Participant means a veteran in a highly rural area who is receiving 
transportation services from a grantee.
    Provision of VA medical care means the provision of hospital or 
medical services authorized under sections 1710, 1703, and 8153 of 
title 38, United States Code.
    State veterans service agency means the element of a State 
government that has responsibility for programs and activities of that 
government relating to veterans benefits.
    Subrecipient means an entity that receives grant funds from a 
grantee to perform work for the grantee in the administration of all or 
part of the grantee's program.
    Transportation services means the direct provision of 
transportation, or assistance with providing transportation, to travel 
to VA medical centers and other VA or non-VA facilities in connection 
with the provision of VA medical care.
    Veteran means a person who served in the active military, naval, or 
air service, and who was discharged or released therefrom under 
conditions other than dishonorable.
    Veterans Service Organization means an organization recognized by 
the Secretary of Veterans Affairs for the representation of veterans 
under section 5902 of title 38, United States Code.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.   17.702 Grants--general.

    (a) One grant per highly rural area. VA may award one grant per 
fiscal year to a grantee for each highly rural area in which the 
grantee provides transportation services. Transportation services may 
not be simultaneously provided by more than one grantee in any single 
highly rural area.
    (b) Maximum amount. Grant amounts will be specified in the Notice 
of Funding Availability, but no grant will exceed $50,000.
    (c) No matching requirement. A grantee will not be required to 
provide matching funds as a condition of receiving such grant.
    (d) Veterans will not be charged. Transportation services provided 
to veterans through utilization of a grant will be free of charge.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.  17.703  Eligibility and application.

    (a) Eligible entity. The following may be awarded a grant:
    (1) A Veterans Service Organization.
    (2) A State veterans service agency.
    (b) Initial application. To apply for an initial grant, an 
applicant must submit to VA a complete grant application package, as 
described in the Notice of Fund Availability.
    (c) Renewal application. Grantees may apply for one renewal grant 
per fiscal year, after receiving an initial grant, if the grantee's 
program will remain substantially the same. The grantee must submit to 
VA a complete renewal application as described in the Notice of Fund 
Availability.
    (d) Subrecipients. Grantees may provide grant funds to other 
entities, if such entities are identified as subrecipients in grant 
applications to perform work for grantees in the administration of all 
or part of grantees' programs.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)


(The Office of Management and Budget has approved the information 
collection requirement in this section under control number 2900-
0790)


Sec.  17.705  Scoring criteria and selection.

    (a) Initial grant scoring. Applications will be scored using the 
following selection criteria:
    (1) VA will award up to 40 points based on the program's plan for 
successful implementation, as demonstrated by the following:
    (i) Program scope is defined, and applicant has specifically 
indicated the mode(s) or method(s) of transportation services to be 
provided by the applicant or identified subrecipient.
    (ii) Program budget is defined, and applicant has indicated that 
grant funds will be sufficient to completely implement the program.
    (iii) Program staffing plan is defined, and applicant has indicated 
that there will be adequate staffing for delivery of transportation 
services according to the program's scope.
    (iv) Program timeframe for implementation is defined, and applicant 
has indicated that the delivery of transportation services will be 
timely.
    (2) VA will award up to 30 points based on the program's evaluation 
plan, as demonstrated by the following:
    (i) Measurable goals for determining the success of delivery of 
transportation services.
    (ii) Ongoing assessment of paragraph (a)(2)(i), with a means of 
adjusting the program as required.
    (3) VA will award up to 20 points based on the applicant's 
community relationships in the areas to receive transportation 
services, as demonstrated by the following:
    (i) Applicant has existing relationships with state or local 
agencies or private entities, or will develop such relationships, and 
has shown these relationships will enhance the program's effectiveness.
    (ii) Applicant has established past working relationships with 
state or local agencies or private entities which have provided 
transportation services similar to those offered by the program.
    (4) VA will award up to 10 points based on the innovative aspects 
of the program, as demonstrated by the following:
    (i) How program will identify and serve veterans who otherwise 
would be unable to obtain VA medical care through conventional 
transportation resources.
    (ii) How program will use new or alternative transportation 
resources.
    (b) Initial grant selection. VA will use the following process to 
award initial grants:
    (1) VA will rank those applications that receive at least the 
minimum amount of total points and points per category set forth in the 
Notice of Fund Availability. The applications will be ranked in order 
from highest to lowest scores.
    (2) VA will use the applications' ranking as the basis for awarding 
grants. VA will award grants for the highest ranked applications for 
which funding is available.
    (c) Renewal grant scoring. Renewal applications will be scored 
using the following selection criteria:
    (1) VA will award up to 55 points based on the success of the 
grantee's program, as demonstrated by the following:

[[Page 19595]]

    (i) Application shows that the grantee or identified subrecipient 
provided transportation services which allowed participants to be 
provided medical care timely and as scheduled.
    (ii) Application shows that participants were satisfied with the 
transportation services provided by the grantee or identified 
subrecipient, as described in the Notice of Fund Availability.
    (2) VA will award up to 35 points based on the cost effectiveness 
of the program, as demonstrated by the following:
    (i) The grantee or identified subrecipient administered the program 
on budget.
    (ii) Grant funds were utilized in a sensible manner, as interpreted 
by information provided by the grantee to VA under Sec.  17.725(a)(1) 
through (a)(7).
    (3) VA will award up to 15 points based on the extent to which the 
program complied with:
    (i) The grant agreement.
    (ii) Applicable laws and regulations.
    (d) Renewal grant selection. VA will use the following process to 
award renewal grants:
    (1) VA will rank those applications that receive at least the 
minimum amount of total points and points per category set forth in the 
Notice of Fund Availability. The applications will be ranked in order 
from highest to lowest scores.
    (2) VA will use the applications' ranking as the basis for awarding 
grants. VA will award grants for the highest ranked applications for 
which funding is available.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.  17.710  Notice of Fund Availability.

    When funds are available for grants, VA will publish a Notice of 
Fund Availability in the Federal Register. The notice will identify:
    (a) The location for obtaining grant applications;
    (b) The date, time, and place for submitting completed grant 
applications;
    (c) The estimated amount and type of grant funding available;
    (d) The length of term for the grant award;
    (e) The minimum number of total points and points per category that 
an applicant or grantee must receive in order for a supportive grant to 
be funded;
    (f) The timeframes and manner for payments under the grant; and
    (g) Those areas identified by VA to be the ``highly rural areas'' 
in which grantees may provide transportation services funded under this 
rule.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.  17.715  Grant agreements.

    (a) General. After a grantee is awarded a grant in accordance with 
Sec.  17.705(b) or Sec.  17.705(d), VA will draft a grant agreement to 
be executed by VA and the grantee. Upon execution of the grant 
agreement, VA will obligate the approved amount to the grantee. The 
grant agreement will provide that:
    (1) The grantee must operate the program in accordance with the 
provisions of this section and the grant application.
    (2) If a grantee's application identified a subrecipient, such 
subrecipient must operate the program in accordance with the provisions 
of this section and the grant application.
    (3) If a grantee's application identified that funds will be used 
to procure or operate vehicles to directly provide transportation 
services, the following requirements must be met:
    (i) Title to the vehicles must vest solely in the grantee or 
identified subrecipient, or with leased vehicles in an identified 
lender.
    (ii) The grantee or identified subrecipient must, at a minimum, 
provide motor vehicle liability insurance for the vehicles to the same 
extent they would insure vehicles procured with their own funds.
    (iii) All vehicle operators must be licensed in a U.S. State or 
Territory to operate such vehicles.
    (iv) Vehicles must be safe and maintained in accordance with the 
manufacturer's recommendations.
    (v) Vehicles must be operated in accordance with applicable 
Department of Transportation regulations concerning transit 
requirements under the Americans with Disabilities Act.
    (b) Additional requirements. Grantees and identified subrecipients 
are subject to the following additional requirements:
    (1) State veterans service agencies and identified subrecipients in 
the grant agreement are subject to the Uniform Administrative 
Requirements for Grants and Cooperative Agreements to State and Local 
Governments under 38 CFR part 43, as well as to OMB Circular A-87, Cost 
Principles for State, Local, and Indian Tribal Governments, and 2 CFR 
parts 25 and 170, if applicable.
    (2) Veterans Service Organizations and identified subrecipients in 
the grant agreement are subject to the Uniform Administrative 
Requirements for Grants and Agreements With Institutions of Higher 
Education, Hospitals, and Other Non-Profit Organizations under 38 CFR 
part 49, as well as to OMB Circular A-122, Cost Principles for Non-
Profit Organizations, codified at 2 CFR part 230, and 2 CFR parts 25 
and 170, if applicable.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.  17.720  Payments under the grant.

    Grantees are to be paid in accordance with the timeframes and 
manner set forth in the Notice of Fund Availability.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)

Sec.  17.725  Grantee reporting requirements.

    (a) Program efficacy. All grantees who receive either an initial or 
renewed grant must submit to VA quarterly and annual reports which 
indicate the following information:
    (1) Record of time expended assisting with the provision of 
transportation services.
    (2) Record of grant funds expended assisting with the provision of 
transportation services.
    (3) Trips completed.
    (4) Total distance covered.
    (5) Veterans served.
    (6) Locations which received transportation services.
    (7) Results of veteran satisfaction survey.
    (b) Quarterly fiscal report. All grantees who receive either an 
initial or renewal grant must submit to VA a quarterly report which 
identifies the expenditures of the funds which VA authorized and 
obligated.
    (c) Program variations. Any changes in a grantee's program 
activities which result in deviations from the grant agreement must be 
reported to VA.
    (d) Additional reporting. Additional reporting requirements may be 
requested by VA to allow VA to fully assess program effectiveness.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)


(The Office of Management and Budget has approved the information 
collection requirements in this section under control numbers 2900-
0709 and 2900-0770)


Sec.  17.730  Recovery of funds by VA.

    (a) Recovery of funds. VA may recover from the grantee any funds 
that are not used in accordance with a grant agreement. If VA decides 
to recover funds, VA will issue to the grantee a notice of intent to 
recover grant funds, and grantee will then have 30 days to submit 
documentation demonstrating why the grant funds should not be 
recovered. After review of all submitted documentation, VA will 
determine whether action will be taken to recover the grant funds.

[[Page 19596]]

    (b) Prohibition of further grants. When VA determines action will 
be taken to recover grant funds from the grantee, the grantee is then 
prohibited from receipt of any further grant funds.

(Authority: Sec. 307, Pub. L. 111-163; 38 U.S.C. 501)


[FR Doc. 2013-07636 Filed 4-1-13; 8:45 am]
BILLING CODE 8320-01-P