[Federal Register Volume 78, Number 69 (Wednesday, April 10, 2013)]
[Rules and Regulations]
[Pages 21262-21267]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-08366]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 59

RIN 2900-AO60


Grants to States for Construction or Acquisition of State Homes

AGENCY: Department of Veterans Affairs.

ACTION: Interim final rule.

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SUMMARY: This interim final rule amends the Department of Veterans 
Affairs (VA) regulation on the prioritization of State applications for 
VA grants for the construction or acquisition of State home facilities 
that furnish domiciliary, nursing home, or adult day health care to 
veterans. As amended, the regulation gives preference to State 
applications that would use grant funds solely or primarily (under 
certain circumstances) to remedy cited life or safety deficiencies. 
This rulemaking also makes certain necessary technical amendments to 
regulations governing State home grants.

DATES: Effective date: This interim final rule is effective April 10, 
2013. Comment date: Comments must be received by VA on or before June 
10, 2013.

ADDRESSES: Written comments may be submitted by email through http://www.regulations.gov; by mail or hand-delivery to Director, Regulation 
Policy and Management (02REG), Department of Veterans Affairs, 810 
Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. (This is not a toll-free number.) Comments should indicate 
that they are submitted in response to ``RIN 2900-AO60--Grants to 
States for Construction or Acquisition of State Homes.'' Copies of 
comments received will be available for public inspection in the Office 
of Regulation Policy and Management, Room 1068, between the hours of 
8:00 a.m. and 4:30 p.m., Monday through Friday (except holidays). 
Please call (202) 461-4902 for an appointment. (This is not a toll-free 
number.) In addition, during the comment period, comments may be viewed 
online through the Federal Docket Management System (FDMS) at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Brandi Fate, Director, Capital Asset 
Management and Support (10NA5), Veterans Health Administration, 810 
Vermont Avenue NW., Washington, DC 20420, (202) 632-7901. (This is not 
a toll-free number.)

[[Page 21263]]


SUPPLEMENTARY INFORMATION: Pursuant to subchapter III of chapter 81 of 
title 38, United States Code, VA is authorized to provide grant funds 
to support the acquisition, construction, expansion, remodeling or 
alteration by States of State home facilities that furnish domiciliary, 
nursing home, or adult day health care to veterans. States that desire 
such assistance must submit to VA an application that VA must assess 
and prioritize in accordance with the criteria set forth in 38 U.S.C. 
8135(c)(2)(A) through (H). VA has implemented this statutory authority 
in part 59 of title 38, Code of Federal Regulations.
    Under 38 U.S.C. 8135(c)(2) and 38 CFR 59.50, VA prioritizes the 
applications for the construction grant funds each fiscal year. 
Pursuant to these authorities, VA must generally give the top priority 
to applications with certified State matching funds, which are 
prioritized in priority group 1 under 38 CFR 59.50(a)(1). VA further 
subprioritizes the priority group 1 applications based on the type of 
project described in the application. Prior to this rulemaking, there 
were six subpriority groups for priority group 1 applications (i.e., 
applications with certified State matching funds). This rulemaking adds 
one more subpriority group to better reflect VA's emphasis on the 
safety of State home residents and program participants. As a result, 
there are now a total of seven subpriority groups.
    Priority group 1, subpriority group 1, at 38 CFR 59.50(a)(1)(i), is 
for applications for projects that remedy life or safety deficiencies 
and that have matching State funding. This interim final rule makes a 
number of changes to this subpriority group that will allow VA to more 
effectively prioritize life or safety projects when awarding State home 
construction grants.
    First, under paragraph (a)(1)(i), as amended, VA prioritizes in 
subpriority group 1 applications for projects that are solely or 
primarily intended to remedy a condition or conditions at an existing 
facility that have been cited as threatening the life or safety of the 
residents or program participants. Formerly, Sec.  59.50(f) directed 
that projects with multiple components be categorized in the priority 
group towards which the preponderance of the costs in the application 
would be dedicated. Therefore, an application could be prioritized in 
priority group 1, subpriority group 1, at Sec.  59.50(a)(1)(i), if a 
State combined a project to remedy a citation with another type of 
project, as long as the larger share of the project cost was used to 
remedy the citation. Prior to this rulemaking, there were no stated 
limits on combining life or safety projects and projects unrelated to 
protecting residents and participants' life or safety. As revised, the 
rule allows for such ``mixed'' projects only when the total cost of the 
life or safety project on its own would be under the $400,000 minimum 
required by Sec.  59.80 and 38 U.S.C. 8134(d)(2)(A), and the majority 
of the funds sought will be used to remedy a citation. Allowing States 
to submit applications with components unrelated to life or safety 
under these limited circumstances will help VA ensure that less costly 
life or safety projects are ranked in subpriority group 1 for VA grant 
funding. This rulemaking will ensure that VA does not rank projects in 
priority 1, subpriority group 1, where it is unnecessary to mix life or 
safety projects and projects unrelated to protecting life or safety 
(i.e., where the life or safety project by itself meets the statutory 
minimum), and in this manner will better ensure that VA directs the 
maximum amount of grant funds to projects that protect the lives and 
safety of the residents and participants.
    Second, under Sec.  59.50(a)(1)(i), as amended, we clarify which VA 
staff members may issue citations for threats to life or safety in a 
State home. Prior to this rulemaking, this paragraph provided that such 
citations may be issued by a ``VA Life Safety Engineer.'' This position 
is not currently used by VA. Therefore, we have replaced this reference 
with language that adequately identifies the VA offices responsible for 
issuing these citations.
    Third, we specify that applications for projects for the addition 
or replacement of building utility systems or features may be included 
in priority group 1, subpriority group 1, if the projects are necessary 
to remedy a cited threat to the life or safety of residents and program 
participants. Prior to this amendment, VA could only prioritize 
applications for projects adding or replacing utility systems or 
features in priority group 1, subpriority group 4. In order to best 
protect the lives and safety of residents or program participants in 
State veterans homes, we believe it is necessary to include these 
projects in subpriority group 1 under the limited circumstances that 
they are needed to remedy a life or safety threat.
    Fourth, revised Sec.  59.50(a)(1)(i) now specifically refers to 
``[s]ecurity'' projects. Under the prior rule, all applications for 
projects that would remedy cited threats to life or safety conditions 
were further prioritized in the following order: Seismic, building 
construction, egress, building compartmentalization, fire alarm/
detection, asbestos/hazardous materials, and ``all other projects.'' In 
the past, security projects such as video cameras to monitor the inside 
or outside of the building or other devices to watch or secure the 
premises have been prioritized as ``other projects.'' Based on our 
administration of the State home program, we believe that security 
projects should be given higher priority. Therefore, we add 
``[s]ecurity'' following ``[f]ire alarm/detection'' to the list of 
conditions used to prioritize applications ranked in subpriority group 
1. We also reorganize the listed prioritizations in separate 
paragraphs, so that the list is easier to identify and read.
    Fifth, VA has noticed instances in which States with outstanding 
citations for life or safety threats submit and are provided funding 
for applications for grants for projects unrelated to protecting 
residents and participants' lives or safety. Prior to this amendment, 
VA's regulations did not provide any mechanism for VA to encourage 
States to remedy outstanding life or safety citations. Therefore, this 
rulemaking adds a new penultimate subpriority group in priority group 1 
for applications from States that have failed to demonstrate they have 
remedied, or will remedy, a life or safety citation. Under revised 
Sec.  59.50(e), a State that has an existing State home with an 
outstanding citation must include in all of its applications for grant 
funds a description of a reasonable plan to remedy the citations. 
Revised paragraph (e) does not require the State to seek a VA grant to 
fund such remedy; however, failure to provide such a plan would result 
in decreased prioritization of the State's applications in the manner 
described in paragraph (e)(1), which states that applications from that 
State for a project for which the State has authorized matching funds 
will be placed in priority group 1, new subpriority group 6, or 
paragraph (e)(2), which states that applications from that State with 
an outstanding citation for a project without matching funds will be 
placed in a new priority group 7 that is described in paragraph (a)(7). 
By doing so, VA will reduce the likelihood of funding new grants from 
States with outstanding safety citations. VA's authority to establish 
this new subpriority group is 38 U.S.C. 8135(c)(2)(G), which authorizes 
VA to prioritize applications that ``meet[ ] other criteria as the 
Secretary [of Veterans Affairs] determines appropriate and has 
established in regulations.''
    The final change to Sec.  59.50(a)(1)(i) clarifies that not all 
residents or

[[Page 21264]]

participants need to be threatened by a condition or conditions for an 
application to be ranked in priority group 1, subpriority group 1. In 
fact, we believe the statutory language authorizes including 
applications that remedy conditions that only threaten one resident or 
participant. For example, if a condition threatens the safety of a 
resident in only one nursing home or domiciliary bed, we believe an 
application to remedy that condition could be ranked in subpriority 
group 1.
    In addition to the changes to priority group 1, subpriority group 1 
described above, this interim final rule amends certain other priority 
and subpriority groups; the amendments are described as follows.
    Section 59.50(a)(1)(iv) is revised to reorganize the listed 
prioritizations to make them easier to read. We also clarify VA's 
authority to provide grants for certain types of renovations in new 
paragraph (a)(1)(iv)(A) and (B). VA has interpreted its authority to 
prioritize States' applications for grants for renovations at 38 U.S.C. 
8135(c)(2)(E) as authorizing the same prioritization for applications 
to replace an existing building when needed to serve the same purposes 
as a renovation. This is consistent with VA's current procedures and is 
reflected in the example set forth in the note to Sec.  59.50(a)(1) 
which indicates that priority group 1, subpriority group 4, includes 
applications for ``Nursing Unit Renovation/Replacement.''
    The note to Sec.  59.50(a)(1), which contains a chart to aid 
readers' understanding how VA prioritizes projects in priority group 1, 
will be amended to conform with the changes to this section.
    VA will continue to perform a final prioritization of applications 
in each priority or subpriority group based on the date that VA 
receives the application, with the applications received earlier given 
higher priority. The prior rule had that stipulation in each priority 
and subpriority group paragraph, but the revised rule states it only 
once at new Sec.  59.50(d).
    This rule updates delegations of VA's authority for administration 
of the State home construction grant program. VHA recently changed its 
organizational structure, and has aligned management of the State home 
construction grant program under the director of the Office of Capital 
Asset Management and Support. These authorities were previously 
assigned to the Chief Consultant of the Office of Geriatrics and 
Extended Care. VHA is, therefore, revising its regulations at 
Sec. Sec.  59.4 and 59.5 to reflect the new organizational structure.
    Once a priority list is approved by the Secretary, VA cannot change 
it unless a change is needed as a result of an appeal. See 38 CFR 
59.50(g). This rulemaking, therefore, will not affect the ranking of 
projects on a priority list that has been approved by the Secretary.

Administrative Procedure Act

    The Secretary finds that there is good cause, under 5 U.S.C. 
553(b)(B) and (d)(3), to dispense with the opportunity for advance 
notice and opportunity for public comment and good cause to publish 
this rule with an immediate effective date. As stated above, VA's 
current regulations do not provide the necessary tools to use public 
funds more effectively in the interest of veterans' safety. For 
example, during its fiscal year 2011 survey of State homes, VA cited 
nearly 2.5 percent of State homes for deficiencies in emergency power, 
to include illuminating exit signs, and powering emergency 
communication systems; these deficiencies pose threats to veterans' 
safety. This regulation would close a loophole whereby a State with a 
cited safety deficiency in one State home could still apply for, and be 
likely to receive, a grant from VA to construct or acquire a different 
State home. VA finds that continuing to fund applications in this 
manner is contrary to VA's priorities of ensuring veterans' safety.
    Because this interim final rule will help VA ensure veterans' lives 
and safety are protected in State homes, the Secretary finds that it is 
contrary to the public interest to delay this rule for the purpose of 
soliciting advance public comment or to have a delayed effective date. 
Furthermore, it would be against the public interest to award publicly 
funded grant money to States that have not remedied, or do not have a 
plan for remedying, safety citations in existing State homes. For the 
above reasons, the Secretary issues this rule as an interim final rule, 
effective immediately upon publication. VA will consider and address 
comments that are received within 60 days of the date this interim 
final rule is published in the Federal Register.

Effect of Rulemaking

    Title 38 of the Code of Federal Regulations, as revised by this 
interim 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

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

Regulatory Flexibility Act

    The Secretary hereby certifies that this interim 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 interim final rule will directly affect only 
States and will not directly affect small entities. Therefore, pursuant 
to 5 U.S.C. 605(b), this rulemaking is exempt from the initial and 
final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 
604.

Executive Order 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 the Office of 
Management and Budget (OMB) unless OMB waives such review, 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.''

[[Page 21265]]

    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 Reform Act

    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 interim 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 64.005, Grants to States for 
Construction of State Home Facilities; 64.008, Veterans Domiciliary 
Care; 64.009, Veterans Medical Care Benefits; 64.010, Veterans Nursing 
Home Care; 64.014, Veterans State Domiciliary Care; 64.015, Veterans 
State Nursing Home Care; 64.016, Veterans State Hospital Care; 64.018, 
Sharing Specialized Medical Resources; 64.022, Veterans Home Based 
Primary Care; 64.024, VA Homeless Providers Grant and Per Diem Program; 
and 64.026, Veterans State Adult Day Health Care.

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 March 11, 2013 for publication.

List of Subjects in 38 CFR Part 59

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

    Dated: April 5, 2013.
William F. Russo,
Deputy Director, Office of Regulation Policy and Management, Office of 
the General Counsel, Department of Veterans Affairs.

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

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

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

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


Sec.  59.4  [Amended]

0
2. Amend Sec.  59.4 by removing ``Chief Consultant, Geriatrics and 
Extended Care'' and adding, in its place, ``Director, Capital Asset 
Management and Support''.


Sec.  59.5  [Amended]

0
3. Amend Sec.  59.5 by removing ``Chief Consultant, Geriatrics and 
Extended Care (114)'' and adding, in its place, ``Director, Capital 
Asset Management and Support (10NA5)''.
0
4. Amend Sec.  59.50 by:
0
a. In paragraph (a) introductory text, removing ``paragraphs (b) and 
(c) of'' and adding ``otherwise'' immediately after ``Except as''.
0
b. Revising paragraphs (a)(1)(i) through (vi) and adding paragraph 
(a)(1)(vii).
0
c. Revising paragraphs (a)(2) through (7) and adding paragraph (a)(8).
0
d. Removing paragraph (f).
0
e. Redesignating paragraph (d) as new paragraph (f).
0
f. Adding a new paragraph (d).
0
g. Redesignating paragraph (g) as paragraph (i).
0
h. Redesignating paragraph (e) as new paragraph (g).
0
i. Adding new paragraph (e).
0
j. Adding paragraph (h).
    The revisions and additions read as follows:


Sec.  59.50  Priority list.

    (a) * * *
    (1) * * *
    (i) Priority group 1--subpriority 1. An application for a life or 
safety project, which means a project to remedy a condition, or 
conditions, at an existing facility that have been cited as threatening 
to the lives or safety of one or more of the residents or program 
participants in the facility by a VA safety office, VA engineering 
office, or other VA office with responsibility for life and safety 
inspections; a State or local government agency (including a Fire 
Marshal); or an accrediting institution (including the Joint Commission 
on Accreditation of Healthcare Organizations). Unless an addition or 
replacement of building utility systems or features is necessary to 
remedy a cited threat to the lives or safety of residents and program 
participants, this priority group does not include applications for the 
addition or replacement of building utility systems or features; such 
applications will be prioritized in accordance with the criteria in 
subpriority group 5 of priority group 1. An application may be included 
in this subpriority group only if all of the funds requested would be 
used for a life or safety project; or, if the estimated cost of the 
life or safety project is under $400,000.00, and the majority of the 
funds requested would be used for such a project. Projects in this 
subpriority group will be further prioritized in the following order:
    (A) Seismic;
    (B) Building construction;
    (C) Egress;
    (D) Building compartmentalization (e.g., smoke barrier, fire 
walls);
    (E) Fire alarm/detection;
    (F) Security;
    (G) Asbestos/hazardous materials; and
    (H) All other projects (e.g., nurse call systems, patient lifts).
    (ii) Priority group 1--subpriority 2. An application from a State 
that has not previously applied for a grant under 38 U.S.C. 8131-8137 
for construction or acquisition of a State nursing home.
    (iii) Priority group 1--subpriority 3. An application for 
construction or acquisition of a nursing home or domiciliary from a 
State that has a great need for the beds that the State, in that 
application, proposes to establish.
    (iv) Priority group 1--subpriority 4. An application from a State 
for renovations to a State Home facility other than renovations that 
would be included in subpriority group 1 of priority group 1. Projects 
will be further prioritized in the following order:
    (A) Adult day health care renovation and construction of a new 
adult day health care facility that replaces an existing facility;
    (B) Nursing home renovation (e.g., patient privacy) and 
construction of a new nursing home that replaces an existing nursing 
home;
    (C) Code compliance under the Americans with Disabilities Act;
    (D) Building systems and utilities (e.g., electrical; heating, 
ventilation, and

[[Page 21266]]

air conditioning (HVAC); boiler; medical gasses; roof; elevators);
    (E) Clinical-support facilities (e.g., for dietetics, laundry, 
rehabilitation therapy); and
    (F) General renovation/upgrade (e.g., warehouse, storage, 
administration/office, multipurpose).
    (v) Priority group 1--subpriority 5. An application for 
construction or acquisition of a nursing home or domiciliary from a 
State that has a significant need for the beds that the State in that 
application proposes to establish.
    (vi) Priority group 1--subpriority 6. An application for 
construction or acquisition of a nursing home or domiciliary from a 
State that has not demonstrated that State funds are being used to 
protect the lives or safety of the residents and program participants 
of the facility as required in Sec.  59.50(e).
    (vii) Priority group 1--subpriority 7. An application for 
construction or acquisition of a nursing home or domiciliary from a 
State that has a limited need for the beds that the State, in that 
application, proposes to establish.

    Note to paragraph (a)(1): The following chart is intended to 
provide a graphic aid for understanding priority group 1 and its 
subpriorities.

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    (2) Priority group 2. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(i) of this section. Projects within this priority group will be 
further prioritized the same as in paragraphs (a)(1)(i)(A) through 
(a)(1)(i)(H) of this section.
    (3) Priority group 3. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(ii) of this section.
    (4) Priority group 4. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(iii) of this section.
    (5) Priority group 5. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(iv) of this section. Projects within this priority group will be 
further prioritized the same as in paragraphs (a)(1)(iv)(A) through 
(a)(1)(iv)(F) of this section.
    (6) Priority group 6. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(v) of this section.
    (7) Priority group 7. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(vi) of this section.
    (8) Priority group 8. An application not meeting the criteria of 
paragraph (a)(1) of this section but meeting the criteria of paragraph 
(a)(1)(vii) of this section.
* * * * *
    (d) Applications in each priority or subpriority group will be 
further prioritized based on the date the application was received in 
VA (the earlier the application was received, the higher the priority 
given). Projects will be prioritized under this paragraph after all 
prioritization is completed under the projects' priority or subpriority 
group, as specified in paragraph (a) of this section, and only if 
necessary to give separate priorities to applications that have the 
same priority ranking after the prioritization specified in paragraph 
(a) of this section is accomplished.
    (e) If any State home in a State has been cited by a VA safety 
office, VA engineering office, or other VA office with responsibility 
for life and safety inspections; a State or local government agency 
(including a Fire Marshal); or an accrediting institution (including 
the Joint Commission on Accreditation of Healthcare Organizations) for 
conditions that threaten the lives or safety of one or more of the 
residents or program participants in the facility, the State must 
include in any application submitted under Sec.  59.20 or its updates 
to such application its plan to address all such citations. If VA 
determines that the State's plan fails to set forth how it will address 
such citations in a reasonable period of time, then VA will prioritize 
all applications of such State as follows:
    (1) Applications that meet the criteria of paragraph (a)(1) of this 
section, but do not meet the criteria of paragraphs (a)(1)(i) or (vii) 
of this section, will be prioritized in subpriority group 6 of priority 
group 1 (paragraph (a)(1)(vi) of this section).
    (2) Applications not meeting the criteria for placement in priority 
group 1 (paragraph (a)(1) of this section) and not meeting the criteria 
of subpriority group 1 of priority group 1 (paragraph (a)(1)(i) of this 
section) will be prioritized in priority group 7 (paragraph (a)(7) of 
this section).
* * * * *
    (h) Except for applications that must be included in subpriority 
group 1 of priority group 1, applications for projects with components 
that could be prioritized in more than one priority group will be 
placed in the priority group toward which the largest share of the cost 
of the project is allocated. Once the correct priority group is 
determined, applications for projects with components that could be 
prioritized in more than one subpriority group in that priority group 
will be placed in the subpriority group toward which the largest share 
of the cost of the project is allocated. For example, if a project for 
which 25 percent of the funds needed would address seismic issues and 
75 percent of the funds needed would be for building construction in a 
State with a great need for new beds, the project would be placed in 
subpriority group 3. If the highest-cost component of an application 
for multiple projects does not meet the criteria for placement in 
priority group 1, subpriority group 1, because it is estimated to cost 
$400,000.00 or more, it will be prioritized based on the component with 
the next largest share of the cost.
* * * * *
[FR Doc. 2013-08366 Filed 4-9-13; 8:45 am]
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