Veterinary Medicine Loan Repayment Program (VMLRP), 20239-20248 [2010-8628]

Agencies

• DEPARTMENT OF AGRICULTURE
• National Institute of Food and Agriculture

[Federal Register Volume 75, Number 74 (Monday, April 19, 2010)]
[Rules and Regulations]
[Pages 20239-20248]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-8628]



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Federal Register / Vol. 75, No. 74 / Monday, April 19, 2010 / Rules 
and Regulations

[[Page 20239]]



DEPARTMENT OF AGRICULTURE

National Institute of Food and Agriculture

7 CFR Part 3431

RIN 0524-AA43


Veterinary Medicine Loan Repayment Program (VMLRP)

AGENCY: National Institute of Food and Agriculture, USDA.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This final rule establishes the process and procedures for 
designating veterinarian shortage situations, specifically for the 
Veterinary Medicine Loan Repayment Program (VMLRP) authorized by the 
National Veterinary Medical Service Act (NVMSA) and administered by the 
National Institute of Food and Agriculture (NIFA) of the U.S. 
Department of Agriculture. NIFA will designate geographic areas and 
other practice situations that have a shortage of food supply 
veterinarians in order to carry out the VMLRP goals of strengthening 
the nation's animal health infrastructure and supplementing the Federal 
response during animal health emergencies. NIFA will carry out NVMSA by 
entering into educational loan repayment agreements with veterinarians 
who agree to provide veterinary services in veterinarian shortage 
situations for a determined period of time. NIFA is establishing 
Subpart A for the designation of the veterinarian shortage situations 
and Subpart B for the administration of the VMLRP.

DATES: This final rule is effective April 19, 2010.

FOR FURTHER INFORMATION CONTACT: Gary Sherman; National Program Leader, 
Veterinary Science; National Institute of Food and Agriculture; U.S. 
Department of Agriculture; STOP 2220; 1400 Independence Avenue, SW.; 
Washington, DC 20250-2220; Voice: 202-401-4952; Fax: 202-401-6156; 
E[dash]mail: gsherman@nifa.usda.gov.

SUPPLEMENTARY INFORMATION: 

Establishment of National Institute of Food and Agriculture

    On October 1, 2009, the Secretary of Agriculture (Secretary) 
established within USDA the National Institute of Food and Agriculture 
(NIFA), as mandated by section 251(f)(2) of the Department of 
Agriculture Reorganization Act of 1994 (Reorganization Act) (7 U.S.C. 
6971(f)(2)). Section 251(f)(2) was added by section 7511 of the Food, 
Conservation, and Energy Act of 2008 (FCEA), Pub. L. 110-246. Pursuant 
to the FCEA, the Secretary transferred to NIFA, effective October 1, 
2009, the authorities (including all budget authorities, available 
appropriations, and personnel), duties, obligations, and related legal 
and administrative functions prescribed by law or otherwise granted to 
the Secretary, the Department, or any other agency or official of the 
Department under the research, education, economic, cooperative State 
research programs, cooperative extension and education programs, 
international programs, and other functions and authorities delegated 
by the Under Secretary for Research, Education, and Economics (``REE'') 
to the Administrator of the Cooperative State Research, Education, and 
Extension Service (CSREES) pursuant to 7 CFR 2.66, and any and all 
other authorities administered by the Administrator of CSREES. 
Accordingly, the agency known as CSREES was abolished upon 
establishment of NIFA.

Background and Purpose

    In January 2003, the National Veterinary Medical Service Act 
(NVMSA) was passed into law adding section 1415A to the National 
Agricultural Research, Extension, and Teaching Policy Act of 1997 
(NARETPA). This law established a new Veterinary Medicine Loan 
Repayment Program (7 U.S.C. 3151a) authorizing the Secretary of 
Agriculture to carry out a program of entering into agreements with 
veterinarians under which they agree to provide veterinary services in 
veterinarian shortage situations. In November 2005, the Agriculture, 
Rural Development, Food and Drug Administration, and Related Agencies 
Appropriations Act, 2006 (Pub. L. 109-97) appropriated $495,000 to 
implement the Veterinary Medicine Loan Repayment Program (VMLRP) and 
represented the first time funds had been appropriated for this 
program. In February 2007, the Revised Continuing Appropriations 
Resolution, 2007 (Pub. L. 110-5) appropriated an additional $495,000 
for support of the program, in December 2007, the Consolidated 
Appropriations Act, 2008 appropriated an additional $868,875 for 
support of this program, and on March 11, 2009, the Omnibus 
Appropriations Act, 2009 (Pub. L. 111-8) was enacted, providing an 
additional $2,950,000, for the VMLRP. In October 2009, the President 
signed into law, Public Law 111-80, Agriculture, Rural Development, 
Food and Drug Administration, and Related Agencies Appropriations Act 
of 2010, which appropriated $4,800,000 for the VMLRP.
    Consequently, there is a cumulative total of approximately $9.6 
million available for NIFA to administer this program. Funding for 
future years will be based on annual appropriations and balances from 
prior years, and will likely vary from year to year.
    Section 7105 of the Food, Conservation, and Energy Act of 2008, 
Public Law 110-246, (FCEA) amended section 1415A to revise the 
determination of veterinarian shortage situations to consider (1) 
geographical areas that the Secretary determines have a shortage of 
veterinarians; and (2) areas of veterinary practice that the Secretary 
determines have a shortage of veterinarians, such as food animal 
medicine, public health, epidemiology, and food safety. This section 
also added that priority should be given to agreements with 
veterinarians for the practice of food animal medicine in veterinarian 
shortage situations.
    NARETPA section 1415A requires the Secretary, when determining the 
amount of repayment for a year of service by a veterinarian to consider 
the ability of USDA to maximize the number of agreements from the 
amounts appropriated and to provide an incentive to serve in veterinary 
service shortage areas with the greatest need. This section also 
provides that loan repayments may consist of payments of the principal 
and interest on government and commercial loans

[[Page 20240]]

received by the individual for the attendance of the individual at an 
accredited college of veterinary medicine resulting in a degree of 
Doctor of Veterinary Medicine or the equivalent. This program is not 
authorized to provide repayments for any government or commercial loans 
incurred during the pursuit of another degree, such as an associate or 
bachelor degree. Loans eligible for repayment include educational loans 
made for one or more of the following: Loans for tuition expenses; 
other reasonable educational expenses, including fees, books, and 
laboratory expenses, incurred by the individual; and reasonable living 
expenses as determined by the Secretary. In addition, the Secretary is 
directed to make such additional payments to participants as the 
Secretary determines appropriate for the purpose of providing 
reimbursements to participants for individual tax liability resulting 
from participation in this program. Finally, this section requires USDA 
to promulgate regulations within 270 days of the enactment of FCEA 
(i.e., June 18, 2008). The Secretary delegated the authority to carry 
out this program to NIFA.

Solicitation of Stakeholder Input and Publication of the Interim Rule

    On August 29, 2008, CSREES published a Federal Register notice [73 
FR 50928-50929] announcing a public meeting to be held on Monday, 
September 15, 2008, at the Waterfront Centre in Washington, DC, to 
solicit stakeholder input as well as the instructions on how to submit 
written comments by Tuesday, September 30, 2008, on the implementation 
of VMLRP.
    CSREES received oral and written comments from the following 
veterinary professional associations and organizations: American 
Veterinary Medical Association (AVMA), Association of American 
Veterinary Medical Colleges (AAVMC), American College of Veterinary 
Microbiologists (ACVM), American Association of Veterinary Laboratory 
Diagnosticians (AAVLD), American College of Veterinary Pathologists 
(ACVP), National Cattlemen's Beef Association (NCBA), Texas Cattle 
Feeders Association (TCFA), and Ohio's Cattlemen Association (OCA) as 
well as a comprehensive joint statement from AVMA and the AAVMC. In 
addition, CSREES received 27 comments from individuals, most of whom 
were students at veterinary colleges. CSREES considered all comments 
received in the development of the interim rule which was published on 
July 9, 2009 [74 FR 32788-32798] with a 60-day comment period.

Response to Comments on Interim Rule and Revisions Included in Final 
Rule

    In the Interim Rule, CSREES established rules and invited comments 
on the process and procedures for (a) designating veterinarian shortage 
situations and (b) administration for the VMLRP. CSREES received 
thirty-eight sets of comments from individuals, including practicing 
veterinarians, farmers, and students, and the following veterinary 
professional associations and organizations: American Veterinary 
Medical Association (AVMA), Association of American Veterinary Medical 
Colleges (AAVMC), American Association of Veterinary Laboratory 
Diagnosticians (AAVLD), National Association of Federal Veterinarians 
(NAFV), Humane Society Veterinary Medical Association (HSVMA), and 
North Dakota Stockmen's Association (NDSA) as well as a joint statement 
from Washington Cattlemen's Association (WCA) and Washington State 
Dairy Federation (WSDF). NIFA considered all comments received in the 
development of the final rule.

Non-Doctor of Veterinary Medicine (D.V.M.) Loans

    Comment: Three commentors expressed concern about the exclusion of 
education loans other than those obtained for the Doctorate of 
Veterinary Medicine (or equivalent) from the VMLRP. AVMA, as one of the 
commentors, ``contends that a veterinary student's undergraduate 
education is an integral component of their academic veterinary career. 
Veterinary students must take required prerequisites for the doctoral 
program while enrolled in undergraduate studies. Without these required 
prerequisite courses a prospective veterinary student would be 
ineligible for admission to veterinary medical school.''
    NIFA Response: The NVMSA legislation specifically states in Section 
1415A(c)(3) of NARETPA the following: Qualifying Educational Loans--
Loan repayments provided under this section may consist of payments on 
behalf of participating individuals of the principal, interest, and 
related expenses on government and commercial loans received by the 
individual for attendance of the individual at an accredited college of 
veterinary medicine resulting in a degree of Doctor of Veterinary 
Medicine or the equivalent * * *''. Consequently, there is no change to 
the regulations regarding eligibility of non-DVM loans for the VMLRP.
    Comment: Seven commentors observed that disqualifying individuals 
who consolidated their undergraduate student loans with veterinary 
school loans would unfairly cause a large group of highly qualified 
veterinarians, many of whom have high levels of debt, ineligible for 
the VMLRP. Additionally, AAVMC reported that ``the issue of 
consolidated debt was the highest rated and most oft mentioned concern 
for AAVMC members.''
    NIFA Response: NIFA agrees. NIFA will allow individuals who 
consolidated their veterinary school loans with other educational loans 
(e.g. undergraduate) to apply for the VMLRP; however, only the eligible 
portion of the consolidation will be repaid by the VMLRP, thus Parts 
3431.9(b)(3) and 3431.15(b)(4) have been removed from the final 
regulations. Furthermore, applicants with consolidated loans will be 
asked to provide a complete history of their student loans from the 
National Student Loan Database System (NSLDS), a central database for 
student aid operated by the U.S. Department of Education. The NSLDS Web 
site can be found at https://www.nslds.ed.gov. Individuals who 
consolidated their DVM loans with non-educational loans or loans 
belonging to an individual other than the applicant, such as a spouse 
or child, will continue to be ineligible for the VMLRP.

Definitions

    Comment: Three commentors requested clarification on the definition 
for ``accredited college of veterinary medicine'' as there are multiple 
accreditation bodies that could be included in the definition. Two of 
the three commentors recommended that the definition be modified to 
specify accreditation by the AVMA Council on Education, a specialized 
accrediting agency recognized and authorized by the U.S. Department of 
Education.
    NIFA Response: NIFA agrees. To eliminate any confusion, the 
definitions have been modified in the definitions (Sec.  3431.3) and 
eligibility (Sec.  3431.9) sections in the final regulations to specify 
that a veterinarian must have attended a college of veterinary medicine 
accredited by the AVMA Council on Education to be eligible to apply to 
the VMLRP.
    Comment: One commentor asked NIFA to give serious consideration to 
including U.S. citizens who are studying to become veterinarians in 
veterinary schools in the Caribbean basin.
    NIFA Response: NIFA welcomes veterinarians that studied abroad to 
obtain their Doctorate in Veterinary

[[Page 20241]]

Medicine degree (or equivalent) to apply for the VMLRP as long as the 
professional veterinary medicine degree was obtained from a college of 
veterinary medicine accredited by the AVMA Council on Education, a list 
that includes fourteen schools outside the United States as of October 
21, 2009.
    Comment: Two commentors, AVMA and NAFV, recommended adding ``animal 
health'' to the definition of ``practice of food supply veterinary 
medicine'' and the areas that have food supply veterinarian shortages.
    NIFA Response: NIFA agrees. ``Animal health'' has been added to 
both definitions in the definitions section (Sec.  3431.3) in the final 
regulations.
    Comment: One commentor recommended that ``caprine'' be added to the 
definition of ``Food animal''.
    NIFA Response: ``Caprine'' has been added to the definition of 
``food animal'' in the definitions section (Sec.  3431.3).

State Animal Health Official

    Comment: Three commentors suggested that the State Animal Health 
Official be required to consult with the State Veterinary Association 
and other interested parties within the State when identifying 
underserved areas within a State.
    NIFA Response: We strongly recommend that State Animal Health 
Officials involve other leading animal health experts in the nomination 
process as they identify underserved areas within their respective 
States.

Shortage Nominations

    Comment: One commentor expressed concern that low density 
agricultural areas will be regarded as less important than areas of 
heavily concentrated agriculture.
    Comment: One commentor recommended that representatives of Federal 
agencies be included on an official review panel.
    NIFA Response: NIFA will take these comments into consideration as 
it develops the solicitation for nominations for veterinarian shortage 
situations and implements the review panel.
    Comment: One commentor urged USDA to examine the feasibility of 
establishing an indexing system whereby each shortage situation that is 
designated is awarded a weighted score for severity of shortage.
    NIFA Response: As with other review processes conducted by NIFA, 
the review panel will evaluate the composite qualitative and 
quantitative arguments presented in the submitted nomination packages 
against criteria described elsewhere in this notice. The panel will 
classify each shortage situation as either ``Recommended for 
designation'' or ``Not recommended for designation''.
    Comment: One commentor suggested that solicitation notices be 
published on an annual basis instead of a biennial basis. Another 
commentor requested clarification on the frequency of the need to apply 
for the designation of shortage areas and the need to reassess a 
designation once it is filled by a veterinarian enrolled in the VMLRP.
    NIFA Response: NIFA presumes that, over time, the shortage 
situation priorities of a State will change due to veterinarians 
relocating to fill critical areas designated by the VMLRP. NIFA will 
also be mindful of spontaneous shifts in perceived threats to animal 
health in time and space. To address changing conditions, NIFA program 
staff will assess the relative demand for reprioritization of shortage 
situation distribution within the States on an annual basis. However, 
NIFA reserves the right to conduct this solicitation on a biennial 
basis to save administrative costs and to adhere to the aggressive 
annual program schedule and/or to respond to funding fluctuations.

Selection Process

    Comment: One commentor stated that the Interim Rule did not address 
how applicants would be chosen for specific shortage areas.
    NIFA Response: NIFA will establish the evaluation criteria and 
process and determine the makeup of the application review panel before 
the application period opens. Applicants will be ranked based on their 
qualifications relative to the attributes of the shortage situation 
applied for.

Licensure

    Comment: One commentor recommended that licensure not be a blanket 
requirement for eligibility to apply for the VMLRP, but that 
veterinarians should be in compliance with State and local regulations, 
including having the appropriate certifications and licenses, in the 
jurisdiction of the shortage situation.
    NIFA Response: NIFA agrees and has updated Parts 3431.8 and 3431.10 
of the regulations to reflect that licensure is required only if it is 
mandated by the State and local regulations in which the shortage 
situation is sited.

Federal Veterinarians

    Comment: Three commentors stated that it was not clear to what 
degree the VMLRP would apply to veterinarians working for the Federal 
government.
    NIFA Response: NIFA recognizes that NVMSA is intended to address a 
national problem. NIFA has also acknowledged in the interim rule that 
approximately 10 percent of the loan repayment awards will be made 
available to address public practice shortages and at least 90 percent 
of funds will be awarded to private practice food animal veterinarians 
to assure appropriate emphasis as requested by the legislation set 
forth by Congress. Hence, some designated veterinarian shortage 
situations may be Federal positions. However, these positions must be 
nominated by the State Animal Health Official (SAHO), designated by the 
review panel as ``recommended for designation,'' and approved by the 
Secretary for designation.

Retention

    Comment: Fourteen commentors stated the importance of making VMLRP 
awards to include veterinarians with established practices in shortage 
areas as a form of retention in addition to the recruitment of 
veterinarians to shortage areas.
    NIFA Response: NIFA agrees. The SAHO may identify and submit a 
shortage situation based on the assessment that there is a great risk 
of losing an established veterinarian in a given shortage situation and 
that the need to retain a veterinarian in this area is of utmost 
importance.

Appropriation

    Comment: Three commentors mentioned the importance of having 
adequate, stable, and reliable funding. AVMA and NAFV also stated that 
NIFA should move towards optimal funding of $6 million each year 
through fiscal year 2016.
    NIFA Response: NIFA and USDA both support the President's proposed 
budget each year. Congress is ultimately responsible for the 
development and passage of the annual Federal appropriations bill. As 
NIFA is prohibited from lobbying Congress, the stability and magnitude 
of future Federal funding for the VMLRP will depend on Congressional 
consideration of Presidential recommendations and public interests 
balanced against other fiscal priorities.

Allocation of Awards

    Comment: One commentor suggested that 90 percent of awards be 
devoted to veterinarians involved with food animal medicine and rural 
practice (mixed large animal and small animal) who have at least 30 
percent or more involvement with food animal species.

[[Page 20242]]

Another commentor recommended that the 10 percent of the awards offered 
to mixed animal practitioners be devoted to the food animal discipline 
for at least half of their practice.
    NIFA Response: NIFA agrees with the notion that there is practical 
value in identifying service commitment requirements for practitioners 
of food supply veterinary medicine of less than 100 percent. 
Accordingly, all three shortage situation types identified in the 
nomination form allow for different percentages of full-time equivalent 
commitment, commensurate with a variety of different public and private 
practice scenarios.

Scholarships

    Comment: One commentor recommended that USDA allocate four 
scholarships to the Washington State University College of Veterinary 
Medicine to allow students to pay down principal and interest on 
qualifying loans accrued while a veterinary student.
    NIFA Response: NIFA appreciates and accepts all comments. However, 
this comment is beyond the scope of the VMLRP as the VMLRP is a 
competitive program and its benefits apply to educational loans taken 
out by graduates of a school of veterinary medicine. Furthermore, 
participants are required to hold a Doctor of Veterinary Medicine 
degree or the equivalent and serve in a shortage area immediately in 
order to receive VMLRP benefits.

Mentoring

    Comment: Two commentors urged NIFA to establish a mentoring program 
for participants in the program.
    NIFA Response: NIFA agrees. NIFA will investigate options for 
including a mentoring component as part of the VMLRP.

Debt Threshold

    Comment: Two commentors questioned the need to have a debt 
threshold for individuals to be eligible to apply to the VMLRP.
    NIFA Response: NIFA disagrees. If there are veterinarians with 
minimal amounts of educational debt that are willing to commit for a 
number of years of service to a shortage situation, they should be able 
to do so without the VMLRP benefit. The goal of the VMLRP is to fill 
shortage situations with veterinarians that would have otherwise gone 
elsewhere. NIFA also aims to maximize the number of agreements, and 
entering agreements with those with negligible debt would create an 
additional administrative burden (both cost and personnel time) as an 
individual's debt level has no effect on the administrative cost to 
process an application and execute a service agreement. Establishing a 
debt threshold eliminates the administrative burden of processing 
applications from those who will scarcely benefit from the VMLRP.

Diagnostic Lab

    Comment: Two commentors requested NIFA to recognize the shortage of 
veterinarians in AAVLD laboratories and to allow veterinarians entering 
the diagnostic laboratory workforce to be considered under the category 
of ``public practice''.
    NIFA Response: Veterinarians entering the diagnostic laboratory 
workforce will be eligible for the VMLRP under the public practice 
nomination provisions and limitations. The number of agreements 
available to this area depends on (a) the nominations by the SAHOs, and 
(b) recommendations of designation by the review panel.

Emergency Situations

    Comment: Two commentors stated their support for the concept of the 
proposed pilot program for VMLRP participants to be called away to work 
in emergency situations. However, both commentors also shared concerns 
about the proper implementation of this component of the program.
    NIFA Response: Due to limited funding and the intricacies involving 
the emergency component, this component will not be implemented during 
the first year of the VMLRP.

Long-Term Program Impact

    Comment: Two commentors expressed concern about the focus of the 
VMLRP. One commentor stated that ``It seems that many of these types of 
programs end up helping those who have a background and obvious desire 
to already go into such a career.'' The other commentor cited a program 
where ``most of the nurses, and other health care workers, only remain 
there as long as is necessary to receive the payback and leave as 
quickly as possible thereafter leaving the reservation's health care no 
better off than it was before.''
    NIFA response: NIFA appreciates all comments both positive and 
negative. NIFA plans to conduct an impact evaluation on the VMLRP to 
assess whether the desired outcomes are achieved.

Program Benefits

    Comment: One commentor recommended that the amount of funding 
provided to cover a VMLRP recipient's tax obligation be reviewed every 
three years to assure tax coverage is adequate.
    NIFA Response: NIFA will reassess the tax percentage every three 
years to ensure VMLRP participants are provided proper tax coverage. 
Section 3431.13(e) has been broadened to allow that the amount provided 
for reimbursement of tax liabilities will not exceed ``any other cap 
established by the Secretary.''

Increasing Educational Debt

    Comment: Five commentors stated concerns about rising educational 
debt for aspiring veterinarians. One commentor questioned whether the 
maximum annual loan repayment of $25,000 was sufficient. Another 
commentor stated that adjustments need to be included to allow for 
increases in annual loan limits. Yet another commentor stated that the 
$25,000 repayment level is a meaningful amount that will help address 
the educational debt load.
    NIFA Response: After program implementation, NIFA will continue to 
monitor trends among participants, applicants, and graduating 
veterinarians to ensure the VMLRP remains successful in providing a 
financial incentive to fill shortage areas, while maximizing the number 
of agreements at the same time.

Other Revisions to the Interim Regulation

    A correction was made to the Withdrawal definition in Sec.  3413.3 
to signify that a withdrawal occurs prior to the VMLRP making the first 
quarterly payment on behalf of the participant rather than the first 
annual payment.

Timeline for Implementing the Program

    NIFA published a solicitation for the veterinarian shortage 
situations via a Federal Register notice on January 22, 2010 [75 FR 
3697-3704] with a solicitation period of 45 days. At the same time, 
NIFA will continue to work with the NIH DLR on adapting the NIH DLR 
application forms for use by VMLRP as well as developing the other 
associated business processes (e.g., reporting, payments). NIFA 
anticipates soliciting for VMLRP participants in April 2010 (open for 
60 days).
    In addition to this final regulation, which addresses most of the 
policies associated with this program, NIFA plans to create 
informational Web pages (providing detailed information and procedures) 
for the program similar to the pages created for the NIH DLR programs.

[[Page 20243]]

    Please note that the solicitation for veterinary shortage 
situations and the VMLRP RFA will provide more specific details on the 
program.

Administrative Requirements for the Final Rulemaking

Executive Order 12866

    The Office of Management and Budget has reviewed this final rule 
because while it is not economically significant, it implements the 
Veterinary Medicine Loan Repayment Program (VMLRP). This final rule 
will not materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs; nor will it have an annual effect on the 
economy of $100 million or more; nor will it adversely affect the 
economy, a sector of the economy, productivity, competition, jobs, the 
environment, public health or safety, or State, local, or Tribal 
governments or communities in a material way. Furthermore, it does not 
raise a novel legal or policy issue arising out of legal mandates, the 
President's priorities or principles set forth in the Executive Order.

Regulatory Flexibility Act of 1980

    This final rule has been reviewed in accordance with the Regulatory 
Flexibility Act of 1980, as amended by the Small Business Regulatory 
Enforcement Fairness Act of 1996, 5 U.S.C. 601-612. The Department 
concluded that the rule does not involve regulatory and informational 
requirements regarding businesses, organizations, and governmental 
jurisdictions subject to regulation.

Paperwork Reduction Act

    The Department certifies that this final rule has been assessed in 
accordance with the requirements of the Paperwork Reduction Act, 44 
U.S.C. 3501 et seq. (PRA). The VMLRP Veterinarian Shortage Situation 
Nomination form has been approved by OMB as No. 0524-0046. The VMLRP 
Application Package and Reporting Requirements have been approved by 
OMB as No. 0524-0047.

Catalog of Federal Domestic Assistance

    This interim regulation applies to the following Federal assistance 
program administered by NIFA, Catalog of Federal Domestic Assistance 
(CFDA) No. 10.313, Veterinary Medicine Loan Repayment Program (VMLRP).

Unfunded Mandates Reform Act of 1995 and Executive Order 13132

    The Department has reviewed this final rule in accordance with the 
requirements of Executive Order No. 13132, 64 FR 43225 (August 10, 
1999) and the Unfunded Mandates Act of 1995, 2 U.S.C. 1501 et seq., and 
has found no potential or substantial direct effects on the States, on 
the relationship between the national government and the States, or on 
the distribution of power and responsibilities among the various levels 
of government. As there is no Federal mandate contained herein that 
could result in increased expenditures by State, local Tribal 
governments or by the private sector, the Department has not prepared a 
budgetary impact statement.

Executive Order 13175: Consultation and Coordination With Indian Tribal 
Governments

    The Department has reviewed this final rule in accordance with 
Executive Order 13175, 65 FR 67249 (Nov. 9, 2000), and has determined 
that it does not have ``tribal implications.'' The final rule does not 
``have substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes.''

Clarity of This Regulation

    Executive Order 12866 and the President's memorandum of June 1, 
1998, require each agency to write all rules in plain language. The 
Department invites comments on how to make this final rule easier to 
understand.

List of Subjects in Part 3431

    Administrative practice and procedure, Agricultural research, 
education, extension, Federal assistance, Veterinarians.

0
For the reasons discussed in the preamble, NIFA amends Chapter XXXIV of 
Title 7 of the Code of Federal Regulations as follows:

Chapter XXXIV--National Institute of Food and Agriculture

0
1. The heading of chapter XXXIV is revised to read as set forth above.

0
2. Part 3431 is revised to read as follows:

PART 3431--VETERINARY MEDICINE LOAN REPAYMENT PROGRAM

Subpart A--Designation of Veterinarian Shortage Situations
Sec.
3431.1 Applicability of regulations.
3431.2 Purpose.
3431.3 Definitions and acronyms.
3431.4 Solicitation of stakeholder input.
3431.5 Solicitation of veterinarian shortage situations.
3431.6 Review of nominations.
3431.7 Notification and use of designated veterinarian shortage 
situations.
Subpart B--Administration of the Veterinary Medicine Loan Repayment 
Program
3431.8 Purpose and scope.
3431.9 Eligibility to apply.
3431.10 Eligibility to participate.
3431.11 Application.
3431.12 Selection of applicants.
3431.13 Terms of loan repayment and length of service requirements.
3431.14 Priority.
3431.15 Qualifying loans.
3431.16 Certifications and verifications.
3431.17 VMLRP service agreement offer.
3431.18 Service agreement.
3431.19 Payment and tax liability.
3431.20 Administration.
3431.21 Breach.
3431.22 Waiver.
3431.23 Service to Federal government in emergency situations.
3431.24 Reporting requirements, monitoring, and close-out.

    Authority: 7 U.S.C. 3151a; Pub. L. 106-107 (31 U.S.C. 6101 
note).

Subpart A--Designation of Veterinarian Shortage Situations


Sec.  3431.1  Applicability of regulations.

    This part establishes the process and procedures for designating 
veterinarian shortage situations as well as the administrative 
provisions for the Veterinary Medicine Loan Repayment Program (VMLRP) 
authorized by the National Veterinary Medical Service Act (NVMSA), 7 
U.S.C. 3151a.


Sec.  3431.2  Purpose.

    The Secretary will follow the processes and procedures established 
in subpart A of this part to designate veterinarian shortage situations 
for the VMLRP. Applications for the VMLRP will be accepted from 
eligible veterinarians who agree to serve in one of the designated 
shortage situations in exchange for the repayment of an amount of the 
principal and interest of the veterinarian's qualifying educational 
loans. The administrative provisions for the VMLRP, including the 
application process, are established in subpart B of this part.


Sec.  3431.3  Definitions and acronyms.

    (a) General definitions. As used in this part:
    Act means the National Veterinary Medical Service Act, as amended.
    Agency or NIFA means the National Institute of Food and 
Agriculture.
    Department means the United States Department of Agriculture.
    Food animal means the following species: Bovine, porcine, ovine/
camelid, cervid, poultry, caprine, and any other species as determined 
by the Secretary.
    Food supply veterinary medicine means all aspects of veterinary 
medicine's involvement in food supply

[[Page 20244]]

systems, from traditional agricultural production to consumption.
    Insular area means the Commonwealth of Puerto Rico, Guam, American 
Samoa, the Commonwealth of the Northern Mariana Islands, the Federated 
States of Micronesia, the Republic of the Marshall Islands, the 
Republic of Palau, and the Virgin Islands of the United States.
    NVMSA means the National Veterinary Medicine Service Act.
    Practice of food supply veterinary medicine includes corporate/
private practices devoted to food animal medicine, mixed animal 
medicine located in a rural area (at least 30 percent of practice 
devoted to food animal medicine), food safety, epidemiology, public 
health, animal health, and other public and private practices that 
contribute to the production of a safe and wholesome food supply.
    Practice of veterinary medicine means to diagnose, treat, correct, 
change, alleviate, or prevent animal disease, illness, pain, deformity, 
defect, injury, or other physical, dental, or mental conditions by any 
method or mode; including:
    (1) The prescription, dispensing, administration, or application of 
any drug, medicine, biologic, apparatus, anesthetic, or other 
therapeutic or diagnostic substance or medical or surgical technique, 
or
    (2) The use of complementary, alternative, and integrative 
therapies, or
    (3) The use of any manual or mechanical procedure for reproductive 
management, or
    (4) The rendering of advice or recommendation by any means 
including telephonic and other electronic communications with regard to 
any of paragraphs (1), (2), (3), or (4) of this definition.
    Rural area means any area other than a city or town that has a 
population of 50,000 inhabitants and the urbanized area contiguous and 
adjacent to such a city or town.
    Secretary means the Secretary of Agriculture and any other officer 
or employee of the Department to whom the authority involved has been 
delegated.
    Service area means geographic area in which the veterinarian will 
be providing veterinary medical services.
    State means any one of the fifty States, the District of Columbia, 
and the insular areas of the United States.
    State animal health official or SAHO means the State veterinarian, 
or equivalent, who will be responsible for nominating and certifying 
veterinarian shortage situations within the State.
    Veterinarian means a person who has received a professional 
veterinary medicine degree from a college of veterinary medicine 
accredited by the AVMA Council on Education.
    Veterinarian shortage situation means any of the following 
situations in which the Secretary, in accordance with the process in 
subpart A of this part, determines has a shortage of veterinarians:
    (1) Geographical areas that the Secretary determines have a 
shortage of food supply veterinarians; and
    (2) Areas of veterinary practice that the Secretary determines have 
a shortage of food supply veterinarians, such as food animal medicine, 
public health, animal health, epidemiology, and food safety.
    Veterinary medicine means all branches and specialties included 
within the practice of veterinary medicine.
    Veterinary Medicine Loan Repayment Program or VMLRP means the 
Veterinary Medicine Loan Repayment Program authorized by the National 
Veterinary Medical Service Act.
    (b) Definitions applicable to Subpart B.
    Applicant means an individual who applies to and meets the 
eligibility criteria for the VMLRP.
    Breach of agreement results when a participant fails to complete 
the service agreement obligation required under the terms and 
conditions of the agreement and will be subject to assessment of 
monetary damages and penalties as determined in the service agreement, 
unless a waiver has been granted or an exception applies.
    Current payment status means that a qualified educational loan is 
not past due in its payment schedule as determined by the lending 
institution.
    Debt threshold means the minimum amount of qualified student debt 
an individual must have, on their program eligibility date, in order to 
be eligible for program benefits, as determined by the Secretary.
    Program eligibility date means the date on which an individual's 
VMLRP agreement is executed by the Secretary.
    Program participant means an individual whose application to the 
VMLRP has been approved and whose service agreement has been accepted 
and signed by the Secretary.
    Qualifying educational expenses means the costs of attendance of 
the applicant at a college of veterinary medicine accredited by the 
AVMA Council on Education, exclusive of the tuition and reasonable 
living expenses. Educational expenses may include fees, books, 
laboratory expenses and materials, as required by an accredited college 
or school of veterinary medicine as part of a Doctor of Veterinary 
Medicine degree program, or the equivalent. The program participant 
must submit sufficient documentation, as required by the Secretary, to 
substantiate the school requirement for the educational expenses 
incurred by the program participant.
    Qualifying educational loans means loans that are issued by any 
Federal, State, or local government entity, accredited academic 
institution(s), and/or commercial lender(s) that are subject to 
examination and supervision in their capacity as lending institutions 
by an agency of the United States or the State in which the lender has 
its principal place of business. Loans must have been made for one or 
more of the following: School tuition, other qualifying educational 
expenses, or reasonable living expenses relating to the obtainment of a 
degree of Doctor of Veterinary Medicine from a college or school of 
veterinary medicine accredited by the AVMA Council on Education. Such 
loans must have documentation which is contemporaneous with the 
training received in a college or school of veterinary medicine. If 
qualifying educational loans are refinanced, the original documentation 
of the loan(s) will be required to be submitted to the Secretary to 
establish the contemporaneous nature of such loans.
    Reasonable living expenses means the ordinary living costs incurred 
by the program participant while attending the college of veterinary 
medicine, exclusive of tuition and educational expenses. Reasonable 
living expenses must be incurred during the period of attendance and 
may include food and lodging expenses, insurance, commuting and 
transportation costs. Reasonable living expenses must be equal to or 
less than the sum of the school's estimated standard student budgets 
for living expenses for the degree of veterinary medicine for the 
year(s) during which the program participant was enrolled in the 
school. However, if the school attended by the program participant did 
not have a standard student budget or if a program participant requests 
repayment for living expenses which are in excess of the standard 
student budgets described in the preceding sentence, the program 
participant must submit documentation, as required by the Secretary, to 
substantiate the reasonableness of living expenses incurred. To the 
extent that the Secretary determines, upon review of the program 
participant's documentation, that all or a portion of

[[Page 20245]]

the living expenses are reasonable, these expenses will qualify for 
repayment.
    Service agreement means the agreement, which is signed by an 
applicant and the Secretary for the VMLRP wherein the applicant agrees 
to accept repayment of qualifying educational loans and to serve in 
accordance with the provisions of NVMSA for a prescribed period of 
obligated service.
    Termination means a waiver of the service obligation granted by the 
Secretary when compliance by the participant is impossible, would 
involve extreme hardship, or where enforcement with respect to the 
individual would be unconscionable (see breach of agreement).
    Withdrawal means a request by a participant for withdrawal from 
participation in the VMLRP after signing the service agreement, but 
prior to VMLRP making the first quarterly payment on behalf of the 
participant. A withdrawal is without penalty to the participant and 
without obligation to the Program.


Sec.  3431.4  Solicitation of stakeholder input.

    The Secretary will solicit stakeholder input on the process and 
procedures used to designate veterinarian shortage situations prior to 
the publication of the solicitation for nomination of veterinarian 
shortage situations. A notice may be published in the Federal Register, 
on the Agency's Web site, or other appropriate format or forum. This 
request for stakeholder input may include the solicitation of input on 
the administration of VMLRP and its impact on meeting critical 
veterinarian shortage situations. All comments will be made available 
and accessible to the public.


Sec.  3431.5  Solicitation of veterinarian shortage situations.

    (a) General. The Secretary will follow the procedures described in 
this part to solicit veterinarian shortage situations as the term is 
defined in Sec.  3431.3.
    (b) Solicitation. The Secretary will publish a solicitation for 
nomination of veterinarian shortage situations in the Federal Register, 
on the Agency's Web site, or other appropriate format or forum.
    (c) Frequency. Contingent on the availability of funds, the 
Secretary will normally publish a solicitation on an annual basis. 
However, the Secretary reserves the right to solicit veterinarian 
shortage situations every two or three years, as appropriate.
    (d) Content. The solicitation will describe the nomination process, 
the review criteria and process, and include the form used to submit a 
nomination. The solicitation may specify the maximum number of 
nominations that may be submitted by each State animal health official.
    (e) Nominations. Nominations shall identify the veterinarian 
shortage situation and address the criteria in the nomination form 
which may include the objectives of the position, the activities of the 
position, and the risk posed if the position is not secured.
    (f) Nominating Official. The State animal health official in each 
State is the person responsible for submitting and certifying 
veterinarian shortage situations within the State to NIFA officials. It 
is strongly recommended that the State animal health official of each 
State involve the leading health animal experts in the State in the 
nomination process.


Sec.  3431.6  Review of nominations.

    (a) Peer panel. State shortage situations nominations will be 
evaluated by a peer panel of experts in animal health convened by the 
Secretary. The panel will evaluate nominations according to the 
criteria identified in the solicitation. The panel will consider the 
objectives and activities of the veterinarian position in the 
veterinary service shortage situation and the risks associated with not 
securing or retaining the position and make a recommendation regarding 
each nomination.
    (b) Agency review. The Secretary will evaluate the recommendations 
of the peer panel and designate shortage situations for the VMLRP.


Sec.  3431.7  Notification and use of designated veterinarian shortage 
situations.

    The Secretary will publish the designated veterinarian shortage 
situations on the Agency's Web site and will use the designated 
veterinarian shortage situations to solicit VMLRP loan repayment 
applications from individual veterinarians in accordance with subpart B 
of this part.

Subpart B--Administration of the Veterinary Medicine Loan Repayment 
Program


Sec.  3431.8  Purpose and scope.

    (a) Purpose. The regulations of this subpart apply to the award of 
veterinary medicine loan repayments under the Veterinary Medicine Loan 
Repayment Program (VMLRP) authorized by the National Veterinary 
Medicine Service Act, 7 U.S.C. 3151a.
    (b) Scope. Under the VMLRP, the Secretary enters into service 
agreements with veterinarians to pay principal and interest on 
education loans of veterinarians who agree to work in veterinary 
shortage situations for a prescribed period of time. In addition, 
program participants may enter into an agreement to provide services to 
the Federal government in emergency situations in exchange for salary, 
travel, per diem expenses, and additional amounts of loan repayment 
assistance. The purpose of the program is to assure an adequate supply 
of trained food animal veterinarians in shortage situations and provide 
USDA with a pool of veterinary specialists to assist in the control and 
eradication of animal disease outbreaks.


Sec.  3431.9  Eligibility to apply.

    (a) General. To be eligible to apply to the VMLRP an applicant 
must:
    (1) Have a degree of Doctor of Veterinary Medicine (DVM), or the 
equivalent, from a college of veterinary medicine accredited by the 
AVMA Council on Education;
    (2) Have qualifying educational loan debt as defined in Sec.  
3431.3;
    (3) Secure an offer of employment or establish and/or maintain a 
practice in a veterinary shortage situation, as determined by the 
Secretary in accordance with the procedures in subpart A of this part, 
within the time period specified in the VMLRP service agreement offer; 
and
    (4) Provide certifications and verifications in accordance with 
Sec.  3431.16.
    (b) Non-eligibility. The following individuals are ineligible to 
apply to the VMLRP:
    (1) An individual who owes an obligation for veterinary service to 
the Federal government, a State, or other entity under an agreement 
with such Federal, State, or other entity are ineligible for the VMLRP 
unless such obligation will be completely satisfied prior to the 
beginning of service under the VMLRP;
    (2) An individual who has a Federal judgment lien against his/her 
property arising from Federal debt; and
    (3) An individual who has total qualified debt that does not meet 
the debt threshold.


Sec.  3431.10  Eligibility to participate.

    To be eligible to participate in the VMLRP, a participant must meet 
the following criteria:
    (a) Meet the eligibility criteria of Sec.  3431.9 for applying to 
the VMLRP;
    (b) Be selected for participation by the Secretary pursuant to 
Sec.  3431.12.
    (c) Comply with all State and local regulations (including 
appropriate licensure where required) in the jurisdiction in which he 
or she proposes to practice;

[[Page 20246]]

    (d) Be a citizen, national, or permanent resident of the United 
States;
    (e) Sign a service agreement to provide veterinary services in one 
of the veterinarian shortage situations; and
    (f) Comply with the terms and conditions of the Service Agreement.


Sec.  3431.11  Application.

    Individuals who meet the eligibility criteria of Sec.  3431.9 may 
submit an online program application or any other application process 
provided by the Secretary.


Sec.  3431.12  Selection of applicants.

    (a) Review of applications. Upon receipt, applications for the 
VMLRP will be reviewed for eligibility and completeness by the 
appropriate staff as determined by the Secretary. Incomplete or 
ineligible applications will not be processed or reviewed.
    (b) Peer review. (1) Applications for the VMLRP that are deemed 
eligible and complete will be referred to the VMLRP peer panel for peer 
review. In evaluating the application, reviewers are directed to 
consider the following components, as well as any other criteria 
identified in the RFA, and how they relate to the likelihood that the 
applicant will meet the terms and conditions of the VMLRP agreement, 
continue to serve in a veterinary shortage situation, or pursue a 
career in food supply veterinary medicine:
    (i) Major or emphasis area(s) during formal post-secondary training 
(e.g., bachelors degree major, minor);
    (ii) Major or emphasis area(s) during formal training for DVM/VMD 
degree;
    (iii) Specialty training area/discipline (e.g., board certification 
or graduate degree);
    (iv) Non-degree/non-board certification training or certifications 
(e.g., animal agrosecurity coursework and certifications);
    (v) Applicant's personal statement;
    (vi) Awards;
    (vii) Letters or recommendation, if applicable; and
    (viii) Other documentation or criteria, as specified in the RFA.
    (2) Applicants will then be ranked based on their qualifications 
relative to the attributes of the shortage situation applied for.


Sec.  3431.13  Terms of loan repayment and length of service 
requirements.

    (a) Loan repayment. For each year of obligated service in a 
veterinary shortage situation, as determined by the Secretary, with a 
minimum of 3 years (and maximum of 4 years) of obligated service, the 
Secretary may pay:
    (1) An amount not exceeding $25,000 per year of a program 
participant's qualifying loans; and
    (2) An additional amount not exceeding $5,000 per year of a program 
participant's qualifying loans, if the program participant has already 
been selected for participation in the VMLRP and agrees to enter into a 
one-year agreement for each year of service to provide up to 60 days of 
obligated service to the Federal government in animal health emergency 
situations, as determined by the Secretary, provided the shortage 
situation in which the participant has agreed to serve has been 
designated as suitable for the Federal obligated service.
    (b) To maximize the number of agreements and to encourage qualified 
veterinarians to participate in the VMLRP, the Secretary may establish 
a loan repayment cap that differs from the cap established under 
paragraph (a)(1) and (a)(2) of this section when it is in the best 
interest of VMLRP. This will be identified in the RFA.
    (c) The Secretary will determine the debt threshold in the RFA.
    (d) Loan repayments will be made directly to the loan provider on a 
quarterly basis, starting with the end of the first quarter after the 
program eligibility date of the service agreement. Tax payments equal 
to 39 percent of the loan repayments will be credited directly to the 
participant's IRS (Federal tax) account simultaneously with each loan 
repayment.
    (e) Once a service agreement has been signed by both parties, the 
Secretary will obligate such funds as will be necessary to ensure that 
sufficient funds will be available to make loan repayments and tax 
payments, as specified in the service agreement, for the duration of 
the period of obligated service. Reimbursements for tax liabilities in 
excess of the amount provided (not to exceed 39 percent of the amount 
of loan repayment or any other cap established by the Secretary) will 
be subject to the availability of funds. These additional tax payments, 
if available to the VMLRP participants, will be identified in the RFA 
and in the participant service agreement.
    (f) Participants are required to keep payments current on all 
qualifying VMLRP loans.
    (g) Travel expenditures. The VMLRP will not reimburse a program 
participant for expenses associated with traveling from the program 
participant's residence to the prospective practice site for the 
purpose of evaluating such site or the expenses of relocating from the 
program participant's temporary or permanent residence to a practice 
site.


Sec.  3431.14  Priority.

    Pursuant to NVMSA, the Secretary will give priority to agreements 
with veterinarians for the practice of food animal medicine in 
veterinarian shortage situations, as determined by the Secretary. The 
Secretary may establish additional criteria in the RFA for assigning 
priority levels to veterinarian shortage situations nominated for 
award.


Sec.  3431.15  Qualifying loans.

    (a) General. Loan repayments provided under the VMLRP may consist 
of payments on behalf of participating individuals of the principal and 
interest on qualifying educational loans received by the individual for 
attendance of the individual at an accredited college of veterinary 
medicine resulting in a degree of Doctor of Veterinary Medicine, or the 
equivalent, which loans were made for one or more of the following:
    (1) Tuition expenses;
    (2) All other reasonable educational expenses, as defined in this 
part and as determined by the Secretary; and
    (3) Reasonable living expenses, as defined in this part and as 
determined by the Secretary.
    (b) Non-eligible loans. The following loans are ineligible for 
repayment under the VMLRP:
    (1) Loans not obtained from a bank, credit union, savings and loan 
association, not-for-profit organization, insurance company, school, 
and other financial or credit institution which is subject to 
examination and supervision in its capacity as lending institution by 
an agency of the United States or of the State in which the lender has 
its principal place of business;
    (2) Loans for which supporting documentation is not available;
    (3) Loans that have been consolidated with loans of other 
individuals, such as spouses or children;
    (4) Loans or portions of loans obtained for educational or living 
expenses which exceed the standard of reasonableness as determined by 
the participant's standard school budget for the year in which the loan 
was made, and are not determined by the Secretary, to be reasonable 
based on additional documentation provided by the individual;
    (5) Loans, financial debts, or service obligations incurred under 
another loan repayment or scholarship program, or similar programs, 
which provide loans, scholarships, loan repayments, or other awards in 
exchange for a future service obligation;
    (6) Non-educational loans, including home equity loans; and

[[Page 20247]]

    (7) Any loan in default, delinquent, or not in a current payment 
status.


Sec.  3431.16  Certifications and verifications.

    (a) The application for the loan repayment program shall include a 
personal statement describing how the applicant would meet the 
requirements of:
    (1) The veterinary service shortage situations as defined in the 
RFA;
    (2) The eligibility criteria for application of section Sec.  
3431.9 of this part; and
    (3) The selection priority of Sec.  3431.14 of this part.
    (b) The applicant shall provide sufficient documentation to 
establish that the applicant has qualifying loans as described in Sec.  
3431.15 of this part.
    (c) The applicant shall provide sufficient documentation to 
establish that the applicant has the capacity to secure an offer of 
employment or establish and/or maintain a veterinary practice in a 
veterinary service shortage situation as defined in subpart A of this 
part.
    (d) The applicant shall provide, if applicable, sufficient 
documentation to establish that the applicant is licensed to practice 
veterinary medicine in the jurisdiction in which the applicant has an 
offer of employment.
    (e) The applicant shall provide, if applicable, the required 
documentation to establish whether the applicant receives payments 
under any other Federal, State, institutional, or private loan 
repayment programs.
    (f) The applicant shall provide the required documentation to show 
that he/she has completed, or is in the process of completing, the 
National Veterinary Accreditation Program (NVAP) if national 
accreditation is required for the veterinary shortage position for 
which the applicant has an offer of employment.
    (g) The applicant shall provide authorization to the appropriate 
staff as designated by the Secretary to obtain a copy of the 
participant's credit report.


Sec.  3431.17  VMLRP service agreement offer.

    The Secretary will make an offer to successful applicants to enter 
into an agreement with the Secretary to provide veterinary services 
under the VMLRP. As part of the offer, successful VMLRP applicants will 
be provided a specific period of time, as defined in the RFA, to secure 
an offer of employment or establish and/or maintain a veterinary 
practice in a veterinary shortage situation.


Sec.  3431.18  Service agreement.

    (a) The service agreement shall be signed by the program 
participant and the Secretary after acceptance of the terms and 
conditions of the loan repayment program by the program participant.
    (b) The service agreement shall specify the period of obligated 
service.
    (c) The service agreement shall specify the amount of loan 
repayment to be paid for each year of obligated service.
    (d) The service agreement shall contain a provision defining when a 
breach of the agreement by the program participant has occurred.
    (e) The service agreement shall provide remedies for the breach of 
a service agreement by a program participant, including repayment or 
partial repayment of financial assistance received, with interest.
    (f) The service agreement shall include provisions addressing the 
granting of a waiver by the Secretary in case of hardship.
    (g) Payments under the service agreement do not exempt a program 
participant from the responsibility and/or liability for any loan(s) 
for which he or she is obligated, as the Secretary is not obligated to 
the lender/note holder for its commitment to the program participant.
    (h) During the term of the service agreement, the program 
participant shall agree that the Secretary or the designated VMLRP 
service provider is authorized to verify the status of each loan for 
which the Secretary will be reimbursing the participant.
    (i) The service agreement shall contain certifications, as 
determined by the Secretary.
    (j) The service agreement shall contain provisions addressing the 
income tax liability of the program participant and the availability of 
reimbursement of taxes incurred as a result of an individual's 
participation in the VMLRP.
    (k) Renewal. The service agreement will indicate whether the 
existing service agreement may be renewed. However, renewal 
applications are subject to peer review and approval, acceptance is not 
guaranteed, and the position must still be considered a veterinarian 
shortage situation at the time of application for renewal. The 
Secretary may request additional documentation in connection with the 
review and approval of a renewal application. The Secretary reserves 
the right not to offer renewals. Any requests for renewal applications 
will be solicited via the RFA.
    (l) The service agreement shall contain participant reporting 
requirements (e.g., quarterly, annual, and/or close-out) to allow for 
program monitoring and evaluation.


Sec.  3431.19  Payment and tax liability.

    (a) Loan repayment. Loan repayments pursuant to a service agreement 
are made directly to a participant's lender(s) by the Secretary or the 
VMLRP service provider. If there is more than one outstanding qualified 
educational loan, the Secretary will repay the loans in the following 
order, unless the Secretary determines significant savings to the 
program would result from paying loans in a different order of 
priority:
    (1) Loans guaranteed by the U.S. Department of Education;
    (2) Loans made or guaranteed by a State;
    (3) Loans made by a School; and
    (4) Loans made by other entities, including commercial loans.
    (b) Tax Liability Payments. Tax payments equal to 39 percent of the 
total loan repayment amount will be credited directly to the 
participant's IRS (Federal tax) account simultaneously with each loan 
payment. The Secretary may make payments of an amount not to exceed 39 
percent of the actual annual loan repayments made in a calendar year 
for all or part of the increased Federal, State, and local tax 
liability resulting from loan repayments received under the VMLRP. 
However, the Secretary may increase the cap, if appropriate. 
Supplementary payments for increased tax liability may be made for the 
actual amount of tax liability associated with the receipt of loan 
repayments under the VMLRP. Availability of these additional tax 
liability payments (i.e., in excess of 39 percent or other approved 
cap) will be identified in the RFA and in the participant service 
agreement. Program participants wishing to receive tax liability 
payments will be required to submit their requests for such payments in 
a manner prescribed by the Secretary and must provide the Secretary 
with any documentation the Secretary determines is necessary to 
establish a program participant's increased tax liability. Tax 
liability payments in excess of 39 percent or other approved cap will 
be made on a reimbursement basis only.
    (c) Under Sec.  3431.19(a) and (b), the Secretary will make loan 
and tax liability payments to the extent appropriated funds are 
available for these purposes.


Sec.  3431.20  Administration.

    The VMLRP will be administered by NIFA, Office of Extramural 
Programs (OEP). OEP may carry out this program directly or enter into 
agreements with

[[Page 20248]]

another Federal agency or other service provider to assist in the 
administration of the VMLRP. However, the determination of the 
veterinarian shortage areas, peer review of individual VMLRP 
applications, and the overall VMLRP oversight and coordination will 
reside with the Secretary.


Sec.  3431.21  Breach.

    (a) General. If a program participant fails to complete the period 
of obligated service incurred under the service agreement, including 
failing to comply with the applicable terms and conditions of a waiver 
granted by the Secretary, the program participant must pay to the 
United States an amount as determined in the service agreement. Payment 
of this amount shall be made within 90 days of the date that the 
program participant failed to complete the period of obligated service, 
as determined by the Secretary.
    (b) Exceptions.
    (1) A termination of service for reasons that are beyond the 
control of the program participant will not be considered a breach.
    (2) A transfer of service from one shortage situation to another, 
if approved by the Secretary, will not be considered a breach.
    (3) A call or order to active duty will not be considered a breach.
    (c) The Secretary may renegotiate the terms of a participant's 
service agreement in the event of a transfer, termination or call to 
active duty pursuant to paragraph (b) of this section.
    (d) Amount of repayment. The service agreement shall provide the 
method for the calculation of the amoun