[Federal Register Volume 78, Number 229 (Wednesday, November 27, 2013)]
[Proposed Rules]
[Pages 71041-71376]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23895]



[[Page 71041]]

Vol. 78

Wednesday,

No. 229

November 27, 2013

Part II





 Department of Veterans Affairs





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





38 CFR Parts 3 and 5





VA Compensation and Pension Regulation Rewrite Project; Proposed Rule

Federal Register / Vol. 78 , No. 229 / Wednesday, November 27, 2013 / 
Proposed Rules

[[Page 71042]]


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

DEPARTMENT OF VETERANS AFFAIRS

38 CFR Parts 3 and 5

RIN 2900-AO13


VA Compensation and Pension Regulation Rewrite Project

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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

SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize 
and rewrite its compensation and pension regulations in a logical, 
claimant-focused, and user-friendly format. The intended effect of the 
proposed revisions is to assist claimants, beneficiaries, veterans' 
representatives, and VA personnel in locating and understanding these 
regulations.

DATES: Comments must be received by VA on or before March 27, 2014.

ADDRESSES: Written comments may be submitted through http://www.regulations.gov; by mail or hand-delivery to: Director, Regulations 
Management (02REG), Department of Veterans Affairs, 810 Vermont Ave. 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to RIN 
2900-AO13. Copies of comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1063B, 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 at http://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: William F. Russo, Deputy Director, 
Office of Regulations Policy & Management (02REG), Office of the 
General Counsel, Department of Veterans Affairs, 810 Vermont Ave. NW., 
Washington, DC 20420, (202) 461-4902 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION: 

Introduction

    The VA Office of the General Counsel provides centralized 
management and coordination of VA's rulemaking process through its 
Office of Regulation Policy and Management (ORPM). One of ORPM's major 
functions is to oversee VA's Regulation Rewrite Project (the Project) 
to improve the organization and clarity of VA's adjudication 
regulations, which are in current 38 CFR part 3. These regulations 
govern the adjudication of claims for VA's monetary benefits 
(compensation, pension, dependency and indemnity compensation, and 
burial benefits), which are administered by the Veterans Benefits 
Administration (VBA).
    The Project responds to a recommendation made by the VA Claims 
Processing Task Force in its October 2001 ``Report to the Secretary of 
Veterans Affairs'' and to criticisms by the U.S. Court of Appeals for 
Veterans Claims. The Task Force recommended that VA reorganize its 
regulations in a logical, coherent manner. The Court referred to the 
current regulations as a ``confusing tapestry'' and criticized VA for 
maintaining substantive rules in its Adjudication Procedures Manual 
(manual). Accordingly, the Project reviewed the manual to identify 
provisions that might be substantive and incorporated those provisions 
in a complete rewrite of part 3. VA published the rewritten material in 
20 Notices of Proposed Rulemaking (NPRMs) and gave interested persons 
60 days to submit comments after each publication. These NPRMs 
addressed specific topics, programs, or groups of regulatory material 
organized under the following Rulemaking Identifier Numbers (RIN):

 RIN 2900-AL67, Service Requirements for Veterans (January 30, 
2004)
 RIN 2900-AL70, Presumptions of Service Connection for Certain 
Disabilities, and Related Matters (July 27, 2004)
 RIN 2900-AL71, Accrued Benefits, Death Compensation, and 
Special Rules Applicable Upon Death of a Beneficiary (October 1, 2004)
 RIN 2900-AL72, Burial Benefits (April 8, 2008)
 RIN 2900-AL74, Apportionments to Dependents and Payments to 
Fiduciaries and Incarcerated Beneficiaries (January 14, 2011)
 RIN 2900-AL76, Benefits for Certain Filipino Veterans and 
Survivors (June 30, 2006)
 RIN 2900-AL82, Rights and Responsibilities of Claimants and 
Beneficiaries (May 10, 2005)
 RIN 2900-AL83, Elections of Improved Pension; Old-Law and 
Section 306 Pension (December 27, 2004)
 RIN 2900-AL84, Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors (March 9, 2007)
 RIN 2900-AL87, General Provisions (March 31, 2006)
 RIN 2900-AL88, Special Ratings (October 17, 2008)
 RIN 2900-AL89, Dependency and Indemnity Compensation Benefits 
(October 21, 2005)
 RIN 2900-AL94, Dependents and Survivors (September 20, 2006)
 RIN 2900-AL95, Payments to Beneficiaries Who Are Eligible for 
More than One Benefit (October 2, 2007)
 RIN 2900-AM01, General Evidence Requirements, Effective Dates, 
Revision of Decisions, and Protection of Existing Ratings (May 22, 
2007)
 RIN 2900-AM04, Improved Pension (September 26, 2007)
 RIN 2900-AM05, Matters Affecting the Receipt of Benefits (May 
31, 2006)
 RIN 2900-AM06, Payments and Adjustments to Payments (October 
31, 2008)
 RIN 2900-AM07, Service-Connected Disability Compensation 
(September 1, 2010)
 RIN 2900-AM16, VA Benefit Claims (April 14, 2008)

    VA received numerous comments to the 20 NPRMs. These came from 
private individuals and several Veterans Service Organizations. VA 
thanks the commenters for the time they invested and the contribution 
they have made to the quality of the proposed regulations in this 
document.
    VA also wishes to thank its employees, past and present, for their 
hard work and dedication in drafting these regulations. We are 
especially grateful for the contributions of the late Richard Hirst and 
Robert M. White, who dedicated their lives to our nation's disabled 
veterans.
    In several of the prior NPRMs, we proposed to amend certain 
provisions or portions of provisions in 38 CFR part 3. Upon further 
consideration, if VA implemented the Project as a new 38 CFR part 5, it 
would not amend any part 3 provisions in conjunction with publishing 
part 5. Instead, it would remove part 3 in its entirety when it is no 
longer applicable to the adjudication of benefit claims and would 
provide public notice before doing so.
    As stated in the prior NPRMs, we would incorporate numerous 
statutory amendments, VA General Counsel Opinions, court decisions, and 
VA manual provisions in the rewritten regulations. To the extent that 
any manual provision would be inconsistent with a rewritten regulation, 
the regulation would be binding on VA and the public. Any 
implementation of the rewritten regulations, whether implemented as 
proposed in this NPRM or in some other manner, would require a 
corresponding rewrite of VA's adjudication procedures manual.

[[Page 71043]]

    VA does not intend to publish a final rule in this rulemaking 
proceeding in the near future. In the first quarter of fiscal year 
2012, VBA formulated a Transformation Plan to improve the delivery of 
benefits to veterans and their dependents and survivors. In the first 
phase of this plan, VBA's transformational people, processes, and 
technology initiatives are designed to achieve VA's priority goals of 
processing all disability claims within 125 days and increasing rating 
quality to 98 percent by the end of 2015. Upon achieving those goals, 
the plan calls for VBA to allocate resources to maintain high-quality 
service for compensation claims while redirecting resources to the 
second phase of the transformation, which will address the needs of 
VBA's other benefit programs (appeals, veterans and survivors pension, 
dependency and indemnity compensation, burial benefits, vocational 
rehabilitation, education, and fiduciary). To ensure that VBA 
successfully implements this plan and accomplishes the Department's 
priority goals of eliminating the disability claims backlog and 
improving veterans' and survivors' access to benefits and services, VA 
may not publish a final-rule notice in this rulemaking until VBA's 
Transformation implementation is complete.
    In the interim, VA will continue to amend its adjudication 
regulations in 38 CFR part 3 to implement changes in law and the 
policies and procedures that it needs to properly administer its 
benefit programs. In amending part 3, VA may refer to the work done by 
the Project and may incorporate that work in whole or in part depending 
upon the nature of the amendments. In this way, regardless of any 
future decision about implementation of the Project's rewritten 
regulations, VA will update its regulations at the same time that VBA 
is improving the delivery of benefits to veterans and survivors under 
the Transformation Plan.

Request for Public Comments

    In this NPRM, we have merged the Rulemaking Identifier Numbers 
(RINs) of the 20 prior NPRMs into the RIN for this NPRM, AO13. The 
preamble to this NPRM addresses the public comments that VA received in 
response to those NPRMs and explains the changes we have made to the 
initially proposed rules.
    Although VA does not intend to complete this rulemaking in the near 
future, we request public comments on the consolidation of the prior 
proposed rules, which would be implemented in a new 38 CFR part 5, and 
on the changes made to those proposed rules. Prior to publishing a 
final rule in this rulemaking, VA will consider any comments that it 
receives in response to this NPRM and will evaluate the feasibility of 
a one-time implementation of new part 5 as proposed. If VA determines 
that such an implementation is feasible, we may need to publish 
additional rulemakings to adapt to implementation plans and keep these 
proposed rules up to date.

Substantive v. Non-substantive Changes

    In the NPRMs we stated:

[a]lthough these regulations have been substantially restructured 
and rewritten for greater clarity and ease of use, most of the basic 
concepts contained in these proposed regulations are the same as in 
their existing counterparts in 38 CFR part 3. However, a few 
substantive differences are proposed . . . .
. . . .
Readers who . . . observe substantive changes between [existing 
regulatory provisions and proposed provisions] should consult the 
text that appears later in this document for an explanation of 
significant changes in each regulation.

    In the NPRMs we sometimes referred to specific proposed changes 
from part 3 as ``substantive'' or ``not substantive.'' Sometimes we 
said ``we intend no substantive change.'' Our intent was to clarify for 
readers whether we were making a policy change (``substantive'') or 
merely restating existing VA policy more clearly (``non-substantive''), 
in those instances where we thought a reader might need that guidance. 
Most often, however, we applied neither label to our changes; instead 
we simply told the reader how we were proposing to change a regulation 
provision and why.
    However, the case of Roberts v. Shinseki, 23 Vet. App. 416 (2010), 
aff'd on other grounds, 647 F.3d 1334 (Fed. Cir. 2011), the U.S. Court 
of Appeals for Veterans Claims (CAVC) showed how such labels can be 
misleading. In Roberts, the CAVC affirmed VA's severance of fraudulent 
service connection. The Secretary argued severance for fraud is subject 
to the due process required in 38 CFR 3.103(b) (concerning adverse 
decisions) and exempt from the requirements of Sec.  3.105(d) 
(concerning severance of service connection). The CAVC also held that 
the reference to compliance with Sec.  3.105(d) in the regulation on 
protection of service-connected status Sec.  3.957 does not apply in 
cases of fraud. In holding that Sec.  3.105(d) does not apply to 
severance of service connection based fraud, the CAVC explicitly 
rejected appellant's Sec. Sec.  3.105(a) and 3.957 arguments that 
severance for fraud requires proof that the grant was based on clear 
and unmistakable error (CUE).
    The Roberts dissent quoted at length from NPRM AM 01, 72 FR 28770, 
May 22, 2007, to rebut the Secretary's assertion that his argument 
correctly stated VA interpretation of Sec. Sec.  3.105(d) and 3.957 in 
light of regulatory history and in the absence of historical 
information that VA ever implemented the regulations differently. The 
dissent first noted that in rewriting Sec. Sec.  3.957 and 3.105(d), 
``VA intends to `clarify' and recodify 38 CFR 3.957 and the provisions 
of 38 CFR 3.105(d) that govern when service connection may be severed 
at 38 CFR 5.175, entitled `Protection or severance of service 
connection.' '' Id. at 436. The dissent also noted that our proposed 
regulations did not except severance of service connection based on 
fraud from the due process or burden of proof elements of Sec. Sec.  
3.957 or 3.105(d). Finally, the dissent noted that the NPRM stated that 
it explained any substantive changes between part 3 and part 5, 72 FR 
28771-27772, May 22, 2007, and that there was nothing in the NPRM 
``indicating that the rewriting and restructuring of the regulations 
[pertaining to severance of service connection for fraud] are intended 
as substantive changes.'' Id. at 437-39. From these observations, the 
dissent reasoned, the NPRM revealed VA's interpretation of Sec. Sec.  
3.957 and 3.105(d) as requiring application of both the process and 
burden of proof provisions of Sec.  3.105(d) before severing service 
connection.
    This dissent illustrates the need to revise the way we use labels 
describing differences between part 5 regulations and the part 3 
regulations from which they derive. In addition to the confusion 
highlighted by the Roberts case, we believe that readers may 
incorrectly read our substantive or non-substantive labels as referring 
to the distinction that the Administrative Procedures Act (specifically 
5 U.S.C. 553) makes between substantive rules and interpretive or 
procedural rules. See Cmty. Nutrition Inst. v. Young, 818 F.2d 943 
(D.C. Cir. 1987); Vermont Yankee Nuclear Power Corp. v. Natural 
Resources Defense Council, 435 U.S. 519 (1978); Am. Hosp. Ass'n v. 
Bowen, 834 F.2d 1037, 1045 (D.C. Cir. 1987).
    To avoid potential confusion, we now advise readers to draw no 
inferences from the use of, or non-use of, the labels substantive or 
non-substantive in the NPRMs. Instead, readers should simply rely on 
our actual description of the change and our reasons for making the 
change. The only instances where we use ``substantive'' in this 
preamble are where we used the term to refute a

[[Page 71044]]

comment asserting that we are diminishing rights or benefits and when 
used to distinguish a ``substantive'' provision from a ``procedural'' 
one.

II. Overview of New Part 5 Organization

    We plan to organize the new part 5 regulations so that most 
provisions governing a specific benefit are located in the same 
subpart, with general provisions pertaining to all compensation and 
pension benefits grouped together. This organization will allow 
claimants, beneficiaries, and their representatives, as well as VA 
adjudicators, to find information relating to a specific benefit more 
quickly than the organization provided in current part 3.
    The first major subdivision would be ``Subpart A: General 
Provisions''. It would include information regarding the scope of the 
regulations in new part 5, general definitions, and general policy 
provisions for this part. We published this subpart as a Notice of 
Proposed Rulemaking (NPRM) on Mar. 31, 2006. See 71 FR 16464.
    ``Subpart B: Service Requirements for Veterans'' would include 
information regarding a veteran's military service, including the 
minimum service requirement, types of service, periods of war, and 
service evidence requirements. We published this subpart as an NPRM on 
Jan. 30, 2004. See 69 FR 4820
    ``Subpart C: Adjudicative Process, General'' would inform readers 
about claim filing and benefit application procedures, VA's duties, 
claimants' and beneficiaries' rights and responsibilities, general 
evidence requirements, and general effective dates of new awards, and 
about revision of decisions and protection of VA ratings. We published 
this subpart as three separate NPRMs due to its size. We published the 
first, concerning the duties of VA and the rights and responsibilities 
of claimants and beneficiaries, on May 10, 2005. See 70 FR 24680. We 
published the second, concerning general evidence requirements, 
effective dates, revision of decisions, and protection of existing 
ratings, on May 22, 2007. See 72 FR 28770. We published the third, 
concerning rules on filing benefits claims, on April 14, 2008. See 73 
FR 20136.
    ``Subpart D: Dependents and Survivors'' would inform readers how VA 
determines whether a person is a dependent or a survivor for purposes 
of determining eligibility for benefits. It would also provide the 
evidence requirements for these determinations. We published this 
subpart as an NPRM on September 20, 2006. See 71 FR 55052.
    ``Subpart E: Claims for Service Connection and Disability 
Compensation'' would define service-connected disability compensation 
and service connection, including direct and secondary service 
connection. This subpart would inform readers how VA determines service 
connection and entitlement to disability compensation. The subpart 
would also contain those provisions governing presumptions related to 
service connection, rating principles, and effective dates, as well as 
several special ratings. We published this subpart as three separate 
NPRMs due to its size. We published the first, concerning presumptions 
related to service connection, on July 27, 2004. See 69 FR 44614. We 
published the second, concerning special ratings, on October 17, 2008. 
See 73 FR 62004. We published the third, concerning service-connection 
and other disability compensation, on September 1, 2010. See 75 FR 
53744.
    ``Subpart F: Nonservice-Connected Disability Pensions and Death 
Pensions'' would include information regarding the three types of 
nonservice-connected pension: Old-Law Pension, Section 306 Pension, and 
Improved Pension. This subpart would also include those provisions that 
state how to establish entitlement to Improved Pension and the 
effective dates governing each pension. We published this subpart as 
two separate NPRMs due to its size. We published the portion concerning 
Old-Law Pension, Section 306 Pension, and elections of Improved Pension 
on December 27, 2004. See 69 FR 77578. We published the portion 
concerning eligibility and entitlement requirements, as well as 
effective dates of Improved Pension, on September 26, 2007. See 72 FR 
54776.
    ``Subpart G: Dependency and Indemnity Compensation, Accrued 
Benefits, and Special Rules Applicable Upon Death of a Beneficiary'' 
would contain regulations governing claims for dependency and indemnity 
compensation (DIC); accrued benefits; and various special rules that 
apply to the disposition of benefits, or proceeds of benefits, when a 
beneficiary dies. This subpart would also include related definitions, 
effective-date rules, and rate-of-payment rules. We published this 
subpart as two separate NPRMs due to its size. We published the NPRM 
concerning accrued benefits, special rules applicable upon the death of 
a beneficiary, and several effective-date rules, on October 1, 2004. 
See 69 FR 59072. We published the NPRM concerning DIC benefits and 
general provisions relating to proof of death and service-connected 
cause of death on October 21, 2005. See 70 FR 61326.
    ``Subpart H: Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors'' would pertain to special and ancillary 
benefits available, including benefits for a child with various birth 
defects. We published this subpart as an NPRM on March 9, 2007. See 72 
FR 10860.
    ``Subpart I: Benefits for Certain Filipino Veterans and Survivors'' 
would pertain to the various benefits available to Filipino veterans 
and their survivors. We published this subpart as an NPRM on June 30, 
2006. See 71 FR 37790.
    ``Subpart J: Burial Benefits'' would pertain to burial allowances. 
We published this subpart as an NPRM on April 8, 2008. See 73 FR 19021.
    ``Subpart K: Matters Affecting the Receipt of Benefits'' would 
contain provisions regarding bars to benefits, forfeiture of benefits, 
and renouncement of benefits. We published this subpart as an NPRM on 
May 31, 2006. See 71 FR 31056.
    ``Subpart L: Payments and Adjustments to Payments'' would include 
general rate-setting rules, several adjustment and resumption 
regulations, and election-of-benefit rules. We published this subpart 
as two separate NPRMs due to its size. We published the first, 
concerning payments to beneficiaries who are eligible for more than one 
benefit, on October 2, 2007. See 72 FR 56136. We published the second, 
concerning payments and adjustment to payments, on October 31, 2008. 
See 73 FR 65212.
    The final subpart, ``Subpart M: Apportionments to Dependents and 
Payments to Fiduciaries and Incarcerated Beneficiaries'' would include 
regulations governing apportionments, benefits for incarcerated 
beneficiaries, and guardianship. We published the NPRM, concerning 
apportionments to dependents and payments to fiduciaries and 
incarcerated beneficiaries, on January 14, 2011. See 76 FR 2766.

III. Tables Comparing Proposed Part 5 Rules With Current Part 3 Rules

    The purpose of the Regulation Rewrite Project is to reorganize all 
of VA's compensation and pension rules in a logical, claimant-focused, 
and user-friendly format. We have redistributed the part 3 regulations 
into a new organizational structure, part 5. We have created two 
tables, the distribution table and the derivation table, to facilitate 
the understanding of the redistribution of the regulations. These 
tables are meant to aid users who are familiar with either

[[Page 71045]]

the part 3 or the part 5 regulations and are searching for their 
counterparts in part 5 or part 3. We have updated the tables in this 
NPRM to reflect the proposed changes from the 20 initial NPRMs already 
published.
    The distribution table lists the part 3 regulations by title and 
matches them with the corresponding part 5 regulations. There may not 
be an equivalent part 5 regulation for some part 3 regulations. This is 
indicated by the phrase ``NO PART 5 REG--unnecessary'' in the part 5 
column. There are several reasons not to include certain part 3 
regulations in part 5. It may be obsolete or repetitive of another 
provision that fully covers the intent of the regulation.
    The derivation table is organized by subpart. Each subpart contains 
regulations relevant to the title of the subpart. The derivation table 
lists the proposed part 5 regulations in numerical order, with the 
corresponding part 3 paragraph numbers and the part 5 section title. 
Some of the part 5 regulations have no part 3 counterpart. This is 
indicated by the term ``new'' in the part 3 column. A regulation is 
determined to be ``new'' because it may be based on a change in law, a 
court decision, a General Counsel Opinion, or a manual provision.
    As stated previously, there are also instances where we have not 
carried over a part 3 regulation into part 5. Where appropriate, we 
have included a comment explaining why part 5 does not include a 
certain part 3 provision. We propose to add part 5 citations to all the 
cross-references on the table to ensure that readers will be able to 
locate the relevant regulation.

IV. General Comments on Regulation Rewrite Project

    One commenter, in response to AL70, ``Presumptions of service 
connection for certain disabilities, and related matters'', suggested 
that VA's decision to rewrite and reorganize the provisions of part 3 
and promulgate them as part 5 is not in the best interest of veterans. 
The commenter stated that as part 3 has withstood the scrutiny of the 
courts and has been changed accordingly, there is no reason to now 
rewrite it. Additionally, the commenter feared that the introduction of 
part 5 will lead to an increase in the number of appeals to the courts 
as the regulations undergo the rigors of judicial review, which will 
result in delays to claimants.
    Another commenter asserted that proposed AL83, ``Elections of 
Improved Pension; Old-Law and Section 306 Pension'', would add to the 
administrative costs of VA programs and therefore should not be 
adopted. This commenter urged VA to provide the services already 
promised rather than seek ``to change the manner in which they are not 
put forward.''
    The project to rewrite and reorganize the regulations responds to a 
recommendation made in the October 2001 ``Report to the Secretary of 
Veterans Affairs'' by the VA Claims Processing Task Force. The Task 
Force recommended that the Compensation and Pension (C&P) regulations 
be rewritten and reorganized in order to improve VA's claims 
adjudication process. These regulations are among the most difficult VA 
regulations for readers to understand and apply. The Project began its 
efforts by reviewing, reorganizing, and redrafting the regulations in 
38 CFR part 3 governing the C&P programs of the Veterans Benefits 
Administration.
    We disagree with the assertion of the commenters that rewriting and 
reorganizing the regulations in part 3 is not in the best interests of 
veterans. Although it is possible that the validity of the new part 5 
regulations may be challenged in the short-term, in the long-term, 
rewriting and reorganizing these regulations will be beneficial to 
veterans. This is because part 5 will be better organized, which will 
allow readers and VA personnel to find information more easily. In 
addition, the part 5 regulations will be easier for the average reader 
to understand, will resolve many ambiguities and inconsistencies, and 
they will not include many outdated references and regulations that are 
found in part 3. Therefore, we propose to make no changes based on 
these comments.
    One commenter asserted that, without legal authority, VA 
interprets, amends, and reverses laws enacted by Congress. The 
commenter stated that VA regulations obstruct compensation and ``impose 
a separate, discriminatory, quasi-judicial process upon veterans.''
    We respectfully disagree with the comment and propose to make no 
changes based on it. Congress has given VA authority to regulate in 
order to carry out statutory programs supporting veterans and their 
families, as stated in 38 U.S.C. 501, ``Rules and regulations''. 
Paragraph (a) of section 501 includes the following:

     The Secretary has authority to prescribe all rules and 
regulations which are necessary or appropriate to carry out the laws 
administered by the Department and are consistent with those laws, 
including--
    [cir] regulations with respect to the nature and extent of proof 
and evidence and the method of taking and furnishing them in order 
to establish the right to benefits under such laws;
    [cir] the forms of application by claimants under such laws;
    [cir] the methods of making investigations and medical 
examinations; and
    [cir] the manner and form of adjudications and awards.

    The same commenter asserted that the Feres Doctrine (which 
restricts active duty servicemembers from filing suit against the U.S. 
Government) and the restrictions on veterans hiring attorneys to 
represent them in VA claims (see 38 U.S.C. 5904) are unconstitutional. 
The commenter also asserted that VA decisions have upheld the grant of 
``sovereign immunity'' to the chemical companies that manufactured 
Agent Orange and other defoliants. Lastly, the same commenter urged 
that VA adopt a regulation requiring that any VA employee who 
wrongfully denies benefits to a veteran to be permanently removed from 
federal employment and lose all their retirement benefits. We propose 
to make no changes based on any of these comments because they are 
outside the scope of this rulemaking.

V. Technical Corrections and Changes to Terminology for Part 5

    We propose to make certain additional technical corrections and 
changes in terminology in this proposed rule.

Technical Corrections

    In addition to considering any necessary changes to proposed part 5 
regulations based on comments received from the public, we propose to 
make certain technical corrections. These corrections include updated 
citations to certain regulations to which the NPRM referred. We are now 
replacing these ``place holder'' citations with the current part 5 
citations.
    Additionally, we propose to renumber certain regulations of part 5 
in order to accommodate all needed regulations.
    As stated previously in this preamble, we propose to eventually 
replace 38 CFR part 3 with a new part 5. We note that numerous 38 CFR 
sections reference part 3 sections. To update these citations 
throughout 38 CFR, we propose to add ``or [insert part 5 section]'' 
after each to include a reference to the part 5 equivalent to the 
referenced part 3 provision.
    We have compiled the following table that lists the sections in 38 
CFR outside part 3 that reference part 3 sections. In addition to the 
part 3 section, the list includes the corresponding part 5 citation. 
The list is organized by part. As discussed in various portions of this 
preamble, there are instances where a

[[Page 71046]]

part 3 regulation will not be carried over into part 5. In those 
instances, we propose to simply leave the part 3 citation unchanged.

                                  Table of References to 38 CFR Part 3 Sections
This table lists the sections in 38 CFR outside part 3 that reference part 3 sections. In addition to the part 3
          section, the list includes the corresponding part 5 citation. The list is organized by part.
----------------------------------------------------------------------------------------------------------------
                                                                        Part 3 section       Equivalent part 5
     Part               Part name               38 CFR section            referenced              citation
----------------------------------------------------------------------------------------------------------------
1............  General Provisions.........  1.17(c)...............  3.311................  5.269
                                            1.911(f)(2)...........  3.103(e).............  5.80
                                            1.969(b)(1)...........  3.104(a).............  5.160(a)
                                            1.969(b)(2)...........  3.105(a); 3.105(b)...  5.162(c); 5.162(f);
                                                                                            5.163
                                            1.969(b)(3)...........  3.103................  5.4(a); 5.4(b); 5.80;
                                                                                            5.81; 5.82; 5.83;
                                                                                            5.84
                                            1.969(c)..............  3.105(b).............  5.163
                                            1.969(c)..............  3.400(h).............  5.150(a); 5.166;
                                                                                            5.55(e)
4............  Schedule for Rating          4.3...................  3.102................  5.249(a); 5.4(b);
                Disabilities.                                                               5.3(b)(2);
                                                                                            5.3(b)(3);
                                                                                            5.3(b)(5);
                                            4.17(b)...............  3.321(b)(2)..........  5.380(c)(5)
                                            4.28(Note(1)).........  3.105(e).............  5.177(f)
                                            4.29(a)(2)............  3.105(e).............  5.177(f)
                                            4.29(g)...............  3.321(b)(1)..........  5.280
                                            4.30 (introduction)...  3.105(e).............  5.177(f)
                                            4.30(a)(3)............  3.105(e).............  5.177(f)
                                            4.71a (table II) (row   3.350(c)(1)(i).......  5.326(a)
                                             2 column 2).
                                            4.71a (table II) (row   3.350(b).............  5.324
                                             2 column 3).
                                            4.71a (table II) (row   3.350(f)(1)(x).......  5.327(a)
                                             2 column 4).
                                            4.71a (table II) (row   3.350(f)(1)(vi)......  5.325(c)
                                             2 column 5).
                                            4.71a (table II) (row   3.350(f)(1)(xi)......  5.328(b)
                                             2 column 6).
                                            4.71a (table II) (row   3.350(f)(1)(viii)....  5.326(f)
                                             2 column 7).
                                            4.71a (table II) (row   3.350(b).............  5.324
                                             3 column 3).
                                            4.71a (table II) (row   3.350(f)(1)(iii).....  5.325(b)
                                             3 column 4).
                                            4.71a (table II) (row   3.350(f)(1)(i).......  5.325(a)
                                             3 column 5).
                                            4.71a (table II) (row   3.350(f)(1)(iv)......  5.326(d)
                                             3 column 6).
                                            4.71a (table II) (row   3.350(f)(1)(ii)......  5.326(c)
                                             3 column 7).
                                            4.71a (table II) (row   3.350(d)(1)..........  5.328(a)
                                             4 column 4).
                                            4.71a (table II) (row   3.350(c)(1)(iii).....  5.326(e)
                                             4 column 5).
                                            4.71a (table II) (row   3.350(f)(1)(ix)......  5.327(d)
                                             4 column 6).
                                            4.71a (table II) (row   3.350(f)(1)(xi)......  5.328(b)
                                             4 column 7).
                                            4.71a (table II) (row   3.350(c)(1)(ii)......  5.326(b)
                                             5 column 5).
                                            4.71a (table II) (row   3.350(f)(1)(vii).....  5.327(c)
                                             5 column 6).
                                            4.71a (table II) (row   3.350(f)(1)(v).......  5.327(b)
                                             5 column 7).
                                            4.71a (table II) (row   3.350(e)(1)(i).......  5.330(a)
                                             6 column 6).
                                            4.71a (table II) (row   3.350(d)(3)..........  5.328(d)
                                             6 column 7).
                                            4.71a (table II) (row   3.350(d)(2)..........  5.328(c)
                                             7 column 7).
                                            4.71a Note to table II  3.350(b);              5.324; 5.330(d);
                                                                     3.350(e)(2);           5.331(d); 5.331(e);
                                                                     3.350(f)(3);           5.331(f)
                                                                     3.350(f)(4);
                                                                     3.350(f)(5).

[[Page 71047]]

 
                                            4.73 Note.............  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.73 Note after (the    3.350(a)(3)..........  5.323(d)(1);
                                             pelvic girdle and                              5.323(d)(2)
                                             thigh).
                                            4.73 Note after 5327    3.105(e).............  5.177(f)
                                             (miscellaneous).
                                            4.73 Note after 5329    3.105(e).............  5.177(f)
                                             (miscellaneous).
                                            4.75(c)...............  3.383(a).............  5.383(b)
                                            4.75(f)...............  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.79 Note after 6014..  3.105(e).............  5.177(f)
                                            4.79 footnote 1 after   3.350................  5.323; 5.322; 5.324;
                                             (diseases of the eye).                         5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.79 footnote 1 after   3.350................  5.323; 5.322; 5.324;
                                             (ratings for                                   5.325; 5.326; 5.327;
                                             impairment of visual                           5.328; 5.329; 5.330;
                                             fields).                                       5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.85(f)...............  3.383................  5.283
                                            4.85(g)...............  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.87 Note after (6208)  3.105(e).............  5.177(f)
                                            4.88b Note after        3.105(e).............  5.177(f)
                                             (6301).
                                            4.88b Note after        3.105(e).............  5.177(f)
                                             (6302).
                                            4.96(c)...............  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.97 Note after (6731)  3.105(e).............  5.177(f)
                                            4.97 Note after (6819)  3.105(e).............  5.177(f)
                                            4.97 footnote 1.......  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.104 Note after        3.105(e).............  5.177(f)
                                             (7011).
                                            4.104 Note after        3.105(e).............  5.177(f)
                                             (7016).
                                            4.104 Note after        3.105(e).............  5.177(f)
                                             (7019).
                                            4.104 Note after        3.105(e).............  5.177(f)
                                             (7110).
                                            4.104 Note 3 after      3.105(e).............  5.177(f)
                                             (7111).

[[Page 71048]]

 
                                            4.104 Note after        3.105(e).............  5.177(f)
                                             (7123).
                                            4.114 Note after        3.105(e).............  5.177(f)
                                             (7343).
                                            4.114 Note after        3.105(e).............  5.177(f)
                                             (7351).
                                            4.115b Note...........  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.115b Note after       3.105(e).............  5.177(f)
                                             (7528).
                                            4.115b Note after       3.105(e).............  5.177(f)
                                             (7531).
                                            4.115b footnote 1.....  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.116 Note2...........  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.116 Note after        3.105(e).............  5.177(f)
                                             (7627).
                                            4.116 footnote 1......  3.350................  5.323; 5.322; 5.324;
                                                                                            5.325; 5.326; 5.327;
                                                                                            5.328; 5.329; 5.330;
                                                                                            5.331(c); 5.331(d);
                                                                                            5.331(f); 5.332;
                                                                                            5.333;
                                                                                            5.346(b)(1)(i);
                                                                                            5.346(b)(2);
                                            4.117 Note after        3.105(e).............  5.177(f)
                                             (7702).
                                            4.117 Note after        3.105(e).............  5.177(f)
                                             (7703).
                                            4.117 Note after        3.105(e).............  5.177(f)
                                             (7709).
                                            4.117 Note after        3.321(b)(1)..........  5.280
                                             (7714).
                                            4.117 Note after        3.105(e).............  5.177(f)
                                             (7715).
                                            4.117 Note after        3.105(e).............  5.177(f)
                                             (7716).
                                            4.118 Note after        3.105(e).............  5.177(f)
                                             (7818).
                                            4.118 Note after        3.105(e).............  5.177(f)
                                             (7833).
                                            4.119 Note after        3.105(e).............  5.177(f)
                                             (7914).
                                            4.119 Note after        3.105(e).............  5.177(f)
                                             (7919).
                                            4.12a Note(5) after     3.114................  5.152
                                             (8045).
                                            4.127.................  3.310(a).............  5.246
                                            4.128.................  3.105(e).............  5.177(f)
14...........  Legal Services, General      14.636(c).............  3.156................  5.3(b)(6); 5.55;
                Counsel, and Miscellaneous                                                  5.153; 5.165
                Claims.
                                            14.636(h)(1)(iii).....  3.750................  5.745
17...........  Medical....................  17.36(b)(7)...........  3.271; 3.272; 3.273;   5.370; 5.410(a);
                                                                     3.276.                 5.410(c); 5.410(d);
                                                                                            5.410(e); 5.410(f);
                                                                                            5.412; 5.413;
                                                                                            5.414(a); 5.414(c);
                                                                                            5.421; 5.423(a);
                                                                                            5.423(b); 5.423(e);
                                                                                            5.706(b); 5.707(c)
                                            17.39(a)..............  3.42(c)..............  5.613
                                            17.39(b)..............  3.42(c)..............  5.613
                                            17.47(d)(4)...........  3.271; 3.272.........  5.370; 5.410(a);
                                                                                            5.410(c); 5.410(d);
                                                                                            5.410(e); 5.410(f);
                                                                                            5.411(a); 5.411(c);
                                                                                            5.412; 5.413;
                                                                                            5.706(b); 5.707(c)
                                            17.47(d)(5)...........  3.275................  5.410(d); 5.411(b),
                                                                                            5.411(c), 5.412(a);
                                                                                            5.414; 5.706(b);

[[Page 71049]]

 
                                            17.96(a)(1)...........  3.1(u);3.1(w)........  5.1 (Improved
                                                                                            Pension);
                                                                                           5.1 (Section 306
                                                                                            Pension); 5.460
                                            17.900................  3.814(c)(2);           5.589; 5.590
                                                                     3.815(c)(2).
                                            17.900................  3.815(c)(3)..........  5.590
                                            17.900................  3.814(c)(1);           5.589; 5.590
                                                                     3.815(c);
                                                                     3.815(c)(1).
                                            17.901(a).............  3.814; 3.815.........  5.589; 5.590; 5.591
                                            17.901(b).............  3.815; 3.815(a)(2)...  5.590
                                            17.903(a)(2)(i).......  3.814................  5.589; 5.591
                                            17.903(a)(2)(ii)......  3.815................  5.590; 5.591
18...........  Nondiscrimination in         Appendix B to Subpart   3.57.................  5.1 (Custody of a
                Federally Assisted           E of part 18                                   child); 5.417;
                Programs of the Department   (Veterans' Benefits)                           5.220; 5.223; 5.225;
                of Veterans Affairs-         (Adjudication).                                5.226; 5.435;
                Effectuation of Title VI                                                    5.695(a)
                of the Civil Rights Act of
                1964.
                                            Appendix B to Subpart   3.57; 3.807(d).......  5.1 (Custody of a
                                             E of part 18                                   child); 5.417;
                                             (Survivors' and                                5.220; 5.223; 5.225;
                                             Dependents'                                    5.226; 5.435;
                                             Educational                                    5.695(a)
                                             Assistance)
                                             (Adjudication).
                                            Appendix B to Subpart   3.807(d).              .....................
                                             E of part 18
                                             (Survivors' and
                                             Dependents'
                                             Educational
                                             Assistance)
                                             (Adjudication)
                                             (Survivors' and
                                             Dependent's
                                             Educational
                                             Assistance Under 38
                                             U.S.C. Chapter 35).
                                            Appendix B to Subpart   3.50; 3.57; 3.59.....  5.1 (Custody of a
                                             E of part 18                                   child); 5.201(a);
                                             (Veterans'                                     5.203(b); 5.220;
                                             Educational                                    5.223; 5.225; 5.226;
                                             Assistance).                                   5.238; 5.417; 5.435;
                                                                                            5.695(a)
20...........  Board of Veterans' Appeals:  20.101(a)(28).........  3.812(d).............  5.588
                Rules of Practice.
                                            20.1502(c)(3).........  3.156................  5.3(b)(6); 5.55;
                                                                                            5.153; 5.165
                                            20.1502(c)(4).........  3.105................  5.162
                                            20.1503(d)............  3.159(b)(1)..........  5.90
                                            20.1504(b)............  3.159(c).............  5.90
                                            20.1505...............  3.2600...............  5.161
                                            20.1507(a)............  3.103(c); 3.2600(c)..  5.82; 5.161
                                            20.1507(a)(2).........  3.2600...............  5.161
                                            Appendix A to part 20   3.103................  5.4(a); 5.4(b); 5.80;
                                             (20.1).                                        5.81; 5.82; 5.83;
                                                                                            5.84
                                            Appendix A to part 20   3.156; 3.160.........  5.3(b)(6); 5.55;
                                             (20.1105).                                     5.153; 5.165;
                                                                                            5.57(b)-(d)
                                            Appendix A to part 20   3.22.................  5.520(b); 5.521;
                                             (20.1106).                                     5.522
                                            Appendix A to part 20   3.103; 3.156; 3.160..  5.3(b)(6); 5.4(a);
                                             (20.1304).                                     5.4(b); 5.55; 5.80;
                                                                                            5.81; 5.82; 5.83;
                                                                                            5.84; 5.153; 5.165;
                                                                                            5.57(b)-(d)
21...........  Vocational Rehabilitation    21.33 Cross-Reference.  3.103................  5.4(a); 5.4(b); 5.80;
                and Education.                                                              5.81; 5.82; 5.83;
                                                                                            5.84
                                            21.42(b)(1)...........  3.12.................  5.30; 5.31(c);
                                                                                            5.31(e); 5.32; 5.33;
                                                                                            5.34(c); 5.35(b)-
                                                                                            (d); 5.36; 5.39
                                            21.48(a)..............  3.105(d); 3.105(e)...  5.83(a)
                                                                                           5.175(b)(1);
                                                                                            5.175(b)(2);
                                                                                            5.177(d); 5.177(f)
                                            21.260(d).............  3.50; 3.51; 3.57;      5.1 (Custody of a
                                                                     3.59.                  child); 5.201(a);
                                                                                            5.203(b); 5.220;
                                                                                            5.223; 5.225; 5.226;
                                                                                            5.238; 5.417; 5.435;
                                                                                            5.695(a)
                                            21.330(a).............  3.451; 3.458.........  5.771; 5.775
                                            21.330(b).............  3.400(e).............  5.782
                                            21.414(a).............  3.105(a).............  5.162(c); 5.162(f)

[[Page 71050]]

 
                                            21.414(b).............  3.105(b).............  5.163
                                            21.414(c).............  3.105(c).............  5.177(e)
                                            21.414(d).............  3.105(d).............  5.177(d)
                                            21.414(e).............  3.105(e).............  5.177(f)
                                            21.422(d)(3)..........  3.103(c); 3.103(d)...  5.81; 5.82
                                            21.3021(a)(2)(ii).....  3.6(a); 3.807........  5.21(a); 5.586(b);
                                                                                            5.586(c)
                                            21.3021(b)............  3.40(b); 3.40(c);      5.610
                                                                     3.40(d); 3.807(d).
                                            21.3021 Cross-          3.6..................  5.21(a); 5.22(a);
                                             Reference.                                     5.23; 5.24; 5.25;
                                                                                            5.29
                                            21.3021 Cross-          3.7..................  5.21(a); 5.23(a)-(b);
                                             Reference (persons                             5.24(a); 5.25(a)-
                                             included).                                     (b); 5.28; 5.31(c)
                                            21.3021 Cross-          3.40.................  5.610
                                             Reference (Philippine
                                             and insular forces).
                                            21.3023 Cross-          3.707................  5.764(b); 5.764(c);
                                             Reference (concurrent                          5.764(d)
                                             payments).
                                            21.3023 Cross-          3.807................  5.586(b); 5.586(c)
                                             Reference
                                             (certification).
                                            21.3024 Cross-          3.708................  5.750; 5.751
                                             Reference.
                                            21.3041(e)............  3.57(c)..............  5.223(b)
                                            21.3131(d)............  3.40(b); 3.40(c);      5.610
                                                                     3.40(d).
                                            21.3133(c)............  3.1000...............  5.1 (Accrued
                                                                                            benefits); 5.1
                                                                                            (Evidence in the
                                                                                            file on the date of
                                                                                            death); 5.551;
                                                                                            5.784; 5.552(a);
                                                                                            5.552(b); 5.553;
                                                                                            5.554
                                            21.3306(b)(3)(ii).....  3.102................  5.3(b)(2); 5.3(b)(3);
                                                                                            5.3(b)(5); 5.4(b);
                                                                                            5.249(a)
                                            21.3333(c)............  3.40(b); 3.40(c);      5.610
                                                                     3.40(d).
                                            21.4003(a)............  3.105(a).............  5.162(c); 5.162(f)
                                            21.4003(b)............  3.105(b).............  5.163
                                            21.4003(c)............  3.105(c).............  5.177(e)
                                            21.4003(d)............  3.105(d).............  5.177(d)
                                            21.4007...............  3.900; 3.901(except    5.675(a); 5.676(b)
                                                                     paragraph (c));        and (c); 5.677(b)
                                                                     3.902 (except          and (c);
                                                                     paragraph (c));        5.678(b)(3);
                                                                     3.903;3.904; 3.905.    5.675(b); 5.1 (Fraud
                                                                                            (1)); 5.676(a);
                                                                                            5.676(b)(2);
                                                                                            5.676(b)(1);
                                                                                            5.676(b)(3)(i);
                                                                                            5.680(c)(1);
                                                                                            5.680(c)(2); 5.677;
                                                                                            5.678; 5.676(d);
                                                                                            5.677(b)(3)(ii);
                                                                                            5.677(c)(2);
                                                                                            5.678(b)(3)(iv);
                                                                                            5.678(c)(2); 5.679;
                                                                                            5.680(a);
                                                                                            5.680(c)(3)
                                            21.4135(t)............  3.114(b).............  5.152
                                            21.4200(x)............  3.1(i)...............  5.1 (State)
                                            21.5021(b)(5).........  3.15.................  5.21(b); 5.39(e)
                                            21.5021(l)............  3.1(j)...............  5.191
                                            21.5021(m)............  3.1(j); 3.52.........  5.191; 5.200(a);
                                                                                            5.200(b)
                                            21.5021(n)(2).........  3.57; 3.58...........  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a); 5.224(a)
                                            21.5021(o)............  3.59.................  5.238
                                            21.5040(b)(2)(ii).....  3.13(c)..............  5.37(d)
                                            21.5040(b)(3).........  3.12; 3.13...........  5.30; 5.31(c);
                                                                                            5.31(e); 5.32; 5.33;
                                                                                            5.34(c); 5.35(b)-
                                                                                            (d); 5.36; 5.39;
                                                                                            5.37(b); 5.37(c);
                                                                                            5.37(d)
                                            21.5040(c)(3).........  3.15.................  5.21(b); 5.39(e)
                                            21.5040(d)(1)(ii).....  3.4(b)...............  5.24(a); 5.24(b)
                                            21.5040(d)(3).........  3.15.................  5.21(b); 5.39(e)
                                            21.5065(b)(5)(iv).....  3.4(b)...............  5.24(a); 5.24(b)

[[Page 71051]]

 
                                            21.5065(b)(6).........  3.15.................  5.21(b); 5.39(e)
                                            21.5067(c)............  3.1000...............  5.1 (Accrued
                                                                                            benefits); 5.1
                                                                                            (Evidence in the
                                                                                            file on the date of
                                                                                            death); 5.551;
                                                                                            5.784; 5.552(a);
                                                                                            5.552(b); 5.553;
                                                                                            5.554
                                            21.5740(b)(2)(iii)....  3.4(b)...............  5.24(a); 5.24(b)
                                            21.5740(b)(3).........  3.15.................  5.21(b); 5.39(e)
                                            21.5742(a)(1).........  3.15.................  5.21(b); 5.39(e)
21...........  VR&E.......................  21.6050(a)............  3.342................  5.380; 5.347
                                            21.6050(b)............  3.342................  5.380; 5.347
                                            21.6420(d)............  3.343................  5.286; 5.347
                                            21.6501(a)............  3.340; 3.341.........  5.284; 5.285
                                            21.6503(b)............  3.340; 3.341.........  5.284; 5.285
                                            21.6507(a)............  3.343(c)(2)..........  5.286
                                            21.6521(b)............  3.343(c)(2)..........  5.286
                                            21.7020(b)(1)(iii)....  3.6(b)...............  5.22(a); 5.22(b);
                                                                                            5.23(a)(1);
                                                                                            5.23(b)(1); 5.24(a);
                                                                                            5.24(b)(1); 5.25(a);
                                                                                            5.29(a)
                                            21.7020(b)(1)(iv).....  3.6(b)...............  5.22(a); 5.22(b);
                                                                                            5.23(a)(1);
                                                                                            5.23(b)(1); 5.24(a);
                                                                                            5.24(b)(1); 5.25(a);
                                                                                            5.29(a)
                                            21.7020(b)(9)(ii).....  3.57.................  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a)
                                            21.7020(b)(9)(iii)....  3.59.................  5.238(a); 5.238(c);
                                                                                            5.238(e)(1) and
                                                                                            5.238(e)(2)(i)
                                            21.7042...............  3.15.................  5.21(b); 5.39(e)
                                            21.7044...............  3.15.................  5.21(b); 5.39(e)
                                            21.7080(c)(3).........  3.57.................  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a)
                                            21.7080(c)(4).........  3.57.................  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a)
                                            21.7031(e) Cross-       3.667................  5.551(a); 5.695(b);
                                             Reference.                                     5.695(c); 5.695(d);
                                                                                            5.695(f)-(i)
                                            21.7135(y)............  3.114(b).............  5.152
                                            21.7140(g)............  3.1000...............  5.1 (Accrued
                                                                                            benefits); 5.1
                                                                                            (Evidence in the
                                                                                            file on the date of
                                                                                            death); 5.551;
                                                                                            5.784; 5.552(a);
                                                                                            5.552(b); 5.553;
                                                                                            5.554
                                            21.7280(b)(2).........  3.312................  5.504
                                            21.7303(a)............  3.105(a).............  5.162(c); 5.162(f)
                                            21.7303(b)............  3.105(b).............  5.163
                                            21.7635(u)............  3.114(b).............  5.152
                                            21.7803(a)............  3.105(a).............  5.162(c); 5.162(f)
                                            21.7803(b)............  3.105(b).............  5.163
                                            21.8010(a)............  3.815(c)(3)..........  5.590
                                            21.8010(a)............  3.814(c)(2);           5.589; 5.590
                                                                     3.815(a)(2);
                                                                     3.815(c)(2).
                                            21.8010(a)............  3.814(c)(3)..........  5.589
                                            21.8010(a)............  3.814(c)(1);           5.589; 5.590
                                                                     3.815(c)(1).
                                            21.9570(b)(3).........  3.57.................  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a)
                                            21.9570(b)(4).........  3.57.................  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a)

[[Page 71052]]

 
                                            21.9625(j)(4).........  3.57.................  5.1 (Custody of a
                                                                                            child); 5.417;
                                                                                            5.220; 5.223; 5.225;
                                                                                            5.226; 5.435;
                                                                                            5.695(a)
                                            21.9635(u)............  3.114(b).............  5.152
                                            21.9680(e)............  3.1000...............  5.1 (Accrued
                                                                                            benefits); 5.1
                                                                                            (Evidence in the
                                                                                            file on the date of
                                                                                            death); 5.551;
                                                                                            5.784; 5.552(a);
                                                                                            5.552(b); 5.553;
                                                                                            5.554
----------------------------------------------------------------------------------------------------------------

Changes in Terminology for Clarity or Consistency

    We propose changes in terminology in this rulemaking primarily to 
achieve consistency throughout part 5. For example, while reviewing the 
NPRMs, we noted that we had used the word ``termination'' 
interchangeably with the word ``discontinuance'' (including variations 
of the two words). To ensure clarity and consistency in our part 5 
regulations, we propose to use the term ``discontinuance'' throughout. 
The word ``discontinuance'' is more accurate because there are 
occasions when the benefit is not terminated, but discontinued for a 
period, and then resumed. Similarly, we propose to use ``person'' 
rather than ``individual'' in all instances where either term would 
apply.
    According to paragraph 12.9 of the Government Printing Office Style 
Manual (2008), numerals rather than words are used when referring to 
units of measurement and time. Therefore, we propose to substitute the 
number for the word (for example, ``1 year'' instead of ``one year'') 
throughout part 5.
    Another source of ambiguity and confusion is the phrase ``on or 
after'' which is used in connection with a specific date when 
discussing the effective date of a regulatory provision or the date by 
which an event must have occurred. For example, a regulatory provision 
might be effective ``on or after'' October 1, 1982, which to some may 
seem to permit a choice between ``on'' or ``after''. The simplest way 
to eliminate this ambiguity is to identify the day before the effective 
date and precede that date with the word ``after''. In the above 
example, the regulatory provision would be effective ``after September 
30, 1982''. This method of stating effective dates makes our 
regulations easier to understand and apply.
    We noted that in the NPRMs we used ``VA benefits'' and ``benefits'' 
inconsistently and interchangeably. We propose to define ``Benefit'' as 
``any VA payment, service, commodity, function, or status, entitlement 
to which is determined under this part, except as otherwise provided.'' 
Therefore, we propose to generally not include ``VA'' before 
``benefit''. However, we propose to still use ``VA benefit'' when that 
term is needed to distinguish it from some other benefit such as a 
Social Security benefit or some benefit for which election is required 
(e.g. Radiation Exposure Compensation Act).

Removal of Death Compensation Provisions

    There are less than 300 beneficiaries currently receiving death 
compensation. Except for one small group of beneficiaries, death 
compensation is payable only if the veteran died prior to January 1, 
1957. VA has not received a claim for death compensation in over 10 
years and we do not expect to receive any more.
    Because of the small number of beneficiaries of death compensation, 
there is no need to include the provisions concerning claims for death 
compensation in part 5. We therefore propose to remove the death 
compensation provisions (Sec. Sec.  5.560-5.562) that were initially 
proposed in AL71. 69 FR 59072, Oct. 1, 2004. We propose to reserve 
Sec. Sec.  5.560-5.562 for later use. We propose to revise Sec.  5.0 
(the scope provision for part 5), as initially proposed in AL87, 71 FR 
16464, Mar. 31, 2006, to direct that any new claims for death 
compensation or actions concerning death compensation benefits be 
adjudicated under part 3. We propose to retain provisions regarding 
death compensation in subpart L because a death compensation 
beneficiary may still elect to receive dependency and indemnity 
compensation instead.

Removal of Spanish-American War Death Pension Provisions

    There is currently one beneficiary receiving a Spanish-American War 
death pension. Therefore, the provisions concerning Spanish-American 
War death pensions should not be carried forward to part 5. Instead, we 
propose to remove the Spanish-American War death pension provisions 
initially proposed in AL83 (Sec. Sec.  5.460(c) and 5.462). 69 FR 
77578, Dec. 27, 2004. We propose to reserve Sec.  5.462 for later use. 
In addition, we propose to change initially proposed Sec.  5.0 (the 
scope provision for part 5) as proposed in AL87, 71 FR 16464, Mar. 31, 
2006, to direct that any new claims or actions concerning Spanish-
American War death pension benefits be adjudicated under part 3.

Change in Titles of Certain VA Officials

    Effective April 11, 2011, VA reorganized its Compensation and 
Pension Service by dividing it into several smaller entities, including 
the Compensation Service and the Pension and Fiduciary Service. We 
propose to update these terms throughout part 5.

VI. Subpart A: General Provisions AL87

    In a document published in the Federal Register on March 31, 2006, 
we proposed to revise Department of Veterans Affairs (VA) regulations 
concerning general compensation and pension provisions. See 71 FR 
16464. We provided a 60-day comment period that ended May 30, 2006. We 
received submissions from seven commenters: Paralyzed Veterans of 
America, Disabled American Veterans, Disabled American Veterans Chapter 
57, Vietnam Veterans of America, National Organization of Veterans' 
Advocates, and two members of the general public.

[[Page 71053]]

Sec.  5.0 Scope and Applicability

    In the NPRM, we identified proposed Sec.  5.0 as a new regulation 
in the derivation table. 71 FR 16465-16466, Mar. 31, 2006. However, 
initially proposed Sec.  5.0 is derived from Sec.  3.2100, which 
governs the applicability of rules in one subpart of 38 CFR part 3. 
Section 5.0(a) states a similar applicability provision for all of part 
5, with only minor revisions to conform it to the part 5 formatting and 
numbering. The derivation and distribution tables are corrected 
accordingly.
    To provide a smooth transition from part 3 to part 5 we propose to 
add a new paragraph (b) to initially proposed Sec.  5.0 establishing 
the applicability date for part 5. We propose two rules to govern the 
applicability date of part 5, and two rules to state the different 
situations in which part 3 would still apply. These rules would make it 
clear that part 5 will apply prospectively, but not retroactively.
    To have part 5 apply immediately to all pending cases would require 
readjudication of thousands of claims (e.g. those where a decision has 
been rendered by the agency of original jurisdiction and the appeal 
period has not expired), which would significantly delay processing new 
claims being filed with VA. We believe that our proposed applicability 
structure will be the most efficient way to transition from part 3 to 
part 5 and is clear both to VA employees and to the members of the 
public who use VA regulations.
    We propose to have part 3 continue to apply to all death 
compensation and Spanish-American War benefits. As explained in detail 
later in this preamble, these two benefit programs have very limited 
numbers of beneficiaries or potential claimants, and these claims can 
continue to be processed under part 3, so there is no need to include 
them in part 5.
    To ensure that users of part 3 are aware of part 5's applicability, 
we propose to add a new Sec.  3.0 to 38 CFR part 3. This section will 
be titled Scope and applicability and will state that part 5, not part 
3, will apply to claims filed on or after the effective date of the 
final rule.
    We note that part 5 is not a ``liberalizing VA issue approved by 
the Secretary or at the Secretary's direction'' under Sec.  5.152 with 
regard to a claim that was filed while part 3 was still in effect for 
new claims. That is because part 5 does not apply to a claim that was 
filed while part 3 was still in effect for new claims. Therefore, part 
5 cannot be liberalizing with respect to such a claim.

Sec.  5.1 General Definitions

    Initially proposed Sec.  5.1, included the following definition of 
the term ``agency of original jurisdiction'': ``Agency of original 
jurisdiction means the VA activity that is responsible for making the 
initial determination on an issue affecting a claimant's or 
beneficiary's right to benefits.'' In the preamble to the AL87 NPRM, we 
noted that this definition differed somewhat from a definition of the 
same term in 38 CFR 20.3(a), which reads as follows: ``Agency of 
original jurisdiction means the Department of Veterans Affairs activity 
or administration, that is, the Veterans Benefits Administration, 
Veterans Health Administration, or National Cemetery Administration, 
that made the initial determination on a claim.'' We stated that, ``The 
difference is because of the narrower scope of part 5 and because the 
definitions in Sec.  20.3 apply in an appellate context while the 
definitions in proposed Sec.  5.1 do not.''
    Notwithstanding our initially proposed reason for creating a 
different definition, we have determined that it is unnecessary because 
the Sec.  20.3(a) definition will work well in part 5. Moreover, having 
two different definitions, even if the two are substantially the same, 
could cause a reader to mistakenly believe that VA intends to define 
``agency of original jurisdiction'' differently depending on whether a 
case is pending at a VA regional office or at the Board of Veterans' 
Appeals (the Board). We therefore propose to replace the definition 
from the AL87 NPRM with the Sec.  20.3(a) definition.
    In response to RIN 2900-AM05, ``Matters Affecting Receipt of 
Benefits'', we received several comments on our proposed definitions of 
``willful misconduct'', ``proximately caused'', and ``drugs''. 71 FR 
31056, May 31, 2006. Because these terms apply to several different 
subparts in part 5, we propose to move them to Sec.  5.1 and will 
therefore discuss these comments in connection with Sec.  5.1 below.
    In proposed rulemaking RIN 2900-AM16, VA Benefit Claims, we 
initially proposed definitions of ``application'' and ``claim'', to be 
added to Sec.  5.1, ``General definitions''. 73 FR 20138, Apr. 14, 
2008. In that rulemaking, we proposed that, ``Application means a 
specific form required by the Secretary that a claimant must file to 
apply for a benefit'' and ``Claim means a formal or informal 
communication in writing requesting a determination of entitlement, or 
evidencing a belief in entitlement, to a benefit.''
    In responding to this comment, we determined that we had used the 
terms ``file'' and ``submit'' interchangeably in the NPRMs. We note 
that other provisions in title 38 use ``submit'' or variants thereof 
with respect to the presentation of evidence. See proposed 38 current 
38 CFR 3.103(b)(2), 3.203(c), and 20.1304. We note also that there is a 
reasonable basis for using ``file'' in relation to documents initiating 
claims and appeals and ``submit'' in relation to presentation of 
evidence: it appears that Congress has used the term ``file'' only in 
relation to documents that have procedural significance in terms of 
initiating claims or appeals. See 38 U.S.C. 5101(a), 7105(b), (c), and 
(d)(3). In referring to the presentation of evidence, Congress has used 
a variety of other terms, such as ``submit[ ]'' (38 U.S.C. 108(b)), 
``furnish'' (sec. 5101(c)), ``provide[ ]'' (sec. 5103), or ``present[ 
]'' (sec. 5108). Further, it is possible that ``file'' may suggest a 
requirement for a written submission--which is appropriate for claims, 
notices of disagreement, and substantive appeals--whereas ``submit'' 
would include oral presentation of evidence at a hearing. For these 
reasons, we propose throughout part 5 to use ``file'' in relation to 
documents initiating claims and appeals and ``submit'' in relation to 
presentation of evidence.
    One commenter commented on our initially proposed definition of 
``claimant,'' which stated that, ``any person applying for, or filing a 
claim for, any benefit under the laws administered by VA'', noting that 
the term ``claim'' has a different meaning than ``application''. The 
commenter noted that a claim does not end with the disposition of the 
application and that there may be subsequent administrative actions in 
a claim which were not initiated by any application and action by the 
claimant. The commenter did not address the substance of our 
definitions nor did the commenter suggest any revisions. For the 
reasons set forth in the preamble to proposed AM16, our definitions of 
``application'' and ``claim'' reflect the distinctions described by the 
commenter. We therefore propose to make no changes based on the 
comment.
    One commenter objected to the scope of our definition of 
``claimant'', noting that Congress, in 38 U.S.C. 5100, restricted the 
definition of ``claimant'' to 38 U.S.C. chapter 51. The commenter 
asserted that VA should restrict its definition to 38 CFR part 5. The 
commenter then noted that 38 U.S.C. 7111 also uses the word 
``claimant'' in connection with a review of a Board decision on grounds 
of clear and

[[Page 71054]]

unmistakable error. The commenter asserted that, in 38 U.S.C. 7111, the 
person whose file is under review is not a claimant.
    The first phrase of Sec.  5.1 states that, ``The following 
definitions apply to this part''. Although other parts of 38 CFR may 
adopt the definitions used in part 5 by expressly stating so, the 
definitions we provided in Sec.  5.1 are restricted by this phrase to 
use in part 5 unless adopted in other parts. The situation described by 
the commenter (concerning the person whose file is being reviewed by 
the Board) is not related to this rule because it concerns 38 CFR part 
20. As stated above, the regulation as initially proposed already 
restricts the application of the definition of claimant to part 5.
    Based on this comment, however, we propose to narrow the definition 
of ``claimant'' to ``a person applying for, or filing a claim for, any 
benefit under this part.'' Because Sec.  5.1 applies only to part 5, it 
is beyond the scope of this section to include as a part 5 claimant a 
person who is seeking VA benefits under another part of title 38 CFR, 
such as health care. For the same reason, we propose to make similar 
changes to our definitions of ``claim'', ``beneficiary'', and 
``benefit''.
    We propose to add the definition of ``custody of a child,'' which 
means that a person or institution is legally responsible for the 
welfare of a child and has the legal right to exercise parental control 
over the child. Such a person or institution is the ``custodian'' of 
the child. This definition is consistent with the definition of ``child 
custody'' in 38 CFR 3.57(d) and with current VA practice and usage in 
38 CFR part 3.
    In AM05, Sec.  5.661(a)(3), we initially proposed to define the 
term ``drugs'' as ``prescription or non-prescription medications and 
other substances (e.g., glue or paint), whether obtained legally or 
illegally.'' The definition is now proposed in Sec.  5.1. A commenter 
suggested an amendment to this definition. The commenter asserted that 
the definition should include the word ``chemical'' because in the 
commenter's view, ``chemical'' abuse also causes euphoria and 
``chemicals'' are widely abused. Our initially proposed definition used 
the term ``other substances'' to describe the chemicals discussed by 
the commenter. We intended our definition to include organic 
substances, such as hallucinogenic mushrooms, and all other substances 
that may be abused to cause intoxication.
    In reviewing this comment, we determined that the ``other 
substances'' language of our definition may have been overly broad. For 
instance, it might be misconstrued to include any substance, for 
example, water. In order to avoid this potential misinterpretation, we 
propose to modify our basic definition of drugs to read as follows: 
``chemical substances that affect the processes of the mind or body and 
that may cause intoxication or harmful effects if abused.'' The 
language about affecting the mind or body is taken from ``Dorland's 
Illustrated Med. Dictionary'' 575 (31st ed. 2007). We propose to add 
the language about intoxication or harmful effects to ensure that we 
exclude items which technically are chemical substances that might 
affect the mind or body (for example, commercially prepared prune 
juice), but do not cause intoxication or harmful effects. We propose to 
add a second sentence to incorporate important concepts already stated 
in the initially proposed definition: that our definition includes 
prescription and non-prescription drugs and includes drugs that are 
obtained legally or illegally.
    Another AM05 commenter stated that the phrase ``obtained legally or 
illegally'' was unnecessary and contained a negative implication. The 
commenter recommended saying, ``however obtained'' instead. We used the 
phrase ``obtained legally or illegally'' because as we stated in the 
NPRM, this phrase is sufficiently broad to cover all the means of 
obtaining drugs or other substances. We used the phrase ``obtained 
legally or illegally'' to ensure that the regulation makes clear that a 
properly prescribed drug, obtained legally, may be abused such as to 
cause intoxication and thus proximately cause injury, disease, or 
death. We propose to make no changes based on this comment because the 
recommended change would not make clear that the abuse of legally 
obtained drugs is also considered drug abuse constituting willful 
misconduct under Sec.  5.661(c).
    We do propose, however, to change ``and drugs that are obtained 
legally or illegally'' to ``whether obtained legally or illegally.'' 
This makes it clearer that ``legally or illegally'' applies to how 
prescription and non-prescription drugs are obtained. The language 
initially proposed could be misread to mean that there are four 
distinct categories of drugs, prescription, non-prescription, legally 
obtained, and illegally obtained. ``Whether obtained legally or 
illegally'' makes it clear that there are two categories, prescription 
and non-prescription, either of which could be obtained legally or 
illegally.
    We propose to define ``effective the date of the last payment'' as 
paragraph (s) in Sec.  5.1. This term is commonly used in part 3 as 
``effective date of last payment'', but not defined in part 3. In 
certain cases of reduction, suspension, or discontinuance of benefit 
payments, VA adjusts payments effective the date of the last payment of 
benefits. This means that ``VA's action is effective as of the first 
day of a month in which it is possible to suspend, reduce, or 
discontinue a benefit payment without creating an overpayment.'' We are 
adding the word ``the'' before ``date'' and ``last'' for clarity.
    One commenter noted that the definition of ``fraud'' depended on 
where in the regulations it was used. This commenter expressed the 
opinion that the meaning of a word in a statute is presumed to be the 
common law meaning unless Congress has plainly provided otherwise. The 
commenter then expressed the opinion that none of the definitions of 
fraud presented in initially proposed Sec.  5.1 incorporate all the 
common law aspects of fraud, especially the requirement for proof of 
fraudulent intent and the requirement for proof by clear evidence.
    We first note that Congress has specifically defined ``fraud'' in 
38 U.S.C. 6103(a) for purposes of forfeiture of benefits. We 
incorporated that definition in paragraph (1) of our initially proposed 
definition of fraud and then proposed to make it VA's ``general 
definition'' of fraud. In reviewing our definition based on this 
comment, we have determined that there is no need for a general 
definition of fraud, since the term is only used in the context of 
forfeiture. We therefore propose to limit the scope to instances of 
forfeiture.
    Regarding the commenter's assertion regarding common law, we note 
that the five elements of common law fraud are: (1) A material 
misrepresentation by the defendant of a presently existing fact or past 
fact; (2) Knowledge or belief by the defendant of its falsity; (3) An 
intent that the plaintiff rely on the statement; (4) Reasonable 
reliance by the plaintiff; and 5) Resulting damages to the plaintiff. 
See 100 Am. Jur. Proof of Facts 3d section 8. The intent element of the 
common law definition of fraud relates to the defendant's desire for 
the plaintiff's reliance on the statement, while the material 
misrepresentation only requires that the person committing the fraud 
have a knowledge or belief that the statement is false.
    As stated above, our proposed definition of fraud in Sec.  5.1 now 
relates only to forfeiture and is consistent with the applicable 
statute. There is no requirement that our definitions in Sec.  5.1 
conform to the common law definition.

[[Page 71055]]

Veterans benefits and the body of law VA applies are often very 
different from the common law. Moreover, the intent requirement 
described in the third common law element above is contained in Sec.  
5.1 in the language requiring an ``intentional'' misrepresentation or 
failure to disclose pertinent facts ``for purpose of obtaining'' the 
specified objective.
    Although some State jurisdictions require ``clear'' or ``clear and 
convincing'' evidence of fraud in various contexts, the Supreme Court 
has stated that ``Congress has chosen the preponderance standard when 
it has created substantive causes of action for fraud.'' Grogan v. 
Garner, 498 U.S. 279, 288 (1991). Congress should not be presumed to 
have intended a higher standard of proof where it has not specified 
such a standard. See id. at 286; Thomas v. Nicholson, 423 F.3d 1279, 
1284 (Fed. Cir. 2005). The definitions in these rules implement 
statutes that do not specify a higher standard of proof, and our 
general rules for evaluating evidence will suffice in determinations 
concerning fraud. Since we already include an intent element where it 
is appropriate and our standards of proof are appropriate for our 
decisions, we propose to make no changes based on this comment.
    We propose to remove the definitions for ``in the waters adjacent 
to Mexico'' and ``on the borders of Mexico''. Both of these phrases 
applied to determining entitlement to benefits for the Mexican Border 
War. There are no surviving veterans of this war, so the definitions 
are no longer necessary.
    We initially proposed to define ``notice,'' now proposed Sec.  5.1, 
as ``written notice sent to a claimant or beneficiary at his or her 
latest address of record, and to his or her designated representative 
and fiduciary, if any.'' In reviewing this definition to respond to a 
comment, we determined that limiting this definition only to written 
communications could create unintended problems. In Paralyzed Veterans 
of America v. Sec'y of Veterans Affairs, 345 F.3d 1334, 1349 (Fed. Cir. 
2003), the court held that the requirement in 38 U.S.C. 5103A(b)(2) 
that VA ``notify'' a claimant of VA's inability to obtain certain 
evidence may be satisfied by either written or oral notice. The court 
noted that ``[i]t is certainly not unreasonable, in our view, for VA to 
retain the flexibility to provide oral rather than written notice, as 
it is clear that under certain circumstances oral notice might be the 
preferred or more practicable option.'' In addition, there may be other 
situations besides those involving section 5103A(b)(2) where written 
notice is not practicable and that it would not be desirable to limit 
the definition of ``notice'' to only written communications. When a 
specific statute or regulation requires written notice, we propose to 
signify that in part 5 by using the term ``written'' in that specific 
context (e.g., Sec.  5.83(b) based on Sec.  3.103(a) and (b)).
    In addition, we have determined that the use of the defined term as 
part of the definition is not useful to the reader. The term ``notice'' 
is more accurately defined as a ``communication,'' as opposed to a 
``notice.'' We, therefore, propose to define ``notice'' as either:
     A written communication VA sends a claimant or beneficiary 
at his or her latest address of record, and to his or her designated 
representative and fiduciary, if any; or
     An oral communication VA conveys to a claimant or 
beneficiary.
    Additionally, we propose to add the definition of ``payee''. This 
term is used throughout part 5. We propose to define this term in Sec.  
5.1 as a person to whom monetary benefits are payable.
    One AM05 commenter disagreed with our initially proposed definition 
of ``proximately caused''. This commenter also disagreed with including 
a definition of ``proximate cause'' in the regulation, stating that the 
concept has a long history and that for VA to select one definition 
narrows the concept, which may not work in the favor of veterans. The 
commenter also objected to restricting the definition to the second 
definition found in ``Black's Law Dictionary'' 213 (7th Ed. 1999).
    It is necessary to define ``proximately caused'' because it has 
many definitions, as the commenter noted. Moreover, we do not believe 
the concept is well-known by the public. Claimants, beneficiaries, 
veterans' representatives, and VA employees are the primary users of 
regulations. It is important that we choose one definition, to ensure a 
common understanding of our regulations and to ensure that all users 
apply them the same way.
    We selected the second definition of ``proximately caused'' from 
``Black's Law Dictionary'' 234 (7th ed. 1999) (the same definition is 
used in the 8th Edition (2004) and the 9th Edition (2009)), because 
that definition most closely reflects the way VA and the U.S. Court of 
Appeals for Veterans Claims (CAVC) apply the concept. See, for example, 
Forshey v. West, 12 Vet. App. 71, 73-74 (1998) (`` `Proximate cause' is 
defined as `that which, in a natural continuous sequence, unbroken by 
any efficient intervening cause, produces injury, and without which the 
result would not have occurred.' ``Black's Law Dictionary'' 1225 (6th 
ed.1990).''). We chose not to adopt the first definition because it 
deals with liability and the VA system is not a tort-claims system. 
Congress has specified different court procedures for tort actions. We 
therefore propose to make no changes based on this comment.
    We propose to add a definition of ``psychosis'' as Sec.  5.1 
because other part 5 regulations use the term. The definition is based 
on 38 CFR 3.384, which defines it as any of the following disorders 
listed in Diagnostic and Statistical Manual of Mental Disorders, Fourth 
Edition, Text Revision, of the American Psychiatric Association (DSM-
IV-TR):
     Brief Psychotic Disorder;
     Delusional Disorder;
     Psychotic Disorder Due to General Medical Condition;
     Psychotic Disorder Not Otherwise Specified;
     Schizoaffective Disorder;
     Schizophrenia;
     Schizophreniform Disorder;
     Shared Psychotic Disorder; and
     Substance-Induced Psychotic Disorder.
    We propose to add definitions of the terms ``service-connected'', 
Sec.  5.1, and ``nonservice-connected'' as Sec.  5.1. Both of these 
definitions are identical to those in 38 U.S.C. 101(16) and (17), 
except that we use the term ``active military service'' in lieu of the 
longer term ``active military, naval, or air service''. See 69 FR 4820, 
Jan. 30, 2004.
    We initially proposed a definition of ``service medical records'' 
in Sec.  5.1. We now propose to change the defined term to ``service 
treatment records'', now Sec.  5.1. The Benefits Executive Council, co-
chaired by senior VA and Department of Defense (DoD) officials, 
formally changed the term for a packet of medical records transferred 
from DoD to VA upon a servicemember's release from active duty. 
Specifically, they found that VA, the reserve components, and all of 
the military services, used approximately 20 different phrases for what 
VA referred to as ``service medical records''. They concluded that this 
inconsistent use of terminology was a contributing factor in the 
fragmented processing of medical records. This proposed change would 
implement the Benefits Executive Council's directive.
    We omitted the Canal Zone from the initially proposed definition of 
``State'' in Sec.  5.1, because Sec.  3.1(i) does not include the Canal 
Zone in its definition of ``State''. However, 38 U.S.C. 101(20) defines 
``State'' to include ``For purpose of section 2303 and chapters 34 and 
35 of this title, such term also includes the Canal Zone.'' To correct 
this omission,

[[Page 71056]]

we propose to revise the definition of ``State'' in proposed Sec.  5.1 
to include the Canal Zone ``for purposes of 38 U.S.C. 101(20), and 38 
U.S.C. chapters 34 and 35''.
    We propose to add a definition of ``VA'', as Sec.  5.1, that is 
consistent with current 38 CFR 1.9(b)(1) and 38 U.S.C. 101.
    Regarding our initially proposed definition of ``willful 
misconduct'', an AM05 commenter suggested revising the last sentence of 
initially proposed Sec.  5.661(a)(1) from, ``A mere technical violation 
of police regulations or other ordinances will not by itself constitute 
willful misconduct'', to, ``A mere technical violation of police 
regulations or any local ordinances, including those under police, city 
or county authority, will not by itself constitute willful 
misconduct.'' Another commenter expressed the opinion that the use of 
the word ``other'' before the word ``ordinances'' may be misunderstood 
to refer to a state's general police power to make and enforce laws. We 
propose to clarify the rule based on these comments for the reasons 
discussed below.
    The definition of ``ordinance'' includes city or county authority. 
The word ``ordinance'' is defined as, ``An authoritative law or decree; 
esp., a municipal regulation.'' ``Black's Law Dictionary'' 1208 (9th 
ed. 2009). ``Municipal'' is defined as, ``1. Of or relating to a city, 
town or local government unit. 2. Of or relating to the internal 
government of a state or nation.'' Id. at 1113.
    In most municipalities, the police department establishes 
regulations relating to parking, street usage, and other similar civil 
issues. The use of the phrase ``police regulations'' is intended to 
express the idea that a violation of these types of regulations will 
not be used as the grounds for a finding of willful misconduct. 
Violations of these regulations are ``civil infractions''. An 
``infraction'' is ``[a] violation, usually of a rule or local ordinance 
and usually not punishable by incarceration.'' ``Black's Law 
Dictionary'' 850 (9th ed. 2009). A civil infraction is ``An act or 
omission that, though not a crime, is prohibited by law and is 
punishable.'' Id. Since that term is not readily understood by most of 
the general public, parenthetical explanations following the use of the 
term will clarify the meaning for most people. We propose to revise the 
last sentence of what was initially proposed Sec.  5.661(a) to read, 
``Civil infractions (such as mere technical violation of police 
regulations or other ordinances) will not, by themselves, constitute 
willful misconduct.'' We are proposing to make this change to ensure 
that civil infractions, while prohibited by law, do not by themselves 
deprive an otherwise entitled veteran to benefits. We now propose to 
incorporate this provision into Sec.  5.1.
    The second sentence of initially proposed Sec.  5.661(a)(2) read: 
``For example, injury, disease, or death is proximately caused by 
willful misconduct if the act of willful misconduct results directly in 
injury, disease, or death that would not have occurred without the 
willful misconduct.'' We have determined that this statement is 
unnecessary because Sec.  5.1 already defines ``proximately caused'', 
so we propose to remove the example.
    One commenter expressed the opinion that a VA determination of 
``willful misconduct'' is a quasi-criminal determination. This 
commenter stated that the preponderance of the evidence standard is not 
appropriate in adjudicating a quasi-criminal determination. The 
commenter asserted that the preponderance of the evidence standard of 
proof for willful misconduct determinations was too low because a 
determination of willful misconduct essentially bars a veteran or 
claimant from receiving benefits based on the veteran's service. The 
commenter asserted that this deprived the veteran or claimants claiming 
entitlement based on a veteran's service of procedural due process 
under the Fifth Amendment to the U.S. Constitution. The commenter 
expressed the opinion that VA should instead establish the clear and 
convincing evidence standard as the standard of proof in making willful 
misconduct determinations. The commenter noted that the U.S. Supreme 
Court has stated that a principal function of establishing a standard 
of proof is ``to allocate the risk of error between the litigants and 
to indicate the relative importance attached to the ultimate 
decision.'' Addington v. Texas, 441 U.S. 418, 423 (1979).
    The commenter acknowledged that VA had adopted the standard of 
proof articulated by the U.S. Court of Appeals for the Federal Circuit 
(Federal Circuit) in Thomas, 423 F.3d 1279. The commenter also noted 
that VA has the authority to adopt a different standard notwithstanding 
the standard adopted by the Federal Circuit, as explained by the 
Supreme Court in Nat'l Cable & Telecomms. Ass'n v. Brand X Internet 
Servs., 545 U.S. 967, 969-70 (2005) (finding that an agency could, 
through publication of a regulation, adopt an interpretation of a 
statute that was different than the interpretation of the same statute 
made by a court if the statute was ambiguous and the court's 
interpretation was not the only permissible interpretation of the 
statute).
    The commenter noted that the Federal Circuit found in Thomas that 
the statute did not contain a standard of proof and that VA had not, by 
regulation, imposed a standard of proof. See 423 F.3d at 1283-84. The 
Federal Circuit then found that the Board's and the U.S. Court of 
Appeals for Veterans Claims' decisions to apply the preponderance of 
the evidence standard were supported by their stated reasons and bases. 
Id. at 1284-85. The commenter noted that the Nat'l Cable & Telecomms. 
Ass'n Court found that even if a court has established a standard of 
proof as a gap-filling measure, an agency may still establish a 
different standard of proof to fill gaps in a statute by regulation if 
the agency decides that the court's determination of a standard of 
proof is not in accordance with the agency's policies or does not align 
with the agency's perception of Congressional intent.
    VA does not equate administrative willful misconduct determinations 
with quasi-criminal proceedings and decisions. VA administrative 
procedures for determining entitlement to benefits are non-adversarial 
and pro-claimant, in contrast to criminal proceedings. Attempts to 
categorize the administrative entitlement decisions made by VA as 
quasi-criminal proceedings characterize both the claimants and the VA 
administrative process incorrectly. While the commenter does not fully 
explain what was meant by ``quasi-criminal'' proceedings, we note that 
unlike criminal proceedings, VA has no authority under these 
regulations to fine, imprison, or otherwise impose punishment on a 
claimant. VA administratively decides entitlement to benefits in 
accordance with the duly enacted statutes of Congress. We do not follow 
the procedures used in either criminal or civil courts.
    A decision that a disability was the result of willful misconduct 
only prohibits service connection for the disability or death incurred 
as a result of the willful misconduct. Contrary to the commenter's 
assertion, a veteran or a claimant claiming entitlement based on a 
veteran's service does not lose entitlement to all benefits. A decision 
that willful misconduct caused a disability results in essentially the 
same consequences as a decision that an injury or disease was not 
incurred in service. Service connection for that disability or death is 
not granted. In making a determination that the

[[Page 71057]]

disability was due to willful misconduct, the veteran or a claimant 
claiming entitlement based on a veteran's service is notified of the 
information or evidence needed to substantiate the claim, of the 
decision on the claim, and of their appellate rights.
    Additionally, there is no violation of the Fifth Amendment through 
application of the preponderance of the evidence standard to willful 
misconduct decisions. Since the commenter merely asserted a violation 
of the Fifth Amendment without explaining how the use of any one 
particular standard of proof could violate the due process provision of 
the Fifth Amendment, we are unable to respond more fully to this 
comment and propose to make no changes based on this comment.
    VA does not need to decide if the commenter's reasoning concerning 
adoption of a standard of proof differing from that found by the court 
in Thomas is correct. After reviewing the various standards of proof, 
we have determined that the preponderance of the evidence standard is 
the appropriate standard of proof to prove willful misconduct, except 
as otherwise provided by statute. We provided our reasons for selecting 
this standard of proof in the NPRM that proposed this segment of part 
5. See 71 FR 16470, Mar. 31, 2006. The preponderance of the evidence 
standard provides that if the evidence demonstrates that it is more 
likely than not that a fact is true, the fact will be considered 
proven. This is an appropriate standard to apply to the administrative 
decisions we propose to make in connection with veterans' benefits.
    We propose to move the definitions of ``accrued benefits'', ``claim 
for benefits pending on the date of death'', and ``evidence in the file 
on the date of death'' from Sec.  5.550 to Sec.  5.1. A comment to RIN 
2900-AL71 ``Accrued Benefits and Special Rules Applicable Upon Death of 
a Beneficiary'', raised questions concerning the initially proposed 
definition of ``accrued benefits''. Based on that comment, we made 
technical revisions to clarify the definition, and also made the 
following revisions.
    The last sentence of initially proposed Sec.  5.550(d) (definition 
of ''[c]laim for benefits pending on the date of death'') read, ``[a]ny 
new and material evidence must have been in VA's possession on or 
before the date of the beneficiary's death.'' One commenter, responding 
to RIN 2900-AL71 ``Accrued Benefits and Special Rules Applicable Upon 
Death of a Beneficiary'', suggested that VA should clarify this 
sentence by inserting the phrase ``used to reopen the claim'' between 
the words ``evidence'' and ``must''. The commenter was concerned that 
the proposed language would deter a deceased beneficiary's survivor 
from filing existing additional evidence in support of a claim for 
accrued benefits. However, because a claim for accrued benefits must be 
granted based on evidence in the file on the date of death, such 
additional evidence would not be considered in deciding the claim. 
Nevertheless, to avoid any potential confusion we propose to add 
``submitted to reopen the claim'' between ``evidence'' and ``must''. We 
propose to use ``submitted'' rather than ``used'' because the later 
implies that VA will always find that the evidence was new and 
material.
    We made additional revisions to the definition of ``claim for 
benefits pending on the date of death'' for both readability and 
consistency purposes. One such revision is that we replaced the 
initially proposed term ``finally disallowed claim'' with ``finally 
denied claim'' and reorganized the sentence structure with respect to 
new and material evidence.

Sec.  5.2 Terms and Usage in Part 5 Regulations

    38 CFR part 3 uses both singular and plural nouns to refer to a 
single, regulated person. For example, Sec.  3.750(b)(2) refers to ``a 
veteran with 20 or more years of creditable service'', while Sec.  
3.809(a) refers to ``veterans with wartime service'' (emphasis added). 
This inconsistent usage could confuse readers so we propose to use only 
singular nouns to refer to a particular regulated person. We propose to 
state in previously reserved Sec.  5.2 that a singular noun that refers 
to a person is meant to encompass both the singular and plural of that 
noun. For example, the term ``a surviving child'' would apply not only 
to a single surviving child, but also to multiple surviving children. 
Where a provision is meant to apply only to a group of people (for 
example, the division of benefits between a surviving spouse and 
children), we will indicate this by using a plural noun to refer to the 
regulated group of people. Similarly, we will use a plural noun when 
referring to a specific, identified group of people. See, for example, 
Sec.  5.27, ``Individuals and groups designated by the Secretary of 
Defense as having performed active military service.''

Sec.  5.3 Standards of Proof, and Comments on Definitions of 
Evidentiary Terms

    One commenter suggested that VA should include additional 
definitions in Sec.  5.1. The commenter suggested that ``evidence'' 
should be defined as ``all the means by which any alleged matter of 
fact, the truth of which is submitted to an adjudicator, is established 
or disproved.'' The commenter went on to state that, ``Evidence 
includes the testimony of witnesses, introduction of records, 
documents, exhibits, objects, or any other probative matter offered for 
purpose of inducing a belief in the contention by the fact-finder'' and 
that, ``evidence is the medium of proof''. The commenter opined that 
defining ``evidence'' would assist an unrepresented claimant in 
understanding the term and would inform claimants that some materials 
he or she submitted would not be evidence (such as arguments, 
assertions, and speculations).
    This commenter asserted that after we define ``evidence'', we 
should define ``relevant evidence'' and ``probative evidence'', as 
follows:

Relevant evidence means evidence having any tendency to make the 
existence of any fact that is of consequence to the determination of 
the matter more probable or less probable than it would be without 
the evidence.

Probative evidence is evidence that tends to prove a particular 
proposition or to persuade a trier of fact as to the truth of an 
allegation.

The commenter asserted that this would enable the claimants to 
understand what evidence should be submitted in order for the claimants 
to succeed with their claims for benefits.
    We propose to make no changes based on these comments. We do not 
believe that there is a significant need to define the referenced 
terms, and there is some risk that such definitions would be 
misinterpreted as limiting the types of items a claimant may file or 
that VA will consider. Except as to claims based on clear and 
unmistakable error, VA is required to consider all material filed. See 
38 U.S.C. 5107(b) (``The Secretary shall consider all information and 
lay and medical evidence of record in a case''). Defining ``evidence'' 
as suggested might discourage claimants from filing arguments or other 
information and statements.
    The dictionary definition of ``evidence'' is ``something that 
furnishes proof.'' ``Merriam-Webster's Collegiate Dictionary'' 433 
(11th ed. 2006). VA does not use the word in a manner different from 
this ordinary or natural definition: ``When a word is not defined by 
statute, we normally construe it in accord with its ordinary or natural 
meaning.'' Smith v. United States, 508 U.S. 223, 228 (1993). This 
concept applies equally to regulations. Thus, it is not necessary to 
define words used in a regulation when the words are used in

[[Page 71058]]

accord with their ordinary or natural meaning. The commenter's 
suggested definitions of ``credibility'', ``determination'', 
``material'', ``matter'', ``proof'', and ``testimony'' are likewise not 
needed.
    The suggested definitions of ``relevant evidence'' and ``probative 
evidence'' are also not necessary. As explained below, the definition 
of ``competent evidence'' will be helpful to claimants because VA may 
in individual cases inform the claimant of the need for competent 
medical expert evidence on some issues. However, definitions that 
appear to delineate other categories of evidence, such as ``relevant 
evidence'' and ``probative evidence'' may be confusing to claimants and 
appear to suggest restrictions on the types of evidence claimants may 
file or that VA will consider. It is generally to the claimants' 
advantage to file all information and evidence they have that have 
potential bearing upon the issues in their claim. Introducing 
definitions of ``relevant evidence'' and ``probative evidence'' might 
create confusion and discourage claimants from filing all information 
and evidence that they might otherwise file.
    The same commenter urged VA to adopt a certain definition of the 
term ``probative value of evidence'', namely ``the tendency, if any, of 
the evidence to make any fact of consequence in the determination of 
the matter more or less probable than it would be without the 
evidence.'' However, the commenter did not specifically state why VA 
should adopt a definition of that term, but focused instead on the 
suggestion that VA define the distinct but related term ``probative 
evidence''. For the same reasons that we propose not to define 
``probative evidence'', we propose not to define ``probative value of 
evidence''.
    This commenter also suggested we adopt a definition of the word 
``issue'' as ``a single, certain point of fact or law that is important 
to the resolution of a claim for veterans' benefits.'' The commenter 
noted that this word is used in 38 U.S.C. 5107(b). The commenter opined 
that because Congress used this word in the statute, we must define the 
word. The commenter similarly opined that Sec.  5.3(b), ``Proving a 
fact or issue'', is confusing because we did not define the word 
``issue'' in Sec.  5.1. The commenter suggested that we used the words 
``issue'' and ``fact'' as unrelated concepts. The commenter then 
reasoned that, since the statute did not use the word ``fact'', VA may 
not have authority to include that word in the regulations, noting the 
canon of ``expressio unius est exclusio alterius'' (``to express or 
include one thing implies the exclusion of the other, or of the 
alternative'', ``Black's Law Dictionary'' 661 (9th ed. 2009)).
    The commenter is correct that the word ``issue'' is used in 38 
U.S.C. 5107(b), but the word is also used in other places in title 38, 
often with a different meaning. See, for example, 38 U.S.C. 5112(b)(6) 
and 5110(g). The word ``issue'' is used within part 5 with at least 
three different meanings. See, for example, Sec. Sec.  5.82(d), 
5.103(e), 5.133(b), and 5.152. VA's policy is to broadly interpret 38 
U.S.C. 5107(b), such that the benefit of the doubt applies both to the 
ultimate ``issue'' in a case (for example, whether to award benefits) 
but also to individual issues of material fact (for example, whether a 
particular event occurred). Therefore, we propose to revise Sec. Sec.  
5.1 and 5.3 to refer, where appropriate, to both questions of fact and 
the resolution of issues.
    The same commenter urged VA to adopt a definition of the term 
``presumption''. In Sec.  5.260(a) of our proposed rule, ``Presumptions 
of Service Connection for Certain Disabilities, and Related Matters'', 
we clearly described the meaning of the term in the veterans benefits 
context: ``A presumption of service connection establishes a material 
fact (or facts) necessary to establish service connection, even when 
there is no evidence that directly establishes that material fact (or 
facts)''. 69 FR 44624, July 27, 2004. We therefore propose to make no 
changes based on this comment.
    The same commenter urged VA to adopt a definition of ``rebuttal of 
a presumption''. Section 5.3(c), which states, ``A presumption is 
rebutted if the preponderance of evidence is contrary to the presumed 
fact'', in effect defines the term already so we decline to make any 
changes based on this comment.
    The same commenter urged VA to adopt a definition of ``weight of 
[the] evidence'', a term which was used in initially proposed Sec.  
5.3(b)(1) and (3). We agree that such a definition would be helpful to 
readers and we therefore propose to add the following definition in 
Sec.  5.3(b)(1), ``Weight of the evidence, means the persuasiveness of 
some evidence in comparison with other evidence.'' ``Black's Law 
Dictionary'' 1731 (9th ed. 2009). With this addition, initially 
proposed paragraphs (b)(1) through (5) are redesignated as paragraphs 
(b)(2) through (6), respectively.
    One commenter noted that 38 U.S.C. 5107(b) contains the language 
``approximate balance of positive and negative evidence'' and that the 
regulation that VA proposed to adopt to implement section 5107(b) did 
not attempt to give any meaning to the statutory terms ``positive and 
negative evidence''. The commenter asserted that these two statutory 
terms have known ``legal'' meaning and that VA must define ``positive 
evidence'' and ``negative evidence'' in order to give full force and 
effect to section 5107(b).
    We did not define the terms ``positive evidence'' and ``negative 
evidence'' in initially proposed Sec.  5.1 because we did not use those 
terms in initially proposed Sec.  5.3(b)(2), which implements section 
5107(b). Instead, we described ``evidence in support of'' and 
``evidence against'' a matter. This interpretation of the statute is 
consistent with the clear and unambiguous meaning of the statute. See, 
for example, Ferguson v. Principi, 273 F.3d 1072, 1076 (Fed. Cir. 2001) 
(holding that section 5107(b) is ``unambiguous'' and upholding a 
decision not to apply the benefit-of-the-doubt-rule to a case where 
``there was more credible evidence weighing against the claim than 
supporting the claim''). We propose to make no changes based on this 
comment.
    In Sec.  5.3(a), we propose to revise the first sentence of the 
initially proposed paragraph by adding ``material to deciding a 
claim''. In response to various comments concerning this proposed 
regulation, we noted that while we had adequately stated the general 
standards for proving facts and resolving issues, we had not included 
the reason for proving a fact.
    Also in initially proposed Sec.  5.3(a), ``Applicability'', we 
stated, ``This section states the general standards of proof for 
proving facts and for rebutting presumptions. These standards of proof 
apply unless specifically provided otherwise by statute or a section of 
this part.'' In reviewing the initially proposed paragraph, we have 
decided to clarify that ``a section'' means another section besides 
Sec.  5.3. We therefore propose to change ``a section'' to ``another 
section''.
    Initially proposed Sec.  5.3(b)(1) (now Sec.  5.3(b)(2)) stated, 
``Equipoise means that there is an approximate balance between the 
weight of the evidence in support of and the weight of the evidence 
against a particular finding of fact, such that it is as likely as not 
that the fact is true.'' One commenter objected to the use of the word 
``equipoise'' in Sec.  5.3(b). The commenter noted that this word does 
not appear in 38 U.S.C. 5107(b), ``Claimant responsibility; benefit of 
the doubt''. The commenter expressed the opinion that VA should remove 
this word and its definition and replace the word and definition with 
the exact language used in 38 U.S.C. 5107(b). The commenter

[[Page 71059]]

noted that ``in attempting to define the meaning of the term 
`equipoise', the initially proposed regulation states that equipoise 
means there is an `approximate balance between the weight of the 
evidence in support of and the weight of the evidence against a 
particular finding of fact, such that it is as likely as not that the 
fact is true.' '' The commenter felt that by omitting the word 
``equipoise'' and its definition, VA would avoid confusion and be 
consistent with the governing statute.
    We propose to make no changes based on this comment. It is not 
necessary to use the exact language Congress used in drafting a statute 
in the wording of the regulations we promulgate. The Secretary has been 
directed by Congress to ``prescribe all rules and regulations which are 
necessary or appropriate to carry out the laws administered by the 
Department.'' 38 U.S.C. 501(a). We chose to use the word ``equipoise'' 
because as used and defined in Sec.  5.3, it is a clear and concise 
term and has the same meaning as traditionally applied to the phrase 
used in 38 U.S.C. 5107(b), ``approximate balance of positive and 
negative evidence''. Our use of this word is consistent with the 
governing statute.
    Another commenter asserted that our definition of ``equipoise'' in 
initially proposed Sec.  5.3(b)(1) (now Sec.  5.3 (b)(2)) accurately 
restates the third sentence of Sec.  3.102, but fails to accurately 
restate the second sentence, which emphasizes and makes clear that the 
balances are always to be resolved in favor of the veteran. The same 
commenter felt that the sentence in initially proposed Sec.  5.3(b)(2) 
(now Sec.  5.3(b)(3)) that read, ``However, if the evidence is in 
equipoise and a fact or issue would tend to disprove a claim, the 
matter will not be considered proven'', contradicts the benefit of the 
doubt rule because the rule must ``always be applied in favor of the 
veteran''. We propose to clarify the statement of the benefit of the 
doubt rule by revising the first sentence Sec.  5.3(b)(3) to now state, 
``When the evidence is in equipoise regarding a particular fact or 
issue, VA will give the benefit of the doubt to the claimant and the 
fact or issue will be resolved in the claimant's favor.''
    In reviewing initially proposed Sec.  5.3(b)(1) (now Sec.  
5.3(b)(2)), we have determined that the phrase ``such that it is as 
likely as not that the fact is true'' might cause a reader to 
mistakenly believe that this is an additional requirement for 
triggering the ``reasonable doubt'' doctrine, over and above the 
requirement that there be an ``approximate balance between the weight 
of the evidence in support of and the weight of the evidence against a 
particular finding of fact''. We therefore propose to remove the 
language ``such that . . .'' from this paragraph.
    One commenter urged VA to use the current language of 38 CFR 3.102 
in proposed Sec.  5.3(b)(2). The commenter asserted that the use of the 
term ``equipoise'' in initially proposed Sec.  5.3(b)(2) is adversarial 
and that the proposed rule would ``restrict [veterans'] ability to put 
forth the best evidence and challenge the credibility [of] evidence 
which the VA accepts or denies.''
    As discussed in the preamble to the NPRM, we are not substantively 
changing the provisions in current Sec.  3.102. Instead, we are 
rewording and reorganizing them to make them easier for the reader to 
understand. We disagree that the changes described in the NPRM and in 
this rulemaking make these provisions adversarial, and we therefore 
propose to make no changes based on this comment.
    Although we decline to make the changes to initially proposed Sec.  
5.3(b)(2) (now Sec.  5.3(b)(3)) suggested by the commenter, in 
reviewing the first two sentences of that paragraph, we have determined 
that they can be clarified. Specifically, the initially proposed 
sentences could be misread to imply that evidence can be in equipoise 
regarding an issue and at the same time tend to prove or disprove a 
claim. As stated in 38 CFR 3.102, where the evidence is in equipoise, 
it ``does not satisfactorily prove or disprove the claim''. We 
therefore propose to remove the potentially confusing language 
regarding ``support'' of a claim and ``tend[ing] to disprove a claim'', 
and combined the two sentences into one. The new sentence now reads, 
``When the evidence is in equipoise regarding a particular fact or 
issue, VA will give the benefit of the doubt to the claimant and the 
fact or issue will be resolved in the claimant's favor.''
    One commenter noted that the sentence in initially proposed Sec.  
5.3(b)(3) (now (b)(4)) lacked parallelism. We agree and propose to 
change the wording by adding the words ``the weight of'' before the 
words ``the evidence against it.''
    One commenter objected to the sentence in initially proposed Sec.  
5.3(b)(5) (now Sec.  5.3(b)(6)): ``VA will reopen a claim when the new 
and material evidence merely raises a reasonable possibility of 
substantiating the claim.'' This commenter asserted that the 
``reasonable possibility of substantiating the claim'' portion could be 
read by an adjudicator as requiring sufficient evidence to grant the 
claim. This commenter suggests adding language to ensure that the 
adjudicator does not equate the new and material evidence requirement 
to the evidence requirements needed to grant the claim.
    We disagree that a VA decisionmaker would apply this sentence as 
requiring that the new and material evidence to reopen a claim also be 
sufficient to grant the claim. To the contrary, when read in 
conjunction with initially proposed Sec.  5.3 (b)(2) (now Sec.  5.3 
(b)(3)), ``Benefit of the doubt rule'', this sentence makes it very 
clear that a lower standard of proof is applied for reopening a claim 
than for granting a claim. We therefore propose to make no changes 
based on this comment.
    One commenter objected to the general format of initially proposed 
Sec.  5.3(b)(5) (now Sec.  5.3(b)(6)) because the commenter asserted 
that there was a lack of emphasis on the different standard of proof 
used to determine whether evidence is new and material. The commenter 
asserted that the last sentence of the paragraph should be rewritten 
and moved to the front of the paragraph to add emphasis to the concept 
that the higher standard of proof does not apply when determining if 
the evidence is new and material.
    We agree and we propose to change the sentence to read, ``The 
standards of proof otherwise provided in this section do not apply when 
determining if evidence is new and material, but do apply after the 
claim has been reopened.'' We propose to place this sentence as the 
first sentence of that paragraph, now designated as Sec.  5.3(b)(6), to 
add emphasis to this provision.
    One commenter noted that in Sec.  5.3(c), we stated that, ``A 
presumption is rebutted if the preponderance of evidence is contrary to 
the presumed fact.'' The commenter stated that in 38 U.S.C. 1111, the 
evidence to rebut the presumption of sound condition when accepted and 
enrolled for service is specified as clear and unmistakable evidence, a 
standard higher than a preponderance of evidence. The commenter 
recommended inserting the phrase ``Except as otherwise provided'' at 
the beginning of the section.
    We agree that the standard in Sec.  5.3(c) applies to rebutting 
presumptions unless an applicable statute provides a different 
standard, such as in the example provided by the commenter. However, we 
already provided for the application of different standards in Sec.  
5.3(a) by stating, ``These standards of proof apply unless specifically 
provided otherwise by statute or a section of this part.'' Since the 
regulations already address the point raised by the

[[Page 71060]]

commenter, we propose to make no changes based on this comment.
    Several commenters noted that under 38 U.S.C. 1113(a), a 
presumption can be rebutted only when ``there is affirmative evidence 
to the contrary.'' The commenters stated that the ``affirmative 
evidence'' requirement should be inserted into Sec.  5.3(c). We 
disagree with the commenters. There are many statutes that govern the 
rebuttal of presumptions, see, for example, 38 U.S.C. 1111, 1132, and 
1154(b), but the ``affirmative evidence'' requirement of section 
1113(a) affects only presumptions related to diseases that are covered 
by proposed Sec.  5.260(c). (We note that section 1113 does not affect 
the ALS presumption, which is also covered by Sec.  5.260(c)). Hence, 
the affirmative evidence requirement appears in Sec.  5.260(c), but not 
in the general rule that applies except as provided otherwise.
    We agree with these assertions to the extent that we should retain 
the phrase ``affirmative evidence'' and propose to revise Sec.  
5.260(c)(2) to include the phrase ``affirmative evidence''. We propose 
to revise Sec.  5.260(c)(2), by replacing ``Any evidence . . .'' with 
``Affirmative evidence'' in the beginning of the sentence. We also note 
that 38 U.S.C. 1116(f) requires ``affirmative evidence'' to rebut the 
presumption of exposure to herbicides in the Republic of Vietnam and so 
we now propose to insert that term into Sec.  5.262(d).
    We also propose to revise Sec.  5.3(c) by adding a second sentence 
after the first sentence, that states, ``In rebutting a presumption 
under Sec.  5.260(c)(2), affirmative evidence means evidence supporting 
the existence of certain facts.'' We have chosen this definition 
instead of one of the definitions recommended by the commenters because 
this is consistent with the definition of ``affirmative'' found in 
``Black's Law Dictionary'', 68 (9th ed. 2009).
    In a related matter, comments on both RIN 2900-AL87, ``General 
Provisions'', 71 FR 16464, Mar. 31, 2006, and on RIN 2900-AL70, 
``Presumptions of Service Connection for Certain Disabilities, and 
Related Matters'', 69 FR 44614, July 27, 2004, indicated the need for 
our rules to address the role of ``negative'' evidence, by which we 
mean an absence of evidence. An absence of evidence may be considered 
as evidence in support of, or weighing against, a claim. For example, 
an absence of evidence of signs or symptoms of a particular disability 
prior to service would support a veteran's claim that he incurred the 
disability during service. On the other hand, a lack of symptoms or 
complaints during service may indicate that the veteran was not 
disabled during service. An absence of evidence may also be used to 
rebut a presumption. The U.S. Court of Appeals for the Federal Circuit 
endorsed this view. Maxson v. Gober, 230 F.3d 1330 (2000) (holding that 
VA may properly consider a veteran's entire medical history, including 
absence of complaints, in determining whether presumption of 
aggravation is rebutted). This evidence is generally one of the weaker 
forms of evidence, but it is nevertheless important to recognize the 
role that it may play in certain cases, particularly where there is 
little evidence to support a claim. Hence, we propose to add Sec.  5.3 
(e), which states, ``VA may consider the weight of an absence of 
evidence in support of, or against, a particular fact or issue.''
    One commenter expressed concern about how a VA decisionmaker would 
read Sec.  5.3(d), ``Quality of evidence to be considered'', in 
conjunction with Sec.  5.1 that defines ``competent lay evidence''. The 
commenter asserted that if he or she determined that the evidence did 
not fit within the definition of competent lay evidence or that lay 
evidence is generally not competent, he or she would be more likely to 
assess the evidence as adverse to the veteran.
    The commenter's assumption is incorrect. Competent lay evidence may 
be neutral or may be favorable to the claimant. Such evidence may also 
be probative, depending on the claim to be adjudicated. We also do not 
agree that a VA decisionmaker would determine that lay evidence was 
generally not competent. We have provided for the determination of what 
makes lay evidence competent in the definition in proposed Sec.  5.1. A 
VA decisionmaker's application of these provisions will lead the 
adjudicator to determine what is competent lay evidence and what is 
not. We propose to make no changes based on this comment.
    In objecting to our initially proposed definitions of ``competent 
expert evidence'' and ``competent lay evidence'', one commenter wrongly 
asserted that there are no such definitions in current VA regulations. 
In fact, as stated in the preamble of RIN 2900-AL87, these definitions 
are based on similar definitions in 38 CFR 3.159(a)(1) and (2).
    The same commenter asserted that defining competent evidence would 
``cause the claims of veterans to be pre-judged by adjudicators and 
foster an adversarial climate in the claims process.'' The commenter 
urged that, ``Rather, all the evidence of record in each case should be 
judged on its own merits, and on the merits of the case as a whole.''
    The commenter did not explain how our definitions of ``competent 
expert evidence'' and ``competent lay evidence'' have the adverse 
effects he predicts, and we disagree that they would have such effects. 
VA has applied substantially similar definitions since 2001. 38 CFR 
3.159(a)(1) and (2); see 66 FR 45630, Aug. 29, 2001. These definitions 
have not caused any such adverse effects, and the changes we are making 
to the definitions in Sec.  5.1 will not either. We therefore propose 
to make no changes based on this comment.
    One commenter expressed concern that by changing the definitions of 
``competent medical evidence'' to ``competent expert evidence'' and 
``competent lay evidence'' we were impermissibly amending Sec.  3.159, 
``Department of Veterans Affairs assistance in developing claims.'' The 
commenter expressed the concern that since these terms were originally 
adopted as part of that regulation, a change in the definitions would 
amend Sec.  3.159 without providing public notice and the opportunity 
for public comment as required by 5 U.S.C. 553.
    The commenter's concerns relate to the removal of part 3 when we 
adopt part 5. This rulemaking will not affect such a removal; nor will 
this rulemaking affect claims currently being adjudicated under part 3. 
The definitions in Sec.  5.1 only apply to part 5, not to part 3. 
Hence, there is no basis for a concern that any action in this 
rulemaking will affect a part 3 rule.
    One commenter opined that the definitions of ``competent expert 
evidence'' and ``competent lay evidence'' should be revised since 
neither definition focused on the relevance of the evidence. The 
commenter also asserted that neither definition correctly described 
``competent expert evidence'' or ``competent lay evidence''. The 
commenter believed that treatises, medical or scientific articles, and 
other writings are not ``competent expert evidence'' because they are 
not based on the author's personal knowledge of the specific facts of 
the veteran's particular case.
    Although we do not agree with the suggestion that treatises, 
medical and scientific articles, and other writings of this type may 
never be ``competent expert evidence'', the commenter raises a valid 
point. Treatises and similar writings may be ``competent'' in the sense 
that they state findings and opinions based on specialized training or 
experience and personal knowledge

[[Page 71061]]

of the facts on which such findings and opinions are based. However, it 
is misleading to equate treatises and similar writings with the types 
of expert evidence ordinarily provided in VA benefit claims. That is 
because medical treatises ordinarily recite facts or opinions derived 
apart from a particular veteran's case and thus are not based on 
personal knowledge of the facts of the veteran's case. The U.S. Court 
of Appeals for Veterans Claims has noted that treatise evidence is 
often too general or speculative to provide significant evidence 
concerning the cause of a particular veteran's disability. See Sacks v. 
West, 11 Vet. App. 314, 316-17 (1998). Citing treatises as an example 
of competent expert evidence may mislead claimants to the belief that 
such treatises are the equivalent of medical opinions based on the 
specific facts of their case. While treatise evidence may in some 
situations be probative of the fact to be proved, and must always be 
considered by VA when presented in a case, we do not consider it 
helpful to cite such writings as representative examples of competent 
expert evidence. Thus, we propose to revise the definition as urged by 
the commenter by removing the reference to treatise evidence in the 
definition of ``competent expert evidence''.
    We propose not to revise the definitions to include a statement 
concerning the relevancy of the evidence. The relevance of the evidence 
depends on the facts in each case and is to be determined on a case-by-
case basis by the VA employee charged with making the decision on the 
claim.
    One commenter urged VA to define ``competent evidence'' in part 5 
as, ``evidence that has any tendency to make the existence of any fact 
that is of consequence to the determination of the matter more probable 
or less probable than it would be without the evidence.''
    This suggested definition is actually more a definition of 
``probative evidence'' than ``competent evidence''. In fact, this same 
commenter urged VA to define ``probative evidence'' as ``evidence that 
tends to prove a particular proposition or to persuade a trier of fact 
as to the truth of an allegation.'' Since the suggested definition of 
competent evidence concerns evidence's probative value rather than its 
competence, we propose to make no changes based on the comment.
    In our initially proposed definition of competent expert evidence, 
we stated, ``Expert evidence is a statement or opinion based on 
scientific, medical, technical, or other specialized knowledge.'' We 
propose to add ``all or in part'' after ``based'' because an expert 
opinion may also be based on the specific facts of a case. An example 
of such an opinion would be a doctor's opinion that general medical 
principles indicate that a particular injury would not likely have been 
aggravated under the facts of a particular case. See Emenaker v. Peake, 
551 F.3d 1332, 1335-37 (Fed. Cir. 2008).
    The initial NPRM to Sec.  5.3 explained why part 5 will not repeat 
the fifth sentence of Sec.  3.102. 71 FR 16464 (Mar. 31, 2006). Section 
5.3 would also not repeat the fourth sentence. It is unnecessary 
because, like the fifth sentence, it confusingly elaborates the idea of 
``approximate balance'' of evidence, which 5.3(b)(2) through (5) do 
well without the confusing language of the fourth or fifth sentences of 
Sec.  3.102.

Sec.  5.4 Claims Adjudication Policies

    One commenter asserted that VA gives too much weight to medical 
exam reports prepared by VA doctors and insufficient weight to medical 
exam reports prepared by a veteran's own doctors. The commenter cited 
the example of VA giving more weight to the report of a VA doctor who 
examined him for less than an hour than to the medical records from his 
treating doctor covering a period of over 5 years. The commenter 
asserted that VA's over-reliance on its own medical exams is ``VA 
policy'' but is not ``sound medical practice''. The commenter further 
asserted that when a VA medical exam is ``poorly conducted and 
documented'', VA orders a second exam rather than rely on the treating 
doctor's records to decide the claim. The commenter urged VA to 
``establish a level of proof which meets the balance test of both 
patient history and proof of medical condition'' and not rely on ``an 
arbitrary, `snapshot' exam conducted in a VA hospital meaning more than 
years of records from the veteran's regular physician(s).''
    We decline to make any changes based on this comment in the manner 
in which VA weighs medical evidence. VA often gives significant weight 
to an examination conducted, or a medical opinion provided by, a VA 
health care provider because they follow set procedures designed to 
elicit information relevant to the particular claim. However, as stated 
in 38 CFR 3.326(b), ``Provided that it is otherwise adequate for rating 
purposes, any hospital report, or any examination report, from any 
government or private institution may be accepted for rating a claim 
without further examination.'' Under 38 U.S.C. 5103A(d), VA must 
provide a medical examination or medical opinion in all disability 
claims when it is ``necessary to make a decision on the claim''. Under 
this duty, VA regularly conducts specialized medical examinations of 
veterans' disabilities and often requests medical opinions on specific 
questions. If VA's adjudicator finds that such an exam or opinion is 
inadequate, he or she returns the case to the health-care provider and 
requests for an adequate one to be provided.
    However, VA must also ``consider all information and lay and 
medical evidence of record in a case''. 38 U.S.C. 5107(b). Another 
statute requires the Board of Veterans' Appeals to review appeals to 
the Secretary ``based on the entire record in the proceeding and upon 
consideration of all evidence and material of record.'' 38 U.S.C. 
7104(a). This statute indicates that evidence is an element of a 
person's entire VA record. The statute prescribing that VA considers 
the ``places, types, and circumstances'' of a veteran's service when 
deciding a claim for service connection prescribes that VA consider 
``all pertinent lay and medical evidence''. 38 U.S.C. 5104(a). Although 
section 5104(a) could be interpreted to distinguish evidence from other 
documents in the record, VA regulations demonstrate that our actual 
practice is to review the entire record in every claim. The regulation 
implementing the benefit of the doubt rule of 38 U.S.C. 5107(b) 
provides for ``careful consideration of all procurable and assembled 
data'' and of ``the entire, complete record''. 38 CFR 3.102. Therefore, 
in addition to considering VA medical exams and opinions, VA weighs and 
considers all other medical evidence, including that produced by a 
veteran's treating physician.
    We note that 38 CFR 3.303(a) only prescribes that VA decide claims 
for service connection ``based on review of the entire evidence of 
record'' and there is no rule in part 3 that specifically implements 38 
U.S.C. 5107(b). We therefore propose to add a new sentence at the 
beginning of Sec.  5.4(b) stating, ``VA will base its decisions on a 
review of the entire record.'' We use the term ``entire record'' 
because it is unclear whether ``entire evidence of record'' means all 
of the evidence of record, or the entire record. The evidence in a VA 
claims file is only part of the entire record comprising the claims 
file. Our language resolves the ambiguity in favor of the more 
inclusive meaning, which is consistent with current VA practice. 
Because Sec.  5.4(b) would clearly state that ``VA will base its 
decisions on a review of the entire record'', we believe it would be 
redundant and possibly confusing to restate this principle in specific 
sections in part 5 (as does part

[[Page 71062]]

3). We therefore propose to remove such provisions from Sec. Sec.  
5.269(e), (f)(1) and (2), and 5.343. In order to incorporate the 
court's holding in Bell v. Derwinski, 2 Vet. App. 611 (1992), we 
propose to add the phrase ``including material pertaining to the 
claimant or decedent, in a death benefit claim, that is within VA's 
possession and could reasonably be expected to be a part of the 
record'' to the end of that sentence.

Sec.  5.5 Delegations of Authority

    We propose to add Sec.  5.5, ``Delegations of authority'', to this 
initially proposed segment. This regulation was inadvertently not 
included in the initially proposed rule. These provisions are the same 
as Sec.  3.100, ``Delegations of authority'', reorganized to make them 
easier to read. We also propose to replace the Sec.  3.100(a) language, 
``. . . entitlement of claimants to benefits under all laws 
administered by the Department of Veterans Affairs governing the 
payment of monetary benefits to veterans and their dependents . . .'' 
with ``entitlement to benefits under part 5''. We propose to make this 
change because part 5, like part 3, includes benefits which do not 
involve monetary payments. These include a grant of service connection 
for a veteran's disability rated 0 percent and certification of loan 
guaranty benefits for a surviving spouse. Lastly, we propose to omit 
the reference to the ``Compensation and Pension Service'' (used in 
Sec.  3.100(a) and now subdivided into the ``Compensation Service'' and 
``Pension and Fiduciary Service'') is a subdivision of the Veterans 
Benefits Administration, and the reference is therefore unnecessary.

VII. Subpart B: Service Requirements for Veterans AL67

    In a document published in the Federal Register on January 30, 
2004, we proposed to amend VA regulations governing service 
requirements for veterans, to be published in a new 38 CFR part 5. See 
69 FR 4820. The title of this proposed rulemaking was, ``Service 
Requirements for Veterans'' (RIN 2900-AL67). We provided a 60-day 
comment period that ended on March 30, 2004. We received submissions 
from four commenters: Disabled American Veterans, Vietnam Veterans of 
America, and two members of the general public.

Sec.  5.20 Dates of Periods of War

    One commenter expressed satisfaction with the progress of the 
Regulation Rewrite Project and offered praise for proposed RIN 2900-
AL67. The commenter was pleased with the inclusion of the Mexican 
Border Period in proposed Sec.  5.20, ``Dates of periods of war'', as 
there are veterans and dependents who may still be alive and eligible 
for benefits based on military service during this period.
    While we appreciate the commenter's concern, because there are no 
veterans or surviving spouses of the Mexican Border Period on VA's 
compensation and pension rolls and only one surviving dependent (a 
child), we propose to delete the provisions related to this period of 
war and refer regulation users to the applicable statutory provisions 
concerning this earlier period of war. This deletion would not affect 
benefit entitlement in any way. Should the occasion arise, VA will 
adjudicate any new claim using the statutory definition of this earlier 
period of war. See 38 U.S.C. 101(30).
    The table in Sec.  5.20 was published as a proposed rule using the 
terms ``armed forces'' and ``active military, naval, or air service''. 
For consistency, we propose to capitalize ``Armed Forces'' and change 
``active military, naval, or air service'' to ``active military 
service''.

Sec.  5.22 Service VA Recognizes as Active Duty

    In our NPRM, we invited comments on ``whether, and to what extent, 
VA should recognize military duty for special work as active duty for 
VA purposes.'' 69 FR 4822, Jan. 30, 2004. One of the commenters urged 
that VA recognize active duty for special work. Subsequent to that 
publication, however, additional issues have arisen which require 
closer coordination than we previously anticipated between VA and the 
Department of Defense. When that coordination has been completed, we 
will publish a separate NPRM on the characterization of active duty for 
special work. Hence, we propose not to revise Sec.  5.22 to address the 
recognition of active duty for special work.

Sec.  5.24 How VA Classifies Duty Performed by Armed Services Academy 
Cadets and Midshipmen, Attendees at the Preparatory Schools of the 
Armed Services Academies, and Senior Reserve Officers' Training Corps 
Members

    Current 38 CFR 3.6(c)(4) refers to ``deaths and disabilities 
resulting from diseases or injuries incurred or aggravated after 
September 30, 1982, and . . . deaths and disabilities resulting from 
diseases or injuries incurred or aggravated before October 1, 1982''. 
In initially proposed Sec.  5.24(c)(1) (based on Sec.  3.6(c)(4)), we 
proposed to replace the phrase ``incurred or aggravated'' with the term 
``that occurred''. Although it was not our intention, the use of 
``occurred'' could be construed as narrowing the scope of the 
regulation by excluding aggravation. Therefore, we now propose to 
replace ``that occurred'' with ``incurred or aggravated'' in Sec.  
5.24(c)(1).

Sec.  5.27 Individuals and Groups That Qualify as Having Performed 
Active Military Service for Purposes of VA Benefits Based on 
Designation by the Secretary of Defense

    The official names of groups of civilians who, pursuant to section 
401 of Public Law 95-202, have been designated by the Secretary of 
Defense as having performed active military service for VA benefit 
purposes are listed alphabetically in proposed Sec.  5.27(b).
    Such groups apply for status as having performed active military 
service using group names that, as nearly as possible, precisely 
identify the members of the group and the service they want recognized. 
In fact, when a favorable determination is made, the Secretary's 
Federal Register notice is almost always phrased in terms of ``service 
of the group known as'', followed by the group's official name.
    In the NPRM, we initially proposed to revise some of the group 
names for clarity and readability. However, we have determined that 
this could cause confusion that a group other than the original was 
determined to have performed active military service. Such confusion 
can be avoided by strictly adhering to the official names of the 
groups, and we now propose to revise Sec.  5.27(b) to reflect the 
original group names exactly as they were provided to VA by the 
Secretary of Defense.

Sec.  5.28 Other Groups Designated as Having Performed Active Military 
Service

    In reviewing initially proposed Sec.  5.28, we determined that we 
mistitled it. This section refers only to groups, not individuals and 
we have retitled it accordingly.

Sec.  5.31 Statutory Bars to VA Benefits

    In initially proposed Sec.  5.31(c)(4), we defined the acronym 
``AWOL'' as ``absence without official leave''. However, in the Uniform 
Code of Military Justice (10 U.S.C. 886) that particular offense is 
called ``absence without leave'', and the word ``official'' is not 
used. Therefore, for purposes of consistency and clarity, we propose to 
delete the word ``official'' from Sec.  5.31(c)(4).

[[Page 71063]]

Sec.  5.39 Minimum Active Duty Service Requirement for VA Benefits

    Initially proposed Sec.  5.39(c)(2) stated, ``If it appears that 
the length of service requirement may not be met, VA will request a 
complete statement of service to determine if there are any periods of 
active military service that are required to be excluded under 
paragraph (e) of this section.'' After reviewing this paragraph to 
respond to a public comment, we propose to correct a typographical 
error (by changing the reference to paragraph ``(e)'' to ``(d)'') and 
to clarify the paragraph to improve readability.
    In Sec.  5.39(d)(4), we initially proposed to exclude any person 
who has a compensable disability under 38 U.S.C. chapter 11 from the 
minimum active duty requirement. A disability is compensable if VA 
rates it as 10 percent or more disabling according to the Schedule for 
Rating Disabilities in part 4 of this chapter. One commenter asserted 
that it would be wrong to discontinue the entitlement of a veteran who 
did not meet the minimum active duty requirements, but was awarded an 
initial temporary 100 percent rating under 38 CFR 4.29 or 4.30, which 
was subsequently reduced to a noncompensable (0 percent) rating. 
Likewise, any veteran lacking the minimum active duty requirements who 
had a compensable disability, but a subsequent decision reduced the 
rating to 0 percent, should not lose entitlement. This commenter agreed 
that disability ratings should fluctuate with the severity of the 
disability, but that eligibility, once established, should not be 
revoked in such cases.
    Under 38 U.S.C. 5303A(b)(1), a person who initially enters service 
after September 7, 1980, must be discharged or released after 
completing 24 months of continuous active duty or the full period for 
which such person was called to active duty to be eligible for, or be 
entitled to, any benefit administered by VA based upon the length of 
active duty service. Section 5303A(b)(3)(C) excludes those persons from 
the minimum active duty service requirements who have a disability that 
the Secretary has determined to be compensable under chapter 11 of this 
title. Section 5.39(d)(4) clarifies the term ``compensable'' to include 
veterans receiving special monthly compensation under 38 CFR 3.350, as 
well as those receiving a 10 percent rating for multiple 0 percent 
disabilities under 38 CFR 3.324.
    The commenter's position appears to be that once service connection 
has been established and a disability rating of 10 percent or more 
disabling has been assigned, a person is forever excluded from having 
to satisfy the minimum active duty service requirements. We cannot 
agree.
    Under 38 U.S.C. 5303A, the minimum active duty service requirements 
must be satisfied in order for a person discharged or released from a 
period of active duty to be eligible for, or entitled to, any benefit 
based on that period of active duty, unless a person is a member of one 
of the excluded groups. Under section 5303A(b)(3)(C), a person ``who 
has a disability that the Secretary has determined to be compensable 
under chapter 11 of this title'' meets the minimum active duty service 
requirement. The statute uses the present tense, ``has'' when referring 
to that disability, which means the veteran trying to show that he or 
she qualifies under section 5303A(b)(3)(C) must currently have a 
compensable disability. We also note that the current regulation on 
this point, Sec.  3.12a(d)(3), already requires a current compensable 
disability to qualify for this exclusion. Section 5.39 does not, in any 
way, change the scope of this exclusion. For these reasons, we propose 
not to make any changes on minimum active duty service requirements 
based on this comment.
    Upon reviewing Sec.  5.39(d)(4) in relation to this comment, we 
determined that it was appropriate to clarify the regulation consistent 
with the above discussion. We therefore propose to replace the phrase 
``VA determines to be'' with ``is currently'' in this paragraph. This 
will ensure that readers understand that the regulation requires that a 
person have a currently compensable disability to qualify for the 
paragraph (d)(4) exclusion.
    One commenter contended that 38 U.S.C. 5303A pertains only to those 
persons who are veterans by virtue of having served on active duty. 
This commenter asserted that a person, who obtained veteran status 
because an injury or disease was incurred or aggravated during active 
duty for training, or because an injury was incurred or aggravated 
during inactive duty training, is exempt from the provisions of section 
5303A. The commenter alleged that the initially proposed rule does not 
clarify that these persons are not required to have a compensable 
disability to qualify for general benefits under title 38.
    Upon a closer review of section 5303A and the definitions in 38 
U.S.C. 101, we agree with the commenter. To be a veteran, a person must 
have ``active military, naval, or air service'', referred to in part 5 
as ``active military service''. There are three types of service that 
qualify as active military service: (1) Service on active duty, (2) 
Service on active duty for training during which an injury or disease 
is incurred or aggravated, or (3) Service on inactive duty training 
during which an injury is incurred or aggravated, or during which the 
person suffers an acute myocardial infarction, a cardiac arrest, or a 
cerebrovascular accident. See 38 U.S.C. 101(24). Since section 5303A, 
by its terms, applies only to veterans who served on active duty, it 
does not apply to veterans who performed active military service under 
the provisions of Sec.  5.21(a)(4) or (5). We therefore propose to 
revise initially proposed Sec.  5.39(d) to add two other categories of 
persons excluded from the minimum active duty service requirements: 
Persons who performed active military service under the provisions of 
Sec.  5.21(a)(4) or (5).
    In reviewing initially proposed Sec.  5.39 in relation to the 
comment discussed above, we discovered that we inadvertently omitted a 
phrase contained in current Sec.  3.12a(b): ``based on that period of 
active service''. To correct that omission, we propose to revise Sec.  
5.39(a) accordingly.
    In initially proposed Sec.  5.39, we included proposed paragraphs 
(f)(2)(iv) and (v). Based on our review of the proposed rule, we noted 
that this was a numbering error. Proposed paragraphs (f)(2)(iv) and (v) 
should have been numbered (f)(2)(iii) and (iv) respectively because the 
proposed regulation did not have a paragraph (f)(2)(iii). Instead, it 
mistakenly skipped from (f)(2)(ii) to (f)(2)(iv). We propose to correct 
this error.

Comments Outside the Scope of RIN 2900-AL67

    One person commented with reference to RIN 2900-AL67. The comments 
related to the definition of ``Service in the Republic of Vietnam'', 
and to the so-called Bluewater sailors. These comments are outside the 
scope of the proposed rule published under RIN 2900-AL67, but relate to 
another NPRM, RIN 2900-AL70. We discussed these comments together with 
the other comments received in connection with RIN 2900-AL70.
    We also received a comment that was not directed at any particular 
proposed rule, but we thought it would be most appropriately addressed 
in this portion of the proposed rule. The commenter was concerned that 
National Guard full time active duty members were not considered 
veterans unless they were injured on duty.
    The commenter is correct. Persons who serve full time in the 
National

[[Page 71064]]

Guard under section 316, 502, 503, 504, or 505 of title 32 are on 
active duty for training and are not considered veterans under title 
38, VA's controlling statutes, unless they are disabled by an injury or 
disease that was incurred or aggravated during such duty. If the law is 
clear and unambiguous, VA is bound by it. Congress has spoken clearly 
about who may be considered a veteran for VA purposes. See 38 U.S.C. 
101(2) and (24). Under such circumstances, the commenter's only remedy 
would be a change of statutory law. No change in regulations can be 
made based on this comment.

Changes in Terminology for Clarity and/or Consistency

    For the convenience of readers and for economy of language, we 
propose to spell out the full name of each VA program or benefit the 
first time we use it in any part 5 regulation, and to abbreviate it 
thereafter. For example, the death benefit payable to a surviving 
spouse, child, or dependent parent based on death in service or due to 
a service-connected disability is officially titled ``dependency and 
indemnity compensation''. That benefit name is quite cumbersome when it 
is repeated several times within a regulation. The abbreviation or 
acronym ``DIC'' is much easier to use and improves the readability of a 
regulation. In order to use the acronym, we must first spell it out for 
the reader, and while we do not want to spell out the term every time 
we use it, neither do we want to spell it out once in part 5 or once in 
each subpart and force the reader to keep referring back to a 
definition that is remote from where the acronym is being used. To 
strike a balance we propose to spell out the official program name 
followed by the acronym in parentheses the first time the program name 
is encountered in a section and to use the acronym throughout the 
remainder of that section. This will apply to regulatory text only, and 
not to section titles. If we use the program title only once in a 
section, we would spell it out with no parenthetical abbreviation or 
acronym. We will apply this convention throughout part 5.
    Lastly, we propose to standardize the words used in referring to 
VA's rating schedule, ``the Schedule for Rating Disabilities in part 4 
of this chapter''. For this subpart, the new term will replace the 
initially proposed language in Sec.  5.39(d)(4)(i).

VIII. Subpart C: Adjudicative Process, General

VA Benefit Claims AM16

    In a document published in the Federal Register on April 14, 2008, 
we proposed to revise VA regulations governing benefit claims. 73 FR 
20136. We provided a 60-day comment period that ended June 13, 2008. We 
received submissions from two commenters: Center for Plain Language and 
a member of the general public.
    One commenter criticized our use of the passive voice and overly 
long sentences in the initially proposed rulemaking. Based on this 
comment, we propose to revise all of the proposed regulations to use 
the active voice and shorter sentences whenever possible or 
appropriate.
    In addition to the specific changes discussed below, we propose to 
revise the regulations proposed in NPRM, RIN 2900-AM16 to help improve 
clarity and consistency with other part 5 regulations.

Sec.  5.50 Applications VA Furnishes

    Initially proposed Sec.  5.50(a) stated, ``Upon request in person 
or in writing, VA will furnish the appropriate application to a person 
claiming or applying for, or expressing intent to claim or apply for, 
benefits under the laws administered by VA.'' Based on our review, we 
propose to remove ``in person or in writing'' because it is too 
restrictive. Claimants may also request applications using the 
telephone or email. We also propose to remove the phrases ``or applying 
for'' and ``or apply for'' because these phrases are redundant of 
``claiming'' and ``claim''. Moreover, they may cause a reader to 
mistakenly believe that we mean something different by the use of these 
different phrases.
    We have defined ``notice'' in Sec.  5.1. The definition applies to 
VA's duty to inform a claimant of something a certain way. We propose 
to revise the first sentence of proposed paragraph Sec.  5.50(b) by 
replacing the word ``notice'' with ``information'' because use of 
``notice,'' as so defined, would be inappropriate.
    The term ``dependent'' as used in the initially proposed rule and 
in Sec.  3.150 from which it derives referred to persons known to VA as 
the deceased veteran's dependents at the time of his or her death. The 
term ``survivor'' better meets the requirement to provide an 
application to persons with ``apparent entitlement'', because it 
encompasses persons not known to VA as the veteran's dependent who 
could, nevertheless, be entitled to a death benefit. We therefore 
propose to revise initially proposed paragraph (b) by replacing the 
word ``dependent'' with the word ``survivor''.
    We also propose to revise paragraph (b) by replacing the word 
``forward'' in the first sentence with ``furnish'' and replacing ``for 
execution by or on behalf of'' with ``to''. As revised, the sentence 
states that, ``VA will furnish the appropriate application to any 
survivor''. ``Furnish'' is a more accurate word for supplying the 
survivor an application and it is consistent with paragraph (a), which 
also uses the word ``furnish''. The initially proposed rule stated that 
VA will forward the application ``for execution by or on behalf of'' a 
dependent. In this regulation, it is surplus to state that the 
application is ``for execution''. Although VA provides applications so 
claimants can execute them, the rules about what to do with an 
application are more appropriate to the regulations about filing 
claims. In the same sentence, we have changed the general reference to 
``such benefits'' to name the benefits that a dependent could possibly 
receive, for example, death pension or dependency and indemnity 
compensation.
    Additionally, we propose to revise the phrase, ``If it is not 
indicated'', which appeared at the beginning of the second sentence of 
the initially proposed rule, to read, ``If the available evidence does 
not indicate''. This phrase more clearly states what records VA will 
review to determine if there is a potential accrued benefits claimant. 
In the same sentence, we have replaced ``forward'' with ``furnish'' for 
the reasons discussed above. We also propose to revise the last 
sentence of paragraph (b) to specifically describe the 1-year time 
limit for filing a claim for accrued benefits because it will be 
helpful to claimants.
    In the NPRM, paragraph (c) implied that VA would not assist in a 
claim for disability or death due to hospital treatment, medical or 
surgical treatment, examination, or training. The initially proposed 
rule stated, in pertinent part, ``VA will not forward an application 
for benefits under 38 U.S.C. 1151.'' We believe that it is important to 
instead inform the reader that VA does not have an application for 
claims under 38 U.S.C. 1151. We therefore propose to revise paragraph 
(c) to clarify that a claimant may apply in any written form for 
disability or death benefits due to hospital treatment, medical or 
surgical treatment, examination, or training under the provisions of 38 
U.S.C. 1151. VA does not have an application for such a claim. See 
Sec.  5.53, Claims for benefits under 38 U.S.C. 1151 for

[[Page 71065]]

disability or death due to VA treatment or vocational rehabilitation, 
for the requirements for filing a claim pursuant to 38 U.S.C. 1151.
    Initially proposed Sec.  5.50 repeated the cross reference to Sec.  
3.109(b) from the end of Sec.  3.150. This cross reference is erroneous 
because Sec.  3.109(b) does not apply to any deadlines for filing 
claims referenced in Sec. Sec.  3.150 or 5.50. We therefore propose to 
remove this cross reference from Sec.  5.50.

Sec.  5.51 Filing a Claim for Disability Benefits

    Initially proposed Sec.  5.51(a) stated, ``An individual must file 
a specific claim in the form prescribed by the Secretary in order for 
disability benefits to be paid under the laws administered by VA.'' We 
propose to replace the phrase ``in order for disability benefits to be 
paid under the laws administered by VA'' with ``for VA to grant a claim 
for disability benefits''. This change clarifies that the provision 
applies not only to cases where VA grants monetary benefits, but also 
to cases where VA grants service connection and rates the disabilities 
as 0 percent disabling.
    Subsequent to the publication of proposed Sec.  5.51, section 502 
of Public Law 112-154 (2012) amended 38 U.S.C. 5101 by adding a new 
paragraph which states that if an individual has not attained the age 
of 18 years, is mentally incompetent, or is physically unable to sign a 
form, a form filed under paragraph (1) for the individual may be signed 
by a court-appointed representative, a person who is responsible for 
the care of the individual, including a spouse or other relative, or an 
attorney in fact or agent authorized to act on behalf of the individual 
under a durable power of attorney. If the individual is in the care of 
an institution, the manager or principal officer of the institution may 
sign the form * * * The term `mentally incompetent' with respect to an 
individual means that the individual lacks the mental capacity--(A) to 
provide substantially accurate information needed to complete a form; 
or (B) to certify that the statements made on a form are true and 
complete. We propose to update Sec.  5.51(a) to reflect this amendment.

Sec.  5.52 Filing a Claim for Death Benefits

    Initially proposed Sec.  5.52(a) stated, ``An individual must file 
a specific claim in the form prescribed by the Secretary (or jointly 
with the Commissioner of Social Security, as prescribed by Sec.  
5.131(a)) in order for death benefits to be paid under the laws 
administered by VA.'' Subsequent to the publication of proposed Sec.  
5.52, section 503 of Public Law 112-154 (2012) amended 38 U.S.C. 5105 
by removing the requirement that the Secretary of Veterans Affairs and 
the Commissioner of Social Security jointly prescribe forms for use by 
survivors of members and former members of the uniformed services in 
filing application for benefits under chapter 13 of title 38 and title 
II of the Social Security Act. Section 503 also removed the requirement 
that each such form request information sufficient to constitute an 
application for benefits under both laws. Finally, section 503 also 
removed the requirement that such a claim be filed on a particular form 
by allowing it to be filed ``on any document indicating an intent to 
apply for survivor benefits''. We proposed to include these statutory 
changes in Sec.  5.52(a).
    In response to the Center for Plain Language's comment about 
sentence length in initially proposed Sec.  5.52, we propose to revise 
the regulation to be more concise. We propose to revise initially 
proposed paragraph (a) by changing ``in the form prescribed'' to ``for 
death benefits by completing and filing the application prescribed''. 
See Sec.  5.1, ``Definitions''; compare definition of ``application'', 
with definition of ``claim'', Sec.  5.1(k). The requirement to use a 
prescribed application to claim a death benefit is consistent with the 
authorizing statute, 38 U.S.C. 5101(a), and its current implementing 
regulation, Sec.  3.152(a). Both statute and regulation incorporate by 
reference the requirement that the Secretary and the Commissioner of 
Social Security jointly prescribe an application for use at either 
agency to apply for certain benefits, and that the application 
constitutes a claim for both agency's benefits when filed with either 
agency. See 38 U.S.C. 5105; 38 CFR 3.153.
    In Fleshman v. West, 138 F.3d 1429, 1431 (Fed. Cir. 1998), 
involving a claim for disability compensation, the Federal Circuit 
addressed whether the phrase ``in the form'' in section 5101(a) means 
``on a form''. The court distinguished between the phrases, citing 
Sec.  3.153 pertaining to claims for death benefits as an example of a 
regulation that clearly requires the claimant to use a specific 
application by using the phrase ``on a form prescribed''. Section 
5.52(a) will implement the court's reasoning and make explicit VA's 
practice regarding claims for death benefits. The proposed change of 
language from ``in the form prescribed'' to ``by completing and filing 
the application prescribed'' is a clarifying change from Sec.  
3.152(a). We also propose to change the language in initially proposed 
paragraph (a) of Sec.  5.52 from, ``in order for death benefits to be 
paid under the laws administered by VA'', to, ``for VA to grant death 
benefits'', to be consistent with Sec.  5.51.
    We propose to revise paragraph (b) by removing references to filing 
a claim for death compensation. This benefit is not available for new 
applicants, so it is not necessary to include death compensation 
provisions in part 5. As a result of this change, we propose to 
eliminate initially proposed (b)(1) and redesignate proposed (b)(2) and 
(3) as (b)(1) and (2), respectively. We propose to revise paragraph (b) 
to eliminate needless repetition of language common to initially 
proposed Sec.  5.52(b)(2) and (3).
    In initially proposed Sec.  5.52(c)(4) and (5), we addressed the 
effective dates of a child's death benefits. These paragraphs 
referenced the claimant's requirement to timely submit evidence that VA 
requests and the consequence of failure to timely submit such evidence. 
The rules on timely submission of evidence are in Sec.  5.136, 
``Abandoned claims'', derived from current Sec.  3.158. We propose to 
remove these provisions from initially proposed Sec.  5.52 because 
there is no need to repeat them. To make the regulations more concise 
and easier to use, we propose to combine the remaining portions of 
initially proposed paragraphs (c)(4) and (5) with paragraph (c)(3) and 
to cross reference the effective date rules by referencing Sec.  5.696 
in paragraph (c)(1) and referencing Sec. Sec.  5.538 and 5.431 in 
paragraph (c)(3).

Sec.  5.53 Claims for Benefits Under 38 U.S.C. 1151 for Disability or 
Death Due to VA Treatment or Vocational Rehabilitation

    We propose to remove the last sentence of initially proposed Sec.  
5.53, which stated, ``Such communication may be contained in a formal 
claim for pension, disability compensation, or DIC, or in any other 
document.'' The first sentence of the regulation states that VA may 
accept ``any communication in writing'' as a claim for benefits under 
38 U.S.C. 1151. In light of that rule, the sentence we propose to 
remove is surplus; ``any communication in writing'' inherently includes 
one ``contained in a formal claim''.

Sec.  5.54 Informal Claims

    We propose to make several changes to initially proposed Sec.  
5.54. These changes will revise and reorganize the rule to be clearer 
and consistent with current VA practice.
    Paragraph (a) defines an informal claim and states that the 
informal claim must be written. VA defines a ``claim'' as a ``formal or 
informal communication

[[Page 71066]]

in writing'' (Sec.  5.1). Section 5.54(a) merely reiterates this 
requirement for clarity in the rule governing informal claims. See 
Rodriguez v. West, 189 F.3d 1351, 1354 (Fed.Cir. 1999) (VA defines 
``claim'' as a formal or informal written communication, therefore 
``under the Department's regulations an informal claim application must 
be written''). We also propose to add a cross reference in proposed 
paragraph (c)(2) to Sec.  5.56, ``Report of examination, treatment, or 
hospitalization as a claim.'' The reader should find it convenient to 
have a reference here to an alternative method of claiming certain 
benefits.
    Initially proposed paragraph (a) also stated that ``[a]ny 
communication or action'' may be an informal claim for benefits. As the 
phrase is used in current Sec.  3.155 from which it derives, any 
``action'' that would be a claim for benefits would be a communication. 
Therefore, we propose to remove the phrase ``or action'' as 
superfluous.
    Additionally, initially proposed paragraph (a) listed who may file 
an informal claim and stated certain conditions for persons other than 
the claimant to file the claim. We propose to move this list to 
paragraph (b) to distinguish the authority to file an informal claim 
from the required content of an informal claim. Readers should find it 
convenient to have in one place a list of persons who can file a claim 
and any conditions on that authority. Initially proposed paragraph (b), 
like 38 CFR 3.155(b), listed several types of representatives: agents, 
attorneys, and service organizations. Initially proposed paragraph (a) 
contained the term ``authorized representative'', which we have moved 
into paragraph (b). Because ``authorized representative'' includes 
agents, attorneys, and service organizations, we propose to remove 
those terms from Sec.  5.54.
    Initially proposed paragraph (a) provided that a ``duly authorized 
representative'' may file a claimant's informal claim. We propose to 
remove the word ``duly'' from the phrase ``duly authorized 
representative''. It is a superfluous legalism. A claimant has or has 
not authorized a representative. There is no such thing as an unduly 
authorized representative. Such a representative would simply not be 
authorized.
    Initially proposed paragraph (b), like current Sec.  3.155(b), 
imposed conditions on VA's acceptance of an informal claim when filed 
by certain organizations or persons. The regulation stated the rule 
negatively: ``A communication . . . may not be accepted . . . if a 
power of attorney . . . was not executed at the time the communication 
was written.'' We propose to restate the rule affirmatively in 
paragraph (b) after the term ``authorized representative''. The 
restated rule will read, ``if authorized before VA received the 
informal claim''. This proposed change would also clarify the timing of 
the authorization.
    Initially proposed Sec.  5.54(b), also like current Sec.  3.155(b), 
required that a power of attorney from the listed parties ``was . . . 
executed at the time the communication was written.'' VA requires that 
it receive the executed power of attorney before it will act on a 
written communication from certain representatives as an informal 
claim. In current practice, VA accepts as an informal claim a written 
communication from one of the listed representatives if it meets the 
requirements of an informal claim and VA receives it along with a power 
of attorney executed as regulation requires. ``At the time the 
communication was written'' is ambiguous. It could mean the power of 
attorney was executed simultaneously, more or less contemporaneously, 
or simply before the communication was written. VA has no mechanism to 
ascertain whether the power of attorney was executed at any of these 
times, nor need VA ensure the power of attorney was executed ``at the 
time the communication was written.'' VA is sufficiently assured of the 
authenticity of the power of attorney and of the authority of the 
representative to act for the veteran if VA receives a properly 
executed power of attorney and the communication the representative 
wrote for the claimant together.
    Initially proposed Sec.  5.54(b) contained a cross reference to 38 
CFR 14.631, ``Powers of attorney; disclosure of claimant information.'' 
Because Sec.  14.630, ``Authorization for a particular claim'', also 
describes a type of authorized representative, we propose to add a 
cross reference to that section, too.
    We propose to reorganize the elements of initially proposed 
paragraphs (a) and (c) that addressed the effect of filing an informal 
claim, combining them in paragraph (c). Paragraph (c)(1) applies to 
original informal claims. Initially proposed paragraph (a) provided 
that VA will ``forward'' an application to anyone who files an informal 
claim, but has not filed a formal claim. We propose to revise this to 
say that VA will ``furnish an appropriate application to a person who 
files an informal claim''. This is consistent with Sec.  5.50(a), which 
requires VA to furnish an ``appropriate application'' for a benefit 
upon request. VA does not have an application for all benefits. We 
propose to make paragraph (c)(1) practicable by limiting the 
requirement that VA ``furnish an appropriate application'' to those 
benefits for which VA has an application.
    The initially proposed rule prescribed that VA would accept the 
date of receipt of an informal claim as the date of the claim, ``If 
[the application is] received within 1 year after the date it was sent 
to the claimant''. We propose to add to paragraph (c)(1) that ``VA will 
take no action on the informal claim until the claimant files the 
completed application.'' Though the initially proposed language stating 
that VA forwards the application ``for execution'' implies that it must 
be returned executed (that is, completed), it is clearer to say so 
explicitly.
    We propose to revise initially proposed paragraph (c) as paragraph 
(c)(2). We propose to remove ``an informal request'' and ``will be 
accepted as a claim''. The revised regulation will prescribe VA's 
action upon receipt of an ``informal claim'' from a claimant who has 
previously satisfied Sec.  5.51 or Sec.  5.52, as did the initially 
proposed regulation. We propose to remove the term ``informal request'' 
for the same reason we propose to remove ``action'' from paragraph (a). 
Any ``informal request'' for an increase or to reopen must be a 
communication indicating ``an intent to apply for one or more 
benefits'', that is, an informal claim. We propose to remove ``will be 
accepted as a claim'', because to say that VA will accept an informal 
request as a claim if the claimant previously satisfied the 
requirements of Sec.  5.51 or Sec.  5.52 is merely to say that an 
informal claim is a claim under those circumstances. That is exactly 
what the regulation means, and VA has never intended an ``informal 
request'' to be something different from an informal claim. Using 
another term for an informal claim confusingly suggests that there is 
some other type of ``informal communication in writing requesting a 
determination of entitlement, or evidencing a belief in entitlement, to 
a VA benefit'' that might not be an informal claim. As the definition 
of ``claim'' reveals, this cannot be so. See Sec.  5.1, defining 
``claim''.
    Paragraph (c)(2) provides that VA will act on an informal claim 
without requiring another application from a person who has previously 
filed an application. The initially proposed rule and current Sec.  
3.155(c) allowed an informal claim for increase or to reopen to be 
accepted without the claimant subsequently filing an application if the 
claimant had previously filed a claim

[[Page 71067]]

that ``met the requirements of Sec.  5.51 [disability benefits] or 
Sec.  5.52 [death benefits]''. It is implicit, but not obvious, that VA 
can accept an informal claim for each type of benefit without requiring 
a subsequent application only if the claimant has previously filed an 
application for that type of benefit. An application that provides 
information critical to the benefit claimed satisfies the statutory 
requirement to file a claim ``in the form prescribed by the 
Secretary''. Fleshman, 138 F.3d at 1431-32 (Applicant must file claim 
containing specified information, and without the ``critical 
information'' it will not be ``in the form prescribed by the 
Secretary'' so as to comply with 38 U.S.C. 5101(a)). It is VA's receipt 
of the information critical to a claim for disability benefits or for 
death benefits that enables VA to accept a subsequent informal claim 
for disability benefits or death benefits without requiring another 
application.
    The previous filing of a claim for disability benefits will not 
have provided VA the critical information necessary for the claimant to 
have met the requirement of 38 U.S.C. 5101(a) for a claim for death 
benefits, and vice versa. As proposed to be revised, Sec.  
5.54(c)(2)(i) and (ii) will explicitly state the implicit requirement 
in initially proposed Sec.  5.54(c) that VA will accept an informal 
claim for increase or to reopen a claim for disability or death 
benefits only if the claimant has previously filed a claim for that 
type of benefit.

Sec.  5.55 Claims Based on New and Material Evidence

    We propose to revise initially proposed Sec.  5.55 in response to a 
comment and based on our further review of the regulation. The 
commenter requested that VA make the rule clearer and use the active 
voice. We propose to revise this regulation to enhance readability and 
be more consistent with the format of other part 5 regulations.
    The proposed revisions describe the process of, and provide 
instructions for, reopening a claim that the initially proposed 
regulation did not. The proposed revisions afford the claimant the same 
rights, however, and prescribe the same burdens and duties for the 
claimant and for VA in seeking to reopen a claim as did the initially 
proposed regulation. They articulate current VA practice in 
implementing 38 U.S.C. 5108, which requires VA to ``reopen the claim 
and review the former disposition'' if ``new and material evidence is 
presented or secured''. They also make explicit several aspects of 
reopening a claim that are implicit in the initially proposed and the 
current regulation.
    We propose to move the definition of a ``reopened claim'' from 
initially proposed Sec.  5.57(f) to Sec.  5.55(a) and (d) and restate 
it as a list of conditions necessary to reopen a claim VA has finally 
denied.
    Initially proposed Sec.  5.55(a) stated, ``A claimant may reopen a 
finally adjudicated claim''. The paragraph characterized new and 
material evidence in reference to ``evidence of record at the time of 
the last prior final denial of the claim sought to be reopened''. Both 
quoted phrases come from current Sec.  3.156(a). As now proposed, Sec.  
5.55(a) states, ``A claimant may reopen a claim if VA has made a final 
decision denying the claim.'' It would be redundant to state that a 
claimant may reopen a ``finally'' adjudicated claim because we define 
``claim'' in Sec.  5.1 and we define ``final decision'' in Sec.  5.1. A 
claim is not subject to reopening if a prior decision is not final. 
Therefore, in order to reopen a claim, paragraph (a) of this section 
requires the existence of a final decision denying that claim. These 
changes are consistent with the circumstances in which a claimant will 
seek to reopen a claim.
    We propose to move the language in initially proposed Sec.  5.57(f) 
regarding the Board of Veterans' Appeals (Board) treatment of certain 
evidence into Sec.  5.55(d) because it relates to new evidence in the 
context of reopening a claim. We have shortened that language because 
under Sec.  20.1304(b)(1)(i), any evidence or request for hearing 
referenced in that rule will be returned to the RO ``upon completion of 
the Board's action on the pending appeal''. Therefore, the RO will 
apply Sec.  20.1304(b)(1)(i) only in the context of a final denial, 
which is already discussed in Sec.  5.55(a), or a grant or remand, in 
which case, the provisions of Sec.  5.55 are irrelevant. The primary 
relevance of Sec.  20.1304(b) to Sec.  5.55 is that evidence submitted 
to the Board prior to its decision, but not considered by the Board, as 
set forth in Sec.  20.1304(b), may be considered ``new'' for purposes 
of Sec.  5.55.
    We propose not to include the provision contained in Sec.  5.57(f) 
regarding hearings in Sec.  5.55(d). When a claimant requests a hearing 
at the Board more than 90 days after certification of an appeal and 
transfer of the claims file to the Board, the Board will not allow the 
hearing unless there is a showing of good cause for the delayed 
request. If the Board finds good cause and allows the hearing, then any 
testimony presented is considered in deciding the appeal. If the Board 
does not find good cause, then it will decide the appeal without 
conducting the hearing. In that case, it will refer the hearing request 
to the AOJ as required by 38 CFR 20.1304(b)(1)(i). Any testimony 
presented at a subsequent AOJ hearing on a claim for a benefit the 
Board denied would necessarily be ``[e]vidence the claimant presented . 
. . since VA last made a final decision denying the claim the claimant 
seeks to reopen'' under Sec.  5.55(d)(1). Therefore, there is no need 
to include the Sec.  5.57(f) language about hearings.
    We propose to add paragraphs (b) and (c). Proposed paragraph (b) 
states, ``To reopen a claim, the claimant must present or VA must 
secure new and material evidence. If VA receives a claim to reopen, it 
will determine whether evidence presented or secured to reopen the 
claim is new and material.'' Proposed paragraph (c) reads, ``If the 
claimant has presented or VA has secured new and material evidence, VA 
will reopen and decide the claim on its merits.'' Together, these 
paragraphs clearly prescribe the sequence of actions in reopening a 
claim, implementing 38 U.S.C. 5108 and long-standing judicial 
precedent. See Manio v. Derwinski, 1 Vet. App. 140 (1991).
    We propose to move the definition of ``new and material evidence'' 
in initially proposed Sec.  5.55(a) to paragraph (d), so it now follows 
the information a claimant needs to know about the process of reopening 
a claim. We propose to reorganize the definition of ``new and material 
evidence'' as a set of criteria that evidence must meet to be ``new'' 
and a set of criteria it must meet to be ``material''.
    As initially proposed, the definition of ``new and material'' 
evidence could be misconstrued to imply that ``new and material'' 
evidence has some sort of combined characteristics in addition to those 
that satisfy the requirement that it is new and that it is material. VA 
has never intended the term ``new and material evidence'' to be 
interpreted this way, and the Federal Circuit has rejected such an 
interpretation. Anglin v. West, 203 F.3d 1343, 1346 (Fed. Cir. 2000) 
(rejecting appellant's assertion that ``the concepts of newness and 
materiality are so intertwined that they cannot meaningfully be 
separated into `prongs' of a test'').
    In proposing the current definition of ``new and material 
evidence'', 38 CFR 3.156(a), VA stated, ``We propose to clarify the 
definition of `new and material evidence' . . . to state that `new 
evidence' means . . . evidence not previously submitted to agency 
decisionmakers, that is neither

[[Page 71068]]

cumulative nor redundant of the evidence of record at the time of the 
last final denial of the claim.'' 66 FR 17838, Apr. 4, 2001. The courts 
have consistently associated ``cumulative'' with a failure of evidence 
to be New See, le.g., Anglin, 203 F.3d at 1346-47 (holding that CAVC 
correctly used first prong of Colvin test in finding appellant who 
filed ``cumulative'' evidence had not filed ``new'' evidence); Elkins 
v. West, 12 Vet. App. 209, 212 (1999) (new evidence is evidence not of 
record at time of last final disallowance of the claim and not merely 
cumulative of other evidence that was then of record); Colvin v. 
Derwinski, 1 Vet. App. 171, 174 (1991) (``New evidence is not that 
which is merely cumulative of other evidence on the record.'') 
(overruled in part by Hodge v. West, 155 F.3d 1356 (Fed. Cir. 1998)).
    In Anglin, the Federal Circuit affirmed the holding of the CAVC 
that the appellant's cumulative evidence was not new evidence. 203 F.3d 
at 1347. The Federal Circuit explained that Hodge did not overrule the 
first prong of the so-called Colvin test of ``new and material 
evidence.'' 203 F.3d at 1346 (``[N]othing in Hodge suggests that the 
understanding of `newness' as embodied in the first prong of the Colvin 
test is inadequate or in conflict with the regulatory definition of new 
and material evidence.''). The Anglin court rejected the appellant's 
argument that ``the concepts of newness and materiality are so 
intertwined that they cannot meaningfully be separated into `prongs' of 
a test.'' Id. at 1346. The CAVC explicitly found ``[b]ecause the 
evidence presented . . . was not new, the CAVC did not examine whether 
it was material. This application of the first prong of the Colvin test 
was entirely consistent with the regulatory definition of new and 
material evidence.'' Id. at 1347. As restated, proposed Sec.  5.55(d) 
clearly distinguishes between new evidence and material evidence. It 
makes clear what new evidence is, what material evidence is, that to 
reopen a claim the evidence must meet both criteria, and that failure 
of the claimant to present or of VA to secure either will bar reopening 
the claim.
    Initially proposed Sec.  5.55(a) reiterated the language of current 
Sec.  3.156(a), ``New evidence means existing evidence'', and 
``Material evidence means existing evidence''. For the following 
reasons, we propose to remove the term ``existing'' in both instances.
    In 2001, VA amended the definition of ``new and material evidence'' 
to implement the Veterans Claims Assistance Act of 2000, Public Law 
106-475, sec. 3, 114 Stat. 2096, 2096-98 (2000), which mandated that VA 
assist claimants to substantiate their claims. In doing so, VA 
prescribed the assistance it would give a claimant to substantiate a 
claim to reopen by limiting its duty to obtain new and material 
evidence to obtaining ``existing evidence'', as distinguished from 
newly created evidence. 66 FR 17837-38, Apr. 4, 2001. VA did this to 
avoid the implication that, under the VCAA of 2000, it had a duty to 
create new evidence, for example through a medical examination. 66 FR 
45628, Aug. 29, 2001 (``VA would not provide an examination or obtain a 
medical opinion to create new evidence''). VA intended ``existing 
evidence'' to mean ``evidence that is not newly generated by or with 
the help of VA''. 66 FR 17838, Apr. 4, 2001.
    Nonetheless, if ``new'' evidence and ``material'' evidence both 
mean ``existing'' evidence, then initially proposed Sec.  5.55(a) could 
be misconstrued to mean that VA would not accept any evidence newly 
created to reopen the claim because it is not ``new and material'' as 
defined. As initially proposed, the rule could produce the strange 
result, for example, of VA rejecting a new medical opinion that a 
claimant obtains and files to reopen a claim as not ``new and material 
evidence'', because it would not be ``existing evidence.'' We therefore 
propose to remove the term ``existing'' to avoid any potential for such 
misapplication.
    There is no need to qualify ``new and material evidence'' as 
``existing evidence'' to ensure that VA's duty to assist the claimant 
in obtaining new and material evidence is as limited as VA intends. In 
any claim, the claimant must identify existing evidence and provide VA 
the information necessary to obtain this evidence before VA is 
obligated to try to procure that evidence for the claimant. See 
proposed Sec.  5.90(c). Nothing about asserting that the evidence is 
new and material or the fact that the claimant wants VA to obtain that 
evidence in order to reopen a claim exempts the claimant from his or 
her obligation. Consequently, the definition of new and material 
evidence does not need the qualifier ``existing'' to limit VA's duty to 
assist. Likewise, another paragraph of the ``duty to assist'' 
regulation provides that VA has no duty to assist a claimant seeking to 
reopen a claim by providing medical examinations or obtaining new 
medical opinions until new and material evidence is presented or 
secured. See proposed Sec.  5.90(c)(4)(iii). Therefore, the definition 
of ``new and material evidence'' does not need the qualifier 
``existing'' to proscribe a duty to provide medical examinations or 
obtain medical opinions for the claimant seeking to reopen a previously 
finally denied claim.
    Finally, we propose to redesignate initially proposed paragraph 
(b), ``Effective date'', as paragraph (e). We propose to change the 
term ``awards'' to ``grants'', consistent with the use of ``grant'' in 
part 5 as a verb meaning to decide a claim affirmatively.

Sec.  5.56 Report of Examination, Treatment, or Hospitalization as a 
Claim

    We propose to revise and reorganize this regulation for simplicity. 
We also propose to address several specific issues.
    We propose to revise initially proposed paragraph (a) so that it 
simply states the purpose and effect of this section. It is necessary 
to explain that evidence construed as a claim in accordance with this 
section meets the claim requirement of Sec.  5.51(a), because after VA 
receives such evidence, VA requires the claimant to take no further 
action to establish that he or she has filed a claim. In other words, 
the evidence constitutes a claim ``that is in the form prescribed by 
the Secretary'' for filing the claims to which this section applies.
    We propose to add a new paragraph (b), ``Claims excluded'', which 
provides that VA's receipt of a report of examination, treatment, or 
hospitalization is a claim only under the circumstances named in 
paragraph (c) of this section. We emphasize this point by explicitly 
excluding from the scope of this section new claims for service 
connection.
    In reviewing the initially proposed regulation, we noticed that in 
some places we referred to a report of examination or hospitalization 
and in others we referred to a report of examination or treatment. Our 
intent was to accept a report of examination, treatment, or 
hospitalization as a claim in the situations described. We propose to 
revise this regulation, including the title, to reflect that any of 
these types of medical reports may be a claim for increased benefits or 
for pension under the circumstances described. The revised title also 
represents the content of the regulation more accurately.
    We propose to reorganize initially proposed paragraph (b) of this 
section and redesignate it as paragraph (c), ``Claims included''. We 
propose to replace the initially proposed language with four succinct 
statements, (c)(1), (2), (3), and (4). Each statement articulates a 
circumstance in which VA's receipt of

[[Page 71069]]

medical records is a claim and identifies what type of claim it is, for 
example, a claim for increased disability compensation. We propose not 
to repeat the language, ``or once a formal claim for disability 
compensation has been denied because the service-connected disability 
is not compensable in degree''. We also propose not to repeat the 
language, ``or an informal claim to reopen''. Both phrases are 
superfluous and potentially confusing to readers. VA formerly 
considered claims where VA granted service connection for an injury or 
disease, but rated the disability as 0 percent disabling as having been 
disallowed or denied. See Par. 4, VA Technical Bulletin 8-180, ``Claims 
for Increase and Reopened Awards'' (June 13, 1951). VA considered 
hospital treatment records as ``an informal claim to reopen'' such a 
claim in order to receive a compensable rating. Id.
    VA currently considers claims for disability compensation to have 
been granted, notwithstanding that the disability is rated 0 percent, 
so long as VA granted service connection. This is because even a 0 
percent rating can yield disability compensation or other benefits, 
such as medical treatment. See 38 CFR 3.324, ``Multiple noncompensable 
service-connected disabilities''. Because VA no longer considers such 
claims disallowed or denied, they cannot be ``reopened''. Instead, a 
claimant who believes he or she is entitled to more than a 0 percent 
rating need only file a claim for an increased rating. Hence, we 
propose to remove the above-referenced language from redesignated Sec.  
5.56(c). Furthermore, 38 CFR 3.157 has never applied to permit the 
reopening of a claim that was denied because the claimed injury or 
disease was not service connected. 38 CFR 3.157(b) applies only where 
``a formal claim for . . . compensation has been allowed or . . . 
disallowed for the reason that the service-connected disability is not 
compensable in degree''. Removing the above-referenced language will 
remove any possible confusion on this point.
    The reasoning for not using the term ``disallowed'' or ``denied'' 
or referring to a ``reopened'' claim in the context of a prior grant of 
service connection to a veteran rated 0 percent disabled also applies 
to claims under this section from veterans receiving retired pay. 
Proposed paragraph (b)(2) changed ``disallowed'' to ``denied'' in 
restating the Sec.  3.157(b) rule about retirees. Section 3.157(b) 
provides for claims from ``a retired member of a uniformed service 
whose formal claim for pension or compensation has been disallowed 
because of receipt of retirement pay.'' ``Disallowed'' is used there in 
the same sense in which Sec.  3.157(b) uses it to refer to nonpayment 
of disability compensation to a service-connected veteran rated 0 
percent and for the reason discussed above; such a claim is not 
``reopened.'' VA may grant service connection to a veteran, yet not pay 
disability compensation because the veteran elects to receive retired 
pay rather than VA disability compensation. VA would also not pay 
pension to the retiree in receipt of retired pay if the amount of 
retired pay is greater than the amount of income above which VA will 
not pay pension benefits. In neither instance is a claim under this 
section ``reopened'' or a claim to reopen. Our proposed restatement of 
initially proposed Sec.  5.56(b)(2), to be redesignated as proposed 
paragraph (c)(3), includes a heading that accurately describes the 
circumstances in which the section applies to veterans receiving 
retired pay. It also describes the claims, simply, as for disability 
compensation or for pension.
    Initially proposed Sec.  5.56(c)(3) used the term ``retirement 
pay''. Upon further review, we noted that the terms ``retirement pay'' 
and ``retired pay'' were inconsistently used in part 3. To correct this 
inconsistency, we propose to use the term ``retired pay'' throughout 
part 5 when we are referring to ``payment received by a veteran that is 
classified as retired pay by the Service Department''. See proposed 
Sec.  5.745(a), for the definition of ``military retired pay''.
    We propose to redesignate initially proposed paragraph (c) as 
paragraph (d). Initially proposed Sec.  5.56(c)(1)(i) read:

    The provisions of paragraph (c)(1) of this section apply only 
when the reports described in paragraph (c)(1)(ii) of this section 
relate to examination or treatment of a disability for which 
service-connection has previously been established or when a claim 
specifying the benefit sought is received within 1 year after the 
date of an examination, treatment, or hospital admission described 
in paragraph (c)(1)(ii) of this section.

    We have not repeated the quoted language of initially proposed 
paragraph (c)(1)(i) in redesignated paragraph (d)(1)(i). The first 
clause of the initially proposed language, as with the equivalent 
language in Sec.  3.157(b)(1), stated, ``The provisions of paragraph 
(c)(1) of this section apply only when the reports described in 
paragraph (c)(1)(ii) of this section relate to examination or treatment 
of a disability for which service-connection has previously been 
established''. The purpose of this language is to emphasize that 
medical records will not be considered a claim for service connection 
for a disability. As stated, however, it would preclude the reports 
described from being a claim for pension. VA has never applied the rule 
to reject records from a VA or uniformed service medical facility as a 
claim for pension following a prior grant or denial of pension. We 
therefore propose to remove the language to avoid such a misapplication 
of the rule.
    The language in the quotation above (Sec.  5.56(c)(1)(i)) also 
tracks language from current Sec.  3.157 that was intended to govern a 
situation in which a claimant obtained treatment for a service-
connected disability and during that treatment, the examiner noted the 
existence of another disability. Before 1962, 38 U.S.C. 3011 had 
described an award of increased disability compensation or pension as 
``an award of increased compensation . . . or pension (amending, 
reopening, or supplementing a previous award, authorizing any payments 
not previously authorized to the individual involved)''. 38 U.S.C. 3011 
(1958). Thus, the law seemed to provide that a claim for increase 
included a claim for additional disability compensation based on a new 
disability, if the veteran was already receiving disability 
compensation. However, that language has long since been repealed. See 
Public Law 87-825, sec. 5(a), 76 Stat. 948, 950 (Oct. 15, 1962). 
Current law does not provide for the possibility of assigning a 1-year 
retroactive effective date of disability compensation awarded based on 
a new disability (unless the claim for disability compensation is 
received no later than 1 year after the veteran is discharged from 
service, see 38 U.S.C. 5110(b)(1)). In this and other respects, current 
law does not treat a claim for disability compensation based on a new 
disability in the same manner as a claim for increased disability 
compensation based on an increase in the severity of a disability that 
is already service connected. Thus, this regulation governing the 
consideration of medical evidence as a claim can no longer apply to a 
claim based on a disability not previously claimed. This is consistent 
with our analysis of the first sentence of current Sec.  3.157(b), 
discussed above, in which we explained why the part 5 rule will not 
refer to a prior claim having been ``disallowed'' or to a claim needing 
to be reopened.
    One commenter suggested that the meaning of the phrase ``or when a 
claim specifying the benefit sought'' that had been used in initially 
proposed Sec.  5.56(c)(1)(i) should be explained more thoroughly. The 
commenter noted some confusion concerning its meaning based

[[Page 71070]]

on the dissent in Ross v. Peake, 21 Vet. App. 534 (2008) (Order denying 
full-court consideration) (Judge Kasold, dissenting).
    As stated above, the language ``or when a claim specifying the 
benefit sought'' is a vestige of a statute that is no longer in effect. 
We are not using the phrase in part 5, and therefore we do not need to 
further explain its meaning.
    Regarding the Ross dissent, Judge Kasold interpreted a similar 
provision in current Sec.  3.157 as providing an earlier effective date 
for claims for secondary service connection. This view, however, 
directly contradicts the holding of the Federal Circuit in MacPhee v. 
Nicholson, 459 F.3d 1323 (Fed. Cir. 2006). Judge Kasold believed that 
Sec.  3.157 ``envisions a claim for increased compensation based on a 
disability for which service connection has not yet been granted.'' 
Ross, 21 Vet. App. at 535. In MacPhee, however, the Federal Circuit 
held that an informal claim pursuant to Sec.  3.157 ``must be for a 
condition that not only has been the subject of a prior claim, but the 
condition must also have been previously found to be service 
connected.'' MacPhee, 459 F.3d at 1326. Thus, Sec.  3.157 does not 
support the assertion that a claim for benefits for a separate 
disability may be considered a claim for increased disability 
compensation.
    The sources of evidence that can constitute a claim under paragraph 
(d)(1) (initially proposed paragraph (c)(1)) are regrouped in paragraph 
(d)(1)(ii) as (d)(1)(ii)(A) through (D), according to date of claim 
that results from submission of the particular evidence. Though this 
makes a fourth level of designation in the rule, it should enhance 
readability.
    Initially proposed paragraph (c)(3)(i), regarding evidence from 
state and other institutions, stated, ``Benefits will be granted if the 
records are adequate for rating purposes; otherwise findings will be 
verified by official examination.'' We propose to change ``official'' 
to ``VA'', to make clear that the official examination to which the 
sentence refers is a VA examination. We also propose to add the phrase, 
``and demonstrate entitlement to an increased rating, to pension, or to 
special monthly pension'' after ``rating purposes'' to clarify that 
mere receipt of such evidence does not establish entitlement to 
benefits.
    Initially proposed paragraph (c)(3)(ii) included the phrase ``and 
entitlement is shown'', derived from current Sec.  3.157(b)(3), as a 
condition on the date of VA receipt of evidence from state and other 
institutions as the date of a claim. Neither Sec.  3.157(b)(1) nor 
(b)(2) contains such a restriction. We therefore propose to remove this 
language because if the claimant does not eventually establish 
entitlement to the benefit, then the date of receipt of the claim has 
no legal significance. Therefore, the language, ``and entitlement is 
shown'' is superfluous.
    Finally, we propose to revise initially proposed paragraph (d), 
``Liberalizing law or VA issue'', for clarity and to redesignate it as 
paragraph (e).

Sec.  5.57 Claims Definitions

    We propose to revise the format of this regulation to be consistent 
with the format of other regulations that provide definitions. We 
propose to revise the title of the regulation to be, ``Claims 
definitions'', because it more clearly indicates the contents of the 
regulation.
    We also propose to restate and expand the scope of the definitions. 
The initially proposed rule, like current Sec.  3.160 from which it 
derives, stated that the definitions applied to claims for pension, 
disability compensation, and DIC. VA administratively processes claims 
under 38 U.S.C. chapter 18 in the same manner as VA processes pension, 
disability compensation, and DIC. Therefore, we propose to restate the 
scope of Sec.  5.57 as applying to claims for disability benefits, 
death benefits, or monetary allowance for a veteran's child under 38 
U.S.C. chapter 18. The proposed change to ``disability benefits'' and 
to ``death benefits'' (from ``pension, disability compensation, and 
dependency and indemnity compensation'') better harmonizes the scope of 
the regulation with the regulations on claims for disability and for 
death benefits. See Sec. Sec.  5.51 and 5.52.
    We propose to remove initially proposed paragraph (a), definition 
of ``formal claim''. As initially proposed, the definition, ``A claim 
filed on the application required'', was impracticable. There are 
benefits for which VA does not have an application, for example 
benefits under 38 U.S.C. 1151. Moreover, as a result of revision of 
several other proposed regulations, the term does not appear in part 5 
other than in its definition. There is no need to define a term that is 
not used.
    We propose to redesignate initially proposed paragraph (b), 
``Informal claim'', as paragraph (a).
    We propose to redesignate initially proposed paragraph (c), 
``Original claim'', as paragraph (b). We propose to revise the 
definition to state, ``Original claim means the first claim VA receives 
from a person for disability benefits, for death benefits, or for 
monetary allowance under 38 U.S.C. chapter 18.'' This restatement 
eliminates the term ``formal claim''. It is the lack of a prior claim 
for any disability, death, or chapter 18 benefit that makes a claim the 
original claim for the benefit.
    It is confusing to define the original claim as ``the initial 
formal claim''. More significantly, it is fallacious. Even if we kept 
the definition of ``formal claim'' as a claim filed on a prescribed 
application, the lack of an application for some benefits would make 
the initially proposed definition of ``original claim'' impracticable. 
If an original claim must be an application and there is no application 
for some benefits, then there cannot be an original claim for some 
benefits. That conclusion is untenable.
    We also propose to add ``from a person'' to be clear that when two 
or more claimants each file a claim for the same benefit, each claim 
will be the original claim for that person. For example, two siblings 
each filing a claim for DIC based on the death of the same veteran 
would each have an original claim. This was not apparent in the 
initially proposed regulation.
    We propose to remove initially proposed paragraph (e), ``Finally 
adjudicated claim''. It is essentially redundant of the definition of 
``final decision'' in Sec.  5.1. The definition of ``final decision'' 
in Sec.  5.1 encompasses the definition of ``finally adjudicated 
claim'' in Sec.  3.160(e), but it is more precise. The procedural 
posture of finality of VA decisions applies to VA claim adjudication 
more broadly than just to claims for pension, disability compensation, 
DIC, and monetrary allowances under 38 U.S.C. chapter 18. For that 
reason, it is more appropriate for the rule defining finality to be in 
Sec.  5.1 than in Sec.  5.57, which has a limited scope.
    One commenter objected to the title of Sec.  5.57(f), ``Reopened 
claim'', asserting that the title is misleading because the paragraph 
does not describe what a reopened claim is and is not consistent with 
how VA and the courts have used the term. This commenter felt that a 
better title would be, ``Claim to reopen.'' We agree that ``reopened 
claim'' is inaccurate. As noted by the commenter, this paragraph 
concerns submission of evidence, information, or an assertion of 
entitlement to a procedure applicable to a previously decided claim. 
Such submission of evidence, information, or an assertion of 
entitlement to a procedure applicable to a previously decided claim may 
not always result in the claim being reopened. We propose to use the 
suggested phrase ``claim to reopen''. However, we propose to do so in 
the context of moving the paragraph

[[Page 71071]]

to Sec.  5.55(a), as we discussed above regarding Sec.  5.55.

Duties of VA; Rights and Responsibilities of Claimants and 
Beneficiaries AL82

General Comment on VA Claims Process

    One private individual submitted a comment concerning the length of 
time VA takes to process a claim and his dislike of the appeal process. 
This comment is outside the scope of these proposed regulations, and we 
therefore propose to make no changes based on this comment.

Sec.  5.80 Rights to Representation

    Two commenters suggested that this initially proposed section was 
deficient in its scope. They expressed a belief that a claimant or 
beneficiary should be given notice of the right to representation 
throughout the adjudicative process, not only when VA sends notice of a 
decision or a proposed reduction, discontinuance, or other adverse 
action. Both expressed the opinion that VA should notify the claimant 
of the right to representation at the beginning of the claims process.
    It has been VA's long-standing practice to provide notice to 
claimants of the right to representation in VA's initial response to 
the claimant after VA receives a substantially complete application. We 
propose to revise initially proposed Sec.  5.80 to state that written 
notice concerning the right to representation will be included in the 
initial response VA sends to the claimant after receipt of a 
substantially complete application.
    One commenter noted that initially proposed Sec.  5.80 failed to 
set out in detail the crucial role of the representative in the 
adjudicative process. Another commenter urged VA to include in 
initially proposed Sec.  5.80 the limitations on hiring an attorney.
    Part 3 regulations do not describe the role of representatives in 
the adjudicative process or the limitations of hiring an attorney and 
we do not believe part 5 should either. The rights, duties, limitations 
and role of a representative are in 38 CFR 14.626--14.637. The first 
sentence of Sec.  5.80 refers the reader to those sections. We are 
making no changes in the language of the regulation in response to 
these comments. We have, however, added a cross reference at the end of 
initially proposed Sec.  5.80 to 38 CFR 19.25, ``Notification by agency 
of original jurisdiction of right to appeal'', which requires that VA 
include the right to representation in its notice of an adverse 
decision on a claim.
    One commenter urged VA to include a provision acknowledging the 
right of both the claimant and the claimant's representative to 
automatically receive copies of evidence secured by VA. The commenter 
asserted that access to the evidence developed and relied upon by VA to 
reach its decision is crucial to proper notice and is a fundamental due 
process right.
    A veteran and representative are entitled to a copy of the evidence 
or other written records contained within a veteran's claims file in 
accordance with the provisions of 38 U.S.C. 5701(b)(1), as implemented 
in 38 CFR 1.503. The veteran or representative must make a written 
request for the copies of the evidence in accordance with the 
provisions of 38 U.S.C. 5702(a). See 38 CFR 1.526. The procedures for a 
veteran and the representative to obtain copies of the evidence used in 
deciding a claim have been established by statute and VA has 
implemented these procedures in our regulations. If VA adopted the rule 
that the commenter urges, it would require VA to copy and mail every 
document it acquires regardless of its relevance to the veteran's 
claim. We do not believe that it would be an appropriate use of VA's 
limited resources to automatically provide both the claimant and the 
claimant's representative with copies of every piece of evidence that 
VA secures.
    The procedures provided in current statutes and regulations do not 
infringe on the claimant's due process rights. The claimant has the 
right to notice of the evidence VA will attempt to obtain on the 
claimant's behalf, of the evidence the claimant has the responsibility 
to obtain and submit, and of the decision on the claim. If the decision 
is adverse, the notice must include a discussion of the evidence 
considered and the reasons and bases for the decision and it must 
include the claimant's appellate rights. The claimant may, upon written 
request, generally obtain a copy of the evidence used in making the 
decision on the claim. Since our regulations already provide for the 
result the commenter requested, though not in the manner urged by the 
commenter, we propose to make no changes based on this comment.

Sec.  5.81 Submission of Information, Evidence, or Argument

    Initially proposed Sec.  5.81(a), ``Submissions included in the 
record'', referred to submissions ``that a claimant offers. . .'' One 
commenter asserted that Sec.  5.81(a) failed to specify that a 
claimant's recognized representative has the authority to raise issues 
on behalf of a claimant.
    As stated in our response to a similar comment on initially 
proposed Sec.  5.80, part 3 regulations do not describe the role of 
representatives in the adjudicative process or the limitations of 
hiring an attorney and we do not believe part 5 should either. 
Initially proposed Sec.  5.81(a) was not intended to regulate the 
specific authority of a claimant's or beneficiary's representative. 
This information is codified in Sec. Sec.  14.626-14.637, to which 
Sec.  5.80 refers, and to include it in part 5 would be redundant. We 
therefore propose to make no change based on this comment.
    In initially proposed Sec.  5.81(a), we used the term ``record of 
proceeding'' twice. We have substituted the term ``evidence of record'' 
to be consistent with the other part 5 regulations. This regulation was 
the only one in part 5 to use the term ``record of proceeding''.
    Initially proposed Sec.  5.81(b) stated:

    Information, evidence, or argument may be submitted by a 
claimant or beneficiary, or, where applicable, through a guardian or 
fiduciary acting on his or her behalf. Unless specifically provided 
otherwise in this part, a claimant's or beneficiary's authorized 
representative may submit information, evidence, or argument 
pursuant to any section of this part that allows or requires 
submission of information, evidence or argument.

    Two commenters expressed concern with this paragraph as implying 
some new restriction on a representative's authority to submit material 
on behalf of a client. One commenter argued that this section is 
inappropriate because an authorized representative stands in the same 
position as the client and should be allowed to submit evidence and 
arguments as if he is the claimant or beneficiary. The same commenter 
suggested inserting the phrase ``or their authorized representative'' 
after ``beneficiary'' and deleting the second sentence.
    We did not intend to constrain an authorized representative's role 
or authority in the VA claims process. After reviewing initially 
proposed Sec.  5.81(b) because of the comments received, however, we 
noted that all the information contained in the paragraph is also in 
other regulations. Section 1.524 provides for the right of a fiduciary, 
representative, attorney, or other authorized person to represent the 
claimant. Sections 13.1, et seq., and 14.626-14.637 provide specific 
provisions concerning these representatives. Because other regulations 
provide for the rights and duties provided in initially proposed Sec.  
5.81(b), and do so in greater detail,

[[Page 71072]]

Sec.  5.81(b) is redundant, and we propose to remove it.

Sec.  5.82 Right to a Hearing

    We propose to add language to initially proposed Sec.  5.82(a) to 
make clear that the section pertains only to hearings in claims at the 
agency of original jurisdiction level of adjudication. We propose to 
change ``claimants'' to ``claimants and beneficiaries'', except in 
paragraph (f), to make clear that the rules in Sec.  5.82 apply to 
claimants and to current beneficiaries. Paragraph (f) pertains only to 
hearings in response to a VA proposal to take adverse action regarding 
a beneficiary's benefits. Finally, we propose to change ``claim'' to 
``matter'' to clarify that if a beneficiary requests a hearing to give 
testimony or evidence on whether VA should take adverse action against 
the beneficiary's benefits, such a hearing is within the scope of Sec.  
5.82.
    Further review of the initially proposed regulation revealed a 
contradiction between paragraphs (a)(1) and (f). Initially proposed 
paragraph (a)(1) provided for one hearing ``at any time on any issue''. 
Initially proposed paragraph (f) provided, as does current Sec.  
3.105(i) from which it derives, that a beneficiary must request a 
hearing on the issue of reduction, discontinuance or other adverse VA 
action within 30 days after receipt of a notice of VA's proposal to 
take the adverse action. Therefore, a hearing under paragraph (f) is 
not available ``at any time on any issue''. We propose to reconcile the 
two paragraphs by beginning paragraph (a)(1), ``Except as provided in 
paragraph (f),''. This is not a change from current regulation. Compare 
Sec. Sec.  3.103(c) (``a hearing on any issue at any time'') with 
3.105(i) (``a predetermination hearing [if] a request . . . is received 
within 30 days''). It merely clarifies the relationship between 
paragraphs (a) and (f). This relationship exists between Sec. Sec.  
3.103(c) and 3.105(i), but it becomes obvious when the provisions are 
consolidated in a single section.
    We propose to revise the second to last sentence of initially 
proposed Sec.  5.82(a), removing the statement entitling a veteran to a 
hearing before the Board of Veterans' Appeals (Board). Instead, we 
propose to add a cross reference to the introduction to make the reader 
aware of Board hearings and to distinguish between hearings at the AOJ 
and at the appellate levels of adjudication. We propose this change 
because 38 CFR part 20 provides for the right to a hearing before the 
Board, and it is not appropriate to regulate Board hearings in part 5.
    The initially proposed rule allowed, ``one hearing before the 
agency of original jurisdiction at any time on any issue or issues 
involved in a pending claim before the agency of original 
jurisdiction'' and permitted one additional hearing ``if the claimant 
asserts that: he or she has discovered a new witness or new evidence to 
substantiate the claim; he or she can present that witness or evidence 
only at an oral hearing; and the witness or evidence could not have 
been presented at the original hearing.'' Four commenters asserted that 
the limitation in initially proposed Sec.  5.82 on the number of 
hearings allowed was too restrictive. For the reasons stated in 
response to specific comments, we disagree that the regulation is too 
restrictive and we reject each of the reasons argued for keeping the 
current rule.
    One commenter asserted that the ``one-hearing rule'' diminishes 
claimants' right to due process because it is inconsistent with the 
VA's tradition of giving claimants the opportunity to continue to 
produce and submit evidence or argument as a claim develops. It might 
be true that the one-hearing rule could inhibit ongoing production of 
evidence or argument throughout the time a claim is pending, if a 
personal hearing were the only way to submit evidence or argument to 
the record in a claim, but it is not. Section 5.81, the regulation 
governing submission of evidence and argument generally, could scarcely 
be more permissive regarding entering material into the record in a 
claim: A claimant may submit virtually anything, at almost any time, by 
nearly any means. Nothing in Sec.  5.82 diminishes the right to submit 
material to the record in a claim throughout the time the claim is 
pending, except as limited by the rules of the Board of Veterans' 
Appeals for submission of material after the AOJ transfers a claim to 
the Board on appeal. 38 CFR 20.1304.
    The same commenter asserted the rule is inconsistent with the 
current due process right to a hearing before the initial decision on a 
claim. The commenter requested that we include a provision informing 
the veteran of the right to a hearing before VA makes a decision on a 
claim. We interpret the comment to express concern that an adverse 
decision in a claim could bias a subsequent decision-makers, and that a 
claimant would have to overcome that bias in a subsequent hearing. 
Initially proposed paragraph (d) provided that ``a VA employee or 
employees having decision-making authority and who did not previously 
participate in the case will conduct the hearing.'' The comment offered 
no basis to believe that a VA official conducting a hearing would not 
be impartial, and we propose to make no change to preempt a bias that 
is not demonstrated.
    To the extent the commenter is concerned about lack of notice to 
the claimant of the right to a hearing before the decision on a claim, 
VA does notify claimants of the right to a personal hearing at any 
time, including before VA has decided a claim. See, for example, VA 
Form 21-526, instructions page 6, Veteran's Application for 
Compensation and/or Pension (Jan. 2004), or VA Form 21-534, 
instructions page 2, Application for Dependency and Indemnity 
Compensation, Death Pension and Accrued Benefits by a Surviving Spouse 
or Child (Including Death Compensation if Applicable). Because VA 
already provides this information to claimants, we propose to make no 
change based on this comment.
    Absent the discovery of a new witness or evidence, there is no 
valid reason to hold an additional hearing. A single hearing provides 
full and fair opportunity to place demeanor evidence in front of the 
decision maker, which satisfies a primary object of personal hearings. 
The one-hearing rule with its paragraph (a)(2) allowance for a second 
hearing under the stated circumstances provides a fair and rational 
balance between the rights of the claimant and the resources of the 
department. Repeated interruption of the adjudication process for 
hearings can result in confusion about the evidence to review and in 
interminable delay, both of the claims subjected to repeated hearings 
and to the progress of the claims of others who wait their turn. These 
are not inconsequential concerns. If a claimant wants to submit new 
arguments, he or she may do so in writing at any time. We therefore 
propose to make no changes based on these comments.
    Another commenter asserted that the provision for an additional 
hearing is likely to result in VA arbitrarily refusing an additional 
hearing that a claimant would use to respond to evidence that entered 
the record subsequent to the first hearing, resulting in limiting a 
claimant to one hearing in almost all circumstances. After noting the 
criteria for a second hearing in paragraph (a)(2), the commenter 
asserted that paragraph (a)(2) should provide for additional hearings 
``when warranted by circumstances'' or ``for good cause'' and authorize 
VA to refuse a second, third, or further additional hearing ``when 
clearly unwarranted.'' The commenter asserted that there are many

[[Page 71073]]

circumstances that would warrant an additional hearing that would not 
meet the criteria in paragraph (a)(2). The commenter asserted that the 
claimant should be able to testify to additional matters even though 
the testimony would not amount to newly discovered evidence or present 
a different witness. The commenter further asserted that paragraph 
(a)(2) would allow a claimant a second hearing for a new witness to 
testify in corroboration of prior testimony, that is, to provide 
cumulative testimony. The commenter concluded that the several 
requirements for a second hearing, including that the hearing be the 
only way to present the evidence or testimony, is a license for refusal 
by VA personnel to afford a supplemental hearing in virtually all 
cases.
    We recognize the commenter's concern that the one-hearing rule will 
thwart a claimant's legitimate desire to respond to developments during 
the pendency of the claim. The threshold for obtaining a second 
hearing, however, is a mere assertion of the factors in the exception 
paragraph. We see no basis for the speculation that VA will probably 
refuse almost all requests. It seems likely that a claimant's desire to 
testify or present witnesses or evidence to rebut evidence that entered 
the record after a prior hearing is exactly a situation in which the 
claimant could not have adduced the new evidence or witnesses' 
testimony before the evidence it would rebut was of record.
    We do not agree that the standards for obtaining a second hearing 
invite arbitrary or capricious refusal of requests for second hearings, 
or even that VA will deny most requests. Rather, the rule the commenter 
proposed ``where circumstances warrant,'' or ``for good cause,'' but 
``not when clearly unwarranted'' are completely devoid of a standard of 
application; they seem far more likely to result in inconsistent 
application than do the paragraph (a)(2) criteria.
    More basically, the commenter would have VA afford additional 
hearings even though the claimant would present no new witness or 
evidence; even though the claimant could present the testimony of a new 
witness, or new evidence, without a hearing; and even though the 
claimant knew of the witness, evidence or argument at the time of the 
first hearing and could have presented them. The commenter ``concede[d] 
that VA has a legitimate interest in preventing duplicative and 
unnecessary hearings,'' a point with which we do agree. We conclude 
that the one hearing rule with the paragraph (a)(2) exception provides 
full and fair hearing process to each claimant.
    A commenter objecting that Sec.  5.82(a) would limit a long-
standing right to unlimited hearings, asserted that VA had not provided 
an adequate rationale for its proposed fundamental change in its 
historic and traditional hearing practice. The preceding paragraphs 
state additional rationale for the change. Additionally, we do not 
agree that the change is fundamental, because VA hearing practice will 
continue to serve every function it has under current Sec.  3.103(c).
    The commenter further asserted that ``Congress has codified and 
ratified the agency's traditional practice of providing claimants with 
multiple opportunities to appear for personal hearings.'' The commenter 
asserted that Congress is presumed to be aware of and adopt an 
administrative interpretation of a statute when it reenacts the statute 
without change, citing Young v.Cmty. Nutrition Inst., 476 U.S. 974, 983 
(1986). The commenter reiterated this point regarding additional 
hearings at the AOJ after the Board remands a claim if the claimant had 
a hearing before Board review of the claim. The commenter asserted that 
Congress intended VA to continue its existing practice regarding 
hearings at the AOJ when it enacted the Veterans' Judicial Review Act 
of 1988, Public Law 100-687, 102 Stat. 4105 (1988), and the Veterans 
Claims Assistance Act of 2000, Public Law 106-475, 104 Stat. 2096 (Nov. 
9, 2000), without changing the law governing provision, number, or 
timing of VA personal hearings. The commenter did not identify a 
statute the reenactment of which constituted Congressional adoption of 
38 CFR 3.103(c), from which Sec.  5.82(a) derives. Neither of the 
statutes cited addresses VA hearing practice. We are aware of no 
statute that does.
    The right-to-a-hearing rule in Sec.  3.103(c) is VA's creation, 
promulgated under the Secretary's general rule-making authority in 38 
U.S.C. 501(a). Moreover, as judicial precedent specific to VA clearly 
shows, congressional silence on a regulation is not necessarily 
adoption or endorsement of the regulation, or even an indication that 
Congress is aware of the regulation. Brown v.Gardner, 513 U.S. 115, 
120-21 (1994) (Sixty-year congressional silence about VA regulation did 
not ratify it; language of statute was plain, record of congressional 
discussion preceding reenactment of the predecessor statute made no 
reference to VA regulation and there was no other evidence to suggest 
Congress was even aware of VA's interpretive provision). Certainly, 
where VA's rule on hearings does not derive from a statute on hearings, 
Congress's silence about the matter does not imply a congressional view 
of the regulation. The cases the commenter cited for the proposition 
that congressional failure to revise a regulation is endorsement of it 
were instances of congressional action on a statute to which a certain 
regulation related.
    The commenter also asserted as fact that ``the legislative history 
associated with congressional oversight of the agency shows that 
Congress knew about VA's practices governing personal hearings and did 
not indicate that it disagreed with the agency's practices.'' As we 
noted above, congressional silence about a practice is not necessarily 
evidence of congressional endorsement. Id., at 120-21. Silence about an 
agency practice in the context of congressional knowledge and 
consideration of a matter could, however, be significant. The House 
Committee on Veterans' Affairs was authorized by enactment of the 
``Legislative Reorganization Act of 1946.'' Public Law 79-601, sec. 
121(a). See http://veterans.house.gov/history/ (World Wide Web site of 
the House Committee, visited Dec. 2, 2009). The Committee has oversight 
responsibility for VA, which it exercises through the Subcommittee on 
Oversight and Investigations. See http://veterans.house.gov/oversight/ 
(World Wide Web site of the oversight subcommittee, visited Dec. 2, 
2009). The commenter does not cite any history of the Subcommittee on 
Oversight and Investigations documenting its knowledge or viewpoint on 
VA hearing practice, or say when during the more than 60-year history 
of congressional oversight of veterans affairs an this expression of 
knowledge happened. We are not aware of any history of congressional 
oversight showing endorsement of VA hearing practice. Consequently, we 
propose to make no change in the initially proposed regulation based on 
the assertion that congressional oversight history shows that Congress 
has approved current practice.
    The same commenter objected to the language in initially proposed 
Sec.  5.82(a)(1) precluding a claimant who had a hearing prior to an 
appeal to the Board from having a second hearing if the Board remands 
the case, except as paragraph (a)(2) provides. The commenter quoted 
from the AL82 NPRM, emphasizing the discussion of current Sec.  
3.103(c), which stated, ``The VA official conducting the hearing is 
obligated to elicit any information or evidence not already of record 
in

[[Page 71074]]

support of the benefit claimed.'' 70 FR 24680, 24683, May 10, 2005. The 
commenter asserted that ``as is so often the case, the requirements of 
the law, [sic] are conveniently forgotten by VA litigation counsel when 
a veteran appeals to the U.S. Court of Appeals for Veterans Claims.'' 
The commenter cited the Secretary's brief in Colon v. Nicholson, 21 
Vet. App. 96 (2006) (table, unpublished decision), WL 2105515 (text), 
as an example of VA excusing the failure of a hearing officer to 
execute the regulatory mandate to explain the issues and suggest 
evidence to submit. The commenter quoted a passage from the brief that 
asserted that the appellant could have cured the failure of the 
Regional Office hearing officer to consider and discuss an issue in the 
case by having another personal hearing or by other means after the 
Board had remanded the case. The commenter argued that VA's argument in 
Colon ``demonstrates . . . why VA should not limit a claimant's right 
to appear for personal hearings.''
    VA's arguments or litigation strategy in a case on appeal to the 
court is beyond the scope of this rulemaking, Whatever the argument or 
reason for an argument raised in litigation, litigation of a VA claim 
is far downstream in the claims process from the hearings for which 
Sec.  5.82 provides. The commenter asserted that VA's argument in Colon 
``shows that [VA's] litigation counsel have no qualms whatsoever in 
presenting argument . . . to undermine the legal effect of the agency's 
binding regulations.'' The commenter essentially argues that VA should 
allow unlimited hearings because far downstream from the hearing the 
Secretary's counsel might argue to the court that a failure to follow a 
regulation was a harmless error in a specific case. We do not agree 
that a right to unlimited hearings is likely to preempt an argument at 
litigation, nor is that an appropriate object of regulation.
    The commenter implicitly raised another point worth addressing, 
that is, whether there is a cure for a defective hearing, and if so, 
whether the one-hearing rule thwarts that right. In practice, another 
hearing would cure a defect in the original hearing, and the one-
hearing rule will not inhibit that remedy. VA and its hearing officers 
have various duties in conducting hearings, such as to explain all 
issues and suggest the submission of evidence the claimant might have 
overlooked. A right to unlimited hearings is an overly broad remedy for 
a defective hearing, because it would result in many redundant hearings 
in cases in which the initial hearing had comprehensively addressed all 
issues and fully provided due process.
    If a hearing was defective, the claimant can assert so to the AOJ, 
or on appeal to the Board. A defective hearing would not be legally 
sufficient to satisfy the claimant's right to one hearing. The claimant 
would be in the position of not having had a hearing. The one-hearing 
rule in paragraph (a)(1) would not bar repeating the hearing to cure 
the defect, and the claimant would not be subject to the criteria in 
paragraph (a)(2) to obtain the new hearing. The claimant could obtain 
this new hearing from the AOJ. If the claimant appeals an adverse 
decision to the Board, the claimant can assert the deficiency in the 
hearing. A Board remand to cure a deficiency in a personal hearing 
would not be subject to the rule against post-remand hearings in 
paragraph (a)(1), because it would require AOJ implementation of a 
specific order within the Board's authority. 38 CFR 19.9. Consequently, 
the one-hearing rule does not raise the specter of deficient hearings 
without a remedy for the claimant. Moreover, a remand from the Board 
alone is not sufficient reason for another hearing in light of the 
reasons expressed above for the one-hearing rule. If a remand from the 
Board orders development of evidence, or otherwise results in the 
conditions that meet the criteria for an additional hearing in 
paragraph (a)(2), then the claimant can obtain the additional hearing. 
We propose to make no change to the rule based on the comment.
    We propose to reorganize initially proposed paragraph (a)(2) to 
make its three criteria visually clear by designating them (i), (ii), 
and (iii).
    Initially proposed Sec.  5.82(b) stated, in pertinent part, that, 
``[t]he purpose of a hearing under this section is to provide the 
claimant with an opportunity to introduce into the record of 
proceedings, in person, any available evidence, arguments, or 
contentions which he or she considers important to the case.'' One 
commenter asserted that the term ``contention'' is redundant of the 
term ``argument,'' and that VA adjudicators often dismiss testimonial 
evidence as ``mere contentions'', citing Hatlestad v. Derwinski, 1 Vet. 
App. 164, 169-70 (1991).
    Merriam-Webster's Collegiate Dictionary, 269 (11th ed. 2006), 
defines ``contention'' as ``a point advanced or maintained in a debate 
or argument''. The term ``argument'' includes the term ``contention''. 
We agree that it is unnecessary to include both terms in Sec.  5.82(b) 
and we propose to remove the word ``contentions''.
    We propose to make an additional change to initially proposed Sec.  
5.82(b) by removing the last sentence, that states, ``[t]estimony at a 
hearing will be under oath or affirmation.'' We propose this change 
because the requirement that the testimony be under oath or affirmation 
is also found in Sec.  5.82(d)(2), where it is more clearly expressed. 
Including this requirement in Sec.  5.82(b) is redundant and 
unnecessary. We propose to revise the title of this paragraph to remove 
the reference to the requirement for oath or affirmation.
    Initially proposed Sec.  5.82(d)(1) stated, in pertinent part, 
``[t]he employee or employees will establish a record of the hearing 
and will issue a decision after the hearing'', which is substantially 
similar to the language in current Sec.  3.103(c)(1). One commenter 
asserted that the phrase ``a record of the hearing'' is too vague and 
urged VA to clarify that testimony cannot be ``manipulated, 
paraphrased, or summarized like minutes of a meeting.'' The commenter 
urged that the witness's exact words and complete statements be made a 
part of the record.
    VA normally transcribes the recording of the hearing and includes 
the transcript of the hearing in the record of evidence. However, it 
would be inappropriate to require by regulation that a transcript be 
prepared for every hearing. There are several reasons why the recording 
of the hearing may not be transcribed. For example, the VA employee 
conducting the hearing may determine that all benefits sought should be 
granted. If all benefits sought are granted, there is no reason to 
expend resources to transcribe the recording of the hearing or to delay 
the promulgation of the decision while waiting for the recording to be 
transcribed. The decision granting the benefit would summarize the 
hearing testimony. Also, the claimant may withdraw the claim during the 
conduct of the hearing. In such situations, there is no need for a 
transcript. In either of these examples, the claimant would gain 
nothing by the VA's expenditure of resources in transcribing the 
recording of the hearing. Finally, VA puts a transcript of the hearing 
in the claims file if the claimant or beneficiary initiates an appeal 
from a decision. The verbatim testimony is thus part of the evidence of 
record when the claimant or beneficiary seeks appellate review. To 
require by regulation that a transcript of the recording of every 
hearing be prepared would not assist the claimant and would 
unnecessarily expend VA resources.
    Currently, VA prepares a transcript of the hearing if the VA 
employee

[[Page 71075]]

conducting the hearing needs one in making a decision on the claim, if 
the claimant (or the claimant's representative) requests a copy, or if 
the claim is to be sent to the Board of Veterans Appeals. If the 
recording of the hearing is not transcribed, the recording of the 
hearing is placed in the claims folder so that if the hearing needs to 
be transcribed later, the tape or other recording medium is available. 
The current procedures adequately protect the claimant's interests 
while providing VA with greater efficiency in using our resources. We 
propose to make no changes based on this comment.
    One commenter urged VA to require in Sec.  5.82(d)(3) that 
adjudicators conducting hearings make express credibility findings on 
the record concerning the sworn, personal hearing testimony of 
claimants and other witnesses. The commenter averred that VA hearing 
officials deciding claims regularly fail to state the reasons for 
rejecting sworn hearing testimony. The commenter asserted that a 
requirement that hearing officers make specific credibility findings is 
necessary to compel hearing officers to include the contribution of his 
or her assessment of the credibility of hearing testimony in the 
statement of reasons for a decision.
    We decline to make this suggested addition. Such findings are 
already required by initially proposed Sec.  5.83(a), which requires VA 
to send each claimant a decision that explains, ``[if] a claim is not 
fully granted, the reason for the decision and a summary of the 
evidence considered. . . .'' Additionally, if VA were to specifically 
require VA personnel conducting hearings to determine the credibility 
of oral hearing testimony, the requirement could be misconstrued as 
emphasizing that type of testimony over others, or that they need not 
make credibility findings on other types of testimony or evidence. A 
finding as to credibility of testimony, or of any evidence, is 
fundamental to all weighing of evidence. See Barr v. Nicholson, 21 Vet. 
App. 303, 310 (2007) (``On remand, the finder of fact must consider the 
credibility and weight of Mr. Barr's statement, and any other competent 
lay or medical evidence''); see also, Layno v. Brown, 6 Vet. App. 465, 
469 (1994) (Credibility is a matter to consider after evidence or 
testimony has been admitted). We agree with the commenter's statement 
that testimony is evidence, and that the Secretary must consider ``all 
information and lay and medical evidence of record''. 38 U.S.C. 5107(b) 
(Benefit of the doubt). That does not mean that regulation must 
specifically require credibility findings as to hearing testimony. The 
lack of a finding of credibility of hearing testimony, as with a 
failure to assess the credibility of any testimony or evidence, can be 
the basis on appeal of an assertion that VA failed to state its reasons 
or bases for a decision. We propose to make no changes based on this 
comment.
    Initially proposed Sec.  5.82(e)(1) stated, ``Normally, VA will not 
schedule a hearing for the sole purpose of receiving argument from a 
representative.'' This was based on current 38 CFR 3.103(c)(2) which 
states, ``The Veterans Benefits Administration will not normally 
schedule a hearing for the sole purpose of receiving argument from a 
representative.'' In reviewing Sec.  5.82 to respond to comments, we 
noted that paragraph (e)(1) provides no guidance on when VA will 
schedule a hearing for the sole purpose of receiving argument from a 
representative. Title 38 CFR 20.700(b) states, in pertinent part, 
``Requests for appearances by representatives alone to personally 
present argument to Members of the Board may be granted if good cause 
is shown. Whether good cause has been shown will be determined by the 
presiding Member assigned to conduct the hearing.'' We believe that 
applying a good cause standard to hearings at the agency of original 
jurisdiction would be fair to claimants and beneficiaries, and 
administratively efficient for VA, so we propose to add that standard 
to paragraph (e)(1).
    We propose to reorganize initially proposed Sec.  5.82(e)(3) (now 
renumbered as paragraph (e)(4)) to make clear that it addresses failure 
to report for a hearing under any circumstance. Paragraph (e)(4)(i) 
addresses failure to report without good cause Paragraph (e)(4)(ii) 
addresses failure to report with good cause and the responsibility of 
the claimant or beneficiary to request rescheduling.
    One commenter urged VA to add a provision to Sec.  5.82(e) on 
rescheduling hearings upon receipt of a reasonable request from a 
claimant or beneficiary. VA's long-standing practice has been to inform 
claimants and beneficiaries, in the letter scheduling their hearing, 
how to contact VA to reschedule the hearing. Based on the comment, we 
have added a new paragraph (e)(3) stating, ``If a claimant or 
beneficiary is unable to attend a scheduled hearing, he or she may 
contact VA in advance to reschedule the hearing for a date and time 
which is acceptable to both parties.''
    Similarly, another commenter argued that VA should provide a 
claimant with a right to reschedule a hearing if the claimant missed 
the originally scheduled hearing for good cause. In our view, a request 
to reschedule is reasonable if the claimant failed to report for good 
cause. VA's long-standing practice has been that if a claimant fails to 
attend the hearing with good cause, VA will reschedule the hearing. We 
agree with the commenter that it would helpful to include this in 
paragraph (e) and we now propose to add such language.
    We reviewed initially proposed Sec.  5.82 in connection with this 
comment, and determined that it might be unclear whether the hearing 
procedures discussed in paragraphs (a) through (e) apply to 
``predetermination hearings'' under paragraph (f). We propose to revise 
(f) by adding the word ``Additional'' before the paragraph heading. It 
now reads, ``Additional requirements for hearings before proposed 
adverse actions.'' The paragraph provides that before VA takes adverse 
action regarding a benefit, VA will give the beneficiary notice of a 
right to a hearing, and that the beneficiary has 30 days to request a 
hearing. Reading the heading and the paragraph together makes it clear 
that the provisions of (f) modify the hearing procedures discussed in 
paragraphs (a) through (e). The modifications consist of VA's unique 
notice requirement and the beneficiary's 30-day limit to request a 
hearing. See discussion of distinction between paragraphs (a) and (f), 
above.
    We have restated the rule in initially proposed paragraph (f) 
regarding the conditions under which VA will hold a hearing prior to 
adverse action so it reads in the affirmative, rather than in the 
negative. That is, stating ``VA will conduct a hearing . . . only if . 
. .'', rather than, ``VA will not conduct a hearing . . . unless . . . 
.'' This change is consistent with part 5's preferred style of stating 
rules in the affirmative. We have also removed the second sentence of 
initially proposed paragraph (f)(1) providing examples of good cause 
for failing to report for a hearing. It is the same as the last 
sentence of paragraph (e)(3). Paragraph (e) provides the rights and 
responsibilities of the beneficiary regarding hearings generally. The 
provision need not be repeated in paragraph (f), which comprises 
hearing requirements in addition to those elsewhere in Sec.  5.82.
    One commenter noted that initially proposed paragraph (f)(3) 
requires that VA ``send the notice of the time and place for the 
predetermination hearing at least 10 days before the scheduled hearing 
date'' and urged that VA provide similar advanced notice for hearings 
conducted under paragraph

[[Page 71076]]

(d). We agree with this suggestion. VA usually provides at least 10 
days advanced notice of hearings, and we propose to revise paragraph 
(d) to provide the same 10 days notice as contained in paragraph (f).
    One commenter urged VA not to use the term ``predetermination 
hearing'' in Sec.  5.82(f), which describes hearings conducted after VA 
proposes to take some adverse action affecting benefits, but before 
rendering a decision. The commenter noted that a claimant may request a 
hearing at any time, including prior to the initial decision on a 
claim, which would also be a ``predetermination hearing.'' The 
commenter did not offer any suggestion as to what term VA should use in 
its place.
    We agree that any hearing preceding a determination can accurately 
be called a ``predetermination'' hearing. The term ``predetermination 
hearing'' has been used in current regulation 38 CFR 3.105(i) for many 
years and is widely understood by VA adjudicators, veterans, and 
veterans' representatives. It is clear in Sec.  5.82(f) what the term 
means and we are not aware of any other term that would be more clear 
to readers. Nonetheless, it is jargon and not essential. A hearing is a 
hearing. The same rules apply to the conduct of the hearing described 
in paragraph (f) as to any other hearing. The decision maker must give 
the same consideration to the testimony and evidence presented as with 
any other hearing. The unique effect of a request for a hearing prior 
to a possible adverse decision is that VA will not reduce or 
discontinue the benefit payments prior to hearing. It is this 
relationship of the request for a hearing to the timing of any action 
resulting from the decision whether to reduce or discontinue a benefit 
that gave rise to the term ``predetermination'' hearing. This rule is 
in the last sentence of Sec.  3.105(i)(1), and initially proposed Sec.  
5.82(f)(4) restated it. The rule applies regardless of whether the 
hearing has a special name. For consistency throughout Sec.  5.82, and 
to avoid any confusion of the sort the commenter highlighted, we 
propose to remove the modifying term ``predetermination'' prior to the 
term ``hearing'' in paragraph (f).
    Initially proposed Sec.  5.82(f)(3) stated that VA will send the 
notice of the time and place for a predetermination hearing at least 10 
days beforehand and that this requirement may be waived by the 
beneficiary or representative. This 10-day notice provision is 
currently contained in 38 CFR 3.105(i). Three commenters asserted that 
this 10-day advanced notice period is often not adequate. They referred 
variously to the time it takes to deliver the mail, the distance a 
claimant or beneficiary must travel, and the time required to gather 
the funds or arrange for time off work to attend a hearing. One 
commenter urged VA to adopt a rule providing for ``negotiated 
appointments acceptable to both parties, with at least 30 days' notice 
unless otherwise agreed.''
    Regarding the suggestion that we revise initially proposed Sec.  
5.82(f) to provide 30 days advanced notice of the date of the hearing; 
we decline to make this change. Ten days is sufficient time for 
beneficiaries to receive VA's scheduling letter and, if necessary, to 
contact VA to reschedule. VA already has the inherent discretion to 
resolve situations where a beneficiary needs more time. For example, if 
VA's letter arrived while the beneficiary was on vacation and the 
beneficiary was unable to reschedule before the hearing date, VA would 
reschedule the hearing when the beneficiary contacted VA. Second, we 
note that the 10-day provision has been contained in Sec.  3.105(i) for 
over 15 years and there have been few, if any, complaints from 
beneficiaries about this provision. For these reasons, we propose to 
make no changes based on this comment.
    We propose to revise initially proposed paragraph (f)(4), removing 
the term ``final'' before ``decision''. The decision that follows a 
proposal to reduce or discontinue a benefit is not a ``final'' decision 
as VA defines ``final'' in Sec.  5.1. Like any other decision on 
entitlement to benefits, it is subject to appeal and can become final 
by expiration of the time allowed to appeal the decision, or because 
the Board of Veterans' Appeals has ruled on an appeal from the 
decision. The decision to which paragraph (f)(4) refers is the type of 
decision described in Sec.  5.160 as ``binding''. Compare preamble to 
Sec.  5.160, with Sec.  3.104(a) (final and binding decision).
    In the NPRM, we initially proposed not to include in Sec.  5.82 the 
last sentence of current Sec.  3.103(c)(2). We stated in the preamble 
of the NPRM that the provision is redundant because 38 U.S.C. 5103A(d), 
enacted in 2000, requires VA to provide a medical examination if it is 
``necessary to make a decision on the claim''. This Sec.  5103A(d) 
examination or opinion provision is now Sec.  5.90(c)(4)(i), which 
derives from Sec.  3.159(c)(4).
    One commenter objected to our proposal not to include the provision 
concerning a visual examination by a physician in part 5. The commenter 
stated that there is significant difference between a claimant's right 
to request a visual examination during a hearing and a claimant's right 
to request an examination under 38 U.S.C. 5103A(d). The commenter 
expressed the opinion that under current Sec.  3.103(c)(2), a claimant 
has the right to have a VA physician ``read into the record'' the 
physician's relevant observations but under 38 U.S.C. 5103A(d) there is 
no guarantee that VA will grant a request for a VA examination. The 
commenter also noted that under VA's current regulation implementing 38 
U.S.C. 5103A(d), 38 CFR 3.159, now Sec.  5.90, VA does not provide 
examinations for veterans seeking to reopen denied claims. The 
commenter urged VA to revise Sec.  5.82 to authorize a visual 
examination by a physician.
    Initially, we note that the claimant did not have a right to have a 
VA physician ``read into the record'' the physician's relevant 
observations, but could request a visual examination by a physician. 
Provision of the visual examination was at the discretion of the VA. 
The portion of the regulation providing for a visual examination by a 
physician at a hearing was included in the regulation at a time when 
the regional offices had physicians (medical members) on the staff, 
usually as part of the rating board. At that time, the medical member 
would either attend the hearing or be available nearby within the 
regional office if needed to conduct the visual examination. Regional 
offices rarely have a medical member on rating boards any more. Few 
regional offices have the capability of providing the visual 
examination by a physician at the hearing location. The provision for a 
visual examination during the hearing is an anachronism and no longer 
practical.
    Additionally, while there is no ``guarantee'' that VA will grant a 
request for a VA examination, the language of 38 U.S.C. 5103A(d) 
(``necessary to make a decision on the claim'') provides sufficient 
assurance that VA will obtain needed medical examinations. If an 
examination is necessary to make a decision on the claim, one will be 
scheduled. If an examination is not necessary to make a decision on the 
claim, a visual examination at a hearing would be unlikely to assist 
the claimant. We also note that in most cases, it is preferable to have 
a claimant examined by a physician in a medical office (where testing 
equipment and privacy is available), rather than in a hearing room at a 
VA regional office. For these reasons, we propose to make no changes to 
initially proposed Sec.  5.82 based on this comment.
    Regarding the commenter's suggestion that VA revise current 
Sec. Sec.  3.159 or 5.90

[[Page 71077]]

to require VA to provide examinations for veterans seeking to reopen 
denied claims, this suggestion was made in comments submitted during 
the initial promulgation of Sec.  3.159. VA declined to make such a 
change, because it would not be an appropriate ``expenditure of its 
finite resources'' to do so. For the reasons stated in that rulemaking 
(66 FR 45628 (August 31, 2001)), we decline to revise Sec.  3.159 or 
its part 5 counterpart, Sec.  5.90.

Sec.  5.83 Right to Notice of Decisions and Proposed Adverse Actions.

    One commenter asserted that the use of the phrase, ``the payment of 
benefits or the granting of relief'' could be interpreted as more 
narrow than the provision in 38 U.S.C. 5104(a), which reads, in 
pertinent part, ``[i]n the case of a decision by the Secretary under 
section 511 of this title affecting the provision of benefits to a 
claimant, the Secretary shall, on a timely basis, provide to the 
claimant (and the claimant's representative) notice of such decision.'' 
The commenter urged VA to replace the phrase ``the payment of benefits 
or the granting of relief'' with ``the provision of benefits''.
    We disagree that the phrase ``the payment of benefits or the 
granting of relief'' would permit VA not to give notice of decisions of 
which it would have to give notice if the regulation used the statutory 
language. The proposed language is taken verbatim from 38 CFR 
3.103(b)(1) and is well understood to include VA decisions that involve 
monetary benefits and those that do not. Switching to the statutory 
language ``provision of benefits'' could be misinterpreted to mean only 
decisions involving monetary benefits. We therefore decline to make the 
change suggested by this commenter.
    The same commenter also noted that the use of ``proposed adverse 
action'' in paragraph (a) was confusing. The commenter urged VA to 
strike the reference to proposed adverse actions and revise the second 
sentence of paragraph (a) for clarity.
    In reviewing initially proposed Sec.  5.83 in response to this 
comment, we have determined that paragraphs (a) and (b) should be 
reorganized for clarity. We have restructured these paragraphs so that 
(a) covers only notices of proposed adverse actions and (b) covers only 
notices of decisions. Consistent with this structure, we have listed 
the elements which are contained in each type of notice.
    Another commenter stated that initially proposed Sec.  5.83(b) 
(redesignated as paragraph (a)) would reduce the time VA allows to 
submit evidence from 1 year to 60 days, which is disadvantageous to 
veterans. The commenter apparently has mistaken the time VA allows for 
a beneficiary to submit evidence in response to a notice of a proposed 
adverse action with the time VA allows for a claimant to submit 
evidence in support of a claim for benefits. Compare 38 CFR 3.159(b) 
with 38 CFR 3.103(b)(2). Initially proposed Sec.  5.83 is based on 
Sec.  3.103, which also states that the time period for a claimant to 
submit evidence in response to a notice of adverse VA action is 60 
days. Therefore, we propose to make no changes based on this comment.
    In responding to these comments, we determined that the initially 
proposed rules failed to explain our omission of the substantively 
identical provisions found in paragraphs (d), (e), (f), and (h) of 38 
CFR 3.105, which state that before notice of a proposed adverse action 
is sent to a beneficiary, ``a rating proposing severance will be 
prepared setting forth all material facts and reasons.'' We believe 
that these provisions confer no rights or duties and relate purely to 
internal agency procedures, so it is not necessary to include them in 
VA's regulations. The due process guarantee of advance notice contained 
in the second sentences of those paragraphs is included in proposed 
Sec.  5.83(a).

Sec.  5.84 Restoration of Benefits Following Adverse Action.

    One commenter asserted that both the current and proposed rules 
were ``contrary to law'' because they imposed a 30-day deadline in 
which the beneficiary is required to contest the decision in order for 
VA to retroactively restore benefits. The commenter noted that under 38 
U.S.C. 7105(b)(1), a beneficiary has 1 year to initiate a corrective 
action for an erroneous decision or action by VA. This would be done by 
filing a Notice of Disagreement with the VA decision. The commenter 
also asserted that ``any action based on nonexistent facts or false 
information provided by a third party would be void ab initio [from the 
beginning], and there is no time limit for requesting corrective 
action,'' citing 38 U.S.C.A. 5109A(b) and 38 CFR 3.105(a). The 
commenter also noted that 38 CFR 3.156(b) and 3.400(q) require that 
when VA reverses a decision on appeal, the effective date will be set 
as if the decision had not been rendered.
    We agree with the commenter that 38 CFR 3.156(b) and 3.400(q) 
require that when VA reverses a decision, the effective date will be 
set as if the decision had not been rendered. The intent of Sec.  
3.103(b)(4) (see 66 FR 20220 (Apr. 20, 2001)) for an explanation of the 
intent of this section) was not to deprive beneficiaries of the proper 
effective date for restoration of benefits nor has VA applied the rule 
so as to limit the rights of beneficiaries in this manner. Rather, 
Sec.  3.103(b)(4) serves the purpose of allowing VA to reverse an 
erroneous decision without requiring the beneficiary to file a Notice 
of Disagreement. This relieves the beneficiary of the burden of 
preparing and filing a written Notice of Disagreement (including the 
elements required under 38 CFR 20.201, ``Notice of Disagreement''). The 
process under Sec.  3.103(b)(4) does not replace the appeal process 
described in 38 U.S.C. 7105. Rather, it provides a convenient and more 
efficient alternative means for beneficiaries to have their benefits 
restored. We therefore disagree that current Sec.  3.103(b)(4) or 
initially proposed Sec.  5.84 is contrary to law.
    However, in order to avoid any confusion that initially proposed 
Sec.  5.84 limits the rights of beneficiaries as described above, we 
are adding the following language as a new paragraph (a)(2), ``[t]his 
paragraph (a) does not limit the right of a beneficiary to have 
benefits retroactively restored based on evidence submitted within the 
1-year appeal period under Sec.  5.153, `Effective date of awards based 
on receipt of evidence prior to end of appeal period.' ''
    Also to avoid confusion, we have inserted the word ``written'' 
before ``information'' in Sec.  5.84 to distinguish that term from 
``oral statements''.


Sec.  5.90  VA Assistance in Developing Claims.

    In the NPRM, we stated:

    Title 38 CFR 3.159 is currently the subject of a separate VA 
rulemaking which will implement changes made by section 701 of Pub. 
L. 108-183, 117 Stat. 2670. When that rulemaking is complete, we 
plan to repeat the language of the amended Sec.  3.159 as Sec.  
5.90. We therefore propose in this rulemaking to reserve space for 
proposed Sec.  5.90.


(70 FR 24683 (May 10, 2005))
    VA has published the final rule amending 38 CFR 3.159 and we are 
now inserting the current language of Sec.  3.159 as Sec.  5.90 (RIN 
2900-AM17, ``Notice and Assistance Requirements and Technical 
Correction'', 73 FR 23353, Apr. 30, 2008, with amendment 73 FR 24868, 
May 6, 2008; based on Sec.  3.159). We propose to remove the 
definitions of competent medical evidence and competent lay evidence, 
revise the definition of competent expert evidence, and place the 
definitions in Sec.  5.1. We have reorganized Sec.  5.90 accordingly 
and changed the references to part 3 regulations to refer to part 5 
regulations.

[[Page 71078]]

    In addition to the provisions of Sec.  3.159, we propose to include 
in Sec.  5.90 the provisions of current Sec.  3.109(a). These 
provisions relate closely to the other provisions in Sec.  5.90 and so 
it is logical to move them into that rule. However, we propose to 
clarify the sentence, ``Information concerning the whereabouts of a 
person who has filed a claim is not considered evidence'' in Sec.  
5.90(b)(3). This sentence means that if a claimant submits information 
or evidence concerning his or her mailing address, that is not 
considered information or evidence under paragraph (b). We propose to 
revise the sentence accordingly to clarify its meaning. The only other 
change we propose is that we have simplified the scope sentence stated 
in Sec.  3.109(a)(2) so that it simply says that the rule applies to 
all part 5 applications.
    Subsequent to the publication of proposed Sec.  5.90, section 504 
of Public Law 112-154 (2012) amended 38 U.S.C. 5103 by removing the 
requirement that a claimant submit ``a complete or substantially 
complete application'' as a prerequisite to VA providing notice of 
information and evidence needed to substantiate the claim. Section 504 
also amended Sec.  5103 to relieve VA of the requirement to provide 
such notice ``to any claim or issue where the Secretary may award the 
maximum benefit in accordance with this title based on the evidence of 
record.'' We propose to include these statutory changes Sec.  5.90.
    Section 505 of Public Law 112-154 (2012) extensively amended 38 
U.S.C. 5103A regarding VA's duty to assist claimants. VA plans to 
conduct a rulemaking to implement Sec.  505 in part 3 and will 
incorporate those part 3 regulations into part 5.

Sec.  5.91 Medical Evidence for Disability Claims.

    One commenter urged VA to replace the word ``may'' with ``shall,'' 
concerning the acceptance of private medical evidence, because this 
would be consistent with the Congressional intent behind 38 U.S.C. 
5125. Although that statute uses the word ``may,'' the commenter 
asserts that Congress meant to give VA authority to accept private 
medical examination reports in place of VA examination reports, but 
that once VA has determined to accept such private reports generally, 
it cannot accept or reject such reports ``on a whim''. The commenter 
asserted, ``[s]uch unwarranted discretion defeats the very purpose of 
the rule.''
    We disagree that Congress' intent was merely to give VA authority 
to accept private medical examination reports generally. Rather, the 
plain language of 38 U.S.C. 5125 allows VA discretion to accept or 
reject such evidence in each individual case. We do not agree that this 
process defeats the purpose of the rule. This process allows VA the 
necessary discretion to reject private reports which, although 
technically ``adequate for purposes of adjudicating a claim'', VA 
considers to be potentially biased or unreliable. We therefore decline 
to make the change suggested by this commenter.
    Another commenter suggested that VA revise Sec.  5.91 to require VA 
regional offices to ``give a clear and precise explanation for why the 
claimant's medical evidence is not sufficient to render a VA 
examination unnecessary.'' We decline to adopt this suggestion because 
such an explanation would be of little use to claimants. VA has a duty 
to make reasonable efforts to obtain the evidence necessary to properly 
decide each claim. In addition to the medical evidence provided by the 
claimant, VA will schedule a VA examination if one is ``necessary to 
decide the claim.'' See 38 U.S.C. 5103A. See also Sec.  5.90. VA 
obtains evidence from multiple sources in most cases and it would be 
unduly burdensome, and a waste of resources, for VA to be required to 
explain why it has obtained every piece of evidence. VA is required to 
explain the reasons for any decision adverse to the claimant and to 
include a summary of the evidence considered in making the decision on 
the claim. See 38 U.S.C. 5104. See also Sec.  5.83. These procedures 
adequately inform the claimant of the relative probative value to any 
medical evidence submitted and we propose to make no changes based on 
this comment.

Sec.  5.92 Independent Medical Opinions.

    In initially proposed Sec.  5.92 we repeated the content of current 
38 CFR 3.328 without change.
    One commenter expressed concern that Sec.  5.92 could be confusing 
by implying that VA will obtain independent medical opinions in place 
of VA medical examinations. We do not agree and we propose to make no 
changes based on this comment. Initially proposed Sec.  5.92 did not 
state or imply that we would not comply with the provisions of Sec.  
3.159. The evidence obtained under the provisions of Sec.  5.92 will 
generally supplement the other medical evidence with an independent 
medical opinion ``[w]hen warranted by the medical complexity or 
controversy''.
    Another commenter noted that Sec.  5.92(a) gave VA authority to 
obtain an independent medical opinion when ``warranted by the medical 
complexity or controversy'' while paragraph (c) stated that, in order 
for VA's Compensation and Pension Service to approve requests for such 
opinions, the claim must pose ``a medical problem of such obscurity,'' 
complexity, or controversy. We agree that it would be logical to state 
the criteria for such opinions using the same terminology in both 
paragraphs and we have removed the word ``obscurity'' from paragraph 
(c). Both paragraphs now use the language used in the authorizing 
statute, 38 U.S.C. 5109.
    Another commenter urged VA to revise Sec.  5.92 to require that VA 
provide claimants with copies of all communications between the VA 
regional office and the institution providing the independent medical 
opinion. The commenter asserted that, ``[s]uch a requirement for 
openness . . . will ensure the fairness and integrity of this new 
procedure.''
    As a preliminary matter, we note that the procedure to obtain an 
independent medical opinion is not new and has been contained in Sec.  
3.328 since 1990. See 55 FR 18602 (May 3, 1990). VA is required by 38 
U.S.C. 5109 to furnish the claimant with notice that an advisory 
opinion was requested and also a copy of the opinion when it is 
received by VA. See Sec.  5.92(d). Furnishing the notice of the intent 
to request the independent medical opinion and a copy of the opinion to 
the claimant sufficiently advises the claimant of the status of the 
independent medical opinion request and results. We do not believe that 
it is necessary to furnish the claimant with notice or a copy of every 
communication VA may have with the individual or organization preparing 
the independent medical opinion. Such communications as a telephone 
call or an electronic mail message to clarify a typographic error or 
other minor issues would not assist the claimant in the presentation of 
the claim. Additionally, records of these communications may be 
obtained by the procedures discussed earlier concerning the procedures 
for a claimant to obtain copies of evidence. We propose to make no 
changes based on this comment.
    One commenter urged VA to include a provision in Sec.  5.92(d) 
allowing a claimant a specified period of time to respond to an 
independent medical opinion that is adverse to the claimant. We do not 
believe this change to be necessary because, at the time that VA is 
seeking the independent medical opinion, the claimant is informed that 
the independent medical opinion is being sought and also what specific 
information is being sought. This provides the claimant ample time and

[[Page 71079]]

opportunity to seek, obtain, and submit their own independent medical 
opinion should they wish to do so. We also note that once the claimant 
receives a copy of the independent medical opinion, even if the claim 
has been denied, he or she has the opportunity to respond. We propose 
to make no changes based on this comment.

Sec.  5.93 Service Records Which Are Lost, Destroyed, or Otherwise 
Unavailable

    One commenter asserted that the force of Sec.  5.93 is diminished 
due to the confusing use of terminology. The commenter argued that the 
phrase, ``alternative evidence'' should be replaced with, ``evidence 
from alternative sources.'' Upon review of the regulation, we propose 
to change the regulation according to the commenter's suggestion. As 
noted by the commenter, the evidence sought may be a copy of the 
missing evidence, not alternate evidence.

Sec.  5.99 Extensions of Certain Time Limits

    In the AL82 NPRM, we inadvertently failed to include provisions 
contained in current 38 CFR 3.109(b). We are doing so now in Sec.  
5.99. This rule restates Sec.  3.109(b) without substantive change. We 
are clarifying in Sec.  5.99(c) that while late requests for extensions 
will be permitted under some circumstances, as is currently the case, 
no extension of time will be granted after VA has made a decision on 
the claim to which the information or evidence relates and the time to 
appeal that decision has expired.

Sec.  5.100 Time Limits for Claimant or Beneficiary Responses

    One commenter felt that VA should specify that the holidays 
referenced in the regulation are Federal holidays. We agree and have 
added the word, ``Federal'' before holidays in Sec.  5.100(a).
    One commenter felt that this regulation should specify whether the 
date of mailing or the date of receipt by VA would be the ending date 
of the applicable time period provided to a claimant to respond to a VA 
communication. We propose to make no changes based on this comment. 
This regulation is intended to specify how to calculate a time limit. 
Within part 5, where a response is required to be submitted within a 
certain time, all the sections specify how the ending date of the 
applicable time period provided to a claimant will be calculated. This 
is generally the date of receipt by VA of whatever evidence or 
information is requested, if received within the applicable time 
period. To include the ending date information here would be redundant.
    One commenter felt that VA should revise this regulation since the 
commenter felt that sometimes a VA letter may be signed after the last 
mail pickup for that day. The letter would not actually be mailed until 
the following workday. The commenter felt that this rule provided for a 
``convenient and arbitrary assumption that disfavors claimants.'' A 
second commenter agreed, stating that the word ``considered'' should be 
removed from the second to last sentence in order to avoid having VA 
rely on a date that it may know to be erroneous.
    We propose to make no changes based on this comment. This 
regulation provides that the first day of the specified time period 
will be excluded in computing the time limit for any action required of 
a claimant. This ensures that the claimant is generally provided the 
full time period. Additionally, the time periods provided allow ample 
time for the claimant to respond. While it is true that the 1-day grace 
period provided by not counting the date of the letter in the time 
period does not provide for those situations where the letter is dated 
on a Friday afternoon, but not actually posted until Monday, the 
claimant still has been provided sufficient time to respond to any 
requests for information or evidence.
    One commenter urged VA to adopt a system of notice for determining 
the time periods for claimants or beneficiaries' responses similar to 
that found in 41 U.S.C. 609(a)(3), which provides that the period of 
time begins running when the notice has been received. VA currently 
begins the period of time from the date of mailing as shown by the date 
of the letter sent to a claimant or beneficiary. The commenter felt VA 
could better afford the minor expense of certified mail than could the 
claimant or beneficiary.
    VA communicates with claimants and beneficiaries at various stages 
in the adjudication process, using various means. It would not be 
appropriate to regulate the manner of all such communications because 
VA needs discretion to use the most effective means of communications 
and because such means may change over time. Additionally, VA routinely 
sends hundreds of thousands of pieces of mail to veterans, claimants, 
and beneficiaries, as well as their representatives. While the burden 
for sending any one piece of mail by certified mail is small, the 
expense and time required to send all notices by certified mail would 
be overwhelming, both in increased monetary cost and human resources 
expended. Routinely sending certified mail to veterans, claimants, or 
beneficiaries is not necessary, nor, in most situations, helpful to the 
veterans, claimants, or beneficiaries. VA provides sufficient time for 
a veteran, claimant, or beneficiary to respond to the communications we 
send them. It is not burdensome for the veteran, claimant, or 
beneficiary to respond, when necessary, within the time limits 
specified in the communication. The additional two or three days that 
would be provided by starting the time period from date of receipt 
instead of date of mailing would rarely assist a veteran, claimant, or 
beneficiary. For these reasons, we decline to make any changes based on 
this comment.

Sec.  5.101 Requirement To Provide Social Security Numbers

    Initially proposed Sec.  5.101 explained the statutory requirement 
that claimants and beneficiaries must provide VA with their Social 
Security numbers and their dependents' numbers.
    One commenter urged VA to excuse those claimants or beneficiaries 
who, for good cause, fail to provide their Social Security number. The 
commenter urged that, if VA reduces or discontinues benefits, it should 
resume the benefits retroactively from the effective date of the 
reduction, if the person had good cause for the failure.
    We note that, as stated in initially proposed Sec.  5.101(f), ``A 
claimant or beneficiary is not required to provide a Social Security 
number for any person to whom a Social Security number has not been 
assigned.'' Other than this, we are unaware of any reason which would 
constitute good cause for a claimant or beneficiary failing to provide 
VA with his or her Social Security number, nor does the commenter offer 
any such example. We therefore propose to make no change based on this 
comment.
    Initially proposed Sec.  5.101(d) stated, ``[i]f a claimant or 
beneficiary provides VA with the requested Social Security number, VA 
will resume payment of benefits at the prior rate, effective on the 
date VA received the Social Security number, provided that payment of 
benefits at that rate is otherwise in order.'' One commenter noted that 
under paragraph (d), if a claimant or beneficiary failed to furnish the 
required Social Security number within the deadline but later provided 
it, VA would pay benefits only from the date it received the Social 
Security number. The commenter noted that Sec.  5.101 would treat 
claimants and beneficiaries disparately in that if they ultimately 
provided VA their Social Security

[[Page 71080]]

number, the former would have benefits granted from the date of claim, 
while the later would have benefits restored only from the date he or 
she provided the number. The commenter objected to this disparate 
treatment, asserting:

    When a claimant receiving benefits is requested to provide a 
social security number and does not promptly comply, VA may 
certainly administratively suspend payment (`terminate the payment') 
of benefits pursuant to Sec.  5101(c), but the benefits should be 
resumed effective the date of suspension if the requested 
information is provided within 1 year. Such a rule would be 
consistent with the time an applicant has to provide the social 
security number under sections 5102(c) and 5103(b) and the general 
rule in 38 CFR 3.158 (2004) that a claim will be considered 
abandoned only if the requested information is not provided within 1 
year.

    The commenter asserted that this rule would be contrary to 38 
U.S.C. 5102 and 5103, which do not explicitly authorize VA to reinstate 
benefits only from the date a beneficiary ultimately provides VA his or 
her Social Security number. In reviewing paragraph (d) in response to 
this comment, we noted that VA cannot ``resume'' payments to a 
claimant, since VA has not begun paying such a person. We therefore 
propose to remove the term ``claimant'' from this paragraph, so that it 
would relate only to beneficiaries and not to claimants.
    Regarding the disparity noted by the commenter, we first note that 
it is not inconsistent with the relevant statutes, 38 U.S.C. 5101-5103. 
Sections 5102-5103 only cover claims, not running awards, so they are 
not germane to the disputed provision. Section 5101(c)(2) states that 
``the Secretary shall deny the application of or terminate the payment 
of compensation or pension to a person who fails to furnish the 
Secretary with a social security number required to be furnished 
pursuant to paragraph (1) of this subsection. The Secretary may 
thereafter reconsider the application or reinstate payment of 
compensation or pension, as the case may be, if such person furnishes 
the Secretary with such social security number.''
    This statute, and its implementing regulation 38 CFR 3.216, leave a 
gap regarding the effective date for the reinstatement of benefits. 
VA's long-standing practice has been to resume benefits effective the 
date the beneficiary ultimately provides the social security number. If 
the rule were changed as the commenter urges, VA would in such cases 
have to make retrospective determinations, in some cases going back 
many years, on whether the former beneficiary actually met all the 
entitlement criteria for the benefit during the entire retroactive 
period. This would consume considerable VA resources when compared with 
the rule proposed in Sec.  5.101(d). Furthermore, there is no 
indication that our proposed rule creates a hardship for beneficiaries. 
For these reasons, we propose to make no change based on this comment.
    Initially proposed Sec.  5.101(e), entitled, ``Claimant's 
application for VA benefits'', stated, ``[i]f 60 days after VA requests 
a Social Security number, the claimant fails either to provide the 
requested Social Security number or to show that no Social Security 
number was assigned, VA will deny the claim.'' One commenter objected 
to this provision, noting that it did not include a provision allowing 
a claimant 1 year to submit his or her Social Security number. The 
commenter noted that 38 U.S.C. 5102 and 5103 allow a claimant 1 year to 
provide the information needed to complete an application. The 
commenter noted that while VA has the authority to deny the application 
earlier than the expiration of the 1 year period, if the information is 
received no later than 1 year after VA's request, VA must reconsider 
the application as if the information had been furnished on the 
application.
    After reviewing the applicable statutes and VA's other regulations, 
we agree with the commenter that it would be appropriate to clarify 
that a claimant has 1 year in which to submit the requested Social 
Security number. We therefore propose to add a sentence to Sec.  
5.101(e), based on a provision from Sec.  5.90(b)(1)(i) (based on 
current 38 CFR 3.159(b)(1). This new sentence states, ``[i]f VA denies 
the claim or denies benefits for the dependent, and the claimant 
subsequently provides the Social Security number no later than 1 year 
after the notice, then VA must readjudicate the claim.''
    In making this proposed change based on the comment, we noted that 
the 60-day deadline in 38 CFR 3.216 applies only to beneficiaries, not 
to claimants. In order to be consistent with Sec.  5.90(b)(1)(i), we 
propose to revise the 60-day period in Sec.  5.101(e) to 30 days. In 
addition to being consistent with Sec.  5.90(b)(1)(i), we believe that 
30 days is sufficient time for claimants to provide VA with requested 
Social Security numbers.
    Subsequent to the publication of proposed Sec.  5.101, section 502 
of Public Law 112-154 (2012) amended 38 U.S.C. 5101 by adding a new 
paragraph stating if an individual has not attained the age of 18 
years, is mentally incompetent, or is physically unable to sign a form, 
a form filed under paragraph (1) for the individual may be signed by a 
court-appointed representative, a person who is responsible for the 
care of the individual, including a spouse or other relative, or an 
attorney in fact or agent authorized to act on behalf of the individual 
under a durable power of attorney. If the individual is in the care of 
an institution, the manager or principal officer of the institution may 
sign the form. The term `mentally incompetent' with respect to an 
individual means that the individual lacks the mental capacity--
     To provide substantially accurate information needed to 
complete a form; or
     to certify that the statements made on a form are true and 
complete.


Section 502 also added Taxpayer Identification Number (TIN) to the 
Social Security number requirement in Sec.  5101. We have updated Sec.  
5.101 to reflect these statutory changes.

Sec.  5.103 Failure To Report for VA Examination or Reexamination

    The preamble to initially proposed Sec.  5.103 stated that part 5 
would not repeat Sec.  3.655(a) because it is unnecessary. 70 FR 24680, 
24685, (May 10, 2005). To clarify, that statement correctly applies 
only to the first sentence of Sec.  3.655(a). The examples of good 
cause in Sec.  5.103(f) derive from the second sentence of Sec.  
3.655(a).
    One commenter felt that the examples provided in the regulation to 
determine what constitutes ``good cause'' for failure to report for a 
scheduled VA examination were too narrow and may lead VA to apply too 
high a standard to determine what constitutes ``good cause''.
    The examples of ``good cause'' for failure to report for a 
scheduled VA examination in initially proposed Sec.  5.103(f) are the 
same examples included in the full revision of Sec.  3.655(a), 
effective December 31, 1990. 55 FR 49520, Nov. 29, 1990. The last 
sentence of Sec.  5.103(f) is new and requires that VA consider each 
reason given for missing a VA examination on a case-by-case basis. Use 
of the examples that have been in place since 1990, together with the 
last sentence, ensures that determinations concerning whether the 
veteran had ``good cause'' for not reporting to the examination will 
not change. We propose to make no changes based on this comment.
    One commenter recommended not repeating Sec.  3.655 in part 5. We 
disagree because if VA did not repeat this rule, there would be no rule 
about how to proceed with adjudication if a claimant

[[Page 71081]]

fails to report for an examination that VA has concluded is necessary 
to decide the claim. The commenter did not state how it would benefit 
claimants or VA to do without it. Omission of this rule would risk 
disparate treatment of claimants with similar claims. Avoiding 
disparate results in similar situations is an important object of 
regulations. To promote this objective, VA will repeat the rule in part 
5.
    The same commenter recommended, alternatively, significantly 
revising the regulation to eliminate several problems he said it has. 
The commenter asserted there is no logical reason to distinguish 
between original and other claims. We interpret the comment to mean 
that VA should treat a failure without good cause to report for a VA 
examination the same whether the examination is for an original 
disability compensation claim or for any other claim.
    Before 1991, Sec.  3.655 was silent about VA examinations in 
original disability compensation claims. 38 CFR 3.655 (1990). It 
applied only to rating action to be taken upon a failure to report for 
examination of a beneficiary with an ongoing award of benefits, 
providing for discontinuance of payments. See Wamhoff v. Brown, 8 Vet. 
App. 517, 520 (1996) (discussing historical Sec.  3.655). VA amended 
Sec.  3.655 in 1990 to include the requirement to report for VA 
examination (formerly in Sec.  3.329, which it rescinded) and to 
provide for unique treatment of original disability compensation claims 
upon the claimant's failure to report for examination.
    There are good and practical reasons to treat the failure to report 
for an examination in an original claim for disability compensation 
differently than in other claims. Establishing that a disability is 
service connected is an element of an original claim for disability 
compensation that precedes determination of the severity of disability. 
See Barrera v. Gober, 122 F.3d 1030, 1032 (Fed. Cir. 1997) (explaining 
``up stream'' and ``down stream'' elements of veterans benefits 
claims); Grantham v. Brown, 114 F.3d 1156, 1158-59 (Fed. Cir. 1997). 
Evidence sufficient to decide whether a disability is service connected 
is likely to be of record without the examination, for example, in the 
case of a battlefield amputee or a veteran who contracted a 
presumptively service-connected chronic disease. Even though the 
evidence of record might be uninformative about the current extent of 
disability, it is practicable and efficient to decide such a claim on 
the evidence of record without the examination, even at the risk of an 
imprecise initial rating. In contrast, current medical information is 
likely to be lacking and indispensable to deciding the other types of 
claims named in the regulation.
    The predicate for ordering an examination is that the information 
to be gained from it is necessary to establish entitlement or confirm 
continued entitlement to a benefit. In other words, if VA has 
determined that it cannot decide a claim, or an element of a claim, 
without the evidence derived from the examination, it would squander 
resources valuable to the entire veteran community to adjudicate the 
claim, and it preserves resources to deny the claim upon failure to 
report for the examination without good cause. We therefore propose to 
not make any changes in response to this comment.
    The object of a VA examination in an original disability 
compensation claim could be to address one of the elements of proof of 
service connection, see Sec.  5.243, ``Establishing service connection 
for a current disability.'', to ascertain the current severity of 
disability (a determination VA initially makes upon finding that a 
disability is service connected), or both. Though the examination could 
be indispensable to making the most accurate current rating, the 
benefit to the claimant and practicality of deciding the service-
connection element of the claim warrants the unique treatment of 
original compensation claims.
    The same commenter asserted the distinction between types of claims 
invites fraud. The commenter did not explain how the distinction would 
invite fraud. We propose to make no changes based on this comment.
    The same commenter noted that we had not defined the terms, ``other 
original claim'' and ``new claim.'' The commenter noted that neither 
term is found in the applicable statutes. The commenter felt this 
section should be revised so that the terms are understood by claimants 
and so that the terms fit within the regulatory framework.
    In Sec.  5.57, we defined several types of claims. We defined 
``original claim'' in Sec.  5.57(b) as ``the first claim VA receives 
from an individual for disability benefits, for death benefits, or for 
monetary allowance under 38 U.S.C. chapter 18.'' Although not defined 
in the statutes, the term ``original claim'' is found in 38 U.S.C. 5110 
and 5113. Consistent with how the term is used in current 38 CFR 
3.655(b), our use of ``other original claim'' was intended to mean any 
original claim arising under part 5 other than an original disability 
compensation claim. This would include, for example, a claim for a 
monetary allowance based on spina bifida under 38 U.S.C. chapter 18. We 
believe that when read in conjunction with Sec.  5.57(b), this term is 
logical and understandable.
    We have not defined the term ``new claim''. Based on this comment, 
we are removing the term from Sec.  5.103(b)(2). We have determined 
that the term is not needed to assist the reader in understanding what 
is intended by this regulation.
    In addition to the comment about specific terms, the commenter 
asserted that VA should revise the regulation so its terms are 
understandable to laypersons and ``fall within the rest of the 
regulatory framework.'' The commenter further asserted that the 
regulation does not fit within the existing statutory framework and 
opinions of the [VA] General Counsel. The commenter did not explain how 
the regulation fails to fit within VA's statutory or regulatory 
framework or cite any precedent opinion of the General Counsel that the 
regulation violates. Consequently, we do not find anything in this 
comment to which VA can respond, and we propose to make no changes to 
the regulation in response to it.
    Finally, the commenter recommended an ``escape clause'' that 
precludes ``endless good cause.'' The object would be to permit VA to 
decide a claim after a year if a claimant fails to report for an 
examination for a good cause of indefinite duration, such as being in a 
coma. The commenter suggested that the regulation should provide for VA 
to reschedule an examination missed for good cause if that good cause 
ends within 1 year. We construe the commenter to mean that if the good 
cause for failure to report for a VA examination persists for more than 
a year after the date of the examination appointment the claimant did 
not keep, VA would decide the claim on the evidence of record.
    We will not add the suggested provision for five reasons. First, 
the suggestion would abrogate the distinction between original 
disability claims and other claims. Whether the claimant failed to 
report for good cause or no cause, without the examination that VA 
determined is necessary to decide a claim (other than an original 
disability compensation claim), the status of the evidence would still 
be such that VA could not grant the claim without the examination. 
Second, it is to the advantage of a claimant to suspend the claim until 
the contingency that prevented the claimant from reporting for the 
examination is removed, because it leaves the claimant

[[Page 71082]]

in control of his or her claim. Third, there is negligible cost or 
burden to VA to suspend adjudication while the good cause of the 
claimant's inability to report for an examination persists. Fourth, 
there is no advantage to VA to decide a claim it has determined lacks 
crucial evidence. Deciding a claim sooner rather than later under these 
circumstances is not sufficient reason for the rule the commenter 
suggests. The failure to report for an examination for good cause is 
not like the failure to submit requested evidence that VA may consider 
abandonment of a claim. Sec.  5.136, ``Abandoned claims''. Finally, the 
claimant can always eliminate the need for a VA examination by 
submitting other medical reports sufficient to serve as a VA 
examination. Sec.  5.91(a), ``Medical evidence rendering VA examination 
unnecessary.'' If the claimant submits a medical report that VA accepts 
as adequate to the needs of the claim, the examination for which the 
veteran cannot report would cease to be one necessary to establish 
entitlement to the benefit claimed. The question of how VA should 
respond to a failure to report for a necessary VA examination for good 
cause would be moot.
    In reviewing initially proposed Sec.  5.103, we noted that the last 
two sentences of paragraph (d)(1) stated, ``The letter [proposing to 
reduce or discontinue benefits] must include the date on which the 
proposed discontinuance or reduction will be effective, and the 
beneficiary's procedural rights. See Sec. Sec.  5.80 through 5.83.'' We 
believe it would be more precise to refer the reader to the procedural 
rights which are listed in such a letter. We therefore propose to 
restate the sentences as ``The notice must include the date on which 
the proposed discontinuance or reduction will be effective, and the 
beneficiary's procedural rights as listed in Sec.  5.83(a)(1) through 
(4).''
    In responding to these comments, we noted that the initial NPRM 
failed to explain our addition of the third sentence of Sec.  5.103(a): 
``If a claimant or beneficiary, with good cause, fails to report for a 
VA examination or reexamination, VA will reschedule the examination or 
reexamination.'' Though Sec. Sec.  3.326(a) and 3.327(a) provide for 
scheduling VA examinations, and Sec.  3.655 prescribes VA action upon a 
claimant's failure to report for a necessary examination without good 
cause, nothing in part 3 specifically states that VA will reschedule an 
examination a claimant missed with good cause, which is VA's standard 
procedure. We propose to set forth this important point in paragraph 
(a).

Sec.  5.104 Certifying Continuing Eligibility to Receive Benefits

    In initially proposed Sec.  5.104(c), we removed the reference to 
the effective date provisions. In part 5, the effective date provisions 
are not contained within one regulation, but are located with the 
regulation concerning the benefit to which the provisions apply. To 
include these provisions would result in an extremely long and complex 
paragraph which would not be helpful to the claimants or beneficiaries.

Changes in Terminology for Clarity and/or Consistency

    The changes in terminology in this final rulemaking are made 
primarily for purpose of achieving consistency throughout our part 5 
regulations. We replaced the word ``evaluation'' with ``rating;'' the 
term ``on behalf of'' with ``for'' or ``to or for'' where appropriate; 
and the word ``notify'' with ``send notice to''. As noted earlier, we 
are removing the modifying term ``predetermination'' prior to the term 
``hearing''.

General Evidence Requirements, Effective Dates, Revision of Decisions, 
and Protection of Existing Ratings AM01

    In a document published in the Federal Register on May 22, 2007, we 
proposed to amend Department of Veterans Affairs (VA) regulations 
governing general evidence requirements, effective dates, revision of 
decisions, and protection of existing ratings, to be published in part 
5. 72 FR 28770, May 22, 2007. We provided a 60-day comment period that 
ended July 23, 2007. We received submissions from five commenters: 
Paralyzed Veterans of America, Vietnam Veterans of America, Disabled 
American Veterans, and two members of the general public.

Sec.  5.130 Submission of Statements, Evidence, or Information 
Affecting Entitlement to Benefits

    We propose to revise and reorganize initially proposed Sec.  5.130 
for clarity. We propose to add the word ``claimant'' to the regulation 
to accurately reflect that this regulation covers submissions by both 
claimants and beneficiaries. Proposed Sec.  5.130 was derived from 
Sec.  3.217, which was originally issued to permit modification of 
existing awards based on electronic and oral reporting of changes, 
including, but not limited to, income and dependents. See 66 FR 20220, 
Apr. 20, 2001. The reference to ``beneficiary'' reflects that original, 
limited purpose. However, given the broad language of the regulation 
and our stated intent to cover all types of submissions, we are 
explicitly including claimants. All claimants and beneficiaries, or 
their representatives or fiduciaries, must meet all requirements of 
this section, such as using a specific form providing specific 
information, providing a signature, or providing a certified statement.
    The initially proposed rule referred to ``other electronic means'' 
of submissions. We propose to add ``that the Secretary prescribes'' in 
paragraphs (a)(1) and (b)(1), to clarify that VA will determine the 
means or medium of submission it will accept. Additionally, this phrase 
allows for technological changes over time.
    Whereas the initially proposed regulation did not address 
claimants, it did not distinguish between them and beneficiaries. We 
propose to revise the regulation to distinguish between the media that 
claimants may use to file statements, evidence, or information, and the 
media that beneficiaries may use. VA currently accepts email and oral 
submissions only from beneficiaries, not from claimants. As revised, 
paragraph (a) would address submissions from claimants and provide the 
acceptable media for those submissions. Paragraph (b) would address 
submissions from beneficiaries and allow submissions, either orally or 
by email. Paragraph (b)(4) would prescribe VA action upon receipt of an 
oral statement.
    One commenter questioned why we used the word ``may'' instead of 
``will'' when referring to how VA will use verbal information provided 
by a beneficiary or fiduciary. We explained in the preamble to the 
proposed rule that the word ``may'' was more accurate because ``VA may 
determine that the information or statement needs to be verified 
through other means''. However, the commenter pointed out that VA will 
use the evidence, even if it is just to ``initiate an investigation to 
. . . confirm and continue an existing award'', or to contradict prior 
evidence. We agree with the commenter as the comment applies to the 
proposed use of ``may'' in proposed paragraphs (c)(1)(iii) and (2)(v). 
We propose to change ``may'' to ``will'' in redesignated paragraphs 
(b)(4)(iii) and (iv)(E). We have also decided that the phrase ``VA may 
take action'' used in proposed paragraph (b) is more accurately stated 
as ``VA will take appropriate action'', and propose to make this change 
accordingly. That is because whether VA takes any action that affects 
entitlement to benefits and what type of action it will take will 
depend on the content of the submission.

[[Page 71083]]

    We also propose to change ``affecting the [claimant's or 
beneficiary's] entitlement to benefits based upon'' to ``in response 
to''. This is because a submission might not affect entitlement to 
benefits. The entire clause now reads, ``VA will take appropriate 
action in response to the statement, evidence, or information.'' We 
have made this change, and the change discussed in the preceding 
paragraph, in paragraphs (a)(3) and (b)(3), which are parallel 
provisions applying to claimants and to beneficiaries, respectively.
    Based on this comment, we have also decided that it would be more 
accurate to say that VA will use the statement described in proposed 
paragraphs (b)(4)(iii) and (iv)(E) ``to determine entitlement'' as well 
as ``to calculate benefit amounts''. Accordingly, we propose to add the 
phrase ``to determine entitlement'' in those paragraphs as 
redesignated. We also propose to revise this sentence from passive 
voice to active voice.
    Initially proposed Sec.  5.130 used the term ``form''. This term is 
no longer used in part 5. For consistency, we propose to change the 
term from ``form'' to ``application'', which is currently defined in 
Sec.  5.1.
    Initially proposed Sec.  5.130(a)(1) stated:

    It is VA's general policy to allow submission of statements, 
evidence, or information by email, facsimile (fax) machine, or other 
electronic means, unless a VA regulation, form, or directive 
expressly requires a different method of submission (for example, 
where a VA form directs claimants to submit certain documents by 
regular mail or hand delivery). This policy does not apply to the 
submission of a claim, Notice of Disagreement, Substantive Appeal, 
or any other submissions or filing requirements covered in parts 19 
and 20 of this chapter.

    In reviewing this paragraph in responding to comments, we 
determined that the last sentence might be misconstrued to mean that a 
claimant may not file a claim, a Notice of Disagreement (NOD), a 
Substantive Appeal, or other item covered in 38 CFR parts 19 or 20 
electronically. This was not our intent. Section 5.130 concerns 
submission of a statement, evidence, or information, and not submission 
of claims. Filing requirements for an NOD and for a Substantive Appeal 
are in parts 19 and 20. To avoid this possible misconstruction, we 
propose to remove this sentence.

Sec.  5.131 Applications, Claims, and Exchange of Evidence With Social 
Security Administration--Death Benefits

    One commenter noted a typographical error in the preamble language 
of the initially proposed rule. The error was in the misspelling of the 
word ``belief''. We acknowledge the typographical error but find no 
need to make the suggested change because the error is not substantive 
and is contained within the preamble language to the proposed rule 
which will not be published again.

Sec.  5.132 Claims, Statements, Evidence, or Information Filed Abroad; 
Authentication of Documents From Foreign Countries

    Initially proposed Sec.  5.132(a) incorrectly grouped together 
claims, statements, information, and evidence, leading to the absurd 
implication that, under the terms of the regulation, a claim could be 
filed in support of a claim. Therefore, we propose to revise Sec.  
5.132(a) to separate a ``claim'' from a ``statement, information, and 
evidence.'' Additionally, we reviewed Sec.  3.108, the part 3 provision 
from which proposed Sec.  5.132(a) is derived, and now propose to 
reinsert the introductory clause from that section. The introductory 
clause of Sec.  3.108 explains that certain Department of State 
representatives in foreign countries are authorized to act as agents 
for VA. We believe that this information, which was not in initially 
proposed Sec.  5.132(a), will be valuable to the reader in 
understanding the agency relationship between the Department of State 
and VA, and we propose to add it to paragraph (a).
    Finally, the regulation text in initially proposed Sec.  5.132 
limits evidence of establishing birth, adoption, marriage, annulment, 
divorce, or death to copies of ``public'' or ``church'' records without 
referencing other religions or religious institutions. We propose to 
add ``other religious-context'' records to the regulation text in 
proposed Sec.  5.132(c)(5) in order to recognize that other religions 
or religious records, besides church records, may suffice.

Sec.  5.134 VA Acceptance of Signature by Mark or Thumbprint

    One commenter noted that the style of the title of this section as 
a question was inconsistent with other section titles throughout this 
part. The commenter suggested an alternative title that ``would more 
closely parallel that of the other proposed sections'', specifically 
``VA acceptance of signatures by mark or thumbprint''. We agree with 
the commenter's suggestion and propose to adopt the proposed language 
as the section title with a slight modification.
    The commenter also suggested revising the content of this section. 
The commenter questioned whether the regulation, as written, would 
produce unintended results, such as a situation where ``an individual 
who can write his or her name may choose to make a mark or sign by 
thumbprint''. We recognize the possibility of the hypothetical posed by 
the commenter, however, it is unlikely that a person who is capable of 
signing would choose the more burdensome witness/certification process. 
Even if that occurred, the witness/certification process would be 
adequate to verify the person's identity and therefore not cause a 
problem. We decline to make any change based on that comment.

Sec.  5.135 Statements Certified or Under Oath or Affirmation

    One commenter noted that initially proposed Sec.  5.135(b) only 
applied to evidentiary requirements for claims for service connection, 
even though we stated in the preamble that we proposed to apply the 
evidentiary requirements equally to all claims for compensation or 
pension benefits. We agree with the commenter and therefore propose to 
remove the restrictive language ``for service connection'' in Sec.  
5.135(b). Any documentary evidence or written assertion of fact filed 
by the claimant or on his or her behalf, for purpose of establishing a 
claim, must be certified or under oath or affirmation. However, as the 
rest of the subsection provides, VA may consider a submission that is 
not certified or under oath or affirmation if VA considers 
certification, oath, or affirmation unnecessary to establish the 
reliability of a document. The language of the subsection has been 
revised for clarity.
    In initially proposed Sec.  5.135(b) we stated, ``Documentary 
evidence includes records, examination reports, and transcripts 
material to the issue received by VA from State, county, or municipal 
governments, recognized private institutions, or contract hospitals.'' 
We have determined that the phrase ``material to the issue'' is 
inaccurate because this paragraph applies regardless of whether the 
evidence is material or not. We therefore propose to remove this 
phrase.

Sec.  5.136 Abandoned Claims

    In the proposed rulemaking, we reserved Sec.  5.136. 72 FR 28770, 
May 22, 2007. We have now decided to name it ``Abandoned Claims'', 
which is derived from Sec.  3.158(a). We propose to make several 
changes to the language derived from Sec.  3.158(a) to increase 
clarity. The scope of the current rule is limited to ``an original 
claim, a claim for increase or to reopen or for purpose of determining 
continued entitlement''. We propose to expand the scope of Sec.  5.136 
to include any claim. This is

[[Page 71084]]

consistent with VA's interpretation and use of current Sec.  3.158(a) 
and makes the rule more concise. The scope of current Sec.  3.158(a) is 
also limited to ``pension, compensation, dependency and indemnity 
compensation, or monetary allowance under the provisions of 38 U.S.C. 
chapter 18''. For the same reasons we propose to expand the scope of 
Sec.  5.136 to include all benefits under part 5. We also propose to 
change the word ``filing'' to ``receipt'' in keeping with our practice 
of using consistent terminology in part 5.

Sec.  5.140 Determining Former Prisoner of War Status

    One commenter noted a typographical error in proposed Sec.  
5.140(a)(3). We agree with the commenter that there should not be a 
hyphen between the terms ``service'' and ``department'', and propose to 
change the language accordingly.
    The commenter also pointed out a typographical error in the 
preamble language concerning this section. The error referred to a 
mischaracterization of the term ``regional office decisions''. We 
acknowledge the typographical error, but propose not to make the 
suggested change because the preamble language to the initially 
proposed rule will not be published again.
    In reviewing initially proposed Sec.  5.140, we determined that it 
would be helpful to readers for all part 5 provisions regarding how VA 
determines former POW status to be in one section. Therefore, we 
propose to remove the definition of former POW from Sec.  5.1, 
``General definitions'', and place it in Sec.  5.140. In combining 
these two provisions, we have removed redundant material that was 
contained in initially proposed Sec. Sec.  5.1 and 5.140.

Sec.  5.150 General Effective Dates of Awards or Increased Benefits

    Several commenters questioned the use of the phrase ``date 
entitlement arose'' in place of the phrase ``facts found''. In the 
preamble to the proposed rule, we explained our decision to use ``date 
entitlement arose'' by the need for consistency throughout part 5 as 
well as our understanding that the two terms meant the same thing and 
are used interchangeably. One commenter did not agree that ``facts 
found'' and ``date entitlement arose'' were interchangeable terms. 
Rather, the commenter asserted that ``facts found'' is an alternative 
to ``date entitlement arose'' because the latter presumably arises as a 
matter of law, such as once a claim is actually filed, but is only 
compensable beginning from a date that is supported by the factual 
evidence. We believe that the phrase ``date entitlement arose'' will be 
clearer to lay persons than the phrase ``facts found'', and that Sec.  
5.150(a)(2) makes clear that the phrase ``date entitlement arose'' 
refers to what the factual evidence shows rather than to procedural 
requirements such as filing claims. Also, VA regulations have long used 
``date entitlement arose'' without the confusion the commenter 
described. We note that we do not intend any substantive changes to the 
determination of the effective dates for benefits based on this 
substitution of phrases.
    The same commenter also felt that it would be unnecessary and 
possibly confusing to a Veterans Service Representative to pick the 
latter of either the ``date of receipt of the claim'' under paragraph 
(a)(1) or ``date entitlement arose'' under paragraph (a)(2). The 
commenter felt that the date of receipt of a claim would presumably 
always be the later date, since veterans usually experience a 
disability before filing a claim of entitlement to compensation. The 
commenter asserted that VA adjudicators sometimes assign ``the later 
effective dates based on the reasoning that increased disability was 
not factually ascertainable until proven by a VA examination or medical 
opinion.''
    We propose not to make any changes based on this comment because 
while (a)(2) acknowledges that the date entitlement arose usually 
precedes the filing of a claim, this may not always be the case. For 
example, a veteran may file a claim but have it properly denied due to 
lack of evidence. However, if the veteran later files new evidence that 
shows that the veteran did not meet all the criteria for a benefit on 
the date the claim was received, but his or her medical condition 
changed so that the criteria were satisfied while the appeal was still 
pending, the date entitlement arose will be after the claim was 
received. Regarding the assertion that VA adjudicators sometimes assign 
later effective dates because an increased disability was not factually 
ascertainable until proven by a VA examination or medical opinion, we 
note that VA has authority to accept non-VA medical records or lay 
statements as a basis for setting an effective date.
    In responding to these comments, we noted that the first sentence 
of paragraph (a)(2) could be clarified. In the NPRM, it read, ``For the 
purposes of this part, `date entitlement arose' means the date shown by 
the evidence to be the date that the claimant first met the 
requirements for the benefit awarded.'' We now propose to simplify this 
sentence to read, ``For purposes of this part, `date entitlement arose' 
means the date that the claimant first met the requirements for the 
benefit as shown by the evidence.''
    Another commenter suggested keeping the phrase ``facts found'' 
because he did not think the phrase was ambiguous or unclear. We have 
reconsidered the replacement of ``facts found'' with ``date entitlement 
arose'', however, we decline to keep the phrase ``facts found''. As 
discussed above, the phrase ``date entitlement arose'' is easier to 
interpret and apply as it is more instructive as to how VA will make an 
effective date determination. Furthermore, we do not intend this 
substitution of the phrases as a substantive change in determining 
effective dates for benefits.
    One commenter suggested that VA should assume that entitlement to 
benefits arises as of the date of receipt of the claim rather than 
before the receipt of the claim. In the commenter's view, ``this would 
prevent a conflict with 38 U.S.C. 5110(b)(2)''. We disagree with the 
commenter and do not see a conflict between the regulation and statute. 
Indeed, if VA assumed that entitlement to benefits arises as of the 
date of receipt of the claim, rather than beforehand, that would 
deprive veterans of potential entitlement to earlier effective dates 
under Sec.  5110(b)(2). We therefore propose to make no changes based 
on this comment.

Changes to Sec.  5.150 Not in Response to Comments

    We omitted the provisions of current Sec.  3.400(h)(3) from the 
AM01 NPRM without any explanation in the preamble. For the reasons 
discussed below, we propose to omit them from part 5.
    Section 3.400(h)(3) states, ``As to decisions which have become 
final (by appellate decision or failure to timely initiate and perfect 
an appeal) and reconsideration is undertaken solely on Department of 
Veterans Affairs initiative, [the effective date of an award based on 
such a reconsideration will be] the date of Central Office approval 
authorizing a favorable decision or the date of the favorable Board of 
Veterans[`] Appeals decision.'' The current structure of Sec.  3.400(h) 
first appeared in the CFR in 1969. See 38 CFR 3.400(h) (34 FR 8703, 
June 3, 1969). VA maintained the previous distinction between non-final 
and final decisions, and also created distinct provisions governing 
final decisions based on the method used to reconsider or reopen the 
case. VA Regulations, Compensation and Pension, Transmittal Sheet 437 
at I,

[[Page 71085]]

132-3R (May 21, 1969). Paragraphs (h)(1) and (2) cover the most common 
difference of opinion situations and distinguish between non-final and 
final decisions. See id. Paragraph (h)(3) was added to apply to those 
admittedly ``rare instances in which there has been final adjudication 
and no application for consideration or reopening has been submitted.'' 
Id.
    For claims that the Board reconsiders and grants ``on its own 
initiative'', there is no distinct effective date rule. VA Central 
Office reconsiders only non-final decisions under its ``difference of 
opinion'' authority (see Sec.  5.163), not final decisions. Indeed, it 
has no statutory or regulatory authority to reconsider final decisions. 
We are therefore not restating the (h)(3) Central Office provision in 
part 5.
    The initially proposed rule mistakenly omitted the provisions of 
Sec.  3.400(o)(1) (second sentence). This rule states that ``[a] 
retroactive increase or additional benefit will not be awarded after 
basic entitlement has been terminated, such as by severance of service 
connection.'' We propose to correct this omission by adding a paragraph 
(b) and redesignating proposed paragraph (b) as paragraph (c).
    As stated in the AM01 NPRM, proposed Sec.  5.150(b), now Sec.  
5.150(c), is a table of the location of other effective-date provisions 
in part 5, which are exceptions to the general effective date rule of 
proposed paragraph (a). As stated in the proposed rulemaking, the table 
is for informational purposes. We propose to add the sentence, ``This 
table does not confer any substantive rights'', to clarify that it is a 
reference tool, and not a substantive rule.
    Also, as stated in the preamble to the initially proposed rule, the 
table showed both already published and as yet unpublished part 5 
regulations, which were subject to change. In this NPRM, we have 
updated the table to reflect the updated part 5 citations. We have also 
moved the references to effective dates of reductions and 
discontinuances to a separate table in Sec.  5.705(b). As a result, 
proposed Sec.  5.150(b), now Sec.  5.150(c), contains only effective 
date provisions for awards or increased benefits. Having separate 
tables for each type of effective date will enable readers to more 
easily locate the section they need.

Sec.  5.151 Date of Receipt

    One commenter proposed adopting a mailbox rule instead of the 
current date-of-receipt rule for purposes of filing claims. The 
commenter pointed out that the Board of Veterans' Appeals (the Board) 
accepts the postmark date as evidence of a document having been timely 
filed, and suggested that VA should adopt a similar rule for claims. 
See 38 CFR 20.305 (concerning how the Board will calculate the time 
limit for filing). We decline to adopt the commenter's suggestion 
because VA is prohibited by statute from awarding an effective date for 
a claim earlier than the date of receipt of the application or claim, 
unless specifically authorized. According to 38 U.S.C. 5110(a), 
``[u]nless specifically provided otherwise in this chapter, the 
effective date of an award based on an original claim, a claim reopened 
after final adjudication, or a claim for increase, of compensation, 
dependency and indemnity compensation, or pension, shall be fixed in 
accordance with the facts found, but shall not be earlier than the date 
of receipt of application therefor.'' Having a date-of-receipt rule 
provides for certainty and consistency in determining when a document 
relating to a claim is received.
    Initially proposed paragraph (b) consisted of one 93-word sentence. 
We propose to break the paragraph into three sentences, which will make 
the paragraph easier to read and understand.

Sec.  5.152 Effective Dates Based on Change of Law or VA Issue

    One commenter suggested that we reconsider our decision to restate 
Sec.  3.114(a) without change. The commenter believed that Sec.  
3.114(a) was very difficult to understand and was neither claimant-
focused nor user-friendly. In response to this comment, we propose to 
revise initially proposed Sec.  5.152 to state the provisions in the 
active voice, replace unnecessarily technical language with more 
commonly understood language, and reorganize the provisions into a more 
logical order.
    The commenter set forth a detailed fact pattern and then correctly 
explained how the rule applied to those facts. The commenter then 
suggested that ``any documented handling of a veteran's claims folder 
following a liberalizing change in law [should] constitute a claim for 
the newly available benefit'' (emphasis in original). The commenter's 
concern was with VA's regulation authorizing retroactive payment of 
benefits for a period of 1 year prior to the date of receipt of a claim 
or the date of a VA-initiated review, if the claimant requests a review 
or VA initiates a review more than 1 year after the effective date of 
the law or VA issue. The commenter believed that such payments should 
be retroactive to the date of the first documented handling of the 
claims file following the effective date of the law or VA issue.
    We decline to make any such change because it would be 
administratively burdensome and an extremely inefficient method of 
claims processing. The term ``claim'' is defined in Sec.  5.1 as ``a 
formal or informal communication in writing requesting a determination 
of entitlement, or evidencing a belief in entitlement, to a benefit 
under this part.'' In other words, a claimant must identify the benefit 
sought. It would be unreasonable to require that, for example, the date 
of receipt of a change-of-address request, which would result in a 
handling of the claims file unrelated to a claim for compensation, 
serve as the effective date for retroactive benefits in a compensation 
claim.
    The commenter also suggested that we define the phrase 
``administrative determination of entitlement''. The commenter did not 
explain how he believes the phrase is confusing, but the ordinary 
dictionary meaning of those words is clear. We note that a court has 
previously held that the meaning of this phrase is clear and consistent 
with its authorizing statute. McCay v. Brown, 106 F.3d 1577, 1580 (Fed. 
Cir. 1997). We therefore propose to make no changes based on this 
comment.
    In initially proposed Sec.  5.152(b) we used the term ``payment''. 
We have determined that this term is too narrow because it excludes 
benefits that have no payment, for example a service-connected 
disability that was rated noncompensable. We have, therefore, used the 
term ``benefits'' instead, which is defined in Sec.  5.1 as ``any 
payment, service, commodity, function, or status, entitlement to which 
is determined under this part.''
    In Sec.  5.152(d)(2), we propose to replace the phrase ``the award 
will be reduced or discontinued effective the last day of the month in 
which the 60-day period expired'' with ``VA will pay a reduced rate or 
discontinue the benefit effective the first day of the month after the 
end of the notice period''. This change in terminology does not affect 
the payment made to a beneficiary based on a reduction or 
discontinuance. The purpose of this change is to remedy any confusion 
that Veterans Service Representatives or beneficiaries may have 
experienced in interpreting the former part 3 language, as well as to 
establish uniform language for describing how to calculate effective 
dates.

[[Page 71086]]

Sec.  5.153 Effective Date of Awards Based on Receipt of Evidence Prior 
to End of Appeal Period or Before a Final Board Decision

    One commenter suggested that we define the term ``appeal period''. 
The term ``appeal period'' does not need a definition. The ordinary 
dictionary meanings for the words are sufficient to define the term. 
The commenter also recommended that the term ``appeal period'' be 
defined as any time ``after a timely [Notice of Disagreement] and 
timely Substantive Appeal have been received''. We decline to make such 
a change because the suggested definition is incorrect. A timely Notice 
of Disagreement (NOD) and Substantive Appeal are the triggers that 
initiate appellate review by the Board. The ``appeal period'', however, 
begins with the date of mailing of notice to a claimant concerning a 
decision made by the agency of original jurisdiction. See 38 CFR 20.302 
through 20.306. The ``appeal period'' ends 1 year after the notice date 
if no NOD is received. Id. We agree, however, that proposed Sec.  5.153 
needs a cross-reference to 38 CFR parts 19 and 20 in order to instruct 
the reader on how to appeal to the Board. This proposed change will 
eliminate the need to define ``appeal period'' in part 5, as suggested 
by the commenter.
    We believe that the heading of this section may have caused 
confusion. Therefore, we propose to revise the heading of Sec.  5.153 
to make clear that the regulation refers to both the appeal period and 
the time period after an appeal has been filed but before a final 
decision has been rendered.
    The commenter also suggested that all evidence received between the 
date of receipt of a claim and expiration of the appeal period must be 
considered as having been filed in connection with the claim which was 
pending at the beginning of the appeal period, and, in claims for 
increase, evidence received during the 1-year period before the date of 
receipt of the claim must also be considered. Proposed 5.4(b) states 
that ``VA will base its decisions on a review of the entire record.'' 
Therefore VA must consider the evidence described by the commenter.
    One commenter believed that proposed Sec.  5.153 would not 
prescribe the same effective date for an award based on evidence 
received during an appeal period as would have applied ``had that 
evidence been submitted and been of record at the time of the decision 
under appeal''. Proposed Sec.  5.153 prescribed the effective date used 
in proposed Sec.  5.150 (the general effective date provision for 
awards or increased benefits) for calculating an effective date based 
on information or evidence received during the appeal period. The 
intent in referencing this general effective date provision is to use 
the same effective date for awarding a benefit as if the final decision 
being appealed had not been decided. We disagree with the commenter 
that proposed Sec.  5.153 would lead to a different result than its 
part 3 predecessors, Sec. Sec.  3.156(b) and 3.400(q)(1). However, 
based on the comment, we have reviewed the last sentence of initially 
proposed Sec.  5.153 and propose to clarify it by replacing it with the 
language in the last sentence of current Sec.  3.400(q)(1), which 
states, ``The effective date will be as though the former decision had 
not been rendered.'' This change would still lead to the same result as 
the proposed rule because Sec.  5.150 is still the applicable general 
effective date provision. We therefore propose to replace the reference 
to Sec.  5.150 in our regulation text with a cross reference.
    This same commenter had several concerns about the preamble 
discussion of proposed Sec.  5.153 which the commenter believed would 
cause ``misapplication of the law''. The commenter expressed concern 
with our statement that ``if the evidence is submitted within the 
appeal period or before an appellate decision is rendered, then the 
effective date of the award can be as early as the date VA received the 
`open' claim.'' 72 FR 28778, May 22, 2007. The commenter noted that 
``an effective date can be earlier than the date VA first received the 
open claim.'' The commenter is correct to the extent that the 
commenter's statement is consistent with 38 U.S.C. 5110, and we did not 
intend any conclusion to the contrary.
    Similarly, the commenter questioned VA's explanation regarding the 
removal of the qualifier ``new and material'' from proposed Sec.  
5.153, which is based on current Sec.  3.156(b). 72 FR 28778, May 22, 
2007. Specifically, the commenter disagreed with our statement that 
``if VA were to treat all evidence submitted after the appeal period 
has begun as `new and material evidence,' then the effective date could 
not be earlier than the date VA received that evidence (which could be 
construed as a claim to reopen).'' Id. We note that any ambiguity in 
this statement is addressed by our other statement in the preamble to 
the proposed rule that ``[t]he current regulation [, Sec.  3.156(b),] 
can be read to suggest that new and material evidence is needed while 
the claim is still `open.' However, in such cases there is no claim to 
`reopen' because the claim has not been `closed' (that is, the claimant 
could still prevail on that claim).'' 72 FR 28778, May 22, 2007. We 
therefore propose to make no change based on this comment.
    Finally, we propose to not include current Sec. Sec.  3.400(p) and 
3.500(u) in part 5. These paragraphs are merely cross-references to 
effective-date provisions (currently in 38 CFR 3.114) are not necessary 
in part 5.

Sec.  5.160 Binding Effect of VA Decisions

    One commenter questioned our decision not to repeat the 38 CFR 
3.104(b) phrase ``made in accordance with existing instructions'' in 
proposed Sec.  5.160(b). The commenter was concerned that our removal 
of the language would allow VA employees to disregard their procedural 
manuals and other VA guidance documents. As explained in our preamble 
discussion of the proposed rule, our reason for not including the 
language in our rewrite was because the ``references to internal 
procedural manuals and other VA-generated documents that lack the force 
and effect of law are not appropriate for inclusion in the 
regulations''. 72 FR 28770, May 22, 2007. The problem we addressed by 
removing the phrase ``made in accordance with existing VA 
instructions'' is that substantive rules in procedural manuals and 
other VA documents that were not promulgated in accordance with the 
Administrative Procedure Act (APA) are not enforceable against 
claimants or beneficiaries. Where VA issuances confer a right, 
privilege, or benefit, or impose a duty or obligation on VA 
beneficiaries or other members of the public, VA continues to be bound 
by notice and comment requirements under the APA. See Fugere v. 
Derwinski, 1 Vet. App. 103 (1990). Therefore, we propose not to make 
any changes based on this comment.

Sec.  5.161 Review of Benefit Claims Decisions

    We received several comments regarding this proposed regulation. 
One commenter suggested that ``whether a hearing is ordered or not, 
[Sec.  5.161] should be amended to require the Service Center Manager 
or Decision Review Officer who conducts post-decision review to be 
subject to the same duty-to-inform obligation as VA hearing officers 
are now required under 38 CFR [3.103(c)(2)]''. The commenter mistakenly 
cited to 38 CFR 3.301(c)(2), but the duties of VA employees who conduct 
hearings are set forth in Sec.  3.103(c)(2).

[[Page 71087]]

    We agree with the commenter that VA should assist a claimant or 
beneficiary in developing his or her claim whenever possible and that 
the duty-to-inform is not limited to situations where a claimant 
requests a hearing. In practice, VA reviewers already suggest 
additional sources of evidence during informal conferences. Therefore, 
we propose to add a sentence to Sec.  5.161(c) stating that, ``In an 
informal conference, the reviewer will explain fully the issues and 
suggest the submission of evidence the claimant may have overlooked 
that would tend to prove the claim.''
    One commenter questioned the accuracy of the statement, ``The 
review will be conducted by a Veterans Service Center Manager or 
Decision Review Officer, at VA's discretion.'' The commenter believed 
this statement was incorrect and referred to a VA application which the 
commenter believed provided ``a right of election in these matters''. 
We decline to make a change based on this comment. Proposed Sec.  5.161 
pertains to a review before the agency of original jurisdiction, which 
is usually conducted by a Decision Review Officer (DRO). However, where 
a DRO is unavailable, VA reserves the right to have a Veterans Service 
Center Manager (VSCM) conduct the review. Proposed Sec.  5.161 is based 
on Sec.  3.2600, which contains this language as well.
    One commenter questioned whether paragraphs (a) and (e) contain 
contradictory provisions. According to the commenter, ``If the reviewer 
may only review a decision that has not yet become final, . . . how 
[can] this same reviewer . . . [also] reverse or revise (even if 
disadvantageous to the claimant) prior decisions of an agency of 
original jurisdiction (including the decision being reviewed or any 
prior decision that has become final) . . . on the grounds of [clear 
and unmistakable error]'' (internal quotations omitted). We disagree 
that paragraphs (a) and (e) are contradictory. While it is true that 
the scope of review under proposed Sec.  5.161(a) is limited to the 
decision with which the claimant has expressed disagreement in the NOD, 
prior decisions are always subject to reversal or revision for clear 
and unmistakable error (CUE). As proposed Sec.  5.162(d) explains, CUE 
is a very specific and rare kind of error reserved for situations where 
reasonable minds cannot differ about the nature of the error. 
Specifically, while a reviewer may not be looking for such CUE during 
the review, if the reviewer encounters one, paragraph (e), as well as 
Sec.  5.162, allow for reversal or revision of the decision containing 
that error. We therefore propose to make no changes based on this 
comment.
    In initially proposed Sec.  5.161(b), we stated that VA will, 
``notify the claimant in writing of his or her right to review under 
this section.'' Because we have defined ``notice'' in Sec.  5.1 as ``a 
written communication VA sends a claimant or beneficiary at his or her 
latest address of record, and to his or her designated representative 
and fiduciary, if any'', we propose to revise paragraph (b) to state 
that VA will ``send notice to the claimant . . .'', to be consistent 
with our definition.

Sec.  5.162 Revision of Agency of Original Jurisdiction Decisions Based 
on Clear and Unmistakable Error

    In reviewing comments received regarding initially proposed Sec.  
5.162, we determined that this section should be revised and 
reorganized to improve readability. We propose to add new paragraphs 
(a) ``Scope''; (b) ``Review for clear and unmistakable error (CUE)''; 
(c) ``Binding decisions and final decisions''; and (d) ``What 
constitutes CUE''; and redesignate initially proposed paragraph (b) as 
paragraph (e).
    We also determined that Sec.  5.162 mistakenly omitted the 
provision in 38 CFR 3.400(k), which states, ``Error (Sec.  3.105). Date 
from which benefits would have been payable if the corrected decision 
had been made on the date of the reversed decision.'' We have added 
this provision to Sec.  5.162(f), restated for better clarity: ``In 
such cases, benefits are payable effective on the date from which 
benefits would have been payable if the corrected decision had been 
made on the date of the reversed decision.''
    We received several comments based on this proposed regulation. One 
commenter suggested that we define the terms ``reversed'' and 
``revised''. We decline to adopt this suggestion because we prefer to 
rely on the common dictionary meanings of these terms and do not wish 
to deviate from these commonly understood meanings.
    The same commenter noted that the cross reference to 38 CFR 20.1403 
in proposed paragraph (a) is inadequate for purposes of adjudicating 
compensation and pension claims. The commenter suggested that VA should 
create a new subpart in part 5 that ``will expressly set out for 
claimants and their representatives what it takes to file, raise, and 
prevail in a [claim] of clear and unmistakable error''. We agree with 
the commenter that it will be helpful to include the relevant portions 
of Sec.  20.1403 in part 5. Newly proposed paragraph (d) includes 
language from the first paragraph of Sec.  20.1403 by explaining what 
CUE is. We decline, however, to make the proposed change in a new 
subpart because such a change is beyond the scope of this project. We 
are also removing the cross reference so readers will not infer that 
Sec.  20.1403 applies to CUE claims at the AOJ.
    One commenter urged that VA include in Sec.  5.162, ``[t]he filing 
and pleading requirements that are necessary in presenting successful 
CUE claims . . .'', but offered no rationale for the suggestion. The 
same commenter urged that VA include provisions stating the 
``relationship of clear and unmistakable error claims to other 
statutes, regulations and legal doctrines'', but offered no rationale 
for the suggestion.
    VA has established procedures for filing claims (Sec. Sec.  5.50 
through 5.57). Claims for CUE require the same procedures. Proposed 
paragraph (d) clearly informs claimants what they must show in order to 
prove CUE. Regarding the suggestion about the relationship of CUE to 
other statutes, regulations and legal doctrines, this type of analysis 
is not germane to the regulation because it would not inform the public 
about VA's duties or claimants' rights or duties. We therefore propose 
to make no changes based on these two comments.
    In the NPRM preamble discussion of Sec.  5.162, we stated that the 
intent of the section is to convey that VA adjudicative agency 
decisions that are final will be presumed correct unless there is a 
showing of CUE. We also stated:

    The requirement of a showing of CUE applies only to a ``final 
decision,'' as defined by proposed Sec.  5.2 to mean ``a decision on 
a claim for VA benefits with respect to which VA provided the 
claimant with written notice'' and the claimant either did not file 
a timely Notice of Disagreement or Substantive Appeal or the Board 
has issued a final decision on the claim. See 71 FR 16464, 16473-74 
(March 31, 2006). We also proposed to incorporate 38 U.S.C. 5109A(c) 
and (d), which state that a CUE claim may be instituted by VA or 
upon request of the claimant and that a CUE claim may be made at any 
time after a final decision is made.

    One commenter interpreted proposed Sec.  5.162 as meaning that only 
final decisions can be reviewed for CUE. The commenter noted that the 
term ``final'' is not contained in the CUE statute, 38 U.S.C. 5109A, 
which states, ``A request for revision of a decision of the Secretary 
based on clear and unmistakable error may be made at any time after 
that decision is made.''
    The commenter asked why, if a claimant has filed a notice of 
disagreement and has not elected review

[[Page 71088]]

under proposed Sec.  5.161, VA should be unable to correct the decision 
if it is found to be clearly and unmistakably erroneous. The commenter 
further asked why, if VA discovered a CUE after a ``binding'' decision 
but before it became final under Sec.  3.160(d), the decision should 
not be subject to immediate correction.
    The commenter asserted, ``The law does not limit a claim of CUE to 
a final VA decision, but rather more accurately contemplates a 
`binding' decision as defined in proposed Sec.  5.160(a),'' which is 
based on 38 CFR 3.104(a). The commenter further asserted that ``[t]his 
would also be consistent with proposed Sec.  5.161(e) [based on Sec.  
3.2600(e)], which permits decision review officers to review a binding, 
but non-final, decision that has been timely appealed and revise that 
decision on the basis of CUE.'' The commenter urged VA to change 
initially proposed Sec.  5.162 to state that CUE can be the basis to 
correct a ``binding'' decision even if the decision has not yet become 
``final''. We agree with the commenter and propose to revise proposed 
Sec.  5.162 as discussed below.
    The courts have consistently stated that a ``final [AOJ] decision'' 
is a prerequisite for a CUE collateral attack. Hines v. Principi, 18 
Vet. App. 227, 236 (2004). Courts have repeatedly found that because an 
AOJ decision was final it was susceptible to reversal or revision based 
on CUE. See Knowles v. Shinseki, 571 F.3d 1167, 1168 (Fed. Cir. 2009) 
(where RO decision was presumptively final because veteran acknowledged 
notice and did not timely appeal, veteran properly raised claim of 
CUE); Hines, 18 Vet. App. at 235-36 (Court assumes RO decision became 
final where veteran filed NOD but not substantive appeal, and ``[s]uch 
a final decision is a prerequisite for a CUE collateral attack'').
    Concomitantly, courts have repeatedly found claims of CUE in AOJ 
decisions improper when that decision was not final, and that CUE may 
not be used to correct non-final decisions. In Norris v. West, 12 Vet. 
App. 413, 422 (1999), the court held, ``as a matter of law that a 
[total disability rating based on individual unemployability] claim was 
reasonably raised to the RO and was not adjudicated. Thus, there is no 
final RO decision on this claim that can be subject to a CUE attack.'' 
See Best v. Brown, 10 Vet. App. 322, 325 (1997) (RO decision not final 
where RO failed to notify veteran, therefore veteran cannot raise CUE 
with respect to that rating decision).
    The courts have not, however, ruled on whether, in order to be 
subject to correction based on CUE, a decision must be ``final'' as 
that term is used in Sec.  3.160(d) (which is based on 38 U.S.C. 
7105(c)). Section 3.160(d) states that a ``finally adjudicated claim'' 
is a decision on a claim, ``the action having become final by the 
expiration of 1 year after the date of notice of an award or 
disallowance. . . .'' We are unaware of any judicial precedent holding 
that, for purposes of CUE review, a decision becomes final only after 
the time to appeal has passed.
    When VA amended 38 CFR 3.105(a) to add the term ``final and 
binding'', it intended the term to have the same meaning in that 
section as it has in Sec.  3.104(a). Specifically, VA meant that 
decisions that are binding on all VA field offices at the time VA 
issues written notification in accordance with 38 U.S.C. 5104 are 
subject to revision for CUE. It did not mean ``final'' under 38 CFR 
3.160(d) (that the decision was not timely appealed or was affirmed by 
the Board.
    A review of the regulatory history of Sec.  3.105(a) shows that VA 
added the ``determinations which are final and binding'' language in a 
1991 rulemaking. 56 FR 65845, Dec. 19, 1991. Prior to that rulemaking, 
38 CFR 3.104(a) used the ``final and binding'' language, but Sec.  
3.105(a) used the language ``determinations on which an action was 
predicated. . . .'' In the preamble to the proposed rule, VA stated, 
``The proposed amendment is intended to clarify that decisions do not 
become final until there has been written notification of the decisions 
to the claimants. . . .'' 55 FR 28234, July 10, 1990. Similarly, in the 
preamble to the final rule, VA stated that the purpose of the amendment 
was, ``to establish by regulation the point at which a decision becomes 
final and binding on all VA field offices.'' It went on to state, 
``That point is reached when VA issues written notification on any 
issues for which it is required that VA provide notice to the claimant. 
. . .'' 56 FR 65845, Dec. 19, 1991.
    In Smith v. Brown, 35 F.3d 1516 (Fed. Cir. 1994), the issue before 
the court was whether an AOJ could reverse or revise a Board decision 
for CUE. In that context, the court analyzed the term ``final and 
binding'' as used in both in Sec. Sec.  3.104(a) and 3.105(a) and found 
that the terms were intended to mean the same thing. Id. at 1523-25.
    Congress codified 38 CFR 3.105(a) as 38 U.S.C. 5109A when it 
enacted Public Law 105-111, sec. 1(a)(1), 111 Stat. 2271 (1997). 
Disabled American Veterans v. Gober, 234 F.3d 682, 686 (Fed. Cir. 
2000). As the court noted in Donovan v. West, 158 F.3d 1377, 1383 (Fed. 
Cir. 1998), ``Although more detailed than [Sec.  3.105(a)], the basic 
substantive provision in [section 5109A] is the same as that in the 
regulation.'' As the commenter noted, Congress did not include any 
finality requirement in that statutory language.
    It has been long-standing VA practice to correct CUE in decisions 
that are ``final and binding'' under 38 CFR 3.105(a), even though they 
have not ``become final by the expiration of 1 year after the date of 
notice [of a decision], or by denial on appellate review, whichever is 
the earlier.'' 38 CFR 3.160(d). We codified this practice in 38 CFR 
3.2600(e), which states the ``reviewer may reverse or revise (even if 
disadvantageous to the claimant) prior decisions of an agency of 
original jurisdiction (including the decision being reviewed or any 
prior decision that has become final due to failure to timely appeal) 
on the grounds of clear and unmistakable error (see Sec.  3.105(a)).'' 
The ``decision being reviewed'' under Sec.  3.2600(e) is one that has 
not ``become final due to failure to timely appeal''.
    Finality under proposed Sec.  5.1 is not a prerequisite for 
correction of a decision based on CUE, and we therefore propose to 
write new paragraph (b) to clearly state that final or non-final 
decisions may be corrected under the CUE doctrine. We propose to 
clarify this point in Sec.  5.162(b) by stating that, ``At any time 
after the AOJ makes a decision, the claimant may request, or VA may 
initiate, AOJ review of the decision to determine if there was CUE in 
the decision.''
    Current Sec.  3.105(a) states, ``[W]here an award is reduced or 
discontinued because of administrative error or error in judgment, the 
provisions of Sec.  3.500(b)(2) will apply.'' While this provision 
tells the reader what effective date provision applies in such cases, 
it is unclear that the standard governing the decision is clear and 
unmistakable error. The intended meaning of this sentence is seen in 
the regulatory history. When VA implemented the effective date rule for 
38 U.S.C. 5112(b)(10), it explained that, ``Payments will be terminated 
under this subparagraph on the basis of clear and unmistakable error. 
(See VA Regulation 1105(A).)'' VA Regulations, Compensation and 
Pension, Transmittal Sheet 271 at iv (Dec. 1, 1962). Although the 
quoted language referred only to ``terminated'' benefits, it cited VA 
Regulation 1105(A), which at that time included both reductions and 
discontinuances of VA benefits. VA Regulations, Compensation and 
Pension, Transmittal Sheet 267 at 37-2R (Dec. 1, 1962). In order to 
clarify this

[[Page 71089]]

point in part 5, we propose to state explicitly in Sec.  5.162(e) that 
when VA reduces or discontinues a benefit resulting from a VA 
administrative error or error in judgment, it applies the clear and 
unmistakable error standard.
    In the AM01 NPRM, we initially proposed to add a new definitions 
section that would define ``administrative error'' and ``error in 
judgment,'' in Sec.  5.165(c)(2). We have determined that, because 
proposed Sec.  5.165 (now renumbered as Sec.  5.166) is an effective 
date regulation and this provision is substantive, it is more logical 
to place it in new Sec.  5.162(e).
    Initially proposed Sec.  5.165(c)(2) included a list of examples of 
administrative errors or errors in judgment. That list included, 
``(iii) Failure to follow or properly apply VA instructions, 
regulation, or statutes.'' We have determined that the term 
``instructions'' is unnecessary. Historically, VA used the term 
``instruction'' to describe the Administrator's binding guidelines for 
implementing newly enacted laws. VA has not issued such ``instructions 
of the Administrator'' since the 1960s. Because VA has not issued such 
instructions since the 1960s, it is not useful to include references to 
them in a list of examples of common sources of administrative error or 
error in judgment.
    Finally, in paragraph (f), ``Effect of reversal or revision on 
benefits'', we propose to add a cross reference to Sec.  5.167(c), the 
effective date rule for reduction or discontinuance of benefits based 
on VA administrative error or error in judgment. This will alert the 
reader that the effective date of such reductions or discontinuances 
differs from the general rule that the revision of a decision 
containing CUE is effective as if the original decision were correctly 
made.

Sec.  5.163 Revision of Decisions Based on Difference of Opinion

    Initially proposed Sec.  5.163 was one 89-word sentence. To improve 
readability we propose to divide it into three sentences. We also 
propose to specify that the revised decision must be more favorable to 
the claimant.

Sec.  5.164 Standard of Proof for Reducing or Discontinuing a Benefit 
Payment or for Severing Service Connection Based on a Beneficiary's Act 
of Commission or Omission

    We have revised the proposed section heading of Sec.  5.164 to 
apply to the several types of adverse actions VA can take upon 
determining a beneficiary obtained a benefit by an act of commission or 
omission. We have revised the headings of Sec. Sec.  5.167 and 5.177 
similarly.
    In initially proposed Sec.  5.162(b), we stated, ``[F]or reductions 
or discontinuances based on CUE resulting from an act of commission or 
omission by the beneficiary or with the beneficiary's knowledge, VA 
will apply Sec.  5.165(b).'' In doing so, we mistakenly overlooked that 
the first sentence of 38 CFR 3.105 states, ``The provisions of this 
section apply except where an award was based on an act of commission 
or omission by the payee, or with his or her knowledge. . . .'' Since 
Sec.  3.105 includes the provisions on CUE, CUE is not the proper 
standard for a reduction or discontinuance of a benefit, or for 
severance of service connection, obtained through an act of commission 
or omission.
    We have revised the proposed regulation to include severance of 
service connection among the adverse actions VA will take upon finding 
an act of commission or omission by a preponderance of the evidence, 
rather than by clear and unmistakable evidence. This would be 
consistent with the holding in Roberts v. Shinseki, 23 Vet. App. 416 
(2010), where the court concluded ``that the provisions of Sec.  3.105 
[(d)] do not apply to cases involving severance of service connection 
based on fraud.'' Id., at 428.
    Neither the statutes nor the regulations provide a standard for 
reduction or discontinuance of a benefit obtained through an act of 
commission or omission. In such cases, VA applies its default standard 
of proof, which is preponderance of the evidence. When VA implemented 
38 U.S.C. 5112(b)(9) in VA Regulation 1500(b)(1) (currently 38 CFR 
3.500(b)(1)), it explained that in determining whether benefits were 
based on an act of commission or omission ``[t]he benefit of any doubt 
will be resolved in favor of the payee.'' VA Regulations, Compensation 
and Pension, Transmittal Sheet 271 at iii (Dec. 1, 1962). Thus, when 
the evidence is in equipoise, VA cannot reduce or discontinue benefits. 
But when the evidence against the beneficiary outweighs the evidence 
supporting the beneficiary, the benefit of the doubt doctrine does not 
apply (Gilbert v. Derwinski, 1 Vet. App. 49, 55-56 (1991)), and VA will 
reduce or discontinue.
    Proposed Sec.  5.3(b)(4) states that, ``A fact or issue is 
established by a `preponderance of evidence' when the weight of the 
evidence in support of that fact or issue is greater than the weight of 
the evidence against it.'' The preponderance standard is relatively 
easy for VA adjudicators to apply. It is also a high enough standard to 
protect beneficiaries from arbitrary or capricious reductions or 
discontinuances by VA. We also note that before reducing or 
discontinuing benefits under Sec.  5.164, VA must provide due process 
to the beneficiary under Sec.  5.83(a).
    It will be helpful to inform the public that VA applies the 
preponderance standard in a reduction or discontinuance of a benefit 
obtained through an act of commission or omission. We therefore propose 
to add a new Sec.  5.164, which states, ``VA will reduce or discontinue 
a benefit, or sever service connection, if a preponderance of the 
evidence shows that it resulted in whole or in part, from an award 
based on an act of commission or omission by the beneficiary or an act 
of commission or omission done with the beneficiary's knowledge.''
    Although section 5112(b)(9) does not specify, VA has long 
interpreted it to mean that it applies when an award was based in whole 
or in part on the act of commission or omission. VA General Counsel's 
opinion VAOPGCPREC 2-90, 55 FR 27756 (July 7, 1990). We propose to 
include the phrase ``in whole or in part'' in paragraph (a) to make 
this point.
    As stated in Sec.  5.162(b), in a CUE claim, VA's review will be 
based ``only on the evidence of record and the law in effect when the 
AOJ made the decision.'' However, no such restriction applies when VA 
reduces or discontinues a benefit, or severs service connection, for 
reasons other than CUE. To ensure that readers are aware of this, we 
propose to insert the following sentence into Sec.  5.164(a), ``The 
review will be based on the law in effect when the agency of original 
jurisdiction (AOJ) made the decision and on all evidence currently of 
record, regardless of whether it was of record at that time.''
    In proposed Sec.  5.164(b), we provide readers with examples of an 
act of commission or omission by the beneficiary or an act of 
commission or omission done with the beneficiary's knowledge. We 
selected all but the fourth of these examples because they are some of 
the most common situations in which VA reduces or discontinues 
benefits. We included the fourth example, service connection obtained 
by fraud, because severance of service connection greatly affects a 
veteran's benefits. Paragraph (b) is not an exclusive list of acts of 
commission or omission.

[[Page 71090]]

Sec.  5.167 Effective Dates for Reducing or Discontinuing a Benefit 
Payment, or for Severing Service Connection, Based on Omission or 
Commission, or Based on Administrative Error or Error in Judgment

    In initially proposed Sec.  5.165 (now renumbered Sec.  5.167) we 
inadvertently omitted severance of service connection in the list of 
actions for which initially proposed Sec.  5.165 provided effective 
dates. The regulation was incomplete without it, because VA will sever 
service connection if a claimant obtained it by an act of commission or 
omission, or if VA granted service connection because of its 
administrative error or error in judgment. We therefore propose to add 
this severance provision.
    We propose to add a new Sec.  5.164 and renumber initially proposed 
Sec.  5.166 as Sec.  5.165, and therefore we have renumbered initially 
proposed Sec.  5.164 as Sec.  5.166 and initially proposed Sec.  5.165 
as Sec.  5.167. One commenter suggested that initially proposed Sec.  
5.165(c) effectively would permit VA to ``take adverse action against 
claimants on much lower showings of VA error than the law governing CUE 
permits''. We disagree with this comment. This paragraph merely 
implements the statutory provision in 38 U.S.C. 5112(b)(10). It does 
not address the standard applicable to VA decisions to reduce or 
discontinue benefits.
    The commenter apparently believed that CUE and VA administrative 
error are similar in that both can result in a decision to reduce or 
discontinue an award, with VA administrative error having to meet a 
lower standard than CUE. That is not correct. Proposed Sec.  5.165 is 
an effective date provision which sets different dates for reduction or 
discontinuance of benefits depending on whether the beneficiary or VA 
made an error. When CUE or severance of service connection and is based 
on a beneficiary's act of commission or omission, VA corrects the award 
retroactively. When CUE results in a reduction or discontinuance of an 
award or severance of service connection and is based solely on VA 
error, VA corrects the award prospectively. VA is not lowering the 
standard for finding error that result in the reduction or 
discontinuance of benefits and these part 5 rules would not cause such 
an effect. We therefore propose to make no changes based on this 
comment.
    Lastly, initially proposed Sec.  5.165(c)(2) provided a list of 
administrative errors or errors in judgment. VA does not intend this 
list to be exclusive, so we propose to add the phrase ``but are not 
limited to'' to this provision, which is now included in Sec.  
5.162(e), in order to avoid that mistaken impression.

Sec.  5.170 Calculation of 5-year, 10-year, and 20-year Periods to 
Qualify for Protection.

    In the preamble to initially proposed Sec.  5.170, we failed to 
state that paragraph (a) is a new scope provision informing the reader 
of the rules gathered in Sec.  5.170 (Sec. Sec.  3.344, 3.951, and 
3.957).
    One commenter suggested that proposed Sec.  5.170(a) was unclear 
because a rating has to be ``in effect'' for 10 years before service 
connection is protected, but a rating has to be ``continuous'' for 5 
years for a disability to be considered stabilized and ``continuous'' 
for 20 years for the disability level to be protected. The commenter 
suggested that we use either ``in effect'' or ``continuous'', or 
explain why we use different terms.
    For the following reasons, we decline to make a change based on 
this comment. We use different terms because different rights are being 
protected. As noted in the preamble to the initially proposed rule, a 
precedent opinion, VA General Counsel's opinion VAOPGCPREC 5-95, 60 FR 
19808 (Apr. 20, 1995), held that a disability could be considered 
``continuously rated'' at or above a specified level for purposes of 38 
U.S.C. 110 only if there was no interruption or discontinuance of the 
compensation being paid based on that rating for a period of 20 years 
or more. The statute provides this protection because veterans become 
dependent on a certain level of compensation when it has been paid 
without interruption for such a long period of time.
    Similarly, when a disability has been continuously rated at the 
same level for 5 years or more, VA considers it to be stabilized. This 
provides some measure of protection in that the veteran is less likely 
to experience a reduction in compensation in the future or be subjected 
to repetitive examinations that yield the same result time after time. 
In both cases, when the term ``continuous'' is used, the protection 
provided concerns the level of compensation.
    On the other hand, the term ``in effect'' is used only in 
connection with the 10-year protection afforded by 38 U.S.C. 1159 for 
service-connected status. There is no discussion of interrupted 
compensation payments breaking the continuity of a rating. Once service 
connection has been granted for a disability, that status is unaffected 
by variations in the level of compensation. If that status remains ``in 
effect'' for 10 years, service connection cannot be severed in the 
absence of fraud or military records showing the person did not have 
the requisite service or character of discharge. Since disability level 
and service-connected status are different concepts, it is appropriate 
to use different terms when discussing their protection criteria.
    Initially proposed Sec.  5.170(b) stated, ``A protection period 
begins on the effective date of the rating decision and ends on the 
date that service connection would be severed or the rating would be 
reduced, after due process has been provided.'' We believe the term 
``protection period'' could be misinterpreted to mean that a rating is 
protected during this period. It is merely a qualifying period that 
triggers the protections in Sec. Sec.  5.171, 5.172, and 5.175. We have 
revised this paragraph to clarify that point and reorganized the 
language to improve readability.
    The same commenter suggested that the language in initially 
proposed Sec.  5.170(c) was unclear because it did not explain whether 
the continuity of a rating resumes after a veteran is discharged from 
active military service. Currently, proposed Sec.  5.170(c) provides 
that ``a rating is not continuous if benefits based on that rating are 
discontinued or interrupted because the veteran reentered active 
service.'' As noted above, in the preamble discussion for the proposed 
rule, we cited to VAOGCPREC 5-95, which held:

    Where compensation is discontinued following reentry into active 
service in accordance with the statutory prohibition on payment of 
compensation for a period in which an individual receives active-
service pay, the continuity of the rating is interrupted for 
purposes of the rating-protection provisions of 38 U.S.C. 110 and 
the disability cannot be considered to have been continuously rated 
during the period in which compensation is discontinued.

    Moreover, VA generally does not have the ability to examine 
veterans once they have returned to active duty, nor does it have a 
reason to do so, so VA generally cannot determine whether their 
condition has improved during that time. Such veterans can still 
satisfy the protection criteria of 38 U.S.C. 110, but the qualifying 
period for protection must begin anew upon resumption of compensation. 
We therefore propose not to adopt the change suggested by the 
commenter.
    Another commenter questioned whether receipt of active duty for 
training (ACDUTRA) pay breaks the continuity of payment for purposes of 
protection. The former part 3 cross reference (Sec.  3.654) that 
followed Sec.  5.170(c), which has since been updated with its part 5 
counterpart Sec.  5.746, clarifies that ``active military service pay 
means pay received for active duty, active duty for training or

[[Page 71091]]

inactive duty training''. Therefore, receipt of ACDUTRA pay is 
considered to be receipt of active military service pay, which operates 
to break continuity of payment for purposes of breaking continuity of a 
rating. We therefore propose not to make any changes to Sec.  5.170 
based on this comment.

Sec.  5.171 Protection of 5-Year Stabilized Ratings

    One commenter observed that the NPRM misquoted sentence 5 of Sec.  
3.344(a) as follows: ``. . . sentence 5, which states, `lists those 
diseases that will not be reduced . . . ' '' (emphasis in comment) 72 
FR 28782, May 22, 2007. The commenter is correct, the quoted language 
actually paraphrased sentence 5 of Sec.  3.344(a). We rewrote sentence 
5 of Sec.  3.344(a) as proposed paragraph (d)(2), reorganized for 
clarity. The comment, though accurate, does not require any change from 
the proposed regulation.
    This commenter asserted that Sec.  3.344 is a very difficult 
regulation full of outdated, superfluous verbiage, much of which we 
could discard. The commenter however, gave one example, specifically 
the eighth sentence of Sec.  3.344(a) (initially proposed as Sec.  
5.171(d)(6)), which the commenter asserted was meaningless. That 
sentence stated, ``When syphilis of the central nervous system or 
alcoholic deterioration is diagnosed following a long prior history of 
psychosis, psychoneurosis, epilepsy, or the like, it is rarely possible 
to exclude persistence, in masked form, of the preceding innocently 
acquired manifestations.''
    We disagree that this provision is meaningless, but we conclude it 
is not useful because it does not provide any instruction, impose any 
duty, or convey any right. The sentence essentially informs VA 
employees who perform disability ratings that syphilis and alcoholic 
deterioration diagnosed after a long prior history of ``psychosis, 
psychoneurosis, epilepsy, or the like,'' can mask the persistent prior 
disease, and therefore the focus of the rating decision should be the 
``preceding innocently acquired manifestations.'' Initially proposed 
paragraph (d)(6) does not actually instruct VA to take any specific 
action. It does not impose any specific duty different than does 
paragraph (d)(2) for diseases subject to episodic improvement, and it 
does not convey any rights in addition to those stated in paragraph 
(d)(2). Consequently, we agree that it is confusing surplus and propose 
not to repeat the eighth sentence of Sec.  3.344(a) in part 5.
    One commenter asked us to clarify that improvement in a veteran's 
disability condition must be demonstrated before VA can reduce a 
stabilized disability rating. The commenter suggested that before VA 
can reduce a disability rating, not only must it be determined that an 
improvement to a disability has actually occurred, but also that the 
improvement reflects an improvement in the veteran's ability to 
function under ordinary conditions of life.
    In response to this comment, we note that initially proposed Sec.  
5.171(c) stated, in pertinent part, that VA will not reduce a 
stabilized rating unless there is evidence of material improvement and 
VA may reduce a stabilized rating when an examination shows sustainable 
material improvement, physical or mental, in the disability, and the 
evidence shows that it is reasonably certain that the material 
improvement will be maintained under the ordinary conditions of life.
    As a practical matter, it is doubtful that there would be a case in 
which the evidence shows that it is reasonably certain that the 
material improvement will be maintained under the ordinary conditions 
of life unless there had already been material improvement under the 
ordinary conditions of life. Therefore, we propose to add ``under the 
ordinary conditions of life'' to proposed paragraph (c)(1), to read, 
``An examination shows material improvement in the disability, under 
the ordinary conditions of life . . .''
    In addition, we propose to remove the word ``sustainable'' because 
it refers to the veteran's future condition, which is covered by 
paragraph (c)(2). We propose to change the word ``when'' to ``if'' in 
the second sentence of paragraph (c) because ``when'' incorrectly 
implies that the veteran's condition will eventually improve. Lastly, 
we propose to remove the phrase, ``physical or mental''. It is 
unnecessary because all disabilities are either physical or mental.
    One commenter suggested that paragraph (d) is vague and ambiguous 
because it does not explain when medical examinations for purposes of 
determining material improvement would be administered. The commenter 
also thought that the paragraph failed to explain whether ``VA will 
follow any standards or rules when it chooses certain veterans for a 
new examination, or if VA will use subjective criteria in its 
selection''.
    Initially proposed Sec.  5.171 does not include the standards VA 
applies when determining whether and when to reexamine a veteran 
because these standards are described in detail in proposed Sec.  
5.102, ``Reexamination requirements''. Based on this comment, we 
propose to add a cross reference to Sec.  5.102 at the end of Sec.  
5.171.
    One commenter questioned whether proposed paragraph (d) would 
create tension with the standard governing reduction of total 
disability ratings under Sec.  3.343. Section 3.343 pertains to the 
rule governing continuance of total disability ratings and outlines a 
list of mandatory considerations that VA must take into account before 
reducing such total disability ratings. The commenter expressed concern 
over whether adoption of Sec.  5.171(d) would in effect ``allow 
adjudicators to bypass the established protections of Sec.  3.343 in 
favor of reducing a total evaluation by . . . more lenient 
conditions''. Proposed Sec.  5.171(d) would not have such an effect. It 
is a rewrite of Sec.  3.344(a), which simply provides guidance on 
factors that VA will consider before reducing disability ratings that 
have either become stable or otherwise were made on account of diseases 
that are subject to temporary or episodic improvement. The part 5 
counterpart to Sec.  3.343 is Sec.  5.286, which will govern the 
continuance of total disability ratings. We therefore propose to make 
no changes based on this comment.
    One commenter suggested that the organization of paragraph (d)(1) 
could be improved by separating the topic of ``how VA will determine 
whether there has been material improvement'' from ``what types of 
evidence a complete medical record consists of''. The commenter 
recommended reorganizing the last sentence of paragraph (d)(1) and its 
paragraphs into a new paragraph (d)(5) after our discussion concerning 
what constitutes material improvement. We agree with this suggestion 
and propose to add a new paragraph (d)(5) consisting of the last 
sentence of paragraph (d)(1) and its paragraphs. We propose to 
redesignate initially proposed paragraph (d)(5) as (d)(6).
    One commenter suggested that we replace the term ``medical record'' 
with ``evidentiary record'' in regard to initially proposed paragraph 
(d)(4), which pertains to when VA will determine material improvement 
exists for purposes of decreasing disability ratings. The commenter was 
concerned that the term ``medical record'' may unduly restrict VA's 
current practice of considering all evidence in the record, including 
lay evidence. We agree with the commenter and propose to adopt the 
suggested change.
    In reviewing initially proposed Sec.  5.171(e) based on this 
comment, we noted that in the preamble of the proposed rulemaking, 72 
FR 28770, May

[[Page 71092]]

22, 2007, we failed to explain that we had omitted from paragraph (e) 
the following, contained in current Sec.  3.344(b): ``the rating agency 
will determine on the basis of the facts in each individual case 
whether 18, 24, or 30 months will be allowed to elapse before the 
reexamination will be made.'' We omitted this language because VA 
schedules reexaminations for various future dates (based on the factors 
described in Sec.  5.102) and these dates are not limited to 18, 24, or 
30 months in the future.
    We also determined that the scope of paragraph (e) (which is based 
on current Sec.  3.344(b)) needed clarification. We therefore propose 
to revise paragraph (e) to clarify that it only applies to cases 
involving a change in diagnosis.

Sec.  5.173 Protection Against Reduction of Disability Rating When VA 
Revises the Schedule for Rating Disabilities

    Initially proposed Sec.  5.173(b) described how VA modifies a 
rating that was assigned under the 1925 Schedule for Rating 
Disabilities. There are no longer any veterans being compensated under 
the 1925 Schedule. We therefore propose to remove the last phrase in 
paragraph (a) and all of paragraph (b) because these concerned 
revisions to ratings under the 1925 Schedule.

Sec.  5.175 Severance of Service Connection

    Initially proposed Sec.  5.175(a)(1) and (2) provided that the 
protection from severance of 10 year old service connection applies to 
grants of disability compensation and to dependency and indemnity 
compensation (DIC), respectively. As initially proposed, Sec.  5.175 
did not address whether this protection applies to benefits under 38 
U.S.C. 1151.
    In August 2010, the U.S. Court of Appeals for Veterans Claims in 
Hornick v. Shinseki, 24 Vet. App. 50, 56 (2010), held that the 
preclusion in 38 U.S.C. 1159 against severing service connection in 
effect for 10 years or more pertains to disability compensation 
payments awarded under 38 U.S.C. 1151 (Benefits for persons disabled by 
treatment or vocational rehabilitation). We propose to add the 
following at the end of initially proposed paragraph (a)(2): ``and to 
disability compensation or DIC granted under 38 U.S.C. 1151'' to afford 
this protection to these benefits. Adding ``disability compensation . . 
. under 38 U.S.C. 1151'' implements the holding in Hornick. We are also 
adding ``or DIC granted under 38 U.S.C. 1151'', to be consistent with 
sections 1151 and 1159, which both apply to DIC. This addition is also 
consistent with Hornick.
    One commenter suggested that we separate this section into two 
regulations, one to address the protection of service connection and 
the other to address the severance of service connection. We decline to 
make this change because the paragraphs are appropriately titled 
regarding when protection of service connection applies versus when 
severance of service connection applies. Further, when taken as a 
whole, the entire section addresses the single issue of whether and 
when VA may sever service connection.
    The commenter further asserted that VA should not adopt the 
proposed regulation Sec.  5.175(b)(2) because ``the law of clear and 
unmistakable error bars a veteran from submitting, and the VA from 
considering, any new medical opinion evidence (or any new evidence for 
that matter), in order to establish the existence of CUE''. The 
commenter also stated that because the law that governs CUE ``does not 
permit the veteran to successfully argue that a change in diagnosis can 
be accepted as a basis for the award of service connection `based on 
clear and unmistakable error . . .', VA cannot be permitted to sever an 
award of service connection based on the same sort of medical 
evidence.'' The commenter asserted that this proposed provision 
``reflects inconsistent and arbitrary agency action''. The commenter 
asserted that the courts have clearly held that ``when an allegation is 
made that a VA decision contains CUE, that VA's decision on the 
allegation is strictly limited to the evidence that was before the VA 
adjudicator at the time VA made the decision being challenged as 
containing CUE.'' The commenter cited Russell v. Principi, 3 Vet. App. 
310 (1992), for the proposition that new medical evidence that corrects 
an earlier diagnosis that was a basis for an earlier decision by the 
agency of original jurisdiction cannot be considered in a CUE case.
    The commenter also noted that the Board of Veterans' Appeals 
(Board) regulation contained in 38 CFR 20.1403(d) states, ``(d) 
Examples of situations that are not clear and unmistakable error--(1) 
Changed diagnosis. A new medical diagnosis that `corrects' an earlier 
diagnosis considered in a Board decision.''
    For the following reasons, we propose to make no change based on 
this comment. The commenter fails to recognize the distinction between 
Sec.  3.105(a) and Sec.  3.105(d). As used in Sec.  3.105(d) and 
proposed Sec.  5.175(b), the phrase ``clearly and unmistakably 
erroneous'' is intended to describe the high standard of proof that 
must be met before VA can sever service connection. The phrase 
``clearly and unmistakably erroneous'' is not intended to incorporate 
the procedural rule applicable to claims under Sec.  3.105(a) that 
collateral review of a prior final decision must be based solely on the 
evidence that was before VA at the time of that decision. The 
provisions of Sec.  3.105(a) and Sec.  3.105(d) involve different 
procedural standards because Sec.  3.105(a) concerns collateral review 
and retroactive correction of a final decision. In contrast, Sec.  
3.105(d) involves only review of the veteran's entitlement to benefits 
prospectively. VA recognizes that the use of the same high standard, 
clear and unmistakable error, might be confusing to some laypersons. 
For that reason, VA has consistently made clear in its regulations that 
severance determinations under Sec.  3.105(d) may be based on 
consideration of evidence obtained subsequent to a prior determination.
    Furthermore, we note that the provision in proposed Sec.  
5.175(b)(2) is not new; it is based on a substantially similar 
provision in current 38 CFR 3.105(d). The courts have held that, as a 
general principle, when an allegation is made that a VA decision 
contains CUE, VA's decision on the allegation is strictly limited to 
the evidence that was before the VA at the time VA made the decision 
being challenged as containing CUE. The U.S. Court of Appeals for 
Veterans Claims set forth this principle in the Russell case (id. at 
314).
    However, Russell involved a CUE claim under 38 CFR 3.105(a), not 
severance of service connection under Sec.  3.105(d). Section 3.105(d) 
states, in pertinent part that ``[s]ubject to the limitations contained 
in Sec. Sec.  3.114 and 3.957, service connection will be severed only 
where evidence establishes that it is clearly and unmistakably 
erroneous (the burden of proof being upon the Government). . . . A 
change in diagnosis may be accepted as a basis for severance action if 
the examining physician or physicians or other proper medical authority 
certifies that, in the light of all accumulated evidence, the diagnosis 
on which service connection was predicated is clearly erroneous. This 
certification must be accompanied by a summary of the facts, findings, 
and reasons supporting the conclusion. . . .''
    Thus, Sec.  3.105(d) does not state that decisions will be reversed 
because they were based on CUE. These are dealt with in Sec.  3.105(a). 
Rather, Sec.  3.105(d) states that a veteran's service-connected status 
will be severed if it is clearly and unmistakably erroneous. Since it 
is a review of the veteran's current status,

[[Page 71093]]

VA naturally must consider current evidence.
    The courts have consistently upheld the long-standing provision in 
38 CFR 3.105(d) that evidence concerning a change in diagnosis (which 
was not of record when service connection was granted) may be 
considered in determining whether service connection is clearly and 
unmistakably erroneous. See Stallworth v. Nicholson, 20 Vet. App. 482, 
488 (2006); Daniels v. Gober, 10 Vet. App. 474, 480 (1997); Venturella 
v. Gober, 10 Vet. App. 340, 343 (1997). As the court has noted, if VA 
were not permitted to consider post-decisional evidence in a severance 
case, VA ``would be placed in the impossible situation of being forever 
bound to a prior determination regardless of changes in the law or 
later developments in the factual record.'' Venturella, 10 Vet. App. at 
343.
    The commenter's reliance on 38 CFR 20.1403(d) is inapposite to the 
question of the validity of Sec.  3.105(d). Section 20.1403 implements 
38 U.S.C. 7111 which relates to the review of Board decisions based on 
clear and unmistakable error. In the proposed rulemaking for Sec.  
20.1403, 63 FR 27535, May 19, 1998, VA noted that, ``the term `clear 
and unmistakable error' originated in veterans regulations some 70 
years ago, see generally Smith (William) v. Brown, 35 F.3d 1516, 1524-
25 (Fed. Cir. 1994), and is now incorporated in VA regulations 
governing VA RO determinations. 38 CFR 3.105(a).'' VA also noted (at 63 
FR 27536, May 19, 1998) that the legislative history for section 7111 
``indicates that the Congress expected the Department would implement 
section 1(b) of the bill in accordance with current definitions of CUE. 
H.R. Rep. No. 52, 105th Cong., 1st Sess. 3 (1997) (report of House 
Committee on Veterans' Affairs on H.R. 1090) (``Given the Court's clear 
guidance on this issue [of CUE], it would seem that the Board could 
adopt procedural rules consistent with this guidance to make 
consideration of appeals raising clear and unmistakable error less 
burdensome''); 143 Cong. Rec. 1567, 1568 (daily ed. Apr. 16, 1997) 
(remarks of Rep. Evans, sponsor of H.R. 1090, in connection with House 
passage) (``The bill does not alter the standard for evaluation of 
claims of clear and unmistakable error.'')''
    Thus, Sec.  20.1403 was intended to codify a statute whose basis 
was Sec.  3.105(a), not Sec.  3.105(d). As such, there is no reason why 
Sec.  3.105(d) or Sec.  5.175 must contain the same procedures as those 
in Sec.  20.1403.
    For the reasons stated above, we propose to make no changes based 
on this comment.
    We propose, however, to revise the heading of initially proposed 
paragraph (b) to read, ``Standard of proof to sever service 
connection--general rule'', and to add paragraph (c), ``Standard of 
proof to sever service connection--fraud''. The new paragraph (c) 
comprises a cross reference to proposed Sec.  5.164. It serves, without 
repeating proposed Sec.  5.164, to inform the reader that VA's burden 
of proof to sever service connection obtained by fraud is the same as 
to sever service connection obtained by any other act of commission or 
omission. Fraud is distinguishable from other acts of commission or 
omission in that a claimant's fraud will breach the protection 
established after service connection has been in effect for 10 years, 
whereas other acts of commission or omission will not.
    These changes would correct a misstatement in the proposed rule 
that the dissenting opinion in Roberts v. Shinseki, 23 Vet. App. 416, 
435-39 (2010) (Hagel, J., dissenting) called to our attention. In that 
case, the dissent first noted that, in rewriting Sec. Sec.  3.957 
(protection of service connection in place 10 years or longer) and 
3.105(d), ``VA intends to `clarify' and recodify 38 CFR 3.957 and the 
provisions of 38 CFR 3.105(d) that govern when service connection may 
be severed at 38 CFR 5.175, entitled `Protection or severance of 
service connection.''' Id. at 436. The dissent also noted that our 
proposed regulations did not except severance of service connection 
based on fraud from the due process or burden of proof elements of 
Sec. Sec.  3.957 or 3.105(d). Id. at 436, 440. Finally, the dissent 
noted that the NPRM stated that it explained any substantive changes 
between part 3 and part 5, 72 FR 28771-72, May 22, 2007, and that there 
was nothing in the NPRM ``indicating that the rewriting and 
restructuring of the regulations [pertaining to severance of service 
connection for fraud] are intended as substantive changes.'' Id. at 
437-39. From these observations, the dissent reasoned, the NPRM 
revealed VA's interpretation of Sec. Sec.  3.957 and 3.105(d) as 
requiring application of both the process and burden of proof 
provisions of Sec.  3.105(d) before severing service connection.
    Any disparity between the NPRM and the Secretary's position in the 
Roberts litigation results from our misstatements in the NPRM. In 
discussing initially proposed Sec.  5.175 in the NPRM, we described 
that paragraph (a) would provide that service connection in effect for 
10 years or more ``may not be severed unless . . . (1) The original 
grant was obtained through fraud.'' We further explained that proposed 
paragraph (b) ``provided that severance of service connection may also 
occur when evidence establishes that it is clearly and unmistakably 
erroneous. . . .'' 72 FR 28783, May 22, 2007. By stating ``also'', we 
intended to state that Sec.  5.175(a) and (b) would be alternatives for 
severing service connection. We did not mean that they would be a 
sequence of events: first, piercing the 10-year protection by showing 
fraud, and second, finding clear and unmistakable error in the grant of 
service connection obtained by fraud. We propose to correct the error 
in initially proposed Sec.  5.175 by explicitly distinguishing the 
procedures and the burden of proof that apply to sever service 
connection that a claimant obtained by fraud.

Sec.  5.176 Due Process Procedures for Reducing or Discontinuing 
Disability Compensation Payments or for Severing Service Connection

    One commenter suggested that we revise the introductory paragraph 
to enlarge the scope of Sec.  5.176 to include situations where VA 
reduces or discontinues a disability rating but compensation benefits 
are not affected. Currently, proposed Sec.  5.176 and its part 3 
predecessor, Sec.  3.105(e), require that VA provide notice of a 
contemplated adverse action followed by a 60-day period for the 
presentation of additional evidence only in situations where a lower 
rating would result in a reduction or discontinuance of compensation 
payments currently being made. However, where compensation benefits are 
not affected, where there is no adverse action, VA will provide only 
contemporaneous notice. See Sec.  5.83(a).
    We decline to make the suggested change to enlarge the scope of 
initially proposed Sec.  5.176 because in cases where VA decreases the 
rating of any disability or disabilities but does not reduce the 
veteran's overall disability rating, there is no reduction of monetary 
benefits. In such cases, VA has no statutory duty to send advanced 
notice of its decision. Stelzel v. Mansfield, 508 F.3d 1345 (Fed. Cir. 
2007). Further, due process concerns are not implicated because the 
veteran suffers no loss of benefits. Moreover, we note that along with 
the contemporaneous notice, VA also provides the veteran with 
information on procedural and appellate rights regarding the decision.
    Another commenter believed that the initially proposed rule would 
eliminate the due process procedure of having an impartial VA employee 
participate in

[[Page 71094]]

the review process for reducing ratings. The commenter noted that such 
procedures are already followed in the context of predetermination 
hearings, see Sec.  3.105(i), and since the reduction of ratings also 
have an adversarial character, the practice ``should be carried over to 
the new regulations''. While we agree that proceedings involving 
proposed adverse actions should be conducted by VA personnel who were 
not directly involved in proposing the adverse action, we decline to 
make changes based on this comment. The reason is that this due process 
procedure is already recognized in proposed Sec.  5.82(d) which states 
that if the hearing arises in the context of a proposed reduction, 
discontinuance, other adverse action or an appeal, a VA employee or 
employees having decision-making authority and who did not previously 
participate in the case will conduct the hearing.
    Proposed Sec.  5.82(d) applies to a claimant's or beneficiary's 
right to a hearing upon being notified of a proposed reduction, 
discontinuance, or other adverse action under proposed Sec.  5.83. 
Therefore, it is unnecessary to repeat the language of proposed Sec.  
5.82(d) in proposed Sec.  5.176 because Sec.  5.82(d) outlines an 
overarching VA policy that applies in all situations where a hearing is 
based on a proposed reduction, discontinuance, other adverse action, or 
on an appeal.
    In addition, the commenter also urged that VA include in proposed 
Sec.  5.176 the overarching duty to assist claimants in their claims by 
``suggest[ing] the submission of evidence which the claimant may have 
overlooked and which would be of advantage to the claimant's 
position''. The commenter urged that proposed Sec.  5.176 be amended to 
require that VA inform beneficiaries of what type of evidence they 
should file to show ``that service connection or a rating should be 
maintained.'' The commenter provided an example, urging that VA inform 
a beneficiary if a notice of disagreement as to the reduction satisfies 
the requirement and would toll the 60-day period so that the veteran 
has more time to file additional evidence if needed.
    As a preliminary matter, we note that it would be impossible for a 
beneficiary to file a valid notice of disagreement until VA had issued 
a decision, not merely a notice of a proposed decision. Initially 
proposed Sec.  5.176(c) stated that in proposing a reduction or 
discontinuance, VA will notify the beneficiary that they may file, 
``evidence to show that service connection should be maintained, the 
rating should not be reduced, or the benefits should remain intact.'' 
If such notices were to attempt to specify the exact type of evidence 
that is relevant, they might inadvertently omit relevant evidence that 
the beneficiary might file. Rather, it is more helpful to clearly 
explain ``the contemplated action and furnish detailed reasons for the 
proposed reduction or discontinuance'' (as stated in initially proposed 
Sec.  5.176(b)) and allow the beneficiary to determine what evidence 
they can obtain or identify for VA to obtain.
    The commenter also suggested that the 60-day time period for a 
beneficiary to present evidence when disputing a proposed severance of 
service connection or reduction in ratings is too short. The commenter 
claimed that ``if VA expects veterans to file medical or scientific 
evidence to support their claims, the 60-day period will be too short 
and veterans will be effectively deprived of their procedural due 
process''. We decline to change the time period within which 
beneficiaries must present evidence to challenge a proposed adverse 
action. Beneficiaries generally are able to meet the 60-day deadline. 
Furthermore, VA already has procedures and regulations in place to 
extend the 60-day period if good cause is shown. See Sec.  5.99, 
``Extensions of certain time limits'', based on Sec.  3.109(b).
    Finally, the commenter remarked that ``many veterans subject to 
reduction or elimination of benefits have previously been found to be 
profoundly disabled.'' The commenter expressed concern that ``VA should 
recognize that in reduction actions it is dealing with some of the more 
helpless segments of the entire veteran population and should tailor 
its procedures accordingly.'' VA beneficiaries subject to reduction of 
benefits have varying degrees of disability and our procedures are 
intended to provide fair treatment to all disabled veterans. To the 
extent that a beneficiary subject to a proposed reduction may have 
difficulty responding due to a profound disability, the veteran may 
request a good cause extension under Sec.  5.99. We therefore propose 
to make no changes based on this comment.
    In reviewing initially proposed Sec.  5.176 to respond to comments, 
we noted that it is largely redundant of initially proposed Sec.  
5.83(a), Right to notice of decisions and proposed adverse actions. We 
therefore propose to delete Sec.  5.176 and leave that number as 
reserved. We propose to include the following sentence from initially 
proposed Sec.  5.176 in Sec.  5.83: ``If VA receives no additional 
evidence within the 60 days, or the evidence received does not 
demonstrate that the action should not be taken, VA will provide notice 
to the beneficiary that VA is taking the action.'' We propose to omit 
the phrase ``Prepare a rating proposing the adverse action and'' 
because this is a administrative action that provides no due process to 
the beneficiary which is not already provided by the notice of the 
proposed adverse action.

Sec.  5.177 Effective Dates for Reducing or Discontinuing a Benefit 
Payment or for Severing Service Connection

    We redesignated initially proposed Sec.  5.177(c) as Sec.  5.177(i) 
to move the paragraph explaining the exceptions of the regulation to 
the end of the section. We accordingly redesignated initially proposed 
Sec.  5.177(d) through (i) as Sec.  5.177(c) through (h), respectively.
    In relation to the comment on initially proposed Sec.  5.176 
regarding enlarging the scope of situations where VA will provide 
advance notice of adverse actions, the commenter also suggested 
revising initially proposed Sec.  5.177(f) for the same reasons. We 
decline to make this change because, as explained in our discussion on 
proposed Sec.  5.176, where a decision does not result in adverse 
action, VA will follow the notification procedure in proposed Sec.  
5.83(b). Because the decision will not adversely affect compensation 
payments or other benefits, the notification procedure outlined in 
Sec.  5.83(b) is adequate to preserve the veteran's procedural and 
appellate rights if the veteran disagrees with the decision.
    One commenter questioned whether initially proposed Sec.  5.177(f) 
would effectively reduce a veteran's compensation benefits by default 
``whether or not a final decision authorizing that reduction has been 
issued''. The commenter mistakenly believed that VA would reduce 
benefits before issuing a final decision on the matter. We decline to 
make any change based on this comment because Sec.  5.177 clearly 
provides for two 60-day periods before a reduction or discontinuance 
takes effect: the first following a notice of a proposed adverse action 
(see Sec.  5.83(a), the second following the notice of the final 
decision.
    In initially proposed paragraphs (d), (e), and (f), we stated that 
VA will sever service connection or reduce or discontinue benefits 
``effective the first day of the month after a second 60-day period 
beginning on the day of notice to the beneficiary of the final 
decision.'' We propose to revise the language in each of those 
paragraphs to clarify that after applying the 60-day notice period, VA 
will apply a second 60-day period which begins on the day VA sends 
notice to the beneficiary of the final

[[Page 71095]]

decision. VA will then take the appropriate action to modify benefits, 
effective the first day of the month after the second 60-day period.
    As with initially proposed Sec.  5.175, discussed above, the 
dissent in Roberts, 23 Vet. App. at 435-39, revealed that initially 
proposed Sec.  5.177 did not clearly accomplish our intent, or, at 
least, it was ambiguous when read together with the regulation on 
effective dates for correcting erroneous awards (initially proposed 
Sec.  5.165, redesignated Sec.  5.167). We therefore propose to revise 
the first sentence of initially proposed paragraph (d), redesignated as 
paragraph (c), to read: ``Unless severance is based on the 
beneficiary's act of commission or omission that resulted in VA's grant 
of benefits, this paragraph applies when VA severs service 
connection.'' We also propose to add a cross reference to Sec.  5.167 
stating, ``See Sec.  5.167 for effective date of severance of service 
connection obtained by fraud.''
    The Roberts dissent noted that ``VA reports that proposed Sec.  
5.165 `applies only to reductions or discontinuances of erroneous 
awards.' 72 Fed. Reg. 22,779.'' Id. at 438, fn 13. The next sentence in 
the NPRM stated, however, ``If a payment has not been authorized by a 
rating decision, then VA has not made an award of such an erroneous 
payment and therefore recovery of that payment is not a reduction or 
discontinuance of an `erroneous award' under 38 U.S.C. 5112(b)(9) or 
(10).'' In other words, initially proposed Sec.  5.165 distinguished 
``reductions or discontinuances'' of ``erroneous awards'' from 
``reductions or discontinuances'' of other types of payments that are 
not ``awards,'' and did not distinguish ``reductions or 
discontinuances'' from severance for fraud as an act of commission or 
omission. The proposed revision to redesignated Sec.  5.177(c) and the 
additional cross reference to Sec.  5.167 should make perfectly clear 
that the effective date of severance of service connection obtained by 
fraud is governed by proposed Sec.  5.167 and is not 60 days after VA 
provides notice of the final decision severing service connection.
    As initially proposed, Sec.  5.177(g) stated that VA would reduce 
or discontinue pension payments because of a change in disability or 
employability status effective the first day of the month after a 
second 60-day period beginning on the day of notice to the beneficiary 
of the final decision. This statement conflicts with 38 U.S.C. 
5112(b)(5), and current 38 CFR 3.105(f). The beneficiary is not 
afforded a second 60-day period before his or her benefits are to be 
reduced. We, therefore, propose to correct paragraph (g) in 
redesignated paragraph (f) to state that the effective date for the 
reduction or discontinuance of pension because of a change in 
disability or employability status is the first day of the month after 
notice to the beneficiary of the final decision.
    We propose to move the effective date provision in initially 
proposed paragraph (h) from Sec.  5.177 to Sec.  5.591(b)(5), to 
consolidate all the effective date rules on Chapter 18 monetary 
allowance into one section.

IX. Subpart D: Dependents and Survivors AL94

    In a document published in the Federal Register on September 20, 
2006, we proposed to revise VA's regulations governing dependents and 
survivors of veterans, to be published in a new 38 CFR part 5. 71 FR 
55052. We provided a 60-day comment period that ended November 20, 
2006. We received submissions from three commenters: Disabled American 
Veterans, and two members of the general public.

Sec.  5.181 Evidence Needed To Establish a Dependent

    In the NPRM, we proposed Sec. Sec.  5.181 and 5.182 as separate 
sections. Because we have combined the contents of initially proposed 
Sec. Sec.  5.181 and 5.182, as explained in Sec.  5.182 below, we 
propose to renumber initially proposed Sec.  5.180 as Sec.  5.181. We 
propose to mark Sec.  5.180 as reserved.
    We also propose to reorganize and simplify the contents of 
initially proposed Sec.  5.180 into Sec.  5.181.
    Proposed paragraph (a) simplifies the initially proposed 
``purpose'' paragraph to clearly state that this regulation is limited 
to rules governing adding dependents, and with the exception of 
paragraph (d), does not govern changes to existing dependents. Also, in 
proposed paragraph (b)(1), we have eliminated the applicability of this 
rule to a case involving death, because death does not establish a 
dependent. Similar conforming changes were made to Sec.  5.182, which 
governs only changes to the status of existing dependents. We proposed 
these changes for clarification purposes; we do not intend to change 
the persons to whom these rules would have applied as initially 
proposed.
    We also propose to change paragraph (b)(1) by inserting ``, day,'' 
after ``month'' and ``(city and state, or country if outside of a 
state)'' after ``place''. This information is necessary for VA to 
properly document marriages, termination of marriages, and births.
    In initially proposed paragraph (c), we stated ``VA will require 
additional supporting evidence to establish a veteran's marital status 
or a parent/natural child relationship . . . if any of the following 
factors are true: . . . (3) VA questions the validity of all or part of 
the statement;''. In comparing paragraph (c) with other sections in 
subpart D, we determined that the term ``validity'' means having legal 
effect or force. Our intent in paragraph (c)(3) was simply to include a 
question of the accuracy of a statement as one of the reasons for 
requiring additional evidence. We have, therefore, replaced the term 
``validity'' with ``accuracy''.
    In paragraph (c)(5), we propose to change the rule that a statement 
is not sufficient to establish dependency when there is an indication 
of fraud or misrepresentation. Thus, we intend to change ``in the other 
evidence in the record'' to ``in other evidence in the record'', 
removing the word ``the'' that appeared before ``other evidence''. This 
change eliminates any suggestion that the reasonable indication of 
fraud or misrepresentation must appear in the totality of the evidence. 
VA will require additional evidence if any individual piece of evidence 
indicates fraud or misrepresentation, or if the evidence in its 
entirety gives such indication. This revision would make proposed 
paragraph (c)(5) better conform to proposed paragraph (c)(4), which 
would provide that a statement is not sufficient to establish 
dependency if the ``statement conflicts with other evidence in the 
record . . .''
    For reasons explained in the preamble to initially proposed Sec.  
5.181(c), 71 FR 55052, 55055, we are omitting certain provisions of 
Sec.  3.213(b) from part 5, subpart D. Because we now propose to 
consolidate initially proposed Sec.  5.181(c) and other initially 
proposed provisions in currently proposed Sec.  5.184(d), we would 
repeat only the first sentence of Sec.  3.213(b) in Sec.  5.184(d). The 
restoration of benefit provisions of Sec.  3.103(b)(4), restated in 
Sec.  5.84, is more comprehensive than the restoration provision of 
Sec.  3.213(b). Consequently, all but the first sentence of Sec.  
3.213(b) is superfluous, and Sec.  5.184(d) would restate only that 
first sentence.
    Initially proposed Sec.  5.180(d) stated:

    The types of additional supporting evidence required by 
paragraph (c) of this section are set forth in Sec. Sec.  5.192 
through 5.194, 5.221, 5.229 and 3.211 of this chapter. Where 
evidence is set forth in a particular section in the order of 
preference, VA may accept evidence from a lower class of preference 
if it is sufficient to prove the fact at issue.

    This language was confusing. The rule was intended to explain that 
certain types of evidence are needed to

[[Page 71096]]

establish specific facts. For example, in proposed Sec.  5.192(c), a 
copy of a public record of marriage is generally more reliable and 
consequently preferred over an affidavit from the official who 
performed the marriage ceremony, and therefore, VA will not accept the 
latter unless the former is unobtainable. These rules of preference are 
more thoroughly explained in the individual paragraphs that set forth 
the hierarchy of preferred evidence, so we struck the language from 
initially proposed Sec.  5.180(d). The only text that remained were the 
cross-references to the actual rules that describe the additional 
evidence that may be provided to establish specific facts. Therefore, 
we propose to move those cross-references into Sec.  5.181(c) and 
renumber initially proposed Sec.  5.180(e) as Sec.  5.181(d). We 
further propose to add language to the specific regulations cited in 
proposed Sec.  5.181(c), which include Sec. Sec.  5.192(c), 5.221, 
5.229, and 5.500. In addition, we have determined that the list of 
cross references was incorrect. We propose to correct the list in Sec.  
5.181(c).
    Several initially proposed rules in RIN 2900-AL94 inadvertently 
added a requirement that a claimant's or beneficiary's statement filed 
as proof of marriage, termination of marriage, or birth of a child must 
be ``written''. No such requirement exists in current Sec. Sec.  
3.204(a)(1) or 3.213(a) and (c). We have therefore not included this 
requirement in Sec. Sec.  5.151(c), 5.181(b), 5.182(a), 5.183(a) or 
(b), 5.192(c), 5.193, 5.221(b), or 5.229.

Sec.  5.182 Changes in Status of Dependents

    We propose to combine the contents of initially proposed Sec. Sec.  
5.181 and 5.182 into Sec.  5.182, and reorganize and simplify the 
rules. In the revised rule, we refer in proposed Sec.  5.182(a) to a 
beneficiary's duty to report a ``[c]hange in status of a living child 
affecting who no longer meets the definition of a dependent''. This 
language replaces language in the initially proposed Sec.  5.182(a)(2) 
that had specifically discussed discontinuance of school attendance. 
The broader language in the proposed rule more accurately describes a 
beneficiary's duty to report any change in a child's status that makes 
the child no longer a dependent of the beneficiary.
    In initially proposed paragraph (a), we stated that a beneficiary 
must provide VA a statement containing the details of any change in 
dependency that could lead to a reduction or discontinuance of VA 
benefits. We required that the beneficiary report the month and year of 
the change. VA now requires the day, as well as the month and year of 
the change. We also require the city and state, or country if outside 
of a state, where the change occurred. See VA Form 21-686c, Declaration 
of Status of Dependents. We propose to amend paragraph (a) to conform 
to VA's current practice.
    We propose to remove the cross reference to Sec.  3.217, 
``Submission of statements or information affecting entitlement to 
benefits'', which was contained in initially proposed Sec.  5.181(b) 
because Sec.  5.182 contains all the relevant information needed to 
understand changes in dependency and so the cross reference is 
unnecessary.
    We propose to move what was initially proposed paragraph Sec.  
5.181(c) to proposed Sec.  5.184(d) because it is an effective-date 
rule specific to Sec.  5.184.

Sec.  5.183 Effective Date of Award of Benefits for a Dependent

    Initially proposed Sec.  5.183 stated that the effective date for 
adding a dependent is the date VA receives notice of the existence of 
the dependent. We propose to change ``notice'' to ``information''. In 
proposed Sec.  5.1, we define notice as a written document that VA 
sends to the claimant or beneficiary. To state that VA receives notice 
of the dependent would be contrary to our proposed definition of the 
term. We mean to say that a dependent will be added upon receipt of 
information of the existence of such dependent. We also propose to 
state that the ``information'' must be filed by the claimant or 
beneficiary. As stated in proposed Sec.  5.181, this regulation is 
limited to adding dependents, therefore, a claimant or beneficiary may 
establish a dependent to a new or existing award. This clarification 
does not constitute a change from the proposed rule.
    Initially proposed Sec.  5.183(a) stated that evidence of 
dependency must be received within 1 year ``of'' VA's request. We 
propose to clarify the regulation to state that the evidence must be 
received ``no later than 1 year after'' VA's request in order to 
eliminate ambiguity with regards to the date of submission of evidence. 
We have made similar changes throughout this regulation, and throughout 
this document, where we previously stated ``1 year of'' to now state 
``1 year after''. These additional changes to this rule are intended to 
simplify the general rule and the exceptions thereto. Notably, we 
propose to move paragraph (c) into paragraph (a) and reorganize 
paragraph (a).
    Initially proposed Sec.  5.183(b)(3) stated the effective date for 
establishing the dependency of an adopted child. However, it did not 
specify that in order for these dates to apply, VA must receive 
information of the adoption no later than 1 year after the event. We 
therefore propose to correct this omission by stating ``For an 
adoption, the earliest of the following dates, as applicable, if VA 
receives information about the adoption no later than 1 year after the 
adoption''. This change is consistent with Sec.  3.401(b)(1)(i) and 
current practice.

Sec.  5.184 Effective Dates of Reductions or Discontinuances Based on 
an Event That Changes Dependency Status

    We propose to combine the effective date provisions of initially 
proposed Sec. Sec.  5.181(c), 5.184, and 5.198 into one section to make 
them easier to find and to avoid redundancy. We propose to mark Sec.  
5.198 as reserved.
    As initially proposed, we referred to a marriage, divorce, 
annulment, or death as a ``change'' in dependency status. However, 
these are ``events'' that result in ``changes'' in dependency status. 
For clarity, we propose to refer to these as an ``event that changes'' 
dependency status.
    In initially proposed Sec.  5.198(b), we stated, ``VA will pay the 
reduced rate or discontinue benefits effective the first day of the 
month that follows the month in which the divorce or annulment 
occurred.'' We have determined that the term ``occurred'' was ambiguous 
because under some states' laws, the divorce or annulment does not take 
effect immediately after the court issues the decree. We therefore 
propose to revise this language to state, ``VA will pay . . . in which 
the death occurred or in which the divorce or annulment became 
effective.'' For the same reason, we propose to make a conforming 
change to Sec.  5.205(b)(1) and (2), regarding annulment, and (c)(1) 
and (2), regarding divorce.

Sec.  5.190 Status as a Spouse

    We have determined that there is no need to establish a rule for 
``status'' as a spouse. First, the term is plain language and does not 
need a specialized definition for VA purposes (unlike, for example, the 
term ``surviving spouse'', which does have a specialized meaning). 
There can be no question that a reference to a ``spouse'' is a 
reference to a person's marriage partner. Second, proposed Sec.  5.191 
more than adequately defines a valid marriage for VA purposes. To the 
extent that proposed Sec.  5.190 had implemented the 38 U.S.C. 101(31) 
requirement that a spouse be of the opposite sex, that requirement is 
contained in proposed

[[Page 71097]]

Sec.  5.191. Hence, we propose to delete this rule and mark Sec.  5.190 
as reserved.

Sec.  5.191 Marriages VA Recognizes as Valid

    Initially proposed Sec.  5.191 referred to deemed-valid marriages 
as an exception to the general rule set forth in this section. However, 
a deemed-valid marriage is not an exception to the types of marriages 
recognized by VA; rather, it is one type of such marriages. Therefore, 
we propose to restructure Sec.  5.191 and add a paragraph (c). In 
addition, we propose to change the term ``is'' valid to ``was'' valid. 
Because the laws of the states may change, we want to specify that the 
marriage had to be valid at the time that it occurred. Finally, we 
propose to change the phrase ``the right to benefits'' in Sec.  
5.191(b) to ``entitlement to benefits''. This change improves clarity 
and is consistent with the language of other part 5 VA regulations.
    Initially proposed Sec.  5.191(a) and (b) used the term ``parties'' 
to mean ``persons'', as stated in the introductory sentence. In order 
to avoid confusion, we propose to change the term ``parties'' to 
``persons'' in paragraphs (a) and (b).

Sec.  5.192 Evidence of Marriage

    As stated in our discussion of Sec.  5.181 above, VA requires the 
first type of evidence listed in the relevant section as proof of a 
certain relationship, if it is obtainable. If it is unobtainable, then 
VA will accept the next listed type of evidence that is obtainable to 
prove the relationship. In part 3, this basic principle is stated in 38 
CFR 3.204(b), which refers the reader to Sec. Sec.  3.205 through 
3.211. It is helpful to state this principle in each section where it 
applies, and we therefore propose to state it in Sec. Sec.  5.192(c), 
5.221(b)(2), 5.229, and 5.500.

Sec.  5.193 Proof of Marriage Termination Where Evidence Is in Conflict 
or Termination Is Contested

    We propose to make minor revisions to Sec.  5.193 for clarity.

Sec.  5.194 Acceptance of Divorce Decrees

    We propose to make minor revisions to Sec.  5.194 for clarity.

Sec.  5.196 Void or Annulled Marriages

    We propose to combine initially proposed Sec. Sec.  5.195 and 5.196 
to improve clarity and eliminate the need for users to refer to two 
regulations to address the issue of void or annulled marriages. The 
content of both initially proposed regulations would now appear in 
Sec.  5.196. Section 5.196(a)(1) was initially proposed as Sec.  5.195. 
Section 5.196 was initially proposed as Sec.  5.196(a). We propose to 
mark Sec.  5.195 as reserved.
    One commenter questioned VA's authority to determine whether a 
marriage was void in accordance with the law of the place that governs 
the marriage's validity. The commenter opines that 38 U.S.C. 103(c) 
does not appear to provide VA with jurisdiction or authority to make an 
independent adjudication on the validity of a veteran's marriage.
    As stated in the preamble to the initially proposed rule, current 
part 3 includes references to ``void'' marriages, but it does not 
explain the meaning of a ``void'' marriage. See 38 CFR 3.207(a). Under 
38 U.S.C. 103, VA does have the authority to make adjudicative 
decisions on the validity or legality of a marriage when determining 
whether or not a person is or was a spouse of a veteran for VA 
purposes. The commenter's suggested interpretation that the statute 
merely allows for the recognition of marriage notwithstanding contrary 
state law is not consistent with the ``whether or not'' wording of the 
statute or with VA's long-standing interpretation of the statute. The 
statute provides that determinations of validity of marriage be made 
according to the law of the place where the parties resided at the time 
of the marriage or the law of the place where the parties resided when 
the right to benefits accrued. This does not mean VA is adjudicating 
the status of the marriage for purposes of state civil law, which the 
commenter seems to misunderstand VA to be doing. We therefore propose 
to make no changes based on this comment.
    This commenter further suggests that any new rule regarding VA's 
authority to determine the validity of a marriage as it pertains to a 
veteran's surviving spouse or a veteran's child, should include a 
procedural reference of such questions to the Regional Counsel because 
VA adjudicators are generally not equipped to research and determine 
such matters. We agree with this suggestion. In fact, VA has long-
standing procedural guidelines for determination of a void marriage. In 
such cases, the Veterans Service Representative collects all of the 
pertinent information and evidence from the claimant and files the case 
with Regional Counsel for a legal opinion as to whether or not the 
marriage is void. To implement this suggestion, we have revised 
proposed Sec.  5.196 to indicate that VA Regional Counsel will make the 
determination concerning whether a marriage is void under the law of 
the place that governs the validity of the marriage.

Sec.  5.200 Surviving Spouse: Requirement of Valid Marriage to Veteran

    We propose to reorganize initially proposed Sec. Sec.  5.200 and 
5.201 to eliminate redundancy and potentially confusing cross 
referencing, and to significantly clarify the rules. First, we propose 
to renumber initially proposed Sec.  5.201 as Sec.  5.200. We have also 
renamed the rule as, ``Surviving spouse: Requirement of valid marriage 
to veteran.'' This title is more descriptive of the rules within this 
section. This reorganization is for clarity and simplification.
    In Sec.  5.200(a), we propose to simplify several initially 
proposed paragraphs to state that in order to qualify as a surviving 
spouse, the marriage between the veteran and the person by or for whom 
surviving-spouse status is sought must have met the requirements of 
Sec.  5.191, unless the ``deemed valid'' exception in paragraph (b) 
applies.
    In Sec.  5.200(b)(1), we clarify that there must have been an 
attempt at legal marriage and that the person seeking surviving-spouse 
status must have believed that a valid marriage resulted and lasted 
until the veteran died. This is not a change from current practice. We 
also clarify that the marriage must have lasted for 1 year unless the 
person had a child with the veteran. The proposed rule had required 
that a child have been both ``of or before the marriage''; however, 
because the marriage must have continued until the veteran died, the 
result is that the child may have been born at any time. Thus, the 
simplified language in Sec.  5.201(b)(1) is not substantively different 
from the current and proposed rules.
    Initially proposed Sec.  5.201(c) did not clearly define the phrase 
``no knowledge of legal impediment''. We propose to clarify the 
definition of legal impediment in initially proposed Sec.  5.201(c), 
which is now renumbered as Sec.  5.200(b)(2). This clarification is 
consistent with current practice. We also propose to clarify the 
evidence that the person must file under Sec.  5.192(c), the 
requirements of which must be met under Sec.  5.200, without any 
contradictory evidence.
    We also propose to reword the regulation text in Sec.  5.201(e), 
which is now renumbered as Sec.  5.200(b)(4), for clarity.

Sec.  5.201 Surviving Spouse: Requirements for Relationship With the 
Veteran

    We propose to renumber initially proposed Sec.  5.200 as Sec.  
5.201, and rename the section, ``Surviving spouse: Requirements for 
relationship with the

[[Page 71098]]

veteran''. This title is more descriptive of the rules within this 
section. This reorganization was made for clarity and simplification.
    Initially proposed Sec.  5.200(a)(2) (now renumbered as Sec.  
5.201(a)) specified that to qualify as a surviving spouse, that person 
must have been a member of the opposite sex from the veteran. Because 
Sec.  5.191, ``Marriages VA recognizes as valid'', requires that a 
valid marriage must be to a person of the opposite sex, that provision 
is unnecessary in Sec.  5.201(a) and we propose to remove it. We also 
propose to make several changes to improve clarity and consistency with 
the language of other VA regulations.
    We propose to move the content of initially proposed Sec.  
5.430(b), ``Marriage date requirements for Improved Death Pension'', to 
Sec.  5.201(b)(1), ``More than one marriage to the veteran.'' The 
content is based on 38 U.S.C. 103(b), which is not limited to just 
Improved Pension.
    We propose to clarify the provision concerning whether a separation 
was temporary, initially proposed as Sec.  5.200(b)(3). In Sec.  
5.201(b)(4) we propose to add the term ``with estrangement'' to modify 
``separation'' to accurately reflect the circumstances to which 
paragraph (b)(4) applies.

Sec.  5.203 Effect of Remarriage on a Surviving Spouse's Benefits

    The preamble to initially proposed Sec.  5.203(a) stated that it 
would be a new provision, restating part 38 U.S.C. 101(3), the 
statutory definition of surviving spouse. Part 3 restates the statutory 
definition of surviving spouse in Sec.  3.50(b). As a result of the 
elimination of initially proposed Sec. Sec.  5.200 and 5.202, and the 
incorporation of some of those initially proposed provisions in 
currently proposed Sec.  5.203, we now propose to restate Sec.  
3.50(b)(2) in Sec.  5.203(a)(2).
    Initially proposed Sec.  5.202 concerned the effect of a Federal 
court decision on a remarriage determination. We propose to mark Sec.  
5.202 as reserved, and include this rule in Sec.  5.203(a)(1). We also 
propose to change the regulation text in proposed Sec.  5.203(a)(1) 
from ``In determining eligibility for pension, death compensation, or 
dependency and indemnity compensation'' to ``In determining eligibility 
for benefits'' to clarify that the rule applies to all benefits based 
on surviving-spouse status. It simplifies the regulation.
    We propose to revise the language of initially proposed paragraph 
(c)(4), now redesignated as (d)(4), by removing the phrase ``openly to 
the public''. That phrase is unnecessary because that provision is 
already stated in paragraph (a)(2). For the same reason, we have 
removed that phrase from initially proposed paragraph (d)(1)(iii), now 
redesignated as paragraph (e)(1)(iii).
    One commenter questioned why there was a rule that allowed 
reinstatement of benefits to a surviving spouse who is no longer 
remarried because of the death of the second spouse, but there was no 
rule that allowed the surviving spouse to establish her initial 
entitlement to benefits after the death of her second spouse. The 
commenter provided the following example. A surviving spouse is married 
to the veteran for over 30 years. The veteran subsequently dies and the 
surviving spouse remarries, but the surviving spouse's second husband 
dies after several years of marriage. After the death of her second 
husband, the surviving spouse wants to claim VA benefits. The commenter 
further indicated that VA allows for the surviving spouse to receive 
benefits only if her second husband died before November 1, 1990, but 
in the scenario that was presented, the veteran died in January 1991. 
The commenter contends that the surviving spouse would not be entitled 
to benefits because this is not considered to be a reinstatement of 
benefits, but rather a first-time application. Initially proposed Sec.  
5.203(c) stated that the surviving spouse of the veteran may be 
entitled to receive benefits if the remarriage ended before November 1, 
1990. This rule corroborates the commenter's statement. However, 
initially proposed Sec.  5.203(d) (now Sec.  5.203(e)) allowed a 
surviving spouse to be eligible for benefits if he or she was otherwise 
ineligible for DIC under the laws in effect prior to June 9, 1998, 
because of the surviving spouse's remarriage after the veteran's death. 
Although the surviving spouse's eligibility to DIC is said to be 
reinstated under Sec.  5.203(e), this section applies to reopened as 
well as original claims. The limitation is that no payments may be 
issued for any period before October 1, 1998. Because proposed Sec.  
5.203(e) already addresses the concerns of the commenter, we propose to 
take no action based on this comment.
    We propose to clarify Sec.  5.203(e)(2) to state that no payments 
may be made for any period before October 1, 1998. The regulation text 
stated the month, and year, but failed to state the date. The exact 
date is needed in order to avoid an erroneous payment.
    We also propose to clarify Sec.  5.203(f)(2) to state that no 
payments may be made for any period before January 1, 2004. The 
regulation text stated the month and year, but failed to state the 
date. The exact date is needed in order to avoid an erroneous payment.

Sec.  5.220 Status as a Child for VA Benefit Purposes

    We propose to reword the introductory text in Sec.  5.220 for 
clarity by improving sentence structure.
    Initially proposed Sec.  5.220(a), began with the exception prior 
to the rule. To improve readability, we propose to place the exception 
at the end of the general rule.
    In nitially proposed Sec.  5.220(b)(2)(i), which is now paragraph 
(b)(1), we referred to a child who is ``incapable of self-support 
through his or her own efforts by reason of physical or mental 
disability''. We propose to eliminate the phrase ``through his or her 
own efforts'' because it is redundant of ``self-support'' and might be 
misinterpreted to mean that the child intentionally caused his or her 
incapacity, which is clearly not what we intended.
    We propose to move the content of initially proposed Sec.  
5.220(c)(2) to Sec.  5.226(c). Section 5.226(c) elaborates on the 
criteria set forth in Sec.  5.220(c)(2). This approach also enables us 
to eliminate the need to refer back to Sec.  5.220 in Sec.  5.226(c). 
We will leave Sec.  5.220(c)(2) as a cross-reference to Sec.  5.226.
    We propose to add a new paragraph (d) to proposed Sec.  5.220. In 
accordance with Sec.  3.503(a)(2), this new paragraph would provide 
that a person is still considered a child of a veteran even if the 
person has entered active duty.

Sec.  5.221 Evidence To Establish a Parent/Natural Child Relationship

    We propose to reword the regulation text in Sec.  5.221(a)(2) for 
clarity.
    We propose to delete Sec.  5.221(a)(2)--Note. The content of the 
Note is adequately covered in Sec.  5.220(c)(2), so it is unnecessary.
    Initially proposed Sec.  5.221(b)(2)(iii)(A) limited evidence of 
paternity to church records of baptism without referencing other 
religions. We propose to revise the rule to allow any ``religious-
context record documenting the birth of the child'' in order to 
eliminate any perceived bias for or against a particular religion or 
faith. We propose to add similar language to Sec.  5.229(b).

Sec.  5.222 Evidence To Establish an Adopted Child Relationship

    We propose to add a sentence to the initially proposed undesignated 
first paragraph to state the purpose of this section. We propose to 
make technical revisions to Sec.  5.222 to clarify that this rule is an 
exception to Sec.  5.181(b). We

[[Page 71099]]

propose to make similar clarifications to Sec. Sec.  5.223 and 5.224.
    We propose to add an order of preference of types of evidence VA 
requires to prove an adopted child relationship. We explained orders of 
preference for evidence in our discussion of Sec.  5.181.

Sec.  5.223 Child Adopted After a Veteran's Death

    Originally proposed Sec.  5.223 (a) (now (b)) required, inter alia, 
that, ``The person adopted was living in the veteran's household at the 
time of the veteran's death . . .'' This language was based on Sec.  
3.57(c)(1). Upon further review, we note that Sec.  3.210(c)(2) uses 
the phrase ``was a member of the veteran's household'' to describe the 
same criteria for children adopted after a veteran's death. To make 
Sec.  5.223(b) consistent with similar provisions in part 5 (Sec. Sec.  
5.220, 5.226, 5.233, 5.332) we propose to change the paragraph to read, 
``was a member of the veteran's household''. We therefore propose not 
to restate the language of Sec.  3.57(c)(1) and (3) in part 5 because 
it is redundant of the language in Sec.  3.210(c)(2).

Sec.  5.225 Child Status Based on Adoption Into a Veteran's Family 
Under Foreign Law

    Our definition of ``State'' in Sec.  5.1 includes territories and 
possessions of the US. Therefore it is unnecessary to include the 
Commonwealth of the Northern Mariana Islands in this section. We 
propose to remove it.

Sec.  5.227 Child Status Based on Permanent Incapacity for Self-Support

    We have clarified the regulation text in Sec.  5.227(b)(1)(iv). The 
initially proposed rule said that ``evidence that a person was not 
employed before or after reaching 18 years old tends to show incapacity 
for self support when the lack of employment was due to the person's 
physical or mental disabilities and not due to unwillingness to work or 
other factors unrelated to the person's disability.'' We believe that 
the phrase ``before or after reaching 18 years old'' could be unclear 
and we therefore propose to clearly state that the rule applies to a 
person who ``has never been employed''.
    We propose to revise initially proposed Sec.  5.227(c) to clarify 
that this rule does not exclude from consideration any particular 
evidence or require that any evidence should be treated more favorably. 
The rule simply provides guidance to VA employees and to the public 
about likely sources of evidence relevant to the question whether a 
person is permanently incapacitated.

Sec.  5.228 Exceptions Applicable to Termination of Child Status Based 
on Marriage of the Child

    We propose to add an introductory sentence to give context to 
initially proposed Sec.  5.228.

Sec.  5.229 Proof of Age or Birth

    We propose to revise initially proposed Sec.  5.229 to clearly 
state that the evidence described therein must be provided in 
accordance with the order of preference in which it is listed, as 
discussed earlier in proposed Sec.  5.192, and have also reorganized 
the rule to improve readability.
    In addition, we propose to remove the cross reference to Sec.  
5.180(e) (now Sec.  5.181(d)), ``Acceptability of photocopies''. That 
paragraph applies equally to all of the sections listed in Sec.  
5.181(c), so there is no need to reference it in any of those sections.
    In the initially proposed paragraph (a)(4) we inadvertently changed 
the persons who could certify a birth. We stated that a claimant or 
beneficiary could prove age or birth with ``[a]n affidavit or certified 
statement from a physician or midwife present during the birth''. 
However, 38 CFR 3.209(d), from which this paragraph derives, allows 
proof of age or birth with an ``[a]ffidavit or a certified statement of 
the physician or midwife in attendance at birth''. We propose to use 
this language because it is a more precise statement of the 
requirement.

Sec.  5.230 Effective Date of Award of Pension or Dependency and 
Indemnity Compensation to, or for, a Child Born After the Veteran's 
Death

    We propose to reword the section for clarity.

Sec.  5.234 Effective Date of an Award, Reduction, or Discontinuance of 
Benefits Based on Child Status Due to Permanent Incapacity for Self-
Support

    We propose to restructure initially proposed Sec.  5.234(a), by 
creating separate paragraphs (a)(1) and (2) for effective dates of 
awards and for reductions and discontinuances. We believe this 
structure will better inform readers on the contents of this section.

Sec.  5.238 Status as Veteran's Parent

    In initially proposed Sec.  5.240(c) we stated that the term 
``parent'' includes a natural mother or father of an illegitimate child 
``if the usual family relationship existed.'' Upon further review, we 
have determined that there is no statutory or regulatory authority for 
this provision, and we therefore propose to remove it.

Comment Relating to a Different Portion of This Rulemaking

    A comment was submitted by a member of the public concerning title 
32 National Guard troops suggesting that their active duty for training 
be considered as ``active duty'', thereby allowing them veteran status. 
This comment is outside the scope of this proposed rule published under 
RIN 2900-AL94, but is relevant to another NPRM, RIN 2900-AL67, 
``Service Requirements for Veterans''. This comment was addressed 
together with all of the other submissions received in connection with 
RIN 2900-AL67.

Changes in Terminology for Clarity and/or Consistency

    We also propose to correct our use of the terms ``claim'' and 
``application''. Under 38 CFR 3.1(p), ``Claim--Application'' is defined 
as ``a formal or informal communication in writing requesting a 
determination of entitlement, or evidencing a belief in entitlement, to 
a benefit''. As stated in initially proposed Sec.  5.1, for purposes of 
part 5, ``claim means a formal or informal communication in writing 
requesting a determination of entitlement or evidencing a belief in 
entitlement, to a VA benefit under this part'' and as stated in 
proposed Sec.  5.1, ``application means a specific form required by the 
Secretary that a claimant must file to apply for a benefit''. We 
similarly propose to edit the part 5 regulations proposed in AL94 to 
correct other inconsistencies in terminology.

X. Subpart E: Claims for Service Connection and Disability Compensation 
Service-Connected and Other Disability Compensation

A. Service-Connected and Other Disability Compensation

    In a document published in the Federal Register on September 1, 
2010, we proposed to revise VA regulations governing service-connected 
and other disability compensation. See 75 FR 53744. We provided a 60-
day comment period that ended November 1, 2010. We received submissions 
from 10 commenters: National Organization of Veterans Advocates, 
National Veterans Legal Services Program, Paralyzed Veterans of 
America, Vietnam Veterans of America, and six members of the general 
public.
    One AM07 commenter commended VA ``for the hard work and dedication 
that its personnel have put into this important project'' and stated 
that,

[[Page 71100]]

``Overall . . . VA did achieve its goals to make its service-connected 
regulations `logical, claimant-focused and user friendly[.]' ''
    One commenter stated that while the general idea of the proposed 
rule is good, some of the proposed changes may be adverse to veterans. 
However, the commenter did not specifically explain which changes might 
be adverse. The commenter also urged that VA offer online access to 
court decisions cited in its rulemaking documents.
    Because the commenter did not specifically explain which changes 
might be adverse to veterans, we cannot respond to that assertion, and 
we propose to make no change based on that comment. Regarding the 
suggestion on court decisions, we note that decisions of the U.S. Court 
of Appeals for Veterans Claims are available on their Web site at 
www.courts.cavc.gov and decisions of the U.S. Court of Appeals for the 
Federal Circuit are available at http://www.cafc.courts.gov. We 
therefore propose to make no changes based on these comments.
    Another commenter asserted that because of the complexity of the 
regulations proposed in AM07, veterans will incur very expensive legal 
costs in order to interpret them and determine what benefits they are 
entitled to. The commenter urged VA to add a section at the end of part 
5 outlining what a veteran's options are if the veteran disagrees with 
a VA decision. The commenter also suggested that VA provide a telephone 
number to call in the event that a veteran does not understand the 
final rule on part 5.
    VA's intent in rewriting these regulations was to make them less 
complex. To the extent that commenter believes that he or she requires 
assistance in preparing a claim for benefits, VA has recognized 87 
Veterans Service Organizations (VSO) for purposes of providing no-cost 
assistance with claims for VA benefits. Each of these VSOs has 
accredited representatives available to help veterans in preparing 
claims. A searchable list of recognized VSOs and accredited 
representatives is available at http://www.va.gov/ogc/apps/accreditation/index.asp.
    The regulations on how to file a notice of disagreement with a VA 
decision are found in 38 CFR parts 19-20, not in part 3, so that 
comment is outside the scope of this rulemaking. VA does not offer a 
phone number for purpose of explaining its regulations; we do not 
believe that would be an efficient use of government resources. But VA 
does have a number where veterans can call to inquire about the status 
of their benefits claims (1-800-827-1000), which veterans find very 
helpful. For these reasons, we propose to make no changes based on this 
comment.
    One commenter stated that he is opposed to ``patient registries'' 
in the prescription process and that all drugs should be taken or not 
at the discretion of the patient with the advice of his or her doctor. 
Because this comment is outside the scope of this rulemaking, we 
propose to make no change.
    One commenter urged that VA suspend its Regulation Rewrite Project 
until it is shown how the implementation of part 5 will interact with 
certain other VA programs: Virtual VA, Virtual Regional Office and the 
Veterans Benefits Management System. We do not believe that the 
implementation of part 5 will disrupt those information technology 
systems because they were designed to accommodate changes in law or 
regulation. VA will attempt to implement part 5 in a manner that causes 
the minimum possible disruption to VA claims processing operations. We 
believe that over the long term, having clear regulations for our 
employees to apply will significantly improve timeliness and accuracy 
in claims processing.

Sec.  5.242 General Principles of Service Connection

    Initially proposed Sec.  5.242(a) states that ``VA will give due 
consideration to any evidence of record concerning the places, types, 
and circumstances of the veteran's service . . .'' One commenter 
suggested that we insert the phrase ``and records constructively in the 
VA's possession'' after ``evidence'', to ensure that VA complies with 
the constructive possession rule set forth in Bell v. Derwinski, 2 Vet. 
App. 611 (1992).
    We do not believe it is necessary to include Bell's constructive 
possession rule in VA regulations, and doing so might actually confuse 
readers. Any evidence that is constructively in VA's possession would 
already be encompassed by the rule in Sec.  5.4(b) that VA decisions 
will be based on a review of the entire record. Adding that this 
includes evidence within VA's possession and which could reasonably be 
expected to be a part of the record could imply a requirement that the 
agency of original jurisdiction (AOJ) must consider material that is 
not actually in the record, which would be impossible. Furthermore, if 
the AOJ is aware of such evidence and it is ``necessary to substantiate 
the claim'', then the AOJ is already under a duty to obtain it and add 
it to the record (see 38 CFR 3.159, to be codified in part 5 as Sec.  
5.90). We therefore propose to make no change based on this comment.
    One commenter expressed concern that we did not repeat in proposed 
Sec.  5.242 the following language from 38 CFR 3.303(a): 
``Determinations as to service connection will be based on review of 
the entire evidence of record, with due consideration to the policy of 
the Department of Veterans Affairs to administer the law under a broad 
and liberal interpretation consistent with the facts in each individual 
case.''
    We inadvertently failed to explain why we did not include this 
language in initially proposed Sec.  5.242. Because proposed Sec.  
5.4(b) would clearly state that ``VA will base its decisions on a 
review of the entire record'', we believe it would be redundant and 
possibly confusing to restate this principle in specific sections in 
part 5 (as does part 3). Similarly, Sec.  5.4(b) states:

    It is VA's defined and consistently applied policy to administer 
the law under a broad interpretation, consistent with the facts 
shown in every case. VA will make decisions that grant every benefit 
that the law supports while at the same time protecting the 
interests of the Government.

    Since this language is substantially the same as the language 
quoted by the commenter, and it applies to all VA claims rather than 
just service connection, there is no need to repeat it in Sec.  5.242.
    One commenter urged VA to establish a new policy by revising 
initially proposed Sec.  5.242 to create a presumption based on H.R. 
1490, 110th Congress, 1st session. The commenter suggested that VA 
include the following language in Sec.  5.242(c):

    (1) A claimant presenting a claim for benefits with respect to a 
service-connected disability or death shall be presumed to have 
presented a valid claim of service connectedness, subject to the 
requirements of subparagraph (2), unless the Secretary determines 
that there is clear and convincing evidence to the contrary.
    (2) A claimant presenting a claim described under subparagraph 
(1) shall be required to support such claim with proof of service 
referred to in such claim, and a brief description of the nature, 
including the connection to such service, of the disability or 
claim.

    The commenter asserted that this presumption would allow VA to 
quickly process backlogged claims.
    The purpose of the Regulation Rewrite Project is to make VA's 
compensation and pension regulations more logical, claimant-focused, 
and user-friendly, not to serve as a vehicle for making major changes 
to VA

[[Page 71101]]

policies. Thus, the comment is outside the scope of this rulemaking.

Sec.  5.243 Establishing Service Connection.

    Two commenters expressed concern that VA's use of the term 
``proximately caused'' in proposed Sec.  5.243(a) would improperly 
narrow the criteria for showing incurrence or aggravation. One of these 
commenters believed that using the term would improperly import a 
restrictive tort law concept into VA's regulations on service 
connection. Although this was not our intent, to avoid any such 
misinterpretation, we propose to revise the term to ``due to or the 
result of'' as suggested by one of the commenters. For the same reason, 
we propose to make the same revision in Sec. Sec.  5.246 and 5.247.
    One of these commenters also rejected the use of term ``caused by'' 
in proposed Sec.  5.241(a) and (b), which the commenter suggested be 
changed to `` `incurred' or `aggravated' '' (as in current 38 CFR 
3.1(k) and 3.303(a)) or ``related to''. The commenter similarly, urged 
VA to replace ``proximately caused'' in proposed Sec.  5.243(a) with 
``related to'' and ``causal link'' in proposed Sec.  5.243(a)(3) with 
``relationship.'' The commenter acknowledged that, as we noted in the 
preamble to proposed Sec.  5.243, the court in Shedden v. Principi, 381 
F.3d 1163, 1166-67 (Fed. Cir. 2004) explained that service connection 
requires ``a causal relationship between the present disability and the 
disease or injury incurred or aggravated during service'' (citing 
Caluza v. Brown, 7 Vet. App. 498, 505 (1995)). Nevertheless, the 
commenter believed that use of the causation terms that VA proposed in 
Sec. Sec.  5.241 and 5.243 will cause confusion by imposing a ``strict 
medical standard'' in cases where it would be ``inappropriate and 
excessive.'' The commenter asserted that diseases such as 
tempromandibular joint syndrome and ulcers ``may not be susceptible to 
definitive proof that the disease was `caused by' the incident in 
service.'' The commenter also noted that VA has determined that there 
is a positive association between herbicides and three medical 
conditions ``even though there is no proof that exposure to herbicides 
caused veterans to develop the conditions.''
    As a preliminary matter, we note that the language ``proximately 
caused'' in proposed Sec.  5.243(a) was merely a recitation of the 
title of proposed Sec.  5.246, rather than regulation text. More 
fundamentally, we note that the ``causal relationship'' principle set 
forth in the Caluza case is a well established principle of veterans 
law and no court has held that it is in any way inconsistent with the 
regulatory language in Sec. Sec.  3.1(k) or 3.303(a). We disagree with 
the assertion that the use of the terms that VA proposed will cause 
confusion by imposing a ``strict medical standard'' in cases where it 
would be ``inappropriate and excessive'' and the commenter offers no 
support for this assertion. We likewise disagree with the assertion 
that the proposed rules would impose some new ``definitive proof'' 
standard for diseases such as temporomandibular joint syndrome and 
ulcers, and again the commenter offers no support for this assertion. 
Regarding the commenter's statement that VA has determined that there 
is a positive association between herbicides and three medical 
conditions ``even though there is no proof that exposure to herbicides 
caused veterans to develop the conditions'', we note that this 
determination was made pursuant to an entirely different statute (38 
U.S.C. 1116) than the statutes that authorize the causation terms used 
in Sec. Sec.  5.241 and 5.243 (38 U.S.C. 1110 and 1131). Our use of the 
causation terms in Sec. Sec.  5.241 and 5.243 will express the same 
concepts as stated in Sec. Sec.  3.1(k) or 3.303(a), with no 
substantive change, and in a way that is more clear to those using the 
regulations. For these reasons, we propose to make no changes based on 
these comments.
    One commenter urged that, in order to comply with the standard for 
continuity of symptomatology contained in Savage v. Gober, 10 Vet. App. 
488, 498 (1997), VA should revise initially proposed Sec.  5.243(d) by 
inserting ``injury or disease'' before ``or signs or symptoms'' in 
paragraphs (d)(1) and (2) and also in paragraph (d)(3). For the same 
reason, the commenter also suggested that VA revise paragraph (d)(3) to 
read, ``(3) Competent evidence relates a present injury or disease or 
present signs or symptoms to the injury or disease or signs or symptoms 
which occurred during service or during an applicable presumptive 
period for a disease.''
    Regarding the suggested additions to paragraphs (d)(1) and (2), we 
note that the Savage court summarized the continuity provision of 38 
CFR 3.303(b) as follows:


    In sum, then, the rule here established is as follows * * * If 
the chronicity provision is not applicable, a claim may still be 
well grounded or reopened on the basis of Sec.  3.303(b) if the 
condition is observed during service or any applicable presumption 
period, continuity of symptomatology is demonstrated thereafter, and 
competent evidence relates the present condition to that 
symptomatology.


Id.
    In initially proposed Sec.  5.243(d)(1) we incorporated the 
requirement, as stated by the Savage court, ``that the condition [was] 
observed during service or any applicable presumption period'' with the 
phrase ``signs or symptoms of an injury or disease during active 
military service or during an applicable presumptive period.'' In 
initially proposed paragraph (d)(2) we incorporated the requirement, as 
stated by the court, that ``continuity of symptomatology [was] 
demonstrated thereafter'' with the phrase ``The signs or symptoms 
continued from the time of discharge . . . until the present.'' In 
initially proposed paragraph (d)(3) we incorporated the requirement, as 
stated by the court, ``that competent evidence relates the present 
condition to that symptomatology'' with the phrase ``The signs or 
symptoms currently demonstrated are signs or symptoms of an injury or 
disease, or the residuals of an injury or disease, to which paragraph 
(d)(1) of this section refers.''
    We believe that the language of initially proposed Sec.  5.243(d) 
accurately restates the intent of current Sec.  3.303(b) as summarized 
by the Savage court. As the court stated, the keys to the continuity 
doctrine are that ``the condition is observed [through signs or 
symptoms] during service or any applicable presumption period, 
continuity of symptomatology [i.e. signs or symptoms] is demonstrated 
thereafter, and competent evidence relates the present condition to 
that symptomatology.'' Savage, 10 Vet. App. at 498. Following the 
commenter's suggestion of inserting ``injury or disease'' would 
introduce a new element to the doctrine which is not found in Sec.  
3.303(b) nor the court cases interpreting that paragraph. Moreover, it 
would risk confusing readers by blurring the line between the 
chronicity doctrine and the continuity doctrine. For these reasons, we 
propose to make no change based on this comment.
    Since we published AM07, ``Service-Connected and Other Disability 
Compensation'' 75 FR 53744 (Sept. 1, 2010), VA has determined that 
initially proposed Sec.  5.243 did not accurately restate current Sec.  
3.303(b) in the following respect. Section 5.243 would have made 
``continuity of symptomatology'' a separate method of showing service 
connection distinct from the ``chronicity'' method set forth in Sec.  
3.303(b). In Walker v. Shinseki, 708 F.3d 1331 (Fed. Cir. 2013), the 
U.S. Court of Appeals for the Federal Circuit explained the correct 
interpretation of these Sec.  3.303(b) provisions. The Court held that 
continuity of symptomatology

[[Page 71102]]

is actually a means of proving the existence of a chronic disease 
during military service or an applicable presumptive period. We now 
propose to correct the error contained in the NPRM by revising the 
provisions of initially proposed Sec.  5.243(d), which we are moving 
into paragraph (c).
    In addition to misstating the role of continuity of symptomatology, 
we erroneously stated in initially proposed Sec.  5.243 that the term 
``chronic disease'' included other diseases besides those listed in 
current Sec.  3.309(a). The Walker court clarified that the term 
``chronic disease'', as used in Sec.  3.303(b), means only a disease 
listed in Sec.  3.309(a) and no others. Id. at 1338. We propose to 
clarify this point in Sec.  5.243(c)(2).
    Lastly, we note that initially proposed paragraph (d)(2), which 
stated, ``The signs or symptoms continued from the time of discharge or 
release from active military service until the present'', omitted a 
presumptive period. To correct this omission, we propose to insert ``or 
from the end of an applicable presumptive period for a disease'' in 
Sec.  5.243.
    In AM07, we stated:

    VA's long-standing practice is to apply the principles of 
chronicity and continuity to residuals of injury. This practice 
provides a fair and efficient means to determine service connection 
in certain cases, and it is logical to apply these principles to 
injuries as well as to diseases. Therefore, proposed Sec.  
5.243(c)(1) would also apply to an injury incurred or aggravated in 
service where the current disability is due to ``the chronic 
residuals of the same injury.''

    The court rejected the argument that Sec.  3.303(b) applies to 
injuries as well as to chronic diseases, stating, ``We thus reject 
Walker's broader argument that continuity of symptomatology in Sec.  
3.303(b) has any role other than to afford an alternative route to 
service connection for specific chronic diseases.'' Id. The court also 
noted that, ``The Secretary is free to amend Sec.  3.309(a) if he 
determines that chronic diseases beyond those currently listed should 
benefit from the application of Sec.  3.303(b),'' and noted that, ``the 
Secretary is currently considering a substantial revision of his 
regulations concerning service connection for disability 
compensation'', referring to VA's Regulation Rewrite Project. Id.
    As stated above in this preamble, our Veterans Benefits 
Administration's Transformation Plan will use improved technology and 
work methods to process disability claims more efficiently. VA has 
determined that significantly revising the substantive content of our 
service connection regulations at this time might interfere with this 
transformation. Moreover, further study is needed to determine the 
potential impact of such changes, after which VA may conduct a separate 
rulemaking for this purpose. We therefore propose not to include 
injuries in Sec.  5.243(c).

Sec.  5.244 Presumption of Sound Condition on Entry Into Military 
Service

    Initially proposed Sec.  5.244(c)(2) stated, ``The presumption of 
sound condition is rebuttable even if an entry medical examination 
shows that the examiner tested specifically for a certain injury or 
disease and did not find that injury or disease, if other evidence of 
record is sufficient to overcome the presumption.''
    One commenter urged that VA clarify paragraph (c)(2) by revising it 
to read, ``The presumption of sound condition is rebuttable, in 
accordance with subsection (d)(1), below, even if an entry medical 
examination shows that the examiner tested specifically for a certain 
injury or disease and did not find that injury or disease, provided 
other evidence of record is sufficient to overcome the presumption.'' 
The commenter asserted that this revision is needed to ensure the 
paragraph complies with Kent v. Principi, 389 F.3d 1380, 1383 (Fed. 
Cir. 2004).
    As we stated in the preamble to AM07, we added paragraph (c)(2), 
which has no part 3 counterpart, to incorporate the Kent holding into 
VA regulations. The commenter offers no explanation of how initially 
proposed paragraph (c)(2) is inconsistent with Kent nor how it is 
unclear in any way. Furthermore, the clear and unmistakable evidence 
standard of paragraph already applies to rebuttal of the presumption of 
service connection. We therefore make no change based on this comment.
    We propose to exclude initially proposed Sec.  5.244(b) because it 
is contrary to judicial interpretation of 38 U.S.C. 1111. Smith v. 
Shinseki, 24 Vet. App. 40 (2010); Crowe v. Brown, 7 Vet. App. 238 
(1994). Proposed Sec.  5.244, the part 5 counterpart of 38 CFR 
3.304(b), would implement 38 U.S.C. 1111, the presumption of sound 
condition. We initially proposed paragraph (b), which has no part 3 
counterpart, to ``clarify that the presumption of sound condition 
attaches even if the military service department did not conduct an 
entry medical examination, or if there is no record of an entry 
examination.'' 75 FR 53744, 53750 (Sep. 1, 2010). We explained that 
``if there was no entry medical examination, then there could be no 
`defects, infirmities, or disorders noted at the time of the 
examination, acceptance, and enrollment' that would serve to prevent 
the presumption from arising.'' Id.
    Initially proposed at 75 FR 53764, paragraph (b) described a report 
of entry examination not a condition for application of the presumption 
as a presumption of sound condition applies even if:
     The veteran did not have a medical examination for entry 
into active military service; or
     There is no record of the examination.
    In drafting paragraph (b), we overlooked precedent decisions of the 
U.S. Court of Appeals for Veterans Claims (CAVC) that held that 38 
U.S.C. 1111 requires an entry examination for the presumption to apply. 
In Smith, the court stated that section 1111 ``provides that the 
presumption applies when a veteran has been `examined, accepted, and 
enrolled for service.''' 24 Vet. App. at 45. The court said, ``Plainly, 
the statute requires that there be an examination prior to entry into 
the period of service on which the claim is based.'' Id. Although Ms. 
Smith ``attained veteran status because she served the required period 
of active duty service,'' id. at 44, the presumption could not apply in 
her case because there was no evidence of ``an examination made 
contemporaneous with [her] entry'' into the periods of active duty for 
training with the National Guard on which she based her claim. Id. at 
46.
    The court explained that ``[i]n the absence of such an examination, 
there is no basis from which to determine whether the claimant was in 
sound condition upon entry into that period of service on which the 
claim is based.'' Id. at 45. The court's reason why the statute 
precludes applying the presumption when there was no contemporaneous 
entry examination, or no evidence of one, was essentially the opposite 
of our reason why the presumption could apply in those situations.
    In Crowe, 7 Vet. App. at 245 (1994), the court stated that the 
presumption of sound condition ``attaches only where there has been an 
induction examination in which the later-complained-of disability was 
not detected.'' Though the court focused on the term ``noted'' in 
section 1111, as VA interpreted the term in 38 CFR 3.304(b), the 
statement is direct and unequivocal.
    Neither Smith nor Crowe was a case of a claimant for disability 
compensation who sought to apply the presumption of sound condition to 
a period of active duty even though he or she had no entry examination. 
Neither Smith nor Crowe was a case of a veteran

[[Page 71103]]

of active duty who claimed to have had an entry examination, but there 
is no record of it. Nonetheless, both decisions made unequivocal 
statements that mean, in essence, if there was no entry examination, 
the presumption cannot apply. VA must give deference to the court's 
interpretation of the plain meaning of a statute. See Cypert v. Peake, 
22 Vet. App. 307, 311 (2008) (Deference to department's regulation not 
warranted when its interpretation of a statute is contrary to the plain 
meaning of the statutory language). We conclude that the court's 
interpretation of Sec.  1111 in both cases precludes initially proposed 
Sec.  5.244(b). Consequently, we have removed it from proposed part 5. 
We also propose to redesignate paragraphs (c) and (d) as (b) and (c), 
respectively.
    In proposed rule AM07, ``Service-Connected and Other Disability 
Compensation,'' 75 FR 53744 (Sept. 1, 2010), we in advertently omitted 
the first five sentences of current Sec.  3.303(c). We now propose to 
insert these sentences, with only minor stylistic changes to improve 
readability, as Sec.  5.244(d).

Sec.  5.245 Service Connection Based on Aggravation of Preservice 
Injury or Disease

    Initially proposed Sec.  5.245(b)(3) stated the usual effects of 
medical or surgical treatment in service that ameliorates a preexisting 
injury or disease, such as postoperative scars, or absent or poorly 
functioning parts or organs, are not an increase in the severity of the 
underlying condition and they will not be service connected unless the 
preexisting injury or disease was otherwise aggravated by service.
    One commenter urged that VA clarify paragraph (b)(3) by revising it 
to read:

    (3) Effects of medical or surgical treatment. Where medical 
evidence establishes by clear and convincing evidence that the usual 
effects of medical or surgical treatment provided to a veteran in 
service to ameliorate a preexisting injury or disease, such as 
postoperative scars, or absent or poorly functioning parts or 
organs, do not constitute an increase in the severity of the 
underlying condition, they will not be service connected unless the 
preexisting injury or disease was otherwise aggravated by service 
(emphasis added).

    The commenter asserted that this revision is needed to ensure the 
paragraph complies with Hines v. Principi, 18 Vet. App. 227, 241-42 
(2004).
    As a preliminary matter, we note that the Hines case does not 
impose any requirement that there be ``clear and convincing'' evidence 
that the usual effects of treatment provided during service do not 
constitute an increase in the severity of the underlying condition. 
Likewise, there is no such requirement in current Sec.  3.306(b)(1), 
the regulation on which initially proposed Sec.  5.245(b)(3) was based. 
The commenter offers no explanation of how initially proposed paragraph 
(b)(3) is inconsistent with Hines or Sec.  3.306(b)(1) nor how it is 
unclear in any way. We therefore propose to make no change based on 
this comment.

Sec.  5.249 Special Service Connection Rules for Combat-Related Injury 
or Disease

    One commenter urged VA to establish a new policy by revising 
initally proposed Sec.  5.249 to create a presumption based on H.R. 
6732, 110th Congress, 2nd session. The commenter suggested that VA 
include the following language in Sec.  5.249: ``(iii) Deployment 
during service to a theatre of combat operations or hostilities during 
a period of war.''
    The purpose of the Regulation Rewrite Project is to make VA's 
compensation and pension regulations more logical, claimant-focused, 
and user-friendly, not to serve as a vehicle for making major changes 
to VA policies. Thus, the comment is outside the scope of this 
rulemaking.

Sec.  5.250 Service Cnnection for Posttraumatic Stress Disorder

    One commenter expressed concern that proposed Sec.  5.250 modifies 
the provision in 38 CFR 3.304(f) that states, ``[i]f the evidence 
establishes that the veteran engaged in combat with the enemy and the 
claimed stressor is related to that combat . . . the veteran's lay 
testimony alone may establish the occurrence of the claimed in-service 
stressor.'' The commenter believed that proposed Sec.  5.250 ``shifts 
the burden to the veteran by requiring `credible evidence from any 
source, other than the claimant's statement, that corroborates the 
occurrence of the in-service stressor.' '' Another commenter also 
expressed the same concerns.
    Proposed Sec.  5.250 does not increase the burden of proof on 
veterans claiming service connection for posttraumatic stress disorder 
(PTSD). The provision quoted by the commenter is merely a restatement 
of the language in the introductory paragraph of Sec.  3.304(f). The 
special provision for combat veterans that the commenter referred to is 
discussed in proposed Sec.  5.250(d). That paragraph refers the reader 
to the rule for combat veterans contained in Sec.  5.249. As we stated 
in the NPRM preamble, because Sec.  5.249 applies to all claims, there 
is no need to repeat it in Sec.  5.250. We therefore propose to make no 
change based on this comment.
    One commenter urged that VA revise initially proposed Sec.  5.250 
to eliminate the ``credible supporting evidence'' requirement for PTSD 
stressors which would permit a VA fact-finding hearing official to 
consider a veteran's sworn, personal hearing testimony--if believed by 
the VA hearing official--as evidence that can establish that the 
veteran was exposed to an adequate stressor. The commenter asserted, 
among other things, that this requirement, which is based on an 
identical, long-standing provision in 38 CFR 3.304(f), is contrary to 
38 U.S.C. 5107(b), which states, ``The Secretary shall consider all 
information and lay and medical evidence of record in a case . . .''
    We respectfully note that the legal arguments raised by the 
commenter were addressed and rejected by the U.S. Court of Appeals for 
the Federal Circuit in Nat'l Org. of Veterans Advocates v. Sec'y of 
Veterans Affairs, 330 F. 3d 1345 (Fed. Cir. 2003). In NOVA, the court 
expressly held that Sec.  3.304(f) does not permit VA to deny service 
connection for PTSD in non-combat veterans without considering all the 
information and evidence of record in cluding lay evidence. 330 F.3d at 
1352. It went on to hold that Sec.  3.304(f) was consistent with 38 
U.S.C. 5107. Id. Because the court has upheld this provision, and 
because we continue to believe that the rationale for the requirement 
is valid, we propose to make no changes based on this comment.
    Initially proposed Sec.  5.250(a)(1), required that in claims for 
service connection for PTSD, there must be ``[m]edical evidence 
diagnosing PTSD in accordance with Sec.  4.125(a) of this chapter.'' 75 
FR at 53765. See 38 CFR 4.125(a) (2010). Under Sec.  4.125, all mental 
disorder diagnoses must conform to the American Psychiatric 
Association's Diagnostic and Statistical Manual of Mental Disorders, 
Fourth Edition (1994) (``DSM-IV'). Id. One commenter asserted that 
initially proposed Sec.  5.250(e)(2)(ii) is inconsistent with the DSM-
IV's first diagnostic criterion to support a diagnosis of PTSD because 
the proposed paragraph uses terms that the DSM-IV does not use. 
Specifically, the commenter noted that under the DSM-IV's first 
diagnostic criterion, a person who has been exposed to a 
psychologically traumatic event, like those events described in 
initially proposed Sec.  5.250(e)(2)(i), VA omitted the term 
``intense'' and instead stated that must have experienced a response to 
the traumatic event that

[[Page 71104]]

``involved intense fear, helplessness, or horror.'' However, under 
initially proposed Sec.  5.250(e)(2)(ii), a veteran's response to a 
traumatic event must ``involve [ ] a psychological or psycho-
physiological state of fear, helplessness, or horror.'' 75 FR at 53766. 
The commenter noted that the terms ``psychological'' and ``psycho-
physiological'' do not appear in the DSM-IV.
    We note that Sec.  5.250(e)(2)(ii) was based on a provision in 
Sec.  3.304(f)(3), which VA added by a separate rulemaking published 
July 13, 2010 (75 FR 39843) and which has been challenged in the case 
Paralyzed Veterans of America v. Sec'y of Veterans Affairs, 412 F. 
App'x 286 (Fed. Cir. 2011). We believe that it would be premature to 
revise proposed Sec.  5.250(e)(1) until the U.S. Court of Appeals for 
the Federal Circuit has rendered a decision in the above captioned 
case, and we therefore propose to make no change based on these 
comments.
    Several commenters suggested that proposed Sec.  5.250(e)(1) be 
changed to allow the stressor to be confirmed by any examining or 
treating psychiatrist or psychologist, not just a VA psychiatrist or 
psychologist. We note this provision is based on a provision in Sec.  
3.304(f)(3), which VA added by a separate rulemaking published July 13, 
2010 (75 FR 39843) and which has been challenged in the case Paralyzed 
Veterans of America v. Sec'y of Veterans Affairs, 412 F. App'x 286 
(Fed. Cir. 2011). We believe that it would be premature to revise 
proposed Sec.  5.250(e)(1) until the U.S. Court of Appeals for the 
Federal Circuit has rendered a decision in the above captioned case, 
and we therefore propose to make no change based on these comments.
    Another commenter urged VA to revise proposed Sec.  5.250 (f) 
``Special rules for establishing a stressor based on personal 
assault'', to allow veterans diagnosed with PTSD resulting from 
Military Sexual Trauma (MST) six months to respond to a VA request for 
more information about their stressor, rather than the 30 days under 
current VA practice pursuant to the Veterans Claims Assistance Act 
(VCAA). The commenter asserted that, ``Without more time veterans with 
PTSD secondary to MST are unlikely to comply.'' In support of this 
assertion, the commenter stated:

    Veterans with PTSD as a result of MST often feel guilt or shame. 
Many of these veterans have not shared with family and friends that 
they were sexually assaulted in the military. If a veteran receives 
a VCAA notice asking for additional evidence, such as statements 
regarding changes in behavior from friends and family, the guilt and 
shame that they are suffering make it unlikely that the veteran will 
respond to the 30 day deadline of the VCAA notice. Many of ICLC's 
clients are in mental health treatment facilities because of the 
impact of their PTSD secondary to MST. These clients cannot handle 
day to day functions. Responding within 30 days to a VCAA notice is 
unrealistic. This is especially true considering that the 
information the Regional Office requires can be difficult to obtain. 
Records from rape crisis centers are destroyed after a period of 
time and it can take as long as nine months to obtain service 
treatment records from the National Personnel Records Center. We 
have found that our clients need significant help and time to 
respond to the VCAA notice.

    The commenter also expressed concern that proposed Sec.  5.250(f) 
does not provide enough detail as to how a veteran will be ``advised 
that evidence from sources other than the veterans service records may 
constitute credible supporting evidence.'' The commenter noted that 
although the purpose of VA's Regulation Rewrite Project is to make VA 
regulations more logical, claimant-focused, and user-friendly, simply 
adopting 38 CFR 3.304(f)(5) ``wastes an opportunity to provide more 
concrete explanation of the type of notice that will be provided to a 
veteran with PTSD secondary to MST.''
    As a preliminary matter, we note that the procedures VA follows for 
requesting evidence from claimants is explained in proposed Sec.  5.90 
(based on current 38 CFR 3.159). These procedures apply to all claims, 
so it would be redundant to restate them in Sec.  5.250. Regarding the 
commenter's suggestion that, for military sexual trauma claims, VA 
expand the time permitted to respond to VA requests for evidence, we 
note that the commenter is correct that the purpose of the Regulation 
Rewrite Project is to make VA's compensation and pension regulations 
more logical, claimant-focused, and user-friendly, not to serve as a 
vehicle for making major changes to VA policies. Thus, the comment is 
outside the scope of this rulemaking.

Sec.  5.251 Current Disabilities for Which VA Cannot Grant Service 
Connection.

    When we initially proposed Sec.  5.251 (see 75 FR 53744, Sept. 1, 
2010), we failed to state in the preamble that proposed 5.251(c) would 
be new. It would incorporate and expand upon 38 CFR 4.127, which 
states, ``Mental retardation and personality disorders are not diseases 
or injuries for compensation purposes, and, except as provided in Sec.  
3.310(a) of this chapter, disability resulting from them may not be 
service-connected. However, disability resulting from a mental disorder 
that is superimposed upon mental retardation or a personality disorder 
may be service-connected.'' Proposed Sec.  5.251(c) expands the 
principle to recognize that the preexistence or coexistence of 
disabilities for which VA cannot grant service connection does not 
preclude granting service connection for ``superimposed'' disabilities 
that independently meet the criteria for service connection.

B. Presumptions of Service Connection for Certain Disabilities, and 
Related Matters

    In a document published in the Federal Register on July 27, 2004, 
we proposed to revise VA regulations governing presumptions of service 
connection for certain disabilities and related matters, to be 
published in new 38 CFR part 5. See 69 FR 44614. We provided a 60-day 
comment period that ended September 27, 2004. We received submissions 
from seven commenters: Disabled American Veterans, Paralyzed Veterans 
of America, Vietnam Veterans of America, and four members of the 
general public.

Undesignated Center Heading Before Sec.  5.260

    One commenter suggested that the proposed undesignated center 
heading before Sec.  5.260 is inaccurate. As proposed, it read, 
``Presumptions of Service Connection for Certain Disabilities, and 
Related Matters.'' The commenter suggested that the word 
``disabilities'' should be replaced by the word ``diseases'' because 
the presumption of service connection attaches to the disease rather 
than the disability and because it conflicts with subsequent regulatory 
language using the word ``disease''.
    We agree with the commenter that it is appropriate to add 
``diseases'' to the undesignated center heading; however, we would do 
so by inserting the word before the word ``disabilities'', rather than 
by replacing that word. The proposed undesignated center heading was 
imprecise because it was under-inclusive; however, to change the 
undesignated center heading by replacing ``disabilities'' with 
``diseases'' would also be under-inclusive because to simply refer in 
our regulations to ``diseases'' may not adequately identify to readers 
all of the medical conditions identified by the authorizing statutes. 
See, for example, 38 U.S.C. 1112 (titled ``Presumptions relating to 
certain diseases and disabilities''); 38 U.S.C.

[[Page 71105]]

1112(b)(10) and (14) (providing benefits for a ``disorder'' and a 
``syndrome''); 38 U.S.C. 1117 (authorizing compensation for 
``qualifying chronic disabilit[ies]''); and 38 CFR 3.309(c) (including 
as presumptively service connectable ``diseases'', psychosis, anxiety 
states, dysthymic disorder, and organic residuals of frostbite, which 
may not be generally understood by the public as ``diseases''). It is 
important that our regulations clearly explain the various conditions 
to which a presumption applies, irrespective of whether current medical 
authorities classify a particular condition as a ``disease'', Referring 
to ``diseases, disabilities, and related matters'' in our undesignated 
subheading will provide the most useful information to VA personnel and 
the public.
    Thus, we propose to revise both the undesignated center heading and 
the regulations herein in accordance with the above discussion. For 
example, in Sec.  5.261, we refer to ``chronic diseases'' because that 
is the term the statute uses and because the list comprises conditions 
that are commonly understood to be diseases. The sole exception might 
be a ``brain hemorrhage'', but we do not believe that including that 
condition on the long list of ``chronic diseases'' will create 
confusion. On the other hand, in Sec.  5.267(b), we provide a ``list 
[of] diseases or injuries that VA will consider associated with full-
body exposure to nitrogen mustard, sulfur mustard, or Lewisite'' 
because that list contains several items that are more commonly 
understood to be injuries, such as corneal opacities and scar 
formation.

Sec.  5.260 General Rules Governing Presumptions of Service Connection

    We propose to revise the heading of Sec.  5.260 from ``General 
rules and definitions'' to ``General rules governing presumptions of 
service connection.'' This title is more precise and more descriptive.
    We received two comments regarding Sec.  5.260(a), a new provision 
that describes the purpose of presumptions of service connection. Both 
commenters agreed that the description of presumptions and how they 
operate in Sec.  5.260(a) is accurate. However, both commenters 
suggested that VA add language to Sec.  5.260(a) to clearly define the 
term ``presumption''.
    One commenter suggested supplementing the explanation of how a 
presumption operates with a legal definition of the term 
``presumption'', in order to make clear that presumptions are a rule of 
law that must be followed unless the presumption is sufficiently 
rebutted. The commenter suggested two definitions. The first is from 
Manning v. John Hancock Mut. Life Ins. Co., 100 U.S. 693, 697-98 
(1879), which held that the existence of a fact may be presumed from 
the existence of other proven facts, so long as the presumed fact has 
an immediate connection or relation with the proven facts. The second 
definition suggested by the commenter is from ``Black's Law 
Dictionary'', 1067 (5th ed. 1979), stating that a presumption is ``a 
rule of law, statutory or judicial, by which finding of a basic fact 
gives rise to existence of presumed fact, until presumption is 
rebutted.''
    After review, we propose not to define the term ``presumption'' in 
Sec.  5.260(a). While both legal definitions of the term 
``presumption'' suggested by the commenter are correct, we do not 
believe that regulation readers will be best served by a legal 
definition of the term ``presumption'' in Sec.  5.260(a). Since the 
legal definition of a presumption is a clear concept in the law, it is 
not necessary to include such a definition to aid the courts in 
interpreting the term ``presumption''. In addition, a legal definition 
of ``presumption'' in proposed Sec.  5.260(a) would not well serve 
readers who may not be familiar with legal jargon in such a definition. 
With respect to the commenter's suggestion that VA must clarify that a 
presumption is a rule of law, we note that the mere existence of 
presumptions in both the statutes and in these regulations makes clear 
that these presumptions are in fact laws. With respect to the legal 
effect of a presumption, we have adequately explained the effect of the 
presumptions of service connection in proposed Sec.  5.260(a).
    Another commenter suggested that VA adopt the final sentence of 
Sec.  3.303(d) as the first sentence of Sec.  5.260(a), as it is a 
clear and succinct statement of the purpose of presumptions. The final 
sentence of Sec.  3.303(d) reads: ``The presumptive provisions of the 
statute and [VA] regulations implementing them are intended as 
liberalizations applicable when the evidence would not warrant service 
connection without their aid.''
    We agree in part, and propose to add the following as the first 
sentence of Sec.  5.260(a): ``Presumptions of service connection apply 
when the evidence would not warrant service connection without their 
aid.'' We do not mean to include the characterization of the 
presumptions as liberalizations because such a characterization is not 
helpful. Although it is true that presumptions of service connection 
allow veterans who might not be able to establish direct service 
connection to have their disease service connected, it is misleading to 
refer to them as liberalizations. The effect of a liberalizing law is 
provided for in Sec.  5.152, and we do not want Sec.  5.260(a) to 
confuse that section with the general law governing presumptions of 
service connection.
    In addition, we determined that in initially proposed Sec.  5.260, 
we failed to include the second sentence of 38 CFR 3.303(d), which 
states, ``Presumptive periods are not intended to limit service 
connection to diseases so diagnosed when the evidence warrants direct 
service connection.'' We propose to restate this provision more clearly 
by adding this sentence at the end of Sec.  5.260(a), ``VA will not use 
the existence of a presumptive period to deny service connection for a 
presumptive disease diagnosed after the presumptive period if direct 
evidence shows it was incurred or aggravated during service.''
    After reviewing initially proposed Sec.  5.260(b)(1), we propose to 
remove the parentheses from around the last sentence of the paragraph 
because they are unnecessary.
    Initially proposed Sec.  5.260(b)(2) discussed ``competent lay 
evidence'', ``lay evidence'', and ``medical evidence''. In Sec.  5.1 we 
have defined ``competent lay evidence'' and ``competent expert 
evidence'' (which includes medical evidence). Our intent in initially 
proposed paragraph (b)(2) was to refer to competent evidence. We 
therefore propose to insert the word competent before lay and medical 
throughout this paragraph. To ensure consistency we propose to make 
these same changes throughout part 5.
    We propose to make a minor technical change to the language of 
Sec.  5.260(c). The introductory text to Sec.  5.260(c), as initially 
proposed, stated: ``VA cannot grant service connection under this 
section when the presumption has been rebutted by the evidence of 
record.'' 69 FR 44624, July 27, 2004. We propose to change the words 
``this section'' in this sentence to ``Sec. Sec.  5.261, 5.262, 5.264 
through 5.268, 5.270 and 5.271''.
    In addition, we propose to change initially proposed Sec.  5.260(c) 
based on comments objecting to our decision not to use the term 
``affirmative evidence'' in the description of what kind of evidence 
may be used to rebut a presumption of service connection for a disease. 
Specifically, in Sec.  5.260(c)(2) we stated that ``[a]ny evidence 
competent to indicate the time a disease existed or started may rebut a 
presumption of service connection that would otherwise

[[Page 71106]]

apply.'' 69 FR 44614, July 27, 2004. Because 38 U.S.C. 1113(a) 
specifically requires ``affirmative evidence'' to rebut the ``disease 
presumptions'' set forth in chapter 11, title 38, United States Code, 
we propose to revise initially proposed Sec.  5.260(c) to require 
affirmative evidence. In addition, we agree with several commenters who 
defined affirmative evidence as evidence that declares a fact 
positively and establishes that a particular disease does not warrant 
the award of presumptive service-connection. We propose to revise 
paragraph (c)(2) to define ``affirmative evidence'' as ``evidence that 
supports the existence of a particular fact,'' and to further state 
that affirmative evidence ``does not mean the mere absence of 
evidence.''
    However, some commenters asserted that under no circumstances may 
VA rebut a presumption based on the absence of evidence. A commenter 
stated that a medical opinion founded on the absence of symptoms is not 
``affirmative evidence''. Similarly, another commenter stated that a 
medical opinion used to rebut the presumption of service connection for 
a chronic disease may not be based on the length of time between 
service and clinical manifestation of the disease, because Congress 
chose a specific period for the presumption of service connection to 
apply for each disease. The commenter noted that in 38 U.S.C. 
1112(a)(2), Congress provided for a presumptive period of ``one year 
from the date of separation from such service, or at a time when 
standard or accepted treatises indicate that the incubation period 
thereof commenced during such service.'' According to the commenter, 
because Congress did not provide this alternative for chronic diseases, 
pure medical judgments cannot override the presumptive period allotted 
by Congress.
    We disagree with these comments in the following respect: To rebut 
a presumption that a presumptive disease was incurred during service or 
during the post-service presumptive period, affirmative evidence would 
have to show that the disease did not exist at such time. A medical 
opinion that establishes the date of onset of the disease determined by 
the use of fact-based medical evidence may serve as ``affirmative 
evidence'' regarding the onset or existence of that disease, even if 
the mere absence of symptoms or other evidence of disease is not. In 
other words, it is the medical professional's qualified opinion that 
serves as evidence to be considered by VA's adjudicator, not the lack 
of evidence in the claims file. Hence, we propose to revise Sec.  
5.260(c)(2) to state that ``the absence of evidence may be a basis for 
affirmative evidence. For example, a medical professional may conclude 
that a disease or disability existed or started at a particular time 
based on an absence of evidence of signs or symptoms of the condition 
before that time.''
    One commenter objected to the statement in proposed Sec.  5.260(c) 
which states that once a presumption has been rebutted, VA can no 
longer grant presumptive service connection. The commenter believes the 
statement is not true in all cases, and suggests that if the veteran 
provides medical or lay evidence, it would be possible for the veteran 
to establish service connection on a presumptive basis. As an example, 
the commenter proposes a situation where VA reviews available medical 
records and finds the evidence rebuts the presumption of service 
connection because the veteran has not received a credible diagnosis of 
the disease for which he or she is claiming presumptive service 
connection. The commenter proposes that if the veteran later obtains a 
credible medical opinion diagnosing the veteran with the presumptive 
disease, the veteran should be entitled to presumptive service 
connection.
    We propose not to make any changes based on this comment. In the 
hypothetical situation posed by the commenter, the absence of a 
credible diagnosis of the claimed disease does not serve to rebut the 
presumption of service connection. In that situation, the presumption 
never arose because the existence of the claimed condition is one of 
the underlying facts necessary to give rise to the presumption. If the 
veteran subsequently presents evidence sufficient to prove that he or 
she did in fact suffer from a disease for which VA may grant 
presumptive service connection, then the presumption will apply.
    In any event, no scenario allows VA to grant presumptive service 
connection after the evidence rebuts the presumption. The commenter is 
correct that if VA rebuts the presumption of service connection for a 
disease, the veteran is entitled to bring forth evidence supporting 
service connection. However, service connection established in this 
manner is granted under 38 U.S.C. 1110 (generally referred to as 
``direct'' service connection) and is not presumptive service 
connection. If the presumption of service connection is rebutted, a 
veteran may still establish service connection by filing evidence 
showing the onset of the disease in service, or by any other method 
provided by these regulations.
    In NPRM AM07, we changed ``symptomatology'' to ``signs or 
symptoms'' consistent with current medical terminology. For 
consistency, we propose to do the same in Sec.  5.260 and throughout 
part 5. In paragraph (b)(1), we propose to change ``symptomatology'' to 
``signs or symptoms''. In (b)(2), we propose to replace the phrase 
``physical findings and symptomatology'' with ``signs or symptoms''. 
The term ``signs'' is equivalent to ``physical findings''. Moreover, we 
intend this rule to include mental as well as physical signs.
    In initially proposed paragraph (c)(2), we stated, ``For example, a 
medical professional may conclude that a disease or disability existed 
or started at a particular time based on an absence of evidence of 
symptoms of the condition.'' We now propose to insert ``signs or'' 
before ``symptoms''. We also propose to insert ``before that time'' at 
the end of the sentence to clarify when an absence of signs or symptoms 
is relevant.
    In initially proposed Sec.  5.260(a) and (c) we omitted reference 
to Sec.  5.263, ``Presumption of Service Connection for Non-Hodgkin's 
Lymphoma Based on Service in Vietnam''. In reviewing the presumption 
regulations to respond to comments, we have noted that there is no 
reason to exclude Sec.  5.263 from these provisions. We recognize that 
38 CFR 3.313 contains no rebuttal provision but we do not believe that 
an irrebuttable presumption would be consistent with title 38 to the 
extent it would authorize benefits for a disease shown by clear 
evidence to be unrelated to service or to be attributable to the 
veteran's willful misconduct. We therefore propose to include Sec.  
5.263 in paragraphs (a) and (c).

Sec.  5.261 Certain Chronic Diseases VA Presumes Are Service Connected

    In reviewing the initially proposed regulation, we noted that we 
included the phrase, ``from a qualifying period of service'', in Sec.  
5.261(a)(1), but not in Sec.  5.261(a)(2). To ensure that readers are 
aware that the presumptions apply only after a period of qualifying 
service, we propose to revise Sec.  5.261(a)(2) to include the phrase, 
``after a qualifying period of service''. In Sec.  5.261(a)(1), we 
propose to change the term, ``a year'' to ``1 year'' to ensure 
consistency throughout our regulations.
    In initially proposed Sec.  5.261(c), based on current Sec. Sec.  
3.307(a)(2) and 3.308(a), we stated, ``In claims based on service 
ending before December 7, 1941, for purpose of determining whether a 
chronic disease manifested within a presumptive period under this 
section,

[[Page 71107]]

the date of separation from wartime service will be the date of 
discharge or release during a war period, or if service continued after 
the war, the end of the war period.'' We have determined that this 
paragraph is erroneous because veterans whose service ended before that 
date get no presumption of service connection for chronic disease. 
Therefore, there can be no ``date of separation from wartime service'' 
for a pre-December 7, 1941 veteran ``for the purpose of determining 
whether a chronic disease manifested within a presumptive period.'' We 
therefore propose to remove paragraph (c) and redesignate the remaining 
paragraphs of Sec.  5.261 accordingly.
    One commenter suggested that VA include a statement clarifying that 
the chronic diseases listed in initially proposed Sec.  5.261(d) (now 
(c)) are the only conditions that will be considered chronic. 
Currently, Sec.  3.307(a) states that no condition other than one 
listed in Sec.  3.309(a) will be considered chronic. In addition, 38 
U.S.C. 1101(3) contains a list of chronic diseases and includes ``such 
other chronic diseases as the Secretary may add to this list'', which 
strongly implies that the list should be considered exclusive absent 
action by the Secretary. The commenter believes that stating that the 
list of chronic diseases in Sec.  5.261(d) is exclusive will prevent 
any misconception that VA has the ability to establish presumptive 
service connection for any disease which appears no later than 1 year 
after leaving service. The commenter concluded that nothing prevents VA 
from stating the list of chronic conditions in Sec.  5.261(d) is 
exclusive.
    We agree and propose to include the sentence, ``Only conditions 
listed in this section are chronic for purposes of this section.'' The 
commenter is correct that only the conditions listed in Sec.  5.261(d) 
will be considered chronic for purposes of presumptive service 
connection under Sec.  5.261.
    One commenter suggested that for clarity, Sec.  5.261(d) should use 
the words ``acute and transitory'' instead of simply using ``acute''. 
The commenter states that the ``acute and transitory'' language is 
``consistent with long-standing VA parlance regarding how it 
adjudicates claims based on chronic conditions.'' Although VA has 
previously used the term ``acute and transitory'' in decisions, it is 
not consistent with current VA terminology used in adjudicating claims 
based on chronic conditions. The word ``transitory'' is not found in 
any regulation in either part 3 or part 4 of title 38 CFR. Nor is it 
found in ``Dorland's Illustrated Med. Dictionary'' (31st ed. 2007). 
Moreover, ``acute'' and ``transitory'' both suggest brief duration, so 
that ``transitory'' does not add to the meaning of the rule. For these 
reasons, we propose to make no changes based on this comment.
    Initially proposed Sec.  5.261(d) is based on Sec.  3.307(b) and 
contains an exclusive list of the diseases VA considers chronic for 
purpose of presumptive service connection. One commenter stated that 
this section would ``authorize adjudicators to determine that a chronic 
disease which has manifested to a compensable degree and which is under 
consideration for service connection is not chronic.'' The commenter 
stated that VA has no lawful authority to make an independent factual 
determination contrary to the command of 38 U.S.C. 1101(3), which lists 
chronic diseases for purposes of disability compensation.
    However, 38 U.S.C. 1101(3) only defines what are considered to be 
chronic diseases; it does not contain any requirement that service 
connection be granted for the listed diseases. The requirement to grant 
presumptive service connection for chronic diseases is found in 38 
U.S.C. 1112(a), which states that a chronic disease will be considered 
to have been incurred in or aggravated by such service. The authority 
to rebut a presumption of service connection is found at 38 U.S.C. 
1113(a), which states that ``where there is affirmative evidence to the 
contrary, or evidence to establish that intercurrent injury or disease 
. . . has been suffered . . . service-connection . . . will not be in 
order.'' The wording in initially proposed Sec.  5.261(c) is a 
restatement of the previous wording used in Sec.  3.307(b), which 
states, ``Unless the clinical picture is clear otherwise, consideration 
will be given as to whether an acute condition is an exacerbation of a 
chronic disease.'' As initially proposed, Sec.  5.261(d) restated this 
principle as, ``Unless the clinical picture clearly shows the condition 
was only acute, VA will consider whether an acute condition was an 
exacerbation of a chronic disease.'' Based on the comment, we 
understand that the proposed rule could be misunderstood to authorize 
VA to treat a chronic condition as if it were acute. Neither the 
statute nor the current regulation authorize such treatment, and we did 
not propose to create such authorization in Sec.  5.261(d). Hence, we 
propose to revise the sentence so that it more closely follows the 
language of the current regulation.
    We received four comments stating that our proposed rule regarding 
the presumption of service connection for aggravation of certain 
chronic diseases and diseases associated with exposure to certain 
herbicide agents in proposed Sec. Sec.  5.261(d) and 5.262(e) is 
contrary to the holding of the U.S. Court of Appeals for the Federal 
Circuit in Splane v. West, 216 F.3d 1058 (Fed. Cir. 2000), and 
otherwise not in accordance with 38 U.S.C. 1112(a) and 1116(a). The 
comments asserted that the statutes do not limit the degree to which a 
pre-existing condition must be disabling prior to entry in order for 
the presumption of aggravation to apply; that the statute does not 
provide that a disease must ``first'' become manifest during the 
presumptive period; and that 38 U.S.C. 1112(a) and 1116(a) should be 
interpreted to provide a presumption of aggravation of the listed 
diseases if the degree of disability increases by any degree during the 
applicable presumptive period (for example, from 20 percent disabling 
to 30 percent disabling).
    Additionally, a commenter suggested that the treatment of 
preexisting conditions under 38 U.S.C. 1112(a) and 1116(a) conflicts 
with the treatment of preexisting conditions under 38 U.S.C. 1153, the 
general presumption of aggravation. Commenters asserted that VA could 
not arbitrarily apply different rules to veterans who had preexisting 
disabilities that were aggravated by service than to veterans who had 
no preexisting disabilities. One commenter suggested that the only 
difference is the ``formality'' that the underlying pathology had its 
inception prior to service rather than during service.
    By way of background, 38 U.S.C. 1153 provides a presumption that 
``[a] preexisting injury or disease will be considered to have been 
aggravated by active military . . . service, where there is an increase 
in disability during such service.'' The presumptions at issue in 
proposed Sec. Sec.  5.261 and 5.262, however, are based on 38 U.S.C. 
1112(a) and 1116(a), which provide a presumption for conditions that 
manifest to a degree of disability of 10 percent or more during a 
specified period of time after service.
    In the Splane case, the Federal Circuit examined whether the post-
service presumptive period in 38 U.S.C. 1112(a) could cover a 
preexisting condition. The Federal Circuit held that the words ``or 
aggravated by'' in paragraph (a) required application of the 
presumption of aggravation of a chronic disease to a veteran whose 
chronic disease existed but was not compensable prior to service, 
regardless of VA's ``not altogether unpersuasive'' argument that those 
words were a vestige of an earlier provision that was long ago rendered 
obsolete. Splane, 216 F.3d at 1069. The court found it ``unreasonable 
to assume

[[Page 71108]]

that Congress did not anticipate the possibility that a veteran, who 
had nonsymptomatic M[ultiple] S[clerosis] before service, might be 
exposed to such aggravating conditions during service that he would 
become disabled to a compensable degree after service.'' Id.
    Our proposed part 5 regulations specifically accounted for this 
possibility by presuming that a chronic disease or a disease associated 
with herbicide exposure is presumed to have been aggravated during 
service if the disease manifests to a compensable degree within the 
applicable presumptive period. Proposed Sec.  5.261(d) stated that VA 
cannot presume service connection when the evidence shows that the 
disease existed prior to military service to a degree of 10 percent or 
more disabling.
    Section 5.262(e) used nearly identical language. We explained our 
rationale in the NPRM, as follows:

    The Federal Circuit held that the words ``or aggravated by'' 
indicate that Congress meant section 1112(a) to apply to those 
situations where multiple sclerosis predated entry into the service 
and became disabling to a compensable degree within the presumptive 
period following service. The ``or aggravated by'' language also 
appears in 38 U.S.C. 1116(a)(1)(B), which provides the authority for 
the presumptions based on herbicide exposure. Therefore, we propose 
to add language to clarify that presumptions may apply to a listed 
disease that preexisted service but first became manifest to a 
degree of 10 percent or more within the presumptive period following 
service.


69 FR 44620, July 27, 2004.
    Limiting Sec. Sec.  5.261 and 5.262 presumptions to situations 
where the condition was not manifest to a degree of 10 percent or more 
disabling before service is not arbitrary, unfair, or beyond VA's 
statutory authority. Under 38 U.S.C. 1112(a)(1), VA must presume 
service connected ``a chronic disease becoming manifest to a degree of 
10 percent or more disabling within one year from the date of 
separation from . . . service,'' and 38 U.S.C. 1116(a) similarly 
creates a presumption based on manifestation of a disease to a degree 
of 10 percent or more disabling within the presumptive period. Use of a 
10 percent threshold would not make sense if a preexisting disease 
manifest to a degree of 10 percent or more disabling prior to service 
could trigger the presumption because the disease would already have 
reached the threshold before service. If Congress had intended to also 
presume aggravation for a veteran who already had a disease manifest to 
a compensable degree prior to service, the law could have been written 
to presume service connection for a disease that ``worsens by 10 
percent or more,'' rather than one that ``becom[es] manifest'' to such 
a degree. Finally, we note that most of the diseases that are 
considered chronic are diseases that, had they been symptomatic prior 
to service, would have likely rendered the person ineligible for 
service. In fact, several of the conditions are so disabling that their 
symptoms cannot even be rated as merely 10 percent disabling. For 
example, the first signs of multiple sclerosis are rated at 30 percent 
under 38 CFR 4.124a, Diagnostic Code 8018. It is unlikely that VA will 
receive claims from persons who were compensably disabled before 
service, and our experience has not shown this to be a problem under 
the current regulations.
    Lastly, we note that the Splane court did not address the type of 
case described by the commenters: where a disability was already 
manifest to a degree of disability of 10 percent or more prior to 
service. The commenters urge VA to adopt an interpretation of 38 U.S.C. 
1112 far beyond that which the Splane court provided. For the reasons 
stated above, we propose to make no changes based on these comments.
    One commenter also had a comment related to the following sentence 
in the NPRM:

    We note that if the condition preexisted service to a degree of 
10 percent, for example, and after service the condition was 20 
percent disabling, the veteran may be able to establish service 
connection using the presumption of aggravation in 38 U.S.C. 1153.


69 FR 44620, July 27, 2004.


    The commenter noted that 38 U.S.C. 1153 only applies to increases 
in disability during service. Therefore, this statement would not be 
correct with respect to increases in disability within the presumptive 
period. The commenter is correct that 38 U.S.C. 1153 only applies to 
aggravation during service. We clarify this statement by noting that 
when we said ``after service'', we meant immediately after service.
    The commenter stated that in some cases, VA would presume that a 
disease in a state of remission or inactivity was disabling to a degree 
of 10 percent at entry, while a draft rule for service connection 
indicates that VA would deny service connection for lack of current 
disability if a disease was in remission. The commenter objects to this 
dual standard for cases when diseases are in remission.
    We propose to make no changes based on this comment. The provision 
the commenter discussed from the draft rule for service connection does 
not address this situation since that concerns direct service 
connection and not establishment of service connection through the use 
of the presumptions. Additionally, if there is no current disability, 
service connection cannot be established. Also, Congress in 38 U.S.C. 
1112, mandated that the disease must manifest to a degree of 10 percent 
or more disabling before VA may presume service connection. A disease 
that is in remission and is not manifest to a degree of 10 percent or 
more disabling may not be service connected under the presumptions of 
service connection provisions.

Sec.  5.262 Presumption of Service Connection for Diseases Associated 
With Exposure to Certain Herbicide Agents

    In our initially proposed regulations on presumptions of service 
connection, we changed the wording found in Sec. Sec.  3.307(a) and 
3.317(c)(3), ``. . . [certain diseases] will be considered to have been 
incurred in or aggravated by service . . .'' to ``VA will presume 
service connection [for certain diseases] . . .'' We proposed this 
language in several part 5 regulations: Sec. Sec.  5.262(a)(2), 
5.264(b) and (c), 5.265(a) and (d), 5.267(a), and 5.268(b). This 
attempt to use simpler language resulted in a technical error because 
under its authorizing statutes, VA service connects disability or 
death, not injury or disease per se. We therefore propose to correct 
these sections to reflect that the diseases listed will be considered 
to have been incurred in or aggravated by service.
    We received four comments regarding the proposed definition of 
``Service in the Republic of Vietnam'' in Sec.  5.262(a)(1) for 
purposes of the presumption of service connection for diseases 
associated with exposure to certain herbicide agents. As proposed, 
Sec.  5.262(a)(1) stated:

    For purposes of this section, ``Service in the Republic of 
Vietnam'' does not include active military service in the waters 
offshore and service in other locations, but does include any such 
service in which the veteran had duty in or visited in the Republic 
of Vietnam, which includes service on the inland waterways.


69 FR 44626, July 27, 2004.
    Three commenters objected to the exclusion of service in the waters 
offshore Vietnam in the definition of ``Service in the Republic of 
Vietnam'' for purposes of Sec.  5.262. One commenter stated that when 
Congress refers to a country by its name in a statute, it is referring 
to the entire country, including the entire area over which a country 
has

[[Page 71109]]

sovereignty. This would, under the 1982 United Nations Convention on 
the Law of the Sea, 21 I.L.M. 1261, include the territorial sea which 
extends up to twelve miles beyond the land territory of Vietnam. All 
three commenters support this proposition with an example of the 
service required to receive the Vietnam Service Medal. Executive Order 
11231, July 8, 1965, provides that the ``Vietnam Service Medal shall be 
awarded to members of the armed forces who serve in Vietnam or 
contiguous waters or air space''. The commenters believe that the 
definition of ``Service in the Republic of Vietnam'' provided in Sec.  
5.262(a)(1) is contrary to the ordinary and common meaning of the 
phrase. Therefore, the commenters believe there is no reason to believe 
that Congress intended to exclude the territorial sea when it drafted 
38 U.S.C. 1116.
    We propose to make no changes based on these comments. These 
comments are adequately addressed by Haas v. Peake, 425 F.3d 1168 (Fed. 
Cir. 2008); the notice proposing to rescind, and the notice actually 
rescinding, the VA manual provision cited in Haas, 72 FR 66218, Nov. 
27, 2007 and 73 FR 20363-65, Apr. 15, 2008; and the proposed revision 
to 38 CFR 3.307(a)(6)(iii), 73 FR 20566-71, Apr. 16, 2008 (withdrawn by 
74 FR 48689, Sept. 24, 2009). We incorporate by reference the 
rationales set forth therein, and do not reiterate them here.
    However, we do propose to revise initially proposed Sec.  
5.262(a)(1) so that it more clearly conveys the requirement that the 
veteran have served ``on land, or on an inland waterway, in the 
Republic of Vietnam.''
    On May 7, 2009, VA published Final Rule RIN 2900-AN01, 
``Presumptive Service Connection for Disease Associated With Exposure 
to Certain Herbicide Agents: AL Amyloidosis'', which stated the 
Secretary's determination of ``a positive association between exposure 
to herbicide agents and the occurrence of AL amyloidosis'' and added 
that disease to 38 CFR 3.309(e). 74 FR 21258. Therefore, we now propose 
to include AL amyloidosis in Sec.  5.262(e) in accordance with the 
Secretary's finding.
    On August 31, 2010, VA published RIN 2900-AN54, ``Diseases 
Associated With Exposure to Certain Herbicide Agents (Hairy Cell 
Leukemia and Other Chronic B-Cell Leukemias, Parkinson's Disease and 
Ischemic Heart Disease)'' which stated the Secretary's determination of 
``a positive association between exposure to herbicide agents and the 
occurrence of those diseases'' and added those diseases to 38 CFR 
3.309(e). 75 FR 53202. Therefore, we now propose to include them in 
Sec.  5.262(e) in accordance with the Secretary's finding.
    We propose to change the term ``acute and subacute peripheral 
neuropathy'' in Sec.  5.262 and instead use the term ``early-onset 
peripheral neuropathy''. Additionally, we have removed note \1\ which 
provided that peripheral neuropathy must resolve within 2 years of 
onset. This conforms to changes made in part 3. 78 FR 54763, Sept. 6, 
2013.

Sec.  5.263 Presumption of Service Connection for Non-Hodgkin's 
Lymphoma Based on Service in Vietnam

    One commenter believed that proposed Sec.  5.263, which was based 
on Sec.  3.313 with minor changes, was unnecessary. Proposed Sec.  
5.263 provides for presumptive service connection for non-Hodgkin's 
lymphoma based on service in Vietnam. The commenter asserted that 
anyone eligible for presumptive service connection under Sec.  5.263 
would also be eligible for presumptive service connection under Sec.  
5.262 and it is therefore unnecessary to have Sec.  5.263.
    We propose to make no changes based on this comment. We agree with 
the commenter that many of the veterans entitled to presumptive service 
connection under Sec.  5.263 may also be entitled to presumptive 
service connection under Sec.  5.262. However, there are differences 
between Sec. Sec.  5.262 and 5.263 that require two separate rules. 
Therefore, we propose to retain Sec.  5.263 in our final rule. One 
difference is in the definition of what constitutes ``service in 
Vietnam''. See VA General Counsel's Opinion, VAOPGCPREC 27-97, 62 FR 
63604 (Dec. 1, 1997). Specifically, the definition of ``service in 
Vietnam'' in Sec.  5.263 includes service in the waters offshore 
Vietnam, whereas the definition in Sec.  5.262 specifically excludes 
such service from the definition of ``service in the Republic of 
Vietnam''. Another difference is that Sec.  5.262 provides for 
determining presumptive exposure to herbicides due to service in the 
Republic of Vietnam while Sec.  5.263 provides for service connection 
for non-Hodgkin's lymphoma without regard to possible exposure to 
herbicides in the Republic of Vietnam.

Sec.  5.264 Diseases VA Presumes Are Service Connected in a Former 
Prisoner of War

    On June 30, 2006, VA published in the Federal Register an addition 
to Sec.  5.264, ``Diseases VA presumes are service connected in former 
prisoners of war'', adding atherosclerotic heart disease or 
hypertensive vascular disease (including hypertensive heart disease) 
and their complications (including myocardial infarction, congestive 
heart failure, and arrhythmia) and stroke and its complications to the 
diseases VA presumes are service connected in former prisoners of war. 
71 FR 37793, June 30, 2006. No comments were received concerning this 
addition. Proposed Sec.  5.264 is revised from the version published in 
the NPRM, by adding these conditions to the list of diseases. 69 FR 
44614, July 27, 2004.
    Section 106 of Public Law 110-389, 122 Stat. 4145, 4149 (2008), 
amended 38 U.S.C. 1112(b)(2) by adding a new subparagraph (F) that 
creates a presumption of service connection for osteoporosis that 
becomes manifest to a degree of 10 percent for prisoners of war (POWs) 
if the Secretary determines that the veteran has posttraumatic stress 
disorder (PTSD). On August 28, 2009, VA published an amendment in the 
Federal Register to Sec.  3.309(c), applying Public Law 110-389. 74 FR 
44288. This amendment also implements a decision by the Secretary to 
establish a presumption of service connection for osteoporosis that 
becomes manifest to a degree of 10 percent for POWs if the veteran was 
interned for more than 30 days. This presumption is based on scientific 
studies. These changes have been incorporated into proposed Sec.  
5.264(b) and (c).

Sec.  5.265 Tropical Diseases VA Presumes Are Service Connected

    In initially proposed Sec.  5.265(d), we stated, ``For any disease 
service connected under this section, VA will also service connect the 
resultant disorders or diseases originating because of therapy 
administered in connection with such a disease or as a preventative 
measure against such a disease.'' We have determined that this sentence 
is redundant of the basic rule on secondary service connection 
contained in Sec.  5.246, ``Secondary service connection--disabilities 
that are due to or the result of service-connected injury or disease.'' 
Therefore, we propose to remove this sentence from Sec.  5.265(d).
    One commenter suggested a minor clarifying change to Sec.  
5.265(e). The commenter suggested revising the sentence stating that 
``Residence during the applicable presumptive period where the 
particular disease is endemic may also be considered evidence to rebut 
the presumption'', to refer to ``post-service'' residence. The 
commenter recognized that this addition would be redundant (because the 
presumptive period is post-service), but

[[Page 71110]]

opined that it would nevertheless make the rule clearer for the average 
lay person. We agree that, while redundant, this minor change could be 
beneficial to readers. Therefore, we propose to change Sec.  5.265(e) 
to refer to ``[p]ost-service residence''.
    One commenter objected to the requirement in Sec.  5.265(f) that 
would require a tropical disease to manifest to a degree of 10 percent 
or more disabling within the presumptive period in order for the 
disease to be presumptively service connected. The commenter noted that 
the statutory authorization for this presumption, 38 U.S.C. 1133, 
provides no minimum degree of manifestation for the presumption of 
service connection to apply for veterans with peacetime service before 
January 1, 1947. The commenter is correct. We propose to revise Sec.  
5.265(f) so that it no longer contains the 10 percent requirement.
    Moreover, we discovered that we mistakenly used the term 
``existed'', rather than ``manifested'', in initially proposed Sec.  
5.265(f). This language was taken from 38 CFR 3.308(b), but it does not 
appear in any other presumption regulation in part 5. Therefore, in 
order to ensure consistency with the other presumption regulations in 
part 5, we propose to replace ``existed'' with ``manifested''.
    We also propose to change the term ``accepted medical treatises'' 
to ``accepted medical literature'' throughout this section because 
``treatise'' is a specific type of scholarly literature, specifically 
``a systematic exposition or argument in writing including methodical 
discussion of the facts and principles involved and conclusions 
reached.'' ``Merriam-Webster's Collegiate Dictionary'' 1258 (10th ed. 
1998). ``Accepted medical literature'' is a broader class of 
literature, sufficiently authoritative and more accessible to claimants 
than are ``treatises''. We propose to make the same change in Sec.  
5.266, Disability compensation for certain qualifying chronic 
disabilities.

Sec.  5.266 Disability Compensation for Certain Qualifying Chronic 
Disabilities

    We propose to reorganize and make technical corrections to 
initially proposed Sec.  5.266. We would reorganize this section as 
follows. Initially proposed paragraph (a) stated that VA will 
compensate veterans for a qualifying chronic disability and defined 
that term. Initially proposed paragraphs (b) and (c) defined 
undiagnosed illness and medically unexplained chronic multisymptom 
illness, respectively. Paragraph (f) would contain the general 
definitions that apply to all types of qualifying chronic disabilities.
    We propose to move initially proposed paragraph (a)(1)(ii), which 
stated, ``By history, physical examination, and laboratory tests cannot 
be attributed to any known clinical diagnosis.'' This paragraph would 
apply only to undiagnosed illnesses, not to other qualifying chronic 
disabilities, so we propose to move it into new paragraph (b), which 
would describe undiagnosed illnesses.
    For purposes of accuracy, we propose to change the title of the 
regulation from ``Compensation for certain disabilities due to 
undiagnosed illnesses'' to ``Disability compensation for certain 
qualifying chronic disabilities''.
    Since publication of the AL70 NPRM, VA published a Final Rule VA 
that made technical revisions to 38 CFR 3.317 to clarify that 
adjudicators have the authority to determine whether diseases in 
addition to the three listed in 38 U.S.C. 1117 qualify as medically 
unexplained chronic multisymptom illnesses in addition to the three 
that are listed in 38 U.S.C. 1117. 75 FR 61995, Oct. 7, 2010. VA 
subsequently published a final rule that replaced ``irritable bowel 
syndrome'' with ``functional gastrointestinal disorders''. 76 FR 41696, 
Jul. 15, 2011. We propose to incorporate these regulatory amendments 
into Sec.  5.266.
    Current 38 CFR 3.317(c) describes situations in which the 
presumptions in that section will be considered rebutted. We note that 
Sec.  3.307(d) (the basis for initially proposed Sec.  5.260(c)) 
already contains this same rebuttal information as it applies to the 
various presumptions listed in Sec.  3.309, but not to Sec.  3.317. We 
now propose to expand the scope of Sec.  5.260(c) to include Sec.  
5.266 and 5.271. To avoid duplication, we propose to exclude the 
duplicate provisions from Sec.  5.266 and 5.271.

Sec.  5.267 Presumption of Service Connection for Conditions Associated 
With Full-Body Exposure to Nitrogen Mustard, Sulfur Mustard, or 
Lewisite

    One commenter asserted that the proposed rule would have changed 
the current rule, Sec.  3.316, which the commenter said requires direct 
service connection for exposure to mustard gas and Lewisite, to a rule 
that would establish presumptive service connection based on such 
exposure. The commenter questioned whether VA has the authority to 
create a new class of presumptive conditions. The commenter stated that 
the wording of proposed Sec.  5.267(a) should be amended to provide for 
direct service connection, rather than presumptive service connection.
    The commenter is incorrect that VA grants direct service connection 
under Sec.  3.316. Although the regulation text does not explicitly 
state so, Sec.  3.316 grants presumptive service connection and not 
direct service connection. The regulation presumes a medical nexus 
between full-body exposure to mustard gas or Lewisite and the listed 
diseases, thereby establishing a presumption as described in Sec.  
5.260(a).
    We also note that our authority to create presumptions is 
explicitly set forth in 38 U.S.C. 501(a)(1), under which the Secretary 
may prescribe ``regulations with respect to the nature and extent of 
proof and evidence . . . in order to establish the right to benefits''. 
As we noted in the preamble to the NPRM, the Secretary exercised this 
authority when he first promulgated Sec.  3.316. 69 FR 44614, July 27, 
2004.
    We propose to revise the sentence preceding the table in Sec.  
5.267(b) so it is a complete sentence instead of a phrase and so it is 
consistent with other table introductions used in this regulation. We 
also propose to change ``condition'' in paragraph (a)(2) to ``injury or 
disease'' to be consistent with paragraph (b). In the table, we propose 
to change ``disease or disability'' to ``injury or disease'' for the 
same reason.

Sec.  5.268 Presumption of Service Connection for Diseases Associated 
With Exposure to Ionizing Radiation

    In initially proposed Sec.  5.268 we inadvertently failed to 
include the provisions of current 38 CFR 3.309(d)(3)(ii)(E). We propose 
to correct this omission by inserting Sec.  5.268(c)(6), which is 
virtually identical to current Sec.  3.309(d)(3)(ii)(E).

Sec.  5.269 Direct Service Connection for Diseases Associated With 
Exposure to Ionizing Radiation

    In reviewing the comment received regarding this section, we have 
determined that both 38 CFR 3.311 and initially proposed Sec.  5.269 
use several different terms interchangeably or inconsistently. For 
example they refer to dose estimates as ``dose assessments,'' ``dose 
information,'' and ``dose data''. We propose to remedy this problem by 
using the phrase ``dose assessment'' throughout Sec.  5.269.
    In initially proposed Sec.  5.269(c)(3), we stated, ``Neither the 
veteran nor the veteran's survivors may be required to produce evidence 
substantiating exposure if the information in the veteran's service 
records or other records maintained by the Department of Defense is 
consistent with the claim

[[Page 71111]]

that the veteran was present where and when the claimed exposure 
occurred.'' Current Sec.  3.311(a)(4) actually limits the scope of this 
provision to only ``cases described in paragraph (a)(2)(i) and (ii) of 
this section'' (those involving atmospheric nuclear weapons test 
participation and Hiroshima and Nagasaki occupation). We inadvertently 
omitted this scope limitation in the initially proposed rule and we not 
propose to insert it in Sec.  5.269(c)(3).
    In initially proposed Sec.  5.269(b), we omitted, without 
explanation, a number of cancers listed in current 38 CFR 3.311(b)(2): 
thyroid cancer; breast cancer; lung cancer; liver cancer; skin cancer; 
esophageal cancer; stomach cancer; colon cancer; pancreatic cancer; 
kidney cancer; urinary bladder cancer; salivary gland cancer; multiple 
myeloma; ovarian cancer; cancer of the rectum; and prostate cancer. We 
omitted these because they are subsumed within the meaning of the 
phrase, ``Cancer (any other not listed)'' in initially proposed 
paragraph (b)(2) (based on the phrase, ``Any other cancer'' in current 
Sec.  3.311(b)(2)(xxiv)). We provide this explanation now, to assure 
the public that the fact that these cancers are not specifically 
referenced in the part 5 rule does not represent VA's intent to alter 
the applicability of the presumption that the diseases in some cases 
were caused by exposure to ionizing radiation.
    In initially proposed paragraph (c)(5)(iii) (now redesignated as 
(d)(2)(iii)) we referred to an estimated dose of ``zero rem gamma''. 
The word ``gamma'' is not in Sec.  3.311 and we propose to remove it 
because it would improperly narrow the scope of this paragraph.
    In initially proposed paragraph (d)(1) (now redesignated as 
paragraph (c)(1)(iii)), we stated, ``If neither the Department of 
Defense nor any other source provides VA with records adequate to 
permit the Under Secretary to prepare a dose estimate, then VA will ask 
the Department of Defense to provide a dose estimate.'' We stated in 
the preamble that this provision would reflect the fact that it is 
impossible to estimate the likelihood that ionizing radiation exposure 
caused a claimed condition in the absence of a numerical ionizing 
radiation dose estimate and that VA would be unable to prepare a dose 
estimate if it has not received any records on which to base such an 
estimate.
    Upon review of this provision, we have determined that it does not 
accurately reflect VA's procedures in such cases. Moreover, it would be 
impracticable to request dose assessments from the Department of 
Defense (DoD) in these cases. This is because if DoD lacked records 
adequate to permit the Under Secretary for Health to prepare a dose 
assessment, then presumably DoD would likewise be unable to do so. For 
this reason, we propose to remove this provision.
    In initially proposed paragraph (f), now redesignated as paragraph 
(g), we stated, ``With regard to any issue material to consideration of 
a claim, the provisions of Sec.  3.102 of this title apply (any 
reasonable doubt on any issue will be resolved in favor of the 
claimant).'' In proposed Sec.  5.3, we state, ``When the evidence is in 
equipoise regarding a particular fact or issue, VA will give the 
benefit of the doubt to the claimant and the fact or issue will be 
resolved in the claimant's favor.'' Since this provision applies to all 
VA claims, there is no need to repeat it in this paragraph and so we 
propose to remove it.
    We received one comment stating that part of initially proposed 
Sec.  5.269(g), now redesignated as paragraph (h), is unnecessary. The 
commenter believes that there is no danger of service connection being 
established for a disease due to radiation exposure if the disease is 
due to the abuse of alcohol or drugs. The commenter believes that since 
Sec.  5.269 requires competent evidence and a decision by the Under 
Secretary of Benefits that it is at least as likely as not that the 
veteran's disease resulted from ionizing radiation in service, a 
disease due to the abuse of alcohol or drugs could not possibly be 
service connected under Sec.  5.269.
    We agree that the language regarding abuse of alcohol or drugs is 
unnecessary in Sec.  5.269(h) and propose to remove it. Section 5.662, 
``Alcohol and drug abuse'', already bars an award of service connection 
for disabilities resulting from such abuse. For the same reason, we 
propose to remove such language from Sec.  5.266(c)(3).
    In initially proposed Sec.  5.269(g), now redesignated as paragraph 
(h), we referred to ``a supervening, nonservice-related condition or 
event [that] is more likely the cause of the disease'' but failed to 
say more likely than what. We propose to clarify this by adding ``than 
was exposure to ionizing radiation in service'' so that the sentence 
will read: ``In no case will service connection be established if 
evidence establishes that a supervening condition or event unrelated to 
service is more likely the cause of the disease than was exposure to 
ionizing radiation in service.''
    In addition to the changes described above, we also propose to make 
minor changes in format and wording for clarity and readability.

Sec.  5.270 Presumption of Service Connection for Amyotrophic Lateral 
Sclerosis

    Since publication of the AL70 NPRM, VA published a Final Rule 
creating a presumption of service connection for amyotrophic lateral 
sclerosis, which was codified as 38 CFR 3.318. 73 FR 54693, Sept. 23, 
2008. We propose to add the text of Sec.  3.318 as new Sec.  5.270, 
with one revision: rather than restate the rebuttal standards already 
contained in Sec.  5.260(c), we simply referenced that paragraph.

Sec.  5.271 Presumption of Service Connection for Infectious Diseases

    Since publication of the AL70 NPRM, VA published a final rule 
creating presumptions of service connection for nine infectious 
diseases, which was codified as 38 CFR 3.317.75 FR 59968, Sept. 29, 
2010. Infectious diseases are not actually within the definition of 
``qualifying chronic disability,'' which is the purported subject of 
the regulation. Removing those provisions to a separate section will 
make the rules easier to comprehend and follow. We propose to 
incorporate these regulatory amendments into Sec.  5.271.

Omission of Sec.  3.379, Anterior Poliomyelitis, From Part 5

    We received two comments relating to the initial proposal in the 
NPRM not to repeat Sec.  3.379 in part 5. This section concerned 
service connection of the disease anterior poliomyelitis. One commenter 
agreed with the proposal. Another commenter disagreed with both the 
proposal and VA's rationale for removing it.
    We proposed not to include Sec.  3.379 because it is unnecessary in 
light of the operation of proposed Sec.  5.261 regarding the 
presumption of service connection for chronic diseases. 69 FR 44623, 
July 27, 2004. Congress specified myelitis as a chronic disease under 
38 U.S.C. 1101(3), and anterior poliomyelitis is a subcategory of 
myelitis. The general rules of presumptive service connection for 
chronic diseases under Sec.  5.261 would apply to anterior 
poliomyelitis and any veteran who would be service connected under 
Sec.  3.379 would also be service connected under Sec.  5.261. 
Therefore, we concluded that Sec.  3.379 was unnecessary and we 
proposed not to include it in part 5. We propose to make no changes 
based on these comments.
    One commenter stated that it is not proper to apply the general 
presumption of service connection to poliomyelitis without taking into 
account the known medical facts, specifically, that

[[Page 71112]]

poliomyelitis is a disease for which the exact cause and date of onset 
can be ascertained.
    The commenter also detailed the three possible outcomes of a 
poliomyelitis infection. First, there is nonparalytic poliomyelitis, 
which is an acute illness, which resolves with no chronic or 
permanently disabling residuals. Nonparalytic poliomyelitis may 
properly be denied service connection on that basis. Second, there is 
paralytic poliomyelitis. The commenter notes that the date of the 
antecedent illness for paralytic poliomyelitis is crucial. If it occurs 
no later than 35 days after separation from service, it must have 
occurred in service, but if it occurs more than 35 days after 
separation from service, it must have occurred after service (therefore 
rebutting the presumption of service connection). Finally, there is 
paralytic poliomyelitis without apparent antecedent illness. In this 
case, it is a matter for medical determination and opinion as to the 
most probable date of exposure. If the medical evidence is 
inconclusive, then the presumption of service connection for myelitis 
should apply.
    We propose to make no changes based on this comment. The general 
rule for presumption of service connection for chronic diseases in 
Sec.  5.261 would provide accurate results for all the situations the 
commenter described, including rebuttal by medical evidence of the type 
the commenter described.
    First, regarding nonparalytic poliomyelitis, because this disease 
cannot possibly be 10 percent or more disabling, the presumption of 
service connection under Sec.  5.261 cannot apply in these cases.
    Second, regarding paralytic poliomyelitis, direct service 
connection may be established in the majority of cases based on medical 
knowledge that the illness occurs no later than 35 days after exposure. 
Where direct service connection is denied based on the fact that the 
illness occurred more than 35 days after separation from service, the 
presumption of Sec.  5.261 will be considered. However, the presumption 
of service connection will be rebutted under the provisions of Sec.  
5.260(c)(1)(iii) because there will be a preponderance of evidence 
(based on fact-based medical evidence and the date symptoms first 
occurred) establishing that the disease was not incurred in service.
    Finally, with respect to paralytic poliomyelitis without apparent 
antecedent illness as described by the commenter, where direct service 
connection is not in order, VA will consider the presumption of service 
connection for myelitis as a chronic disease. However, the Centers for 
Disease Control and Prevention reports that all forms of poliomyelitis 
have an incubation period of 3 to 35 days, so a fact-based medical 
opinion would be needed to establish the approximate date of onset. 
Poliomyelitis, Centers for Disease Control and Prevention 232, 
Poliomyelitis, http://www.cdc.gov/vaccines/pubs/pinkbook/downloads/polio.pdf, last viewed Sept. 15, 2009.

Technical Corrections

    One commenter noted that in one part of the NPRM preamble, we 
``reserved'' Sec.  5.263, but elsewhere in the NPRM we proposed to 
repeat Sec.  3.313 as Sec.  5.263. The commenter felt that this was 
confusing. This was an error that we now propose to correct. We propose 
to create a new Sec.  5.263 that has the same wording as Sec.  3.313, 
except for the changes discussed in the preamble of the NPRM. We have 
corrected this in this proposed rule.

C. Rating Service-Connected Disabilities

Sec.  5.280 General Rating Principles

    Initially proposed Sec.  5.280(b)(1), based on 38 CFR 3.321, stated 
that for extra-schedular ratings in unusual cases that to accord 
justice to the exceptional case where the Veterans Service Center (VSC) 
finds the schedular ratings to be inadequate, the Under Secretary for 
Benefits or the Director of the Compensation and Pension Service, upon 
VSC submission, is authorized to approve an extraschedular rating 
commensurate with the average impairment of earning capacity due 
exclusively to the service-connected disability or disabilities. 
Paragraph (b)(1) also stated that the governing norm in these 
exceptional cases is a finding that the application of the regular 
schedular standards is impractical because the case presents an 
exceptional or unusual disability picture with such related factors as 
marked interference with employment, or frequent periods of 
hospitalization.
    One commenter suggested that to avoid injustice in a case where the 
VSC improperly fails to find that the schedular rating is inadequate, 
VA should revise Sec.  5.280(b)(1) to read:

    To accord justice to the exceptional case, the Under Secretary 
for Benefits or the Director of the Compensation and Pension 
Service, is authorized to approve on the basis of the criteria set 
forth in this paragraph, an extra-schedular rating commensurate with 
the average impairment of earning capacity due exclusively to the 
service-connected disability or disabilities.

    The commenter asserted that this suggested language is consistent 
with Colayong v. West, 12 Vet. App. 524, 536-37 (1999) and Young v. 
Shinseki, 22 Vet. App. 461, 470 (2009), which state that whether or not 
the VSC has, in the first instance, found the schedular rating to be 
inadequate, if it is inadequate it must be referred for an extra-
schedular rating.
    We note that the language of initially proposed 5.280(b)(1) was not 
substantively different from current Sec.  3.321(b)(1), the regulation 
which was the basis for the courts' rulings in Colayong and Young. 
Those cases left undisturbed the requirement in Sec.  3.321(b)(1) that 
extra-schedular review may be undertaken by the Under Secretary for 
Benefits or the Director, Compensation and Pension Service, only ``upon 
field station submission''. Rather, those cases held that the Board of 
Veterans' Appeals (Board) must adjudicate the issue of entitlement to 
an extraschedular evaluation, if the issue is raised by the evidence of 
record or by the appellant.
    We do not believe it is necessary to incorporate this line of cases 
into part 5. Since the Colayong case was decided in 1999, the Board has 
been under the duty set out by the court and the Board's Veterans Law 
Judges are now well aware of this duty. Moreover, it would be outside 
the scope of part 5 to impose a duty on the Board via a part 5 
regulation. We therefore propose to make no change based on this 
comment.
    In reviewing proposed Sec.  5.280 to respond to this comment, we 
have noted that it contains language (substantively the same as Sec.  
3.321(b)) that might confuse a reader. Specifically, proposed Sec.  
5.280(b)(1) stated, ``To accord justice to the exceptional case where 
the [VA] finds the schedular ratings to be inadequate, the [VA] is 
authorized to approve on the basis of the criteria set forth in this 
paragraph (b) an extra-schedular rating commensurate with the average 
impairment of earning capacity due exclusively to the service-connected 
disability or disabilities.'' The use of the plural ``disabilities'' 
might be misconstrued as allowing VA to approve an extra-schedular 
rating based partly on a disability for which the schedular rating is 
inadequate and partly on a disability for which the schedular rating is 
adequate, or to suggest that under Sec.  5.280 VA must consider the 
combined effect of multiple disabilities in determining whether an 
extra-schedular award is appropriate.
    VA never intended that Sec.  3.321, nor initially proposed Sec.  
5.280, apply in either of those ways but rather that they be applied 
individually to each specific disability being evaluated. Therefore, we 
propose to use only the singular

[[Page 71113]]

form of ``disability'', and to replace the word ``case'' with 
``disability'' in the second sentence of Sec.  5.280(b)(1), to clarify 
this point. We also propose several other, non-substantive changes to 
improve readability of paragraph (b)(1).

Sec.  5.281 Multiple 0 Percent Service-Connected Disabilities

    Initially proposed Sec.  5.281 stated:

    VA may assign a 10 percent combined rating to a veteran with two 
or more permanent service-connected disabilities that are each rated 
as 0 percent disabling under the Schedule for Rating Disabilities in 
part 4 of this chapter, if the combined effect of such disabilities 
interferes with normal employability. VA cannot assign this 10 
percent rating if the veteran has any other compensable rating.

    One commenter suggested that for clarity, the second word in this 
section should be changed from ``may'' to ``shall'' to emphasize the 
mandatory nature of assigning the combined rating. We agree with this 
suggestion but we use ``will'' instead of ``shall'' throughout part 5 
because the former is easier for the public to understand. We therefore 
propose to change ``may'' to ``will'' in Sec.  5.281.

Sec.  5.282 Special Consideration for Paired Organs and Extremities

    Initially proposed Sec.  5.282(c) stated that, ``If a veteran 
receives money or property of value in a judgment, settlement, or 
compromise from a cause of action for a qualifying nonservice-connected 
disability involving an organ or extremity described in paragraph (b) 
of this section, VA will offset the value of such judgment, settlement, 
or compromise against the increased disability compensation payable 
under this section.''
    One commenter suggested that because the VA Schedule for Rating 
Disabilities does not provide compensation for non-economic loss, such 
as pain and suffering and loss of enjoyment of life, initially proposed 
Sec.  5.282(c)(2) should calculate the offset of damages by first 
reducing the total amount recovered as damages by the amount received 
for pain and suffering and loss of enjoyment of life. The commenter 
also suggested that the amount paid for attorney fees and expenses for 
that recovery should be subtracted from the total amount recovered as 
damages.
    The relevant statute, 38 U.S.C. 1151 does not allow VA to reduce 
the offset for any reason. Moreover, the purpose of the Regulation 
Rewrite Project is to make VA's compensation and pension regulations 
more logical, claimant-focused, and user-friendly, not to serve as a 
vehicle for making major changes to VA policies. Thus, the comment is 
outside the scope of this rulemaking.

Sec.  5.283 Total and Permanent Total Ratings and Unemployability

    Initially proposed Sec.  5.283(b) stated that, ``VA will consider a 
total disability to be permanent when an impairment of mind or body, 
that makes it impossible for the average person to follow a 
substantially gainful occupation, is reasonably certain to continue 
throughout the life of the disabled person.''
    One commenter asserted that it is inconsistent for VA to provide 
that total disability is permanent only if it is reasonably certain to 
continue throughout the lifetime of the veteran when the Social 
Security Administration considers a total disability to be permanent if 
it is likely to continue for 1 year or lead to death. The commenter 
asserted that veterans should not have a higher threshold for 
permanency than Social Security Disability recipients.
    The purpose of the Regulation Rewrite Project is to make VA's 
compensation and pension regulations more logical, claimant-focused, 
and user-friendly, not to serve as a vehicle for making major changes 
to VA policies. Thus, the comment is outside the scope of this 
rulemaking.

Sec.  5.300 Establishing Dependency of a Parent

    In initially proposed Sec.  5.300(b)(2)(ii), we stated, ``Net worth 
of a minor family member will be considered income of the parent only 
if it is actually available to the veteran's parent for the minor's 
support.'' This statement was erroneous and inconsistent with Sec.  
3.250(b)(2). In fact, a minor's net worth is not considered income. 
Rather it is considered as a separate matter from income. We therefore 
propose to revise paragraph (b)(2)(ii) to read, ``Net worth of a minor 
family member will be considered in determining dependency of a parent 
only if it is actually available to the veteran's parent for the 
minor's support.''
    In initially proposed Sec.  5.300 we also failed to address a 
minor's income. We therefore propose to add a new paragraph (b)(1)(iii) 
which states, ``Income of a minor family member from business or 
property will be considered income of the parent only if it is actually 
available to the veteran's parent for the minor's support.'' This is 
merely a plain language restatement of the Sec.  3.250(b)(2) provision 
quoted above.

5.304 Exclusions From Income--Parent's Dependency

    Following publication of proposed Sec.  5.304 in AM07, VA published 
a rulemaking to implement the ``Caregivers'' provisions of Public Law 
111-163. 76 FR 26148 (May 5, 2011). As we stated in the preamble, ``The 
stipend payments to Primary Family Caregivers under 38 U.S.C. 
1720G(a)(3)(A)(ii)(V) constitute `payments [of benefits] made to, or on 
account of, a beneficiary' that are exempt from taxation under 38 
U.S.C. 5301(a)(1). VA does not intend that the stipend replace career 
earnings.'' Consistent with that interpretation, we believe that this 
stipend should not be counted as income when determining parental 
dependency. We therefore propose to add this exclusion as Sec.  
5.304(l) and redesignate previous paragraph (l) as paragraph (m).

C. Special Ratings AL88

    In a document published in the Federal Register on October 17, 
2008, we proposed to revise Department of Veterans Affairs (VA) 
regulations governing special ratings, to be published in new 38 CFR 
part 5. 73 FR 62004. We provided a 60-day comment period, which ended 
December 16, 2008. We received a submission from one commenter.

Sec.  5.320 Determining Need for Regular Aid and Attendance

    Current 38 CFR 3.352(c) states, ``The performance of the necessary 
aid and attendance service by a relative of the beneficiary or other 
member of his or her household will not prevent the granting of the 
additional allowance.'' Initially proposed Sec.  5.320(a) inadvertently 
omitted this paragraph. We therefore propose to insert this provision, 
phrased in a clearer way, into Sec.  5.320(a).
    The commenter noted that initially proposed Sec.  5.320(b) differs 
from current Sec.  3.352(a), from which it derives. The current rule 
defines ``bedridden'' as ``that condition which, through its essential 
character, actually requires that the claimant remain in bed.'' The 
initially proposed rule defined bedridden as requiring that the 
claimant ``must remain in bed due to his or her disability or 
disabilities based on medical necessity and not based on a prescription 
of bed rest for purposes of convalescence or cure.'' The commenter 
asserted that the change of language ``may eliminate the possibility of 
using proof by lay testimony that remaining in bed is required.''
    The need for aid and assistance or confinement to bed may be shown 
by

[[Page 71114]]

medical treatment records, medical opinions, and competent non-medical 
evidence based on personal observations. However, the relationship 
between service-connected disability and need for aid and attendance or 
confinement to bed as a result of a service-connected disability must 
be shown by medical treatment records and medical opinions.
    VA will always accept and consider lay evidence, even if such 
evidence cannot be dispositive of a particular factual issue. The 
consideration of lay evidence in the context of a determination on 
whether a person is bedridden is no different that the consideration of 
lay evidence on the context of any other factual determination. 
Therefore, we propose not to include an instruction regarding lay 
evidence.
    However, the comment revealed that the initially proposed rule was 
unclear about the meaning of the term ``bedridden''. Current Sec.  
3.352(a) states, ``The fact that . . . a physician has prescribed rest 
in bed for the greater or lesser part of the day to promote 
convalescence or cure will not suffice'' to establish bedridden status. 
The gist of this qualification is to distinguish the need to stay in 
bed unremittingly from a need to be in bed intermittently. It is the 
intermittency that distinguishes being in bed ``for the greater or 
lesser part of the day'' from being bedridden, not that convalescence 
or cure is the reason. If a doctor forbids a person to leave bed 
because of the person's medical condition, the person would be 
bedridden, whether the prescribed confinement was for convalescence, 
cure, or other reason. We propose to revise Sec.  5.320(b) to preserve 
this point, consistent with Sec.  3.352(a), by stating that the person 
who is bedridden ``must remain in bed due to his or her disability or 
disabilities based on medical necessity and not based on a prescription 
of periods of intermittent bed rest.'' Because the reason for the 
prescribed confinement is irrelevant, we propose to remove the phrase 
``for purposes of convalescence or cure''.
    The initially proposed rule required that, ``The individual is 
temporarily or permanently bedridden. . . .'' A person who is 
permanently bedridden logically meets the requirement that he or she is 
temporarily bedridden. Because being either temporarily or permanently 
bedridden satisfies the requirement of Sec.  5.320(b), there is no need 
to qualify ``bedridden'' as either temporarily or permanently. We 
therefore propose to remove the phrase ``temporarily or permanently'' 
before ``bedridden''. However, a finding that a veteran is permanently 
bedridden is significant because such a veteran's special monthly 
compensation (SMC) will not be reduced based on hospitalization, as we 
explained in the preamble to the initially proposed rule. See 73 FR 
62011, Oct. 17, 2008; see also proposed Sec.  5.724, ``Payments and 
Adjustments to Payments'', 73 FR 65212, Oct. 31, 2008. The only statute 
that requires payment of SMC based on the ``permanently bedridden'' 
criterion is 38 U.S.C. 1114(l). Therefore, we have added a cross 
reference to Sec.  5.324, the regulation that implements section 
1114(l). This change will not affect entitlement, because even a person 
who is temporarily bedridden will qualify for SMC under section 1114(l) 
(because such a person needs regular aid and attendance). The change is 
intended to improve clarity in terms of the potential for a reduction 
based on hospitalization.
    Initially proposed Sec.  5.320(b) omitted the sentence from current 
Sec.  3.352(a) that states, ``It is not required that all of the 
disabling conditions enumerated in this paragraph be found to exist 
before a favorable rating may be made.'' However, we failed to explain 
that omission in our preamble. We note that initially proposed 5.320(a) 
already provided for aid and attendance if the claimant meets ``any or 
all'' of the listed criteria. Therefore this sentence was unnecessary 
and we propose not to include it in Sec.  5.320.

Sec.  5.321 Additional Disability Compensation for a Veteran Whose 
Spouse Needs Regular Aid and Attendance

    At the end of initially proposed paragraph (a), we propose to add a 
notation that the term ``aid and attendance'' used in that paragraph is 
``defined in paragraphs (b) and (c) of this section.'' The notation is 
needed to ensure that a reader does not think that the term means only 
the generally applicable definition set forth in proposed Sec.  5.320.
    The commenter addressed the visual impairment criteria of automatic 
eligibility for regular aid and attendance. Initially proposed Sec.  
5.321(b) provided that the spouse of a veteran who is 30 percent 
disabled is automatically considered in need of regular aid and 
attendance if the spouse's visual impairment meets one of two criteria: 
``(1) The spouse has corrected visual acuity of 5/200 or less in both 
eyes; [or] (2) The spouse has concentric contraction of the visual 
field to 5 degrees or less in both eyes''. Section 3.351(c)(1), from 
which proposed Sec.  5.321(b)(2) derives, states, ``. . . or concentric 
contraction of the visual field to 5 degrees or less.'' The proposed 
rule specified the bilateral requirement, which VA has long 
implemented, as we explained in the notice of proposed rulemaking 
(NPRM). We explained that VA had long used these objective vision 
criteria to satisfy the regulatory criteria of ``blind or so nearly 
blind''. See 38 U.S.C. 1115(1)(E). Noting that the VA Schedule for 
Rating Disabilities provides only a 30 percent disability rating for 
unilateral concentric contraction of the visual field to 5 degrees and 
a rating of 100 percent for bilateral concentric contraction to that 
degree, we explained that unilateral contraction could not be 
considered ``so nearly blind as to support a need for aid and 
attendance''. We further noted that, although the rating schedule 
applies to ratings for veterans, there is no rational basis not to 
apply the same criteria for veterans' spouses in considering the proper 
standards for determining the need for aid and attendance.
    The commenter asserts that there is a rational basis to construe 
the visual impairment criteria of the need for regular aid and 
attendance differently for the spouse of a 30 percent disabled veteran 
than for a veteran seeking disability compensation for visual 
impairment. The commenter stated:

    To the contrary, the criterion for granting a veteran, who 
already has a 30% disability, additional benefits because of having 
a spouse with a serious visual impairment should be more relaxed 
than the standard for rating the veteran's own visual impairment. It 
follows that even a spouse with a unilateral concentric contraction 
of the visual field to 5 degrees or less would necessarily require 
regular aid and attendance which would be an additional financial 
burden on a veteran who is 30% disabled.

    We disagree with the commenter for two reasons. First, the aid and 
attendance criterion of ``blind, or so nearly blind'' is established by 
statute. 38 U.S.C. 1115(1)(E)(ii). VA would exceed its authority to 
``relax'' the statutory standard for finding the veteran's spouse in 
need of regular aid and attendance. As we explained in the initial 
NPRM, by reference to the VA Schedule for Rating Disabilities, a person 
with unilateral concentric contraction of the visual field to 5 degrees 
or less ``cannot rationally be considered `so nearly blind' as to need 
regular aid and attendance.'' Section 5.321(b) states an objective 
measure of vision that VA considers ``so nearly blind'' as to need 
regular aid and attendance without further inquiry. It confers the 
benefit of automatic eligibility without burdening the veteran to prove 
some other way that his or her spouse is ``blind, or so nearly

[[Page 71115]]

blind'' as to need regular aid and attendance. Section 5.321(b) does 
not deprive the veteran of the ability to establish need for aid and 
attendance by other means. This is because Sec.  5.321(c) provides for 
proof of entitlement with any evidence that shows the veteran's spouse 
in fact needs regular aid and attendance, even, possibly, with evidence 
of visual impairment that is much less than the impairment that 
automatically establishes a need for regular aid and attendance.
    Second, we disagree that because a veteran is 30 percent disabled 
the veteran's spouse would necessarily require regular aid and 
attendance with unilateral concentric contraction of the visual field 
to 5 degrees or less, or, by implication, with less impairment than 
prescribed by proposed Sec.  5.321(b). The need for regular aid and 
attendance is a function of a person's ability to care for himself or 
herself, not of another's ability to provide financial or other 
support. Although the veteran's ability to provide for the spouse 
financially or otherwise could vary in relation to the veteran's 
disability, it does not logically follow that the spouse's need for 
regular aid and attendance varies in relation to the veteran's 
disability. In light of the discussion above, we propose to make no 
changes based on this comment.

Sec.  5.322 Special Monthly Compensation: General Information and 
Definitions of Disabilities

    In initially proposed Sec.  5.322(a)(1), we stated that multiple 
regulations allow special monthly compensation (SMC) to veterans who 
have certain service-connected disabilities. In initially proposed 
paragraph (a)(2), we stated that certain nonservice-connected 
disabilities will be considered in determining entitlement to SMC, and 
we listed the relevant sections. To emphasize that service-connected 
disability is a prerequisite for SMC, we propose to add this sentence 
to paragraph (a)(1): ``Except as specified in paragraph (a)(2) of this 
section, the disabilities referred to in Sec. Sec.  5.323-5.333 must be 
service connected.''
    Section 601 of Public Law 111-275, 124 Stat. 2864, 2884 (2010) 
amended 38 U.S.C. 1114(m) to replace the phrases ``at a level, or with 
complications,'' and ``at levels, or with complications,'' with the 
phrase ``with factors''. The public law also amended section 1114(n) to 
replace ``at levels, or with complications,'' with the phrase ``with 
factors'' and to replace ``so near the shoulder and hip as to'' with 
``factors that''. It also amended section 1114(o) to replace ``so near 
the shoulder as to'' with ``with factors that''. We propose to revise 
initially proposed Sec. Sec.  5.322, 5.325-5.330, and 5.334 to conform 
to this new statutory language.
    In the NPRM, we identified many disabilities in those sections as 
``service connected''. Given that service-connected disability is a 
requirement for all SMC benefits (except as specifically provided in 
certain sections), we have determined that it is unnecessary to specify 
each disability as service connected throughout those sections. We have 
therefore removed the modifier ``service-connected'' throughout 
Sec. Sec.  5.321 and 5.323-5.333, except where necessary to distinguish 
the service-connected disability from a nonservice-connected 
disability.

Sec.  5.323 Special Monthly Compensation Under 38 U.S.C. 1114(k)

    We have reorganized initially proposed Sec.  5.323(b) and moved one 
sentence from paragraph (b) into a closely related part 5 section. 
Initially proposed Sec.  5.323(b) stated limitations on SMC under 38 
U.S.C. 1114(k). Paragraph (b)(1) stated limitations on combining SMC 
under 38 U.S.C. 1114(k) with disability compensation under section 
1114(a) through (j). Paragraph (b)(2) stated limitations on combining 
SMC under section 1114(k) with SMC under 1114(l) through (n). On 
review, we see that paragraph (b)(1)(ii) stated a limitation germane to 
paragraph (b)(2). We therefore propose to move it to paragraph (b)(2), 
and redesignate it as paragraph (b)(2)(i). We propose to redesignate 
initially proposed paragraph (b)(2) as paragraph (b)(2)(ii).
    One provision of initially proposed paragraph (b)(1)(iii) stated 
that the additional compensation for dependents under 38 U.S.C. 1115 is 
not subject to the ``above limitations'', meaning the limitations in 
initially proposed paragraph Sec.  5.323(b)(1). We propose to move this 
provision to Sec.  5.240, ``Disability compensation'', because it 
pertains to all disability compensation, not just to SMC.
    The remainder of initially proposed paragraph (b)(1)(iii) stated 
that ``the additional allowance for regular aid and attendance or a 
higher level of care provided by 38 U.S.C. 1114(r) [is] not subject to 
the above limitations regarding maximum monthly compensation payable 
under this paragraph.'' To improve clarity, we therefore propose to 
redesignate this provision of initially proposed paragraph (b)(1)(iii) 
as paragraph (b)(3) and have clearly identified the excluded 
limitations as those of Sec.  5.323(b). For consistency throughout part 
5, we propose to revise ``compensation'' to read ``disability 
compensation''. As revised, the sentence will read: ``The additional 
allowance for regular aid and attendance or a higher level of care 
provided by 38 U.S.C. 1114(r) is not subject to the limitations of 
paragraph (b) of this section regarding maximum monthly disability 
compensation payable under 38 U.S.C. 1114(k) in combination with other 
rates.''

Sec.  5.324 Special Monthly Compensation Under 38 U.S.C. 1114(l)

    The commenter asserted that as initially proposed, Sec.  5.324(d) 
violated the ``benefit of the doubt'' rule of 38 U.S.C. 5107(b) by 
defining ``permanently bedridden'' as ``reasonably certain that the 
confinement to bed will continue throughout his or her lifetime.'' The 
commenter noted that the benefit of the doubt rule is ``[w]hen there is 
an approximate balance of positive and negative evidence regarding any 
issue material to the determination of a matter, the Secretary shall 
give the benefit of the doubt to the claimant.'' The commenter argued 
that to comply with the benefit of the doubt rule, Sec.  5.324(d) 
should substitute ``at least as likely as not'' for ``reasonably 
certain''. That is, it should read, ``It is at least as likely as not 
that the confinement to bed will continue throughout his or her 
lifetime.''
    The statute that Sec.  5.324(d) implements authorizes VA to pay 
special monthly compensation to a veteran who is ``permanently 
bedridden.'' 38 U.S.C. 1114(l). We agree that use of the term 
``reasonably certain'' could be misconstrued to require a higher 
standard of proof than ``at least as likely as not''. Therefore, we 
propose to remove ``reasonably certain''. As revised, the standard of 
proof would be the default standard, which is the ``benefit of the 
doubt'' rule. The ``benefit of the doubt rule'', found in Sec.  5.3, 
incorporates the concept of ``at least as likely as not.''

Sec.  5.325 Special Monthly Compensation at the Intermediate Rate 
Between 38 U.S.C. 1114(l) and (m)

    We propose to amend the language in Sec.  5.325 for clarity.

Sec.  5.326 Special Monthly Compensation Under 38 U.S.C. 1114(m)

    In initially proposed Sec.  5.326(i), we provided an award of SMC 
under 38 U.S.C. 1114(m) based on the facts found ``[i]f the veteran has 
. . . concentric contraction of the visual field to 5 degrees or less 
in both eyes''. This paragraph was derived from Sec.  3.350(c)(3), 
which does not include the ``or less'' criterion. See 38 CFR

[[Page 71116]]

3.350(c)(3) (``[w]ith . . . the vision field reduced to 5 degrees 
concentric contraction in both eyes''). We did not explain our reason 
for the addition of the ``or less'' criterion. Although we did not 
receive any comments on this issue, we note that in the NPRM for 
proposed Sec.  5.325(d) we explained our rationale for treating visual 
acuity of 5/200 or less and concentric contraction of the visual field 
to 5 degrees or less as equally disabling. See 73 FR 62012, Oct. 17, 
2008. In that notice, we also stated our intent to apply the principle 
of equivalence of visual acuity of 5/200 or less with concentric 
contraction of the visual to 5 degrees or less ``wherever it is 
applicable''. It applies to Sec.  5.326(i).

5.330 Special Monthly Compensation Under 38 U.S.C. 1114(o).

    In initially proposed Sec.  5.330(c), we stated one combination of 
disabilities that qualify a veteran for an award under 38 U.S.C. 
1114(o) as follows: ``Total deafness in one ear, or bilateral deafness 
rated at 40 percent or more disabling, even if the hearing impairment 
in one ear is nonservice connected, in combination with service-
connected blindness of both eyes having only light perception or 
less.'' We believe the phrase ``only light perception or less'', which 
is also contained in current 38 CFR 3.350(e)(1)(iv), may confuse 
readers because it fails to explain what ``less'' refers to. The intent 
of Sec.  3.350(e)(1)(iv) is to include veterans with only light 
perception or less vision, so we propose to add the word vision at the 
end of Sec.  5.330(c).
    The preamble to initially proposed 5.330 stated, ``We will not 
repeat Sec.  3.350(e)(4) and the third and fourth sentences of Sec.  
3.350(e)(3). These sentences are redundant of Sec.  3.350(e)(1)(ii) . . 
.'' In fact, we actually omitted the second through fourth sentences, 
for the same reason.

5.332 Additional Allowance for Regular Aid and Attendance Under 38 
U.S.C. 1114(r)(1) or for a Higher Level of Care Under 38 U.S.C. 
1114(r)(2)

    Section 601 of Public Law 111-275, 124 Stat. 2864, 2884 (2010) 
amended 38 U.S.C. 1114 by adding a new paragraph (t) which provides:

    Subject to section 5503(c) of this title, if any veteran, as the 
result of service-connected disability, is in need of regular aid 
and attendance for the residuals of traumatic brain injury, is not 
eligible for compensation under subsection (r)(2), and in the 
absence of such regular aid and attendance would require 
hospitalization, nursing home care, or other residential 
institutional care, the veteran shall be paid, in addition to any 
other compensation under this section, a monthly aid and attendance 
allowance equal to the rate described in subsection (r)(2), which 
for purposes of section 1134 of this title shall be considered as 
additional compensation payable for disability. An allowance 
authorized under this subsection shall be paid in lieu of any 
allowance authorized by subsection (r)(1).

    We propose to add a new paragraph (c)(7) to initially proposed 
Sec.  5.332 to implement this statutory change.

Sec.  5.333 Special Monthly Compensation Under 38 U.S.C. 1114(s)

    In Bradley v. Peake, issued after Sec.  5.333 was initially 
proposed, the U.S. Court of Appeals for Veterans Claims held that under 
VA's existing regulation (38 CFR 3.350(i)) entitlement to SMC under 
section 1114(s) may be provided to a claimant who was assigned ``a TDIU 
[total disability based on individual unemployability] rating based on 
a single disability to satisfy the statutory requirement of a total 
rating.'' Bradley, 22 Vet. App. 280, 293 (2008). To clearly implement 
the court's holding, we propose to revise the first paragraph of 
initially proposed Sec.  5.333 to state:

    Special monthly compensation under 38 U.S.C. 1114(s) is payable 
to a veteran who has a single disability rated 100 percent disabling 
under subpart B of the Schedule for Rating Disabilities in part 4 of 
this chapter, or a disability that is the sole basis for a rating of 
total disability based on individual unemployability (TDIU) under 
Sec.  4.16 of this chapter, and [additional disabilities as 
described in either paragraph (a) or (b) of Sec.  5.333].


We propose to revise paragraphs (a) and (b) so that they will be clear 
when read in connection with these revisions.

Sec.  5.336 Effective Dates: Additional Compensation for Regular Aid 
and Attendance Payable for a Veteran's Spouse Under Sec.  5.321

    We propose to revise Sec.  5.336(a)(2) to be in the active voice 
and to improve clarity. In initially proposed paragraph (a)(2), we 
stated, ``[retroactive] regular aid and attendance for the spouse will 
also be awarded''. We now propose to clarify that the benefit paid is 
properly called ``additional compensation'' for regular aid and 
attendance. Also, initially proposed paragraph (a)(2) referred to a 
spouse's ``entitlement to regular aid and attendance''. However, it is 
the spouse's need for, not entitlement to, regular aid and attendance 
that is the basis for the additional compensation. We therefore propose 
to change the reference to ``entitlement'' to a reference to ``need''. 
The whole sentence will read, ``When VA awards disability compensation 
based on an original or reopened claim retroactive to an effective date 
that is earlier than the date of receipt of the claim,VA will also 
award additional compensation for any part of the retroactive period 
during which the spouse needed regular aid and attendance.''
    Title 38 CFR 3.501(b)(3) states that the effective date for 
discontinuance of additional compensation paid based on a spouse's need 
for regular aid and attendance is the, ``[e]nd of month in which award 
action is taken if need for aid and attendance has ceased.'' Initially 
proposed paragraph (b) stated, ``The effective date for the 
discontinuance of regular aid and attendance will be the end of the 
month in which VA stops paying the aid and attendance.'' The proposed 
regulation incorrectly stated that VA will stop paying the benefit when 
we discontinue the benefit. It also failed to identify the reason for 
the discontinuance: the spouse no longer needs regular aid and 
attendance. We propose to remedy these two defects by revising the 
sentence to read, ``If the veteran's spouse no longer needs regular aid 
and attendance, VA will discontinue additional compensation effective 
the end of the month in which VA takes the award action to 
discontinue.''

5.337 Award of Special Monthly Compensation Based on the Need for 
Regular Aid and Attendance During Period of Hospitalization

    We have determined that initially proposed Sec.  5.337 is redundant 
of Sec.  5.720(f). We therefore propose to delete Sec.  5.337 from part 
5.

Sec.  5.350 Benefits Under 38 U.S.C. 1151(a) for Additional Disability 
or Death Due to Hospital Care, Medical or Surgical Treatment, 
Examination, Training and Rehabilitation Services, or Compensated Work 
Therapy Program

    Initially proposed Sec.  5.350 erroneously included applicability 
date rules derived from current Sec.  3.361(a)(1) and (2). Those rules 
pertain, respectively, to the applicability date of Sec.  3.361 to 
claims for benefits under 38 U.S.C. 1151(a) generally, and to claims 
for benefits related to compensated work therapy specifically. No 
regulation in part 5 will apply before the applicability date of part 5 
as a whole, which will be on a date prescribed in the final rule. 
Consequently, we erred in restating in initially proposed Sec.  5.350 
the applicability dates prescribed in Sec.  3.361. We now propose not 
to include them in Sec.  5.350. We also propose to similarly revise 
initially proposed Sec. Sec.  5.351 and 5.353, which also involve 
benefits under section 1151.

[[Page 71117]]

    Section 3.800(a), ``Disability or death due to hospitalization, 
etc.'', provides that:

    Where disease, injury, death or the aggravation of an existing 
disease or injury occurs as a result of having submitted to an 
examination, medical or surgical treatment, hospitalization or the 
pursuit of a course of vocational rehabilitation under any law 
administered by the Department of Veterans Affairs and not the 
result of his (or her) own willful misconduct, disability or death 
compensation, or dependency and indemnity compensation will be 
awarded for such disease, injury, aggravation, or death as if such 
condition were service connected.

    In initially proposed Sec.  5.350, we failed to include a similar 
basic explanation of the benefits payable under 38 U.S.C. 1151. To 
correct this omission, we propose to insert similar language as new 
paragraph (a).
    In initially proposed Sec.  5.350(g), we stated, ``The benefit 
payable under 38 U.S.C. 1151(a) to an eligible survivor for a veteran's 
death occurring after December 31, 1956, is dependency and indemnity 
compensation.'' This paragraph is unnecessary because we use the term 
``dependency and indemnity compensation'' in new paragraph (a), and 
part 5 will not govern any claims filed on or before December 31, 1956. 
We therefore propose to delete paragraph (g).

Sec.  5.352 Effect of Federal Tort Claims Act Compromises, Settlements, 
and Judgments Entered After November 30, 1962, on Benefits Awarded 
Under 38 U.S.C. 1151(a) for Additional Disability or Death Due to 
Hospital Care, Medical or Surgical Treatment, Examination, Training and 
Rehabilitation Services, or Compensated Work Therapy Program

    For the same reasons explained above as to Sec.  3.350, we propose 
to delete initially proposed paragraph (a), which had stated that this 
rule applied to claims received after September 30, 1997. Accordingly, 
we propose to redesignate initially proposed paragraph (b) as paragraph 
(a), proposed paragraph (c) as paragraph (b), and proposed paragraph 
(d) as paragraph (c). We propose to remove unnecessary language from 
these paragraphs for clarity.
    We propose to add paragraph (d), ``Offset of award of benefits 
under 38 U.S.C. chapter 21 or 38 U.S.C. chapter 39'', to initially 
proposed Sec.  5.352. Section 304(c) of the Veterans Benefits 
Improvement Act of 2004 amended 38 U.S.C. 1151(b) by adding section 
1151(b)(2) relating to offset of chapter 21 and 39 benefits. VA amended 
current Sec.  3.362 in August 2006 by adding paragraph (e) to that 
section to implement the part of 38 U.S.C. 1152(b) pertaining to 38 
U.S.C. chapter 39. On September 23, 2010, VA amended Sec.  3.362(e) to 
implement 38 U.S.C. 1151(b) pertaining to 38 U.S.C. chapter 21. See 75 
FR 57859. Initially proposed Sec.  5.352 omitted a counterpart to Sec.  
3.362(e). We now propose to add the language of Sec.  3.362(e), 
reorganized for clarity.

Sec.  5.360 Service Connection of Dental Conditions for Treatment 
Purposes

    Initially proposed Sec.  5.360 was based on 38 CFR 3.381 as it 
existed at the time (2008). See 73 FR 62004. VA revised Sec.  3.381 on 
January 30, 2012 (77 FR 4469). This amendment was intended to clarify 
the language of Sec.  3.381 by adding a new introductory paragraph (a) 
explaining the types of issues that VBA adjudicates in a dental claim. 
VA also added a sentence to Sec.  3.381(b) explaining that, ``These 
conditions and other dental conditions or disabilities that are 
noncompensably rated under Sec.  4.150 of this chapter may be service 
connected for purposes of Class II or Class II (a) dental treatment 
under Sec.  17.161 of this chapter.''
    We propose to revise initially proposed Sec.  5.360(a), ``General 
Principles'', to incorporate the new introductory paragraph (a) of 
Sec.  3.381 and to add a statement explaining what service connection 
for treatment purposes means. We likewise propose to include the second 
sentence of Sec.  3.381(b) in Sec.  5.360(c)(3). We also propose to 
revise initially proposed Sec.  5.360 to simplify the provisions, to 
state the provisions in the active voice, to specify which 
Administration within VA must make which determinations, and to reorder 
the provisions in a more logical sequence.
    We propose to change the sequence of the paragraphs, designating 
paragraph (b) as (c), paragraph (c) as (e), paragraph (d) as (b), and 
paragraph (e) as (d). It is more logical to include the paragraphs 
concerning what VA will service connect for treatment purposes together 
and in sequence and before the paragraph that provides for the 
conditions VA will not service connect for treatment purposes.
    In proposed paragraph (c) (initially proposed paragraph (b)), we 
propose to rephrase the first sentence to state it in the active voice. 
We propose to remove the modifier, ``chronic'' from periodontal disease 
in paragraph (iv) because VA will treat any periodontal disease in a 
veteran who is eligible for treatment in accordance with the provisions 
of Sec.  17.161 of this chapter. Periodontal disease, whether labeled 
acute or chronic, is classified based on the severity of the disease. 
Gingivitis, which is acute and treatable, is a milder form of 
periodontal disease. Periodontitis, which is chronic, is the condition 
that develops if gingivitis is untreated. Since these are essentially 
different stages of the same disease, VA will treat both stages.
    We propose to remove the phrase, ``outpatient dental'' from the 
first sentence of paragraph (e) (initially proposed paragraph (c)) 
because it is redundant and unnecessary. This entire section concerns 
service connection of dental conditions for treatment purposes. It is 
immaterial whether VA treats the veteran as an outpatient or while 
hospitalized. We also propose to remove ``acute periodontal disease'' 
from the list of conditions that VA will not service connect for 
treatment purposes for the reasons stated earlier. We propose to 
redesignate the subsequent paragraphs accordingly.

Sec.  5.365 Claims Based on the Effects of Tobacco Products

    Initially proposed Sec.  5.365 restated Sec.  3.300 essentially 
without change. Initially proposed Sec.  5.365(b)(1) stated: ``The 
disability or death resulted from injury or disease that is otherwise 
shown to have been incurred or aggravated during service, which means 
that the disability or death can be service connected on some basis 
other than the veteran's use of tobacco products during service.'' The 
phrase ``otherwise shown to have been incurred or aggravated'' quotes 
paragraph (b) of the authorizing statute, 38 U.S.C. 1103. However, we 
have determined that the phrase ``the disability or death can be 
service connected on some basis other than the veteran's use of tobacco 
products during service'' is the premise of the paragraph. The other 
language in the initially proposed paragraph is superfluous. We 
therefore propose to remove this other language.
    We also determined that the phrase, ``the disability became 
manifest or death occurred during service'', which appeared in 
initially proposed (b)(1), is a separate exception to paragraph (a). We 
therefore propose to designate it paragraph (b)(2). Consequently, we 
propose to redesignate initially proposed paragraph (b)(2) as (b)(3) 
and initially proposed paragraph (b)(3) as (b)(4).
    We further propose to change the word ``appeared'' in initially 
proposed paragraph (b)(2), redesignated paragraph (b)(3), to 
``manifested'' because the cited sections, Sec. Sec.  5.260 through 
5.268, use the word ``manifested''. Likewise, 38 U.S.C. 1103(b) uses 
the word ``manifest''.

[[Page 71118]]

    In the preamble to the initially proposed rule, we explained that 
we were not repeating the first clause of Sec.  3.300, ``For claims 
received by VA after June 9, 1998,'' because all claims under part 5 
will be received after 1998. We have noted that one of the authority 
citations listed in initially proposed Sec.  5.365 was 38 U.S.C. 1103 
note. Because this note only concerns this effective date provision, we 
propose to omit it from Sec.  5.35.

Sec.  5.367 Civil Service Preference Ratings for Employment in the U.S. 
Government

    Initially proposed Sec.  5.367 was not explicit as to the purpose 
of the civil service preference ratings. We now propose to clarify that 
these ratings are for ``employment by the U.S. government''. This 
clarification is consistent with current practice.
    The second sentence stated, ``Any directly or presumptively 
service-connected injury or disease that exhibits some extent of actual 
impairment may be held to exist at the level of less than 10 percent.'' 
This implied a two-step process in which VA found ``actual impairment'' 
and then assigned a rating of less than 10 percent. In fact, there is 
only one step: if a veteran has any actually disabling directly or 
presumptively service-connected disability he or she will qualify for 
the civil service preference. We propose to revise the sentence to say 
this explicitly.

Sec.  5.368 Basic Eligibility Determinations: Home Loan and Education 
Benefits

    In initially proposed Sec.  5.368(a)(1), we stated that claims 
based on service after January 31, 1955, and before August 5, 1964; or 
after May 7, 1975, would be governed by the presumption of aggravation 
in current Sec.  3.306(a) and (c). This was derived from current Sec.  
3.315(b). However, the current rule is incorrect, and should refer to 
Sec.  3.306(b), which applies to all claims based on service after 
December 7, 1941. We will state the rule correctly in part 5. We 
propose to make the same correction to paragraph (b)(4).

XI. Subpart F: Nonservice-Connected Disability Pensions and Death 
Pensions Improved Pension

A. Improved Pension

    In a document published in the Federal Register on September 26, 
2007, we proposed to revise VA's regulations governing Improved Pension 
benefits, to be published in a new 38 CFR part 5. 72 FR 54776. We 
provided a 60-day comment period that ended November 26, 2007. We 
received no comments.
    Although we received no comments regarding our publication on 
September 26, 2007, an internal review of initially proposed Subpart F 
revealed several drafting errors that needed to be corrected, and we 
propose to do so. We also propose to make organizational and technical 
changes to improve the clarity of the regulations, and to maintain 
consistency throughout part 5.

Sec.  5.370 Definitions for Improved Pension

    We propose to add a general definition of ``Improved Pension'', as 
Sec.  5.370(d), to be consistent with our practice of providing general 
definitions for the benefits provided by VA. See, for example, 
Sec. Sec.  5.240(a) (defining disability compensation) and 5.460 
(defining certain VA pension programs). The text of the definition is 
based on the text of what was initially proposed as Sec.  5.371, with 
minor revisions to improve clarity.
    We also propose to add a definition of ``Improved Pension payment 
amount'' as paragraph (e), which is ``the monthly payment calculated 
under Sec.  5.421(a)''.
    In the definition of ``Maximum annual pension rate'', proposed 
paragraph (f), we changed the reference to Sec.  5.400 from ``The 
various types of maximum annual pension rates are set forth at Sec.  
5.400'' to ``Maximum annual pension rates are described in Sec.  
5.400''. Section 5.400 does not ``set forth'' any rates; it merely 
refers the reader to title 38, United States Code.
    In this revised version of Sec.  5.370, we would add a definition 
of ``net worth in proposed paragraph (g)'' as ``the value of real and 
personal property, as calculated under Sec.  5.414''. This is a general 
definition, and is consistent with common usage of the term; however, 
it will be useful to provide a definition in this central location of 
Sec.  5.370, where it will guide readers to the relevant (and more 
detailed) substantive rules in Sec.  5.414.
    In Sec.  5.370, we initially proposed to define ``special monthly 
pension'' as:

    [A] type of Improved Pension with higher maximum annual pension 
rates than the basic rates listed in Sec.  5.400(a)(1) and (5). 
Special monthly pension is based on a veteran's or surviving 
spouse's disability or disabilities ratable at 60 percent or more, 
their housebound status, or their need of the aid and attendance of 
another person in performing their daily living habits.


We propose to revise the definition in proposed paragraph (i) to make 
it more general; specific entitlement criteria are more appropriately 
discussed in the substantive rules at Sec. Sec.  5.390 and 5.391. There 
is no need to restate those criteria here. We will explicitly note in 
the definition that claimants for special monthly pension must meet the 
eligibility criteria for Improved Pension, notwithstanding that this is 
implied by the definition of special monthly pension as a ``type of 
Improved Pension''.
    We propose to delete the initially proposed definition of 
``surviving child'' as unnecessary and redundant of other material in 
part 5.

Sec.  5.371 Eligibility and Entitlement Requirements for Improved 
Pension

    We propose to revise Sec.  5.371(a) so that it is in the active 
voice and so that it specifically refers to special monthly pension, 
where, in the initially proposed version, it applied only implicitly to 
special monthly pension. In addition, we propose to delete from 
paragraph (a) the material that was moved to the definition in Sec.  
5.370.
    Initially proposed paragraph Sec.  5.371(c) states the general 
rules for the eligibility requirements to Improved Death Pension for a 
surviving spouse or surviving child. We propose to add cross-references 
in Sec.  5.371(c)(1) and (2) to the part 5 regulations relating to 
status as a surviving spouse, and surviving child.
    We propose to clarify paragraph Sec.  5.371(c) by moving the 
material in initially proposed Sec.  5.371(c)(3) to the beginning of 
the paragraph. The purpose of the language is to explain that in 
determining eligibility for Improved Death Pension, it does not matter 
whether the veteran's death is service-connected.

Sec.  5.372 Wartime Service Requirements for Improved Pension

    We propose to add the word ``nonconsecutive'' to Sec.  5.372(b)(2), 
to illustrate that, unlike the period described in paragraph (b)(1), 
the days need not be consecutive to meet this requirement. Indeed, if 
the days were consecutive, the service described in paragraph (b)(2) 
would meet the requirements of paragraph (b)(1). We do not need to add 
the word ``nonconsecutive'' to paragraph (b)(3) because that paragraph 
explicitly requires two separate periods of service.
    Initially proposed Sec.  5.372(b)(4)(ii) provided wartime service 
if the veteran served for any period of time during a period of war and 
had a disability ``at the time of discharge that in medical judgment 
would have justified a discharge for disability''. This requirement 
appears in current Sec.  3.3(a)(3)(ii). In part 5, we will remove the 
``medical judgment'' requirement. Instead, we will require that the 
veteran

[[Page 71119]]

have ``had such a service-connected disability at the time of discharge 
that would have justified discharge.'' This change will recognize that 
in some cases lay evidence may be sufficient to establish the existence 
of a disability that could have served as a basis for discharge.
    In addition, we propose to improve the clarity of the paragraph by 
specifying that the disability that existed at discharge must be one 
for which service connection is granted without relying on a 
presumption. This is consistent with current Sec.  3.3(a)(3)(ii).

Sec.  5.373 Evidence of Age in Improved Pension Claims

    In initially proposed Sec.  5.373, we stated that the regulation 
applies when age ``is material to the decision of an Improved Pension 
claim''. It is possible to misread this language as a narrowing of the 
current rule, such that the new rule would apply only when age is 
outcome determinative. We therefore propose to remove the phrase ``the 
decision of''. As revised, the part 5 rule will be substantively 
identical to the current rule.

Sec. Sec.  5.380 Disability Requirements for Improved Disability 
Pension; 5.381 Permanent and Total Disability Ratings for Improved 
Disability Pension Purposes; and 5.382 Improved Disability Pension--
Combining Disability Ratings

    We propose to significantly revise Sec. Sec.  5.380, 5.381, and 
5.382 by combining the initially proposed regulations, removing 
redundant material, correcting errors, and otherwise improving clarity. 
In addition, we propose to reserve Sec. Sec.  5.381 and 5.382, and 
several other changes as discussed below.
    In Sec.  5.380(a), we propose to add guidance on how VA combines 
disability ratings to determine whether a veteran is permanently and 
totally disabled for Improved Pension purposes. This guidance was 
initially contained in proposed Sec.  5.382(b). We now propose to move 
Sec.  5.382(b) to Sec.  5.380(a) because it is more logical to state 
that provision in Sec.  5.380(a) along with the other disability 
requirements. We also propose to eliminate Sec.  5.382(a) because in 
the case, as here, where a veteran has multiple disabilities, all 
disabilities are combined in the same manner, regardless of whether the 
disability is service or non-service connected. We now propose to mark 
Sec.  5.382 as reserved.
    In initially proposed Sec.  5.380, we failed to explain our 
omission of current 38 CFR 3.342(b)(5). We consider that paragraph to 
be a comingled authority citation and cross reference and we therefore 
believe it is unnecessary in part 5.
    Initially proposed Sec.  5.381(b)(2), which is now Sec.  
5.380(c)(2), consisted of seven sentences that were not logically 
organized and were not stated clearly. We propose to reorganize the 
material. In sentence one, we propose to replace ``consistent with the 
evidence in the case'' with ``that is shown by the evidence'', because 
that phrase has the same meaning as ``consistent with the evidence'' 
and is easier for the public to understand. For the same reason, we 
propose to use the phrase ``that is shown by the evidence'' in 
paragraphs (c)(2)(i) through (iii). The remaining material will be 
divided into three separate paragraphs, Sec.  5.380(c)(2)(i) through 
(iii), to distinguish between generally applicable rules, rules that 
apply to cases involving disabilities that require hospitalization for 
indefinite periods, and special rules that apply only in tuberculosis 
cases.
    In what was initially proposed as Sec.  5.381(b)(3), which is now 
proposed Sec.  5.380(c)(3), we propose to remove language requiring VA 
to give ``special consideration'' to veterans under 40 years of age. As 
revised, the regulation will describe how VA determines the permanence 
of total disability in such veterans, without suggesting that VA treats 
these veterans in a ``special'' way, that is, without suggesting that 
these veterans are not entitled to the same treatment as any other 
veteran.
    In initially proposed Sec.  5.381(b)(4), which is now Sec.  
5.380(c)(4), we propose to change ``presumed'' to ``considered'' to be 
consistent with the current regulation, Sec.  3.342(b)(4), and the 
statute, 38 U.S.C. 1718(g). ``Considered'' is more favorable to 
veterans because it establishes a rule rather than a rebuttable 
presumption.
    In initially proposed Sec.  5.381(b)(4)(i), which is now Sec.  
5.380(c)(4)(i), we repeated a typographical error from Sec.  
3.342(b)(3)(i) by using ``member-employer''. The correct term is 
``member-employee''. Compare 50 FR 36632, Sept. 9, 1985 (proposed 
amendment of Sec.  3.342(b)(4) using ``member-employee'') with 50 FR 
52775, Dec. 26, 1985 (final rule amending Sec.  3.342(b)(4) using 
``member-employer'').
    In initially proposed Sec.  5.381(b)(5), which is now Sec.  
5.380(c)(5), we had cross-referenced a part 5 regulation that would be 
based on current 38 CFR 3.321(b)(2) (concerning extra-schedular ratings 
for pension). We have since decided against establishing a separate 
regulation based on that current rule. Thus, in the revised Sec.  
5.380(c)(5), we propose to include a rule equivalent to current 38 CFR 
3.321(b)(2).

Sec.  5.383 Effective Dates of Awards of Improved Disability Pension

    We have determined that initially proposed Sec.  5.383(a)(2) is an 
exception to the general effective date rule for Improved Disability 
Pension. It deals with previously denied claims, and we propose to name 
it as addressing such claims and redesignate it as paragraph (b). What 
was previously proposed paragraph (b) will now be proposed paragraph 
(c).
    We propose to revise Sec.  5.383(b)(3), eliminating the description 
of an incapacitating disability, which was circular and confusing. The 
revised language will also affirmatively state that a disability that 
requires extensive hospitalization is an incapacitating disability for 
Improved Disability Pension purposes, whereas the initially proposed 
language appeared to establish a rebuttable presumption to the same 
effect. Compared to current Sec.  3.400(b)(1)(ii)(B) and to the 
initially proposed rule, the revised rule is easier to understand and 
apply. Consequently, this will be a change from both part 3 and the 
initially proposed rule, but it will result in a clearer regulation and 
will not lead to later effective dates of awards to disabled veterans.

Sec.  5.390 Special Monthly Pension for a Veteran or Surviving Spouse 
Based on the Need for Regular Aid and Attendance

    Initially proposed Sec.  5.390 was titled, ``Special monthly 
pension for veterans and surviving spouses at the aid and attendance 
rate.'' We propose to revise the title to read, ``Special monthly 
pension for a veteran or surviving spouse based on the need for regular 
aid and attendance.'' The revision is in part to help clarify that 
special monthly pension is essentially Improved Pension paid at a 
higher maximum annual pension rate. The revision also makes the 
reference to regular aid and attendance consistent with our terminology 
in the rest of part 5.
    We propose to make significant clarifications, eliminate 
redundancy, and otherwise simplify the introductory paragraph, proposed 
as Sec.  5.390(a).
    In initially proposed Sec.  5.390(b)(4), which is now Sec.  
5.390(d), we had cross-referenced Sec.  5.333 for the rules to govern 
factual need for aid and attendance. We propose to change this citation 
to Sec.  5.320 because we propose to renumber the regulation.

[[Page 71120]]

Sec.  5.391 Special Monthly Pension for a Veteran or Surviving Spouse 
At the housebound rate

    In initially proposed part 5, there are several regulations that 
define ``permanently housebound'' as it applies to the veteran and the 
surviving spouse. To ensure consistency throughout part 5, we propose 
to change the definition in Sec.  5.391(a)(2), to the language used in 
proposed Sec.  5.511(c). Proposed paragraph (a)(2) will now define the 
term to mean that the veteran is substantially confined to his or her 
residence (ward or clinical areas, if institutionalized) and immediate 
premises because of a disability or disabilities, and that it is 
reasonably certain that such disability or disabilities will not 
improve during the veteran's lifetime.
    Initially proposed Sec.  5.391(b) was a new provision intended to 
reconcile current VA regulations, which have not been altered since 
being promulgated in 1979, with Hartness v. Nicholson, 20 Vet. App. 216 
(2006). In that case, the United States Court of Appeals for Veterans 
Claims (CAVC) stated that current Sec.  3.351(d) does not consider the 
interpretive effects of 38 U. S.C. 1513(a), first enacted in 2001, on 
38 U.S.C. 1521(e). See Hartness, 20 Vet. App. at 221. The CAVC held 
that, according to these statutes, a veteran who is otherwise eligible 
for Improved Pension based on being age 65 or older, and who is not in 
need of regular aid and attendance, is entitled to special monthly 
pension at the housebound rate if he or she has a disability ratable at 
60 percent or more or is considered permanently housebound. See 
Hartness, 20 Vet. App. at 221-22. The court held that such a veteran, 
unlike a veteran who is under 65 years old, need not have a disability 
that is permanent and total. See id.
    However, in 2012, the U.S. Court of Appeals for the Federal Circuit 
overturned Hartness. In Chandler v. Shinseki, 676 F.3d 1045 (Fed. Cir. 
2012), the court stated:

    This court concludes Sec.  1513(a) only eliminates the permanent 
and total disability requirement in Sec.  1521(a), which applies to 
all Sec.  1521 subsections. The language of section 1521 is 
structured so that subsection (a) is a threshold requirement and the 
other subsections recite additional requirements for a veteran to 
qualify for different pension rates. As such, Sec.  1521's language 
and structure, when viewed in light of the statute's purpose and 
meaning, suggest that the parenthetical exclusion in section 1513(a) 
refers only to the threshold requirement found in section 1521(a) 
for pension benefits under Sec.  1521 and not to the additional 
[housebound] requirements imposed by Sec.  1521(e). slip op at 11.


We therefore propose to delete Sec.  5.391(b) and reorder the section 
paragraphs accordingly.

Sec.  5.392 Effective Dates of Awards of Special Monthly Pension

    Although it was technically accurate, initially proposed Sec.  
5.392, ``Effective dates of awards of special monthly pension'', was 
unnecessarily complex. In paragraph (a), we had stated the general rule 
that the effective date of an award of special monthly pension was the 
date VA received the claim for special monthly pension or the date 
entitlement arose, whichever date is later. This is essentially the 
same as the effective date of an award of Improved Pension under 
Sec. Sec.  5.383 and 5.431, except that it does not address the 
eligibility or entitlement criteria for Improved Pension. It is 
unnecessary for the special monthly pension effective date regulation 
to address such criteria, because the claimant must have met those 
criteria as a prerequisite for the award. Moreover, in cases where a 
claimant who was not already receiving Improved Pension is awarded 
special monthly pension, the claim for Improved Pension constitutes the 
claim for special monthly pension, because special monthly pension is a 
form of Improved Pension paid at a higher maximum annual pension rate. 
Thus, the award of special monthly pension is predicated upon the same 
rules that govern the award of Improved Pension, and the award of 
special monthly pension will be effective on the same date as the award 
of Improved Pension in every situation except where entitlement to 
special monthly pension arose after the date of entitlement to Improved 
Pension. This could occur in a case where an Improved Pension 
beneficiary files a new claim for special monthly pension, or where a 
claimant seeking Improved Pension incurs, after filing the Improved 
Pension claim, additional disability that makes him or her eligible for 
special monthly pension. Hence, we propose to revise the rule to simply 
state that the effective date of an award of special monthly pension 
will be the later of either the effective date of the award of Improved 
Pension under Sec.  5.383 or the award of Improved Death Pension under 
Sec.  5.431, or the date entitlement to special monthly pension arose.
    In initially proposed Sec.  5.392 we failed to include the 
provisions of 38 CFR 3.402(c)(1), concerning aid and attendance, and 
housebound benefits payable to a surviving spouse. We propose to 
correct this omission by adding a reference to proposed Sec.  5.431, 
``Effective dates of Improved Death Pension''. We also omitted the 
provisions of Sec.  3.402(c)(2), concerning concurrent receipt of 
Improved Pension and Improved Death Pension. We propose to correct this 
omission by adding a new paragraph (b).
    In initially proposed Sec.  5.392(b), we stated an exception 
applicable ``when an award of Improved Pension is effective 
retroactively''. This refers to the retroactive provisions in Sec.  
5.383(b). By referencing Sec.  5.383 in its entirety in Sec.  5.392(a), 
the simplified version of paragraph (a) will eliminate the need for 
this exception.

Sec.  5.400 Maximum Annual Pension Rates for a Veteran, Surviving 
Spouse, or Surviving Child

    After reviewing initially proposed Sec.  5.400, we propose to make 
several changes, including redesignating due to the removal and 
revision of certain paragraphs, described below.
    We determined that it would be helpful for readers to know that the 
rates of pension are listed on the Internet. We therefore propose to 
add the following sentence to what is now the introductory paragraph 
(which, as initially proposed, was designated as paragraph (a)): 
``Current and historical maximum annual rates can be found on the 
Internet at http://www.va.gov or are available from any Veterans 
Service Center or Pension Management Center.'' We propose to include 
``Pension Management Center'' because most pension cases are processed 
in these three centers. We propose to remove from that paragraph 
language related to 38 U.S.C. 5312 because it was redundant of Sec.  
5.401. For similar reasons, we propose to add ``Pension Management 
Center'' to initially proposed Sec.  5.471(a).
    Also in reviewing this section, we found that what is now 
designated as paragraph (e) could be simplified to refer only to a 
surviving spouse. The authorizing statute for that paragraph addresses 
the different rates based on whether or not the spouse has custody of a 
child of the deceased veteran.
    We propose to delete initially proposed Sec.  5.400(b), pertaining 
to World War I veterans, because VA does not have any Improved 
Pensioners on its rolls who served in World War I and does not expect 
to receive any new claims from such veterans. If any claims are 
received, they may be adjudicated in accordance with 38 U.S.C. 1521(g), 
which provides the higher rate for such veterans.
    Finally, we propose to move the information that had been contained 
in initially proposed Sec.  5.400(c), concerning higher maximum annual 
pension rates

[[Page 71121]]

based on the number of dependents, to the second sentence of what is 
now the introductory paragraph. We were concerned that the separate 
paragraph would lead a reader to think that paragraph (c) was an 
exception to the information in the introductory paragraph when, in 
fact, the statutes referred to in the introductory paragraph provide 
the higher rates.

Sec.  5.401 Automatic Adjustment of Maximum Annual Pension Rates

    We propose to omit a counterpart to Sec.  3.23(c) from Sec.  5.401. 
The preamble to initially proposed Sec.  5.401(b), 72 FR 54776, 54782-
54783 (Sept. 26, 2007), stated that it derives, in part, from Sec.  
3.23(c), which provides for publication of increases in the rate of 
pension paid to Mexican border period and World War I veterans. As 
explained in the initial, 72 FR 54776, 54782, and current preambles for 
Sec.  5.400, part 5 will not repeat 3.23(c) because it is obsolete. 
Consequently, though proposed 5.401(b) restates the requirement to 
publish increases in the rate of certain benefits, VA will not publish 
increased in the rate for veterans of the Mexican border period or 
World War I, and Sec.  5.401(b) does not partly derive from Sec.  
3.23(c).

Sec.  5.410 Countable Annual Income

    We propose to clarify Sec.  5.410(a)(1) and make its phrasing 
parallel in structure to paragraph (a)(2) for consistency.
    In initially proposed Sec.  5.410(b)(3), we stated that: ``The 
income of a surviving child includes the income of that child's 
custodial parent and the income of other surviving children as 
described in Sec.  5.435, `Calculating annual Improved Pension amounts 
for surviving children.' '' The preamble to the initially proposed rule 
explained that the rule regarding whose income must be included in a 
surviving child's income was ``too complex to be included in this 
regulation, so we propose to include a cross-reference to proposed 
Sec.  5.435''. However, Sec.  5.435 requires including the income of 
the surviving child's custodian, irrespective of whether the custodian 
is a ``custodial parent''. Thus, the reference in Sec.  5.410(b)(3) to 
``custodial parent'' was improperly narrow. We therefore propose to 
change the term ``custodial parent'' to ``custodian''. This change 
corrects the erroneous reference to a ``custodial parent'' in the 
proposed rule. We also propose to clarify in paragraph (b)(3) that the 
income of a surviving child includes that child's income, to make the 
provision consistent with paragraphs (b)(1) and (2).
    We propose to add paragraphs (c)(3)(i) and (ii) to address 
overlapping irregular income. This type of income was not previously 
addressed. This change follows current VA practice.

Sec.  5.411 Counting a Child's Income for Improved Pension Payable to a 
Child's Parent

    In reviewing initially proposed Sec.  5.411, we determined that 
this section could be much clearer, and we also identified several 
problems with the initially proposed regulation.
    In paragraph (a), we propose to now state the general rule, which 
is that ``VA counts as income to the parent-beneficiary (that is, the 
veteran or surviving spouse receiving Improved Pension) the annual 
income of every child of the veteran who is in the parent-beneficiary's 
custody''. In current Sec.  3.23(d)(4) and (5), this rule is phrased as 
a presumption: ``There is a rebuttable presumption that all of such a 
child's income is available to or for the [parent-beneficiary].'' Using 
a presumption makes this rule far more complicated than it needs to be. 
Moreover, neither the current regulation nor the initially proposed 
part 5 regulation clearly stated that the parent-beneficiary must 
specifically seek to rebut the presumption. Thus, in Sec.  5.411(a), we 
propose to state that the child's income is counted as income to the 
parent-beneficiary unless the parent-beneficiary files a claim to 
exclude all or part of the child's income.
    We also, in paragraph (a), propose to establish a duty on the part 
of VA to provide the proper VA form to describe the bases for the 
exclusions that follow. VA uses VA Form 21-0571, ``Application For 
Exclusion Of Children's Income'', to gather the information needed to 
calculate whether a parent-beneficiary qualifies for an exclusion. Much 
of the specificity that we have added to Sec.  5.411 in this rulemaking 
is derived from that form, and using that form simplifies the process 
and greatly reduces the burden of seeking an exclusion under this rule.
    In initially proposed Sec.  5.411(b), we set forth the first basis 
for an exclusion of the child's income, which is that the income is not 
considered available for expenses necessary for reasonable family 
maintenance. We propose to change the term ``reasonably available'' to 
``considered available'' for clarity. This rule is similar to the 
current and initially proposed rules, except that in paragraph (b)(2) 
we provide specific examples of common ways to establish that income is 
not considered available. These examples are derived from current VA 
practice and VA Form 21-0571.
    In Sec.  5.411(c), we describe the hardship exclusion. The 
calculation required under paragraphs (c)(1) through (5) was included 
in the initially proposed rule and is set forth in current Sec.  
3.272(m), but it is not clearly described as a mathematical formula. 
This subsequently proposed rule more clearly shows how VA calculates 
the amount of the hardship exclusion.
    In paragraph (b)(1), we propose to add that annual expenses cannot 
include ``expenses for items such as luxuries, gambling, and 
investments''. This guidance is based on long-standing VA practice and 
will clarify for VA employees what types of expenditures are, or are 
not, necessary to support a reasonable quality of life.
    Finally, we propose to move what was initially proposed as Sec.  
5.411(c), ``Child's earned income'', to Sec.  5.412(a). This provision 
was mistakenly included in Sec.  5.411, but it applied, by its terms, 
to calculating a child's income in all situations. Hence, we have moved 
it to Sec.  5.412(a), where it is more appropriately located. We 
propose to redesignate the paragraphs of initially proposed Sec.  5.412 
to accommodate the new paragraph (a).

Sec.  5.412 Income Exclusions for Calculating Countable Annual Income

    In Osborne v. Nicholson, 21 Vet. App. 223 (2007), the court held 
that ``pursuant to Sec.  3.272(e), the receipt of accrued interest on 
the redemption of a savings bond is `profit realized from the 
disposition of . . . personal property' and is therefore excluded from 
income for VA pension purposes.'' A GC Opinion was issued based on this 
ruling, VAOPGCPREC 2-2010 (May 10, 2010). The GC Opinion stated that 
the holding of Osborne v. Nicholson depended not on the political 
entity that issued the bond, but rather on the terms of the bond. The 
Opinion further stated that ``If a bond requires redemption for the 
payment of accrued interest . . . then the statutory exclusion for 
profit realized from the disposition of real or personal property 
applies. If accrued interest is payable on the bond without redemption, 
then it does not qualify for the exclusion.'' This income exclusion 
also applies to interest received from the surrender of a life 
insurance policy. However, if a bond pays interest semiannually without 
the redemption of such bond, VA will consider the interest received as 
income. The GC Opinion also held that the exclusion of interest 
received from the redemption of a bond applies to income calculations 
in parents' dependency and indemnity

[[Page 71122]]

compensation (DIC), Improved Pension, and Section 306 Pension. Section 
3.262(k) excludes from income the accrued interest received from the 
redemption of a savings bond for purposes of Section 306 Pension and 
parents' DIC to the extent that Sec.  3.272(e) excludes such income in 
Improved Pension. Conversely, there is no profit exclusion for Old-Law 
Pension in Sec.  3.262(k)(3). VA will therefore consider as income the 
interest received from the surrender of a bond or life insurance in 
Old-Law Pension. Although not specifically stated in the Opinion, we 
believe that this exclusion also applies in the income calculation for 
the dependency of a parent for purposes of disability compensation. 
This interpretation is considered to be just and consistent with the 
intent of the statute.
    We therefore propose to incorporate the holding of the GC Opinion 
in proposed Sec.  5.412(e). We also propose to include similar changes 
in Sec. Sec.  5.302(d), ``General income rules--parent's dependency'', 
5.472, ``Evaluation of income for Old-Law Pension and Section 306 
Pension'', and 5.533, ``Income not counted for parent's dependency and 
indemnity compensation.''
    In initially proposing this subpart, we inadvertently omitted Sec.  
3.272(x) (listing ``lump-sum proceeds of any life insurance policy on a 
veteran'' as an item VA will not count when calculating countable 
income for Improved Pension), so we propose to insert Sec.  5.412(l)(8) 
as its part 5 equivalent.
    We propose to move the broad provision proposed as Sec.  
5.412(k)(8) to Sec.  5.412(m).
    Section 604 of Public Law 111-275, 124 Stat. 2864, 2885 (2010) 
amended 38 U.S.C. 1503(a) to exclude payment of a monetary amount of up 
to $5,000 to a veteran from a State or municipality that is paid as a 
veterans benefit due to injury or disease from countable income for 
purposes of Improved Pension. We propose to add this exclusion as Sec.  
5.412(n).

Sec.  5.413 Income Deductions for Calculating Adjusted Annual Income

    In reviewing initially proposed Sec.  5.413, we determined that 
this section could be clarified. We propose to revise the language, 
particularly in paragraph (b), to more accurately reflect current 
policy. These changes will not alter the legal effect of this section. 
In paragraph (b), we propose to add a cross-reference to Sec.  5.707, 
``Deductible Medical Expenses,'' to be consistent with Sec.  5.474, 
``Deductible Expenses for Section 306 Pension Only'', and Sec.  5.532, 
``Deductions from income for parent's dependency and indemnity 
compensation.''
    We propose to revise paragraphs (b)(2)(i) and (ii). As initially 
proposed, the provision could be interpreted to permit deductions for a 
member of the household ``for whom there is a moral or legal obligation 
of support'' on the part of the beneficiary, irrespective of whether 
that person was a relative of the beneficiary. The part 3 rule, located 
in Sec.  3.272(g)(1) and (2), requires that the person be both a 
relative and a member of the household. We propose to revise Sec.  
5.413(b)(2) so that it accords with the current rule. We also propose 
to correct an error in initially proposed paragraph (b)(2)(i). The 
initially proposed provision and the current rule, Sec.  3.272(g)(1)(i) 
and (ii), refer incorrectly to the veteran's ``spouse'' instead of 
referring to the veteran's ``dependent spouse''.
    In paragraphs (c)(2)(ii) and (iii), we propose to remove a 
reference to ``just debts'' because ``just debts'' are included in the 
definition of final expenses set forth in paragraph (c)(1).
    We propose to remove the reference to chapter 51 and Sec.  5.551(e) 
in Sec.  5.413(c)(3)(i). The current rule, Sec.  3.272(h)(1)(ii), and 
the authorizing statute, 38 U.S.C. 1503(a)(3), only reference 
``expenses not reimbursed under chapter 23 of this title''. We propose 
to revise Sec.  5.413(c)(3)(i) so that it accords with them.
    We also propose to clarify Sec.  5.413(c)(3)(ii) to state that if 
``The expenses of a veteran's last illness were allowed as a medical 
expense deduction on the veteran's pension or parents' dependency and 
indemnity compensation (DIC) account during the veteran's lifetime'', 
then said expenses will not be deducted from a surviving spouse's 
award. This change will follow current VA practice.
    Subsequent to the publication of proposed Sec.  5.413, section 509 
of Public Law 112-154 (2012) amended 38 U.S.C. 1503(a) by adding new 
provisions which set forth in detail what casualty loss reimbursements 
are excludable from countable income for purposes of VA Improved 
Pension. We propose to include these new provisions in Sec.  5.413(d).
    We propose to move Sec.  5.413(e), concerning the treatment of 
gambling losses, to Sec.  5.410(g), because it primarily concerns 
counting income from gambling. Initially proposed paragraph (f) of this 
section is redesignated paragraph (e), accordingly. Initially proposed 
Sec.  5.413(g), which is now Sec.  5.413(f), used the term 
``profession''. The regulation meant a professional practice. We are 
now clarifying this term.

Sec.  5.414 Net Worth Determinations for Improved Pension

    In reviewing initially proposed Sec.  5.414, we determined that 
this section could be clarified by the reorganization and removal of 
unnecessary verbiage. We also propose to provide more detailed 
explanations of when a dependent's net worth is considered and how net 
worth can bar Improved Pension.
    In what is now paragraph (b)(1) (initially proposed paragraph (a)), 
we propose to add the word ``primary'' before residence to clarify that 
VA excludes from net worth only the value of the residence where the 
claimant or beneficiary usually lives, not the value of other 
properties where they may occasionally reside. A claimant or 
beneficiary can only have one primary residence at any given time. The 
term is well understood because a primary residence is considered as a 
legal residence for purpose of income tax and/or acquiring a mortgage. 
We also propose to clarify that the primary residence will not be 
counted as net worth simply because the veteran has moved into a 
nursing home.
    In what is now paragraph (b)(3) (initially proposed paragraph 
(c)(3)), we propose to clarify that the ``child educational exclusion'' 
applies whether the child is a dependent or a claimant in his or her 
own right.
    In Sec.  5.414(d)(2)(i), we propose to clarify that a claimant's 
adjusted annual income includes the adjusted annual income of any 
person whose net worth is considered part of the claimant's net worth. 
These rules were not explicit in the initially proposed rule, but they 
comport with current VA practice and policy and are not inconsistent 
with the initially proposed rule.
    In initially proposed Sec.  5.414(d), we determined that there was 
a lack of criteria for determining whether net worth is a bar for 
benefits. To eliminate ambiguity, we propose to establish an $80,000 
guideline and determined that ``it is reasonable to expect that part of 
the claimant's net worth should be used for the claimant's living 
expenses'' when the net worth is $80,000 or more. Having a specific 
dollar amount ensures uniformity and fairness of VA decision-making 
throughout the country. This change is consistent with current 
practice.
    We also propose to revise Sec.  5.414(e) for clarity.

[[Page 71123]]

Sec.  5.415 Effective Dates of Changes in Improved Pension Benefits 
Based on Changes in Net Worth

    We had stated in Sec.  5.415(a) that an increase in a child's net 
worth requires VA to reduce the payment amount of Improved Pension. 
However, if the child's net worth is increased, the removal of his 
dependency from the beneficiary's award may cause an increase in 
payment. Such a situation may occur when the dependent child has income 
and the removal of the child's dependency and his or her income causes 
an increase in the beneficiary's award. We propose to clarify that 
regardless of whether or not the removal of such child's dependency 
results in a higher pension rate, the effective date based on the 
change in net worth is the first day of the year after the year that 
net worth increased. This change is consistent with current practice.

Sec.  5.416 Persons Considered as Dependents for Improved Pension

    We propose to remove the sentence, ``The child need not be living 
with the veteran or surviving spouse to be in custody'', from initially 
proposed Sec.  5.416(b)(1) because the same information is provided in 
what was initially proposed Sec.  5.417(d), now the definition of 
``custody of a child'' in proposed Sec.  5.1. The rule is appropriately 
located in that definition. It is not necessary to Sec.  5.416, which 
pertains to persons considered as dependents.
    We also propose to change ``reasonably contributes'' to ``provides 
reasonable contributions'' in both paragraphs (a)(3) and (b)(2), 
because it is the amount of the contributions that must be reasonable, 
not the way that the person provides those contributions.

Sec.  5.417 Child Custody for Purposes of Determining Dependency for 
Improved Pension

    We propose to move the definitions of ``custody'' and ``legal 
responsibility'' to proposed Sec.  5.1, defining ``custody of a 
child''. The remainder of this regulation contains four presumptions 
for determining dependency. We propose to simplify the regulation to 
eliminate redundancy without altering its meaning.

Sec.  5.420 Reporting Periods for Improved Pension

    In initially proposed Sec.  5.420, we stated, ``When calculating 
adjusted annual income, VA counts income that is anticipated or 
received during a specific period, called a `reporting period.' '' We 
have determined that it would be helpful for readers to have a simple 
definition of ``reporting period'' so we propose to insert the 
following definition (based on Sec.  3.661, the current rule regarding 
income reporting): ``A reporting period is a time period established by 
VA during which a claimant or beneficiary must report to VA all income, 
net worth, and adjustments to income.''
    We propose to revise Sec.  5.420(a) to include that a claimant or 
beneficiary may report a change in income or net worth when the change 
occurs. The claimant or beneficiary does not have to wait until the 
beginning of the next reporting period to report the change. This 
change is consistent with current VA practice.

Sec.  5.422 Effective Dates of Changes to Annual Improved Pension 
Payment Amounts Due to a Change in Income

    In paragraphs (b)(2) and (3) of initially proposed Sec.  5.422, we 
used the term ``required evidence'' without explaining what the 
evidence should prove. To resolve this potential ambiguity, we propose 
to revise paragraph (b)(2) by replacing ``required evidence'' with 
``evidence showing the dependency''. Likewise, we propose to revise 
(b)(3) by replacing ``required evidence'' with ``evidence showing the 
loss of a dependent''.

Sec.  5.423 Improved Pension Determinations When Expected Annual Income 
Is Uncertain

    We propose to provide a definition for ``expected annual income'' 
in the first sentence of Sec.  5.423(a). We propose to define the term 
as ``the annual income a claimant or beneficiary anticipates receiving 
during a given reporting period.''
    We propose to remove all references in this subpart to the term 
``anticipated income'' and propose to replace it with ``expected 
income''. This proposed change will be for consistency purposes.

Sec.  5.424 Time Limits To Establish Entitlement to Improved Pension or 
To Increase the Annual Improved Pension Amount Based on Income

    In reviewing initially proposed Sec.  5.424, we determined that 
this section can be clarified and shortened by minor reorganization and 
the removal of unnecessary verbiage. We propose to make these changes.

Sec.  5.430 Marriage Date Requirements for Improved Death Pension

    Initially proposed Sec.  5.430(a)(2)(i) referred to veterans of the 
Mexican Border period and World War I. We propose to remove these 
references because there are no longer any surviving veterans of these 
war periods and VA does not anticipate receiving any more Improved 
Death Pension claims from the surviving spouses of these deceased 
veterans. Moreover, if VA does receive such a claim, it could process 
the claim under the controlling statutes, 38 U.S.C. 103(b) and 1541(f).
    We also propose to remove initially proposed Sec.  5.430(b), which 
had concerned the marriage-date requirements of a surviving spouse. 
That paragraph was based on 38 U.S.C. 103(b), which is not limited to 
Improved Pension. We propose to move the rule to Sec.  5.200, 
``Surviving spouse: requirement of valid marriage to veteran.''

Sec.  5.432 Deemed Valid Marriages and Contested Claims for Improved 
Death Pension

    In Sec. Sec.  5.432 and 5.433, we propose to delete the term 
``legal'' as it was used in the initially proposed rule to describe a 
surviving spouse. Although there is no explicit definition of ``legal 
surviving spouse'' in current part 3, the term is used to denote a 
spouse who was legally married to the veteran at the time of the 
veteran's death as contrasted with a deemed valid spouse. This 
distinction has no legal significance in Sec.  5.432 or Sec.  5.433. 
For the same reason, we propose to delete the term ``lawful'' before 
``surviving spouse'' in Sec.  5.539.

Sec.  5.434 Award or Discontinuance of Award of Improved Death Pension 
to a Surviving Spouse Where Improved Death Pension Payments to a Child 
Are Involved

    In initially proposed Sec.  5.434(a)(3) we stated:

    When a surviving spouse establishes eligibility for Improved 
Death Pension but is not entitled because his or her adjusted annual 
income is greater than the maximum annual pension rate or because 
his or her net worth bars entitlement, VA will discontinue the 
child's pension award effective the first day of the month after the 
month for which VA last paid benefits to the surviving spouse.


Consistent with current Sec. Sec.  3.503(a)(9) and 3.657(b)(1), the 
reference to the surviving spouse at the end of Sec.  5.434(a)(3) 
should refer instead to the child. We now propose to correct this 
error.

    In addition, we propose to reorganize Sec.  5.434(b) to improve 
clarity.

Sec.  5.435 Calculating Annual Improved Pension Amounts for a Surviving 
Child

    In initially proposed Sec.  5.435(a) we parenthetically defined the 
term ``personal custodian'' as ``a person legally responsible for the 
child's support''. We propose to add a

[[Page 71124]]

definition of ``custody of a child'' as Sec.  5.1. Therefore, the 
definition initially proposed in this section is superfluous and we 
propose to remove it.

B. Elections of Improved Pension; Old-Law and Section 306 Pension AL83

    In a document published in the Federal Register on December 27, 
2004, we proposed to publish in a new 38 CFR part 5 VA regulations 
governing Old-Law Pension, Section 306 Pension, and elections of 
Improved Pension. 69 FR 77578. The title of this proposed rulemaking 
was ``Elections of Improved Pension: Old-Law and Section 306 Pension'' 
(RIN: AL83). The proposed regulations were based on current regulations 
in 38 CFR part 3, but were revised to reflect plain English and updated 
to reflect current practice. We provided a 60 day comment period that 
ended on February 25, 2005. We received submissions from two 
commenters.

Terminology

    We mean to add the word ``Pension'' after ``Old-Law'' and ``Section 
306'' whenever these two pension programs are mentioned together in a 
single sentence. For example, ``Old-Law and Section 306 Pension'' will 
be rewritten as ``Old-Law Pension and Section 306 Pension.'' This will 
help readers understand that these two pension benefits are separate 
and distinct programs.
    For consistency purposes in describing whether particular potential 
sources of revenue are considered by VA in calculating a beneficiary's 
income or net worth, we propose to replace the word ``include'' with 
``count'' (or with a commensurate substitute) and ``exclude'' with 
``does not count'' (or with a commensurate substitute).

Comment Relating to a Different Portion of This Rulemaking

    One commenter suggested that a rating decision that reduces a 
rating during a period of hospitalization should be considered void if 
notice of a prior rating decision had not been sent to a veteran at the 
veteran's latest address of record. The commenter used her husband's 
case as an example, stating that his 1990 reduction should be void 
because she alleges that VA did not provide her husband with notice of 
a 1971 rating decision. This comment deals with defective notice and 
the effect it has on the finality of decisions. Accordingly, this 
comment will be discussed with other comments received for RIN 2900-
AL87, ``General Provisions'', in subpart A of this part, which contains 
VA's definition of a ``Final decision'' in proposed Sec.  5.1.

Sec.  5.461 Electing Improved Pension Instead of Old-Law Pension or 
Section 306 Pension

    In the initially proposed rule, we proposed to include Sec.  5.461, 
``Electing Improved Pension instead of Old-Law or Section 306 
Pension'', in subpart F of part 5. However, upon further consideration, 
it would be more appropriate to place this regulation in subpart L, 
``Payments and Adjustments to Payments'', along with other rules on 
elections of veterans benefits as Sec.  5.758. Hence, we propose to 
include Sec.  5.461 in our proposed subpart L, initially published in 
the Federal Register on December 27, 2004. 69 FR 77578.

Sec.  5.472 Rating of Income for Old-Law Pension and Section 306 
Pension

    Initially proposed Sec.  5.472(b)(2) defined ``payments'' as ``cash 
and cash equivalents (such as goods and other negotiable instruments) . 
. . '' We propose to revise our definition by replacing the term 
``goods'' with ``checks''. This change is made in order to be 
consistent with our definition of ``payments'' in Sec.  5.370(h) and 
Sec.  5.531(b).

Sec.  5.475 Gaining or Losing a Dependent for Old-Law Pension and 
Section 306 Pension

    For consistency purposes, we propose to revise the heading and the 
regulatory text in Sec.  5.475(b)(2) by replacing ``on or before 
December 31, 1978'' with ``before January 1, 1979''. This change will 
improve clarity in the application of effective dates and is consistent 
with the rest of part 5.

Sec.  5.477 Effective Dates of Reductions and Discontinuances of Old-
Law Pension and Section 306 Pension

    In Sec.  5.477(b), we propose to delete the reference to 
``Sec. Sec.  3.500 through 3.503'' from the regulatory text and replace 
it with a reference to Sec.  5.705, the part 5 regulation that lists 
all of the part 5 regulations governing the effective dates of 
reductions and discontinuances. We propose to revise the regulatory 
text by inserting the words ``appropriate'' and ``as specified'' in 
order to notify readers that the provisions in Sec.  5.705 will 
indicate which effective dates, other than those stated in paragraph 
(a), are applicable to a particular case.

Sec.  5.478 Time Limit To Establish Continuing Entitlement to Old-Law 
Pension or Section 306 Pension

    We propose to revise the regulatory text in Sec.  5.478(a), 
Expected income appears to exceed income limit, by inserting the phrase 
``for that calendar year'' after ``annual income limit'' and inserting 
the word ``calendar'' before ``year effective January 1''. These 
revisions will remove ambiguity and clarify that VA measures income in 
calendar-year units.

Deletion of Withholding Provision, Formerly Under 38 CFR 3.260(b), 
Computation of Income

    In addition, we note that under 38 CFR 3.260(b) (the current rule 
upon which Sec.  5.478(a) is based), VA has the authority to withhold 
payments if that income will exceed the statutory limit. However, this 
withholding provision only applied to new claims for Old-Law Pension 
and Section 306 Pension. Since such claims have been barred by statute 
since 1979 (see Public Law 95-588, sec. 306(a), 92 Stat. 2508 (1978)), 
there is no need to include the provision in part 5.

XII. Subpart G: Dependency and Indemnity Compensation, Death 
Compensation, Accrued Benefits, and Special Rules Applicable Upon Death 
of a Beneficiary

A. Dependency and Indemnity Compensation Benefits AL89

    In a document published in the Federal Register on October 21, 
2005, we proposed to revise Department of Veterans Affairs (VA) 
regulations governing dependency and indemnity compensation (DIC) 
benefits, to be published in a new 38 CFR part 5. 70 FR 61326. We 
provided a 60-day comment period that ended December 21, 2005. We 
received submissions from four commenters: Disabled American Veterans, 
Vietnam Veterans of America, National Organization of Veterans' 
Advocates, and one from a member of the general public.

Sec.  5.500 Proof of Death

    Initially proposed Sec.  5.500 described the types of evidence VA 
will accept as proof of death. We propose to revise this provision to 
explain that, where the rule lists more than one type of evidence that 
VA will accept as proof of death, VA requires the first-listed type of 
evidence, if obtainable. If the first-listed document is not 
obtainable, VA will accept the next-listed type of evidence that is 
obtainable. This clarification reflects VA's established practice. With 
respect to matters that are ordinarily documented by official public 
records, such as death, VA's long-standing practice is to require the 
official records that VA considers most reliable to establish those 
facts, if such records are available. We believe that it is helpful to 
state this principle in proposed

[[Page 71125]]

Sec.  5.500 and we propose to revise it accordingly. In accordance with 
its duty to assist, VA will assist claimants as necessary in seeking to 
obtain the types of evidence needed to establish the fact of death.

Sec.  5.504 Service-Connected Cause of Death

    All four of the comments received concerned the provisions of 
initially proposed Sec.  5.504. This proposed section defined a 
service-connected disability for purposes of determining entitlement to 
VA death benefits, and provided the rules for determining if a 
veteran's death is service connected. The AL89 NPRM, omitted the 
following sentence from 38 CFR 3.312(a), ``[t]he issue involved will be 
determined by exercise of sound judgment, without recourse to 
speculation, after a careful analysis has been made of all the facts 
and circumstances surrounding the death of the veteran, including, 
particularly, autopsy reports.'' This language is unnecessary in 
proposed Sec.  5.504 because it mainly restates the generally 
applicable principle that VA decisions will be based on a review of the 
entire record. See 38 U.S.C. 5107(b) and 38 CFR 3.102. We have stated 
this in proposed Sec.  5.4(b), ``Claims adjudication polices''. 
Regarding avoiding ``speculation'', we have stated this concept in 
proposed Sec.  5.3(b)(6). Regarding the ``exercise of sound judgment'', 
and conducting a ``careful analysis'', these duties are inherent in any 
adjudication process and where a claimant disagrees with the judgment 
or analysis of a VA adjudicator, he or she may appeal the decision. We 
therefore believe it is unnecessary to include this language in our 
regulations.
    One commenter was concerned with the provision in initially 
proposed Sec.  5.504(b)(1)(ii) that states, ``[f]or purposes of this 
section, VA will deem a sudden death in service from trauma to have 
been preceded by disability from the trauma.'' This commenter stated 
that the sentence we initially proposed ``is unnecessarily logically 
convoluted and restrictive, is legally insufficient, and is in fact 
altogether unnecessary.'' He suggests as alternative language, ``[f]or 
purposes of this section, a death in service is service-connected 
[sic], provided the death was in line of duty and was not due to the 
servicemember's own willful misconduct.''
    We agree in part with the commenter's concerns. Part of this 
sentence is somewhat convoluted and could be read as restrictive. We 
propose to revise the sentence for the reasons explained in the 
following paragraphs.
    The purpose of this sentence in the proposed rule is to preclude 
the interpretation that a traumatic death in service is so sudden that 
it does not produce a disability before death. This provision is 
necessary because Title 38 of the United States Code requires that to 
be service-connected, a death in service must result from a disability 
incurred or aggravated in service. ``The term 'service-connected' means 
. . . that the death resulted from a disability incurred or aggravated, 
in line of duty in the active military, naval, or air service'', 38 
U.S.C. 101(16). For a surviving spouse or dependent to be eligible for 
many VA benefits due to a servicemember's death in service, the 
person's death must be a result of a disability ``incurred or 
aggravated, in line of duty in the active military, naval, or air 
service''. 38 U.S.C. 101(16); see also 38 U.S.C. 1310, 2307, 3500, and 
3701.
    We agree with the commenter that the sentence may be construed to 
be restrictive if not read carefully. This is due primarily to use of 
the words ``trauma'' and ``sudden''. Accordingly, we propose to remove 
the phrases ``from trauma'' and ``from the trauma'' and the word 
``sudden'' in the subject sentence in proposed Sec.  5.504(b)(1)(ii).
    The revised proposed sentence now reads, ``[f]or purposes of this 
section, VA will presume that a death that occurred in line of duty was 
preceded by disability.'' This will make clear VA's intent that the 
presumption applies to all deaths that occur in line of duty. We 
substituted ``line of duty'' for ``in service'' to reflect the 
requirement in 38 U.S.C. 105 and 1110 that disability must be incurred 
in the line of duty in order to be service connected.
    Three commenters expressed concern with the provisions of initially 
proposed Sec.  5.504(c), regarding service connection for the cause of 
death when the service-connected disability hastens death. The 
commenters stated that the proposed revisions in Sec.  5.504 were more 
restrictive than the provisions in current 38 CFR 3.312. To avoid such 
a misinterpretation, we are retaining the provisions of Sec.  3.312(c). 
Accordingly, we are inserting the exact wording of Sec.  3.312(c) into 
proposed Sec.  5.504(c)(2).

Sec.  5.510 Dependency and Indemnity Compensation--Basic Entitlement

    Initially proposed Sec.  5.510 stated that in order to be entitled 
to dependency and indemnity compensation a survivor of the veteran 
``must be otherwise qualified'' for this benefit. We propose to delete 
the terms ``otherwise qualified'' and ``qualified'' from proposed Sec.  
5.510. To say that a survivor of a veteran must be qualified is 
redundant of other VA provisions that state the requirements that must 
be met in order to be considered a dependent of the deceased veteran.
    In proposed Sec.  5.510(b)(2), to be consistent with the Federal 
Register Document Drafting Handbook, page 1-19, we propose to change 
the order of the references to list the United States Code first. In 
addition, we propose to correct the authority citation at the end of 
proposed Sec.  5.510.

Sec.  5.511 Special Monthly Dependency and Indemnity Compensation

    We propose to revise initially proposed Sec.  5.511(a) to clarify 
that entitlement to this benefit is determined based on whether the 
surviving spouse or parent needs regular aid and attendance. 
Determinations of the need for aid and attendance will be made under 
the criteria in proposed Sec.  5.320.

Sec.  5.520 Dependency and Indemnity Compensation--Time of Marriage 
Requirements for Surviving Spouses

    We propose to revise initially proposed Sec.  5.520(b)(1)(iii) and 
(b)(2)(ii) by adding the words, ``was born to them'' between ``marriage 
or'' and ``before the marriage'' in both places it appears. These 
changes are made to ensure that readers understand that the child VA is 
referring to is a child of a veteran and spouse, not a veteran's 
stepchild. This is the same wording used in part 3.
    In the NPRM to this rulemaking we stated that ``Proposed Sec.  
5.520 is based on portions of current Sec.  3.54 and applicable 
statutory provisions. . .'' However, it is also based on Sec.  3.22(d), 
which is substantially the same as Sec.  3.54.

Sec. Sec.  5.521 Dependency and Indemnity Compensation Benefits for 
Survivors of Certain Veterans Rated Totally Disabled at Time of Death, 
and 5.523 Dependency and Indemnity Compensation Rate for a Surviving 
Spouse

    In the NPRM, we reserved Sec. Sec.  5.521 and 5.523 as the eventual 
locations for rules concerning entitlement to DIC for survivors of 
certain veterans rated totally disabled at the time of death and 
concerning the rates of DIC payments to surviving spouses. We explained 
that, when the NPRM was issued, rulemaking was pending to amend the 
provisions in part 3, Code of Federal Regulations, involving those 
matters, and that we would incorporate those part 3 provisions in this 
final rule once the pending part 3 changes were made.

[[Page 71126]]

Because those part 3 changes have now been made, as explained below, we 
propose to add the corresponding provisions in part 5.
    VA issued a final rule in December 2005 amending its part 3 
regulations in response to the decision in Nat'l Org. of Veterans' 
Advocates, Inc. v. Sec'y of Veterans Affairs, 314 F.3d 1373 (Fed. Cir. 
2003). This final rule (see 70 FR 72211, Dec. 2, 2005) revised Sec.  
3.22(b) to clarify the meaning of the phrase ``entitled to receive'' 
for purposes of determining whether a veteran's survivors are entitled 
to benefits under 38 U.S.C. 1318, ``Benefits for survivors of certain 
veterans rated totally disabled at time of death''. This final rule 
also revised provisions previously in Sec.  3.5(e) relating to the 
rates of DIC payable to surviving spouses and moved those provisions 
into Sec.  3.10.
    VA completed another rulemaking in 2006, implementing section 301 
of the Veterans Benefits Improvement Act of 2004. Section 301 amended 
38 U.S.C. 1311, Dependency and indemnity compensation to a surviving 
spouse, by adding subsection (e) (amended to be subsection (f) by 
section 4 of Pub. L. 109-361, 120 Stat. 2062 (2006)), providing a $250 
increase in the monthly rate of DIC to which a surviving spouse with 
one or more children below age 18 is entitled. The increased rate is 
payable for the 2-year period beginning on the date entitlement to DIC 
began and ends the first month after the month all children of the 
surviving spouse attain age 18. This statutory change was incorporated 
as Sec.  3.10(e)(4). See 71 FR 44915, Aug. 8, 2006.
    In anticipation of these regulatory changes, VA reserved Sec. Sec.  
5.521 and 5.523 in the NPRM for this regulation rewrite segment. We 
propose to incorporate the current versions of Sec. Sec.  3.22 and 3.10 
(as amended), as proposed Sec. Sec.  5.521 and 5.523, respectively. In 
addition, we propose to remove the reference to, ``Sec.  5.521 
(Reserved) and Sec.  5.523 (Reserved)''. As noted in the NPRM and this 
proposed notice, the provisions of current Sec.  3.22(d) are 
incorporated in proposed Sec.  5.520 and the provisions of current 
Sec.  3.22(e) and (f) are incorporated in proposed Sec.  5.522(a), (b), 
and (c)(4).
    Current 38 CFR 3.22(a)(2)(iii) implements 38 U.S.C. 1318(b)(3) 
which states that VA will pay death benefits to the surviving spouse or 
children in the same manner as if the veteran's death were service-
connected if the veteran's death was not the result of his or her own 
willful misconduct and at the time of death, the veteran was receiving, 
or was entitled to receive, compensation for service-connected 
disability that was rated by VA as totally disabling for a continuous 
period of not less than 1 year immediately preceding death, if the 
veteran was a former prisoner of war who died after September 30, 1999. 
Section 603 of Public Law 111-275, 124 Stat. 2864, 2885 (2010) amended 
section 1318(b)(3) by removing the requirement that the veteran have 
died after September 30, 1999, so we have omitted this requirement from 
Sec.  5.521(a)(2)(iii).

Sec.  5.524 Awards of Dependency and Indemnity Compensation Benefits to 
Children When There Is a Retroactive Award to a Schoolchild

    We propose to make changes to initially proposed Sec.  5.524 to 
reduce wordiness and enhance clarity. For example, paragraph (a), as 
initially proposed, stated: ``The total amount payable to the children, 
which varies according to the number of children, is divided and paid 
to the children in equal shares.'' We propose to revise that sentence 
to state: ``The total amount VA pays to a child depends on the number 
of children, and the amount is paid to each child in equal shares.'' 
Further, we propose to add the term ``currently'' to paragraph (a)(1) 
to clarify that the exception stated in proposed Sec.  5.524 only 
applies when, at the time DIC is reestablished for the additional 
child, other children are receiving running DIC awards.
    We propose to delete the term ``eligible'' as it applies to child 
in proposed Sec.  5.524. To state that dependency and indemnity 
compensation is payable to an eligible child is redundant of other VA 
regulations that state the requirements of a dependent. For this same 
reason, we propose to make similar changes in proposed Sec.  5.536 to 
the term ``eligible parents''.
    We additionally propose to reword paragraphs (a)(2) and (3) to 
enhance reader comprehension. The rewording of proposed Sec.  5.524(a) 
will make this regulation more comprehensible to the average reader.
    Proposed Sec.  5.524(b) deals with retroactive payments and payment 
dates for additional children who successfully reestablish DIC 
entitlement. Upon further review, we determined that rewording the 
paragraph would make it easier to understand. We intend no change in 
the meaning of paragraph (b).

Sec.  5.525 Awards of Dependency and Indemnity Compensation When Not 
All Dependents Apply

    In NPRM AM06, ``Payments and Adjustments to Payments''; 73 FR 
65212, Oct. 31, 2008, we included proposed Sec.  5.696, ``Awards of 
dependency and indemnity compensation when not all dependents apply''. 
In preparing this proposed rule, we have determined that because it 
concerns only dependency and indemnity compensation benefits, this 
section more logically belongs in part 5, subpart G, which is titled, 
``Dependency and Indemnity Compensation, Death Compensation, Accrued 
Benefits, and Special Rules Applicable Upon Death of a Beneficiary''. 
We therefore propose to move this section into subpart G, renumbering 
it as proposed Sec.  5.525.

Sec.  5.530 Eligibility for, and Payment of, a Parent's Dependency and 
Indemnity Compensation

    We propose to correct the authority citation at the end of 
initially proposed Sec.  5.530 so that the United States Code sections 
are in chronological order.

5.533 Income Not Counted for Parent's Dependency and Indemnity 
Compensation

    In the preamble for initially proposed Sec.  5.302, 70 FR 61326, 
61336, (Oct. 21, 2005), we explained our omission of the first sentence 
of Sec.  3.262(j)(2) as an unnecessary specific instance of a broader 
general rule in 5.302(a) that encompasses the specific rule. The second 
sentence of Sec.  3.262(e) is analogous to Sec.  3.262(j)(2) and 
unnecessary for the same reason. The preamble to initially proposed 
explained our omission of the third sentence of Sec.  3.262(e)(4). 
Without the third sentence, the fourth sentence is moot without the 
third sentence, because it provides a process to implement after 
implementing the third sentence.

Sec.  5.535 Adjustments to a Parent's Dependency and Indemnity 
Compensation When Income Changes

    In reviewing the AL89 NPRM, we determined that we failed to 
incorporate Sec.  3.660(b)(2) in initially proposed Sec.  5.535. The 
concept of anticipated income is different from that of actual income. 
This is because a beneficiary's actual income may be less than his 
anticipated income. VA may learn of this in any of the following ways: 
(1) Actual income is reported by the parent on an eligibility 
verification report (EVR); (2) VA requests a statement from the parent 
of their actual income at anytime; or (3) The parent notifies VA of 
income changes on their own.
    We therefore propose to insert the rules from Sec.  3.660(b)(2) 
into proposed Sec.  5.535.

[[Page 71127]]

Sec.  5.536 Parent's Dependency and Indemnity Compensation Rates

    In initially proposed Sec.  5.536(d) we intended only to restate 
current Sec.  3.251(a)(4), but we inadvertently misstated that 
provision. Section 3.251(a)(4) does not purport to apply only if there 
is one eligible parent. Instead, it states that if a parent's 
remarriage ends, the parent will be paid at the rate for one parent 
alone or for two parents not living together, whichever is applicable. 
This means that the parent will be paid at the ``one parent'' rate if 
there is no other eligible parent, or at the ``two parents not living 
together rate'' if the other parent is alive. Initially proposed Sec.  
5.536(d) limited this rule to cases where there is only one parent and 
stated that VA will pay at the ``one parent'' rate if the remarriage 
ends or at the ``two parents not living together'' rate if the parent 
is separated from his or her spouse. We propose to revise initially 
proposed paragraph (d) so that it is now consistent with Sec.  
3.251(a)(4).

Note Regarding Sec.  5.573 Through Sec.  5.579.

    In the NPRM for AL89, we included Sec. Sec.  5.573 through 5.579. 
We received no comments on these sections. To cut down on the length of 
this rulemaking, we chose to include those sections in the rule segment 
to the companion rulemaking, RIN 2900-AL71, Accrued Benefits and 
Special Rules Applicable Upon Death of a Beneficiary, published as NPRM 
at 69 FR 59071, Oct. 1, 2004. Any technical corrections or changes in 
terminology made to these regulations are included there. Thus 
initially proposed Sec. Sec.  5.573 and 5.574 have been removed from 
this proposed subpart, as well as the reference to reserving proposed 
Sec. Sec.  5.575-5.579.

Technical Corrections and Changes in Terminology

    The changes in terminology in this proposed rulemaking are made 
primarily for purpose of achieving consistency throughout our part 5 
regulations. Except as otherwise provided in this preamble, no 
substantive changes are intended by these changes made in terminology.
    According to paragraph 12.9 of the Government Printing Office Style 
Manual, numerals rather than words are used when referring to units of 
measurement and time. Therefore, we substituted the numeral ``7'' for 
the word ``seven'' in proposed Sec.  5.503(b). Likewise, we substituted 
the numeral ``1'' for the word ``one'' in proposed Sec.  
5.520(b)(1)(ii) and (b)(2)(i).
    To be consistent in style with the rest of part 5, we propose to 
change ``DIC'' to ``dependency and indemnity compensation'' if it was 
used in a heading to a regulation section in the NPRM. We also propose 
to change the headings in proposed Sec. Sec.  5.521 and 5.535 
accordingly. Similarly, ``dependency and indemnity compensation'' was 
changed to ``dependency and indemnity compensation (DIC)'' the first 
time it appears in each section, if we did not do so in the NPRM. We 
propose to make this change in proposed Sec.  5.531(c) and the 
introductory paragraph to proposed Sec.  5.533. Likewise, we propose to 
change ``dependency and indemnity compensation'' to ``DIC'' the second 
and subsequent times it appeared in each section, if we had not already 
done so in the NPRM. We propose to make such changes to proposed Sec.  
5.523(a) and (e)(4).
    To clarify that only one parent is required to apply for DIC, not 
both, we propose to change the heading of the undesignated center 
heading entitled, ``Dependency and Indemnity Compensation--Eligibility 
Requirements and Payment Rules for Parents,'' to, ``Dependency and 
Indemnity Compensation--Eligibility Requirements and Payment Rules for 
a Parent''. Also, where appropriate to make this requirement more 
apparent, we propose to change references from ``parents'' to ``a 
parent,'' except where the context clearly encompasses both parents or 
all parents in receipt of DIC.
    To be consistent with other regulations in part 5, we propose to 
change the phrases, ``[t]he amount to be offset includes'' and ``[t]he 
amount to be offset excludes'' to ``VA will count in the amount to be 
offset'' and ``VA will not count in the amount to be offset'' in each 
place they appeared in the NPRM in initially proposed Sec.  5.522(c)(1) 
through (4). For the same reason, in (c)(1) we propose to change 
``excluded'' to ``not counted'', in (c)(2) we changed ``[t]his 
includes'' to ``VA will also count'', and in (c)(3) we changed 
``included'' to ``counted''. Similarly, in Sec.  5.531(a) and (b), we 
propose to change the word ``included'' to the phrase or word, ``are 
counted'' or ``counted'', as appropriate. Finally, we propose to change 
the heading of initially proposed Sec.  5.533 from ``Exclusions from 
income'' to ``Income not counted for parent's dependency and indemnity 
compensation,'' and in initially proposed Sec.  5.533(i)(2), we propose 
to change the phrase, ``be excluded'' to ``not be counted.''

B. Accrued Benefits, Death Compensation, and Special Rules Applicable 
Upon Death of a Beneficiary AL71

    In a document published in the Federal Register on October 1, 2004, 
we proposed to revise Department of Veterans Affairs (VA) regulations 
governing accrued benefits and special rules applicable upon death of a 
beneficiary, to be published in a new 38 CFR part 5. 69 FR 59072. We 
provided a 60-day comment period that ended November 30, 2004. We 
received submissions from two commenters: Vietnam Veterans of America 
and a member of the general public.

Sec.  5.538 Effective Date of Dependency and Indemnity Compensation 
Award

    In initially proposed AL71, we placed all the dependency and 
indemnity compensation (DIC) effective date provisions at the end of 
subpart G, ``Dependency and Indemnity Compensation, Death Compensation, 
Accrued Benefits, and Special Rules Applicable Upon Death of a 
Beneficiary''. We have determined that they will be easier to locate if 
they appear after the series of regulations on DIC, rather than after 
the series of regulations on accrued benefits. Therefore, we propose to 
renumber the sections initially proposed as Sec. Sec.  5.567 through 
5.574 as Sec. Sec.  5.538 through 5.545.
    We propose to revise initially proposed Sec.  5.538 to identify 
dates as ``effective dates'' instead of ``payment dates'' to be 
consistent with other provisions in part 5.
    In Sec.  5.538(a)(1)(i), we propose to change the phrase, ``If VA 
receives a claim for [DIC] within one year from'' to ``If VA grants DIC 
based on a claim received no later than 1 year after''. In proposing 
this rule, we incorrectly omitted the relevant event of VA granting the 
benefit. In addition, because VA considers a claim for death pension to 
also be a claim for DIC, it could be misleading to imply that the claim 
must be for DIC. For the same reasons, we propose to make conforming 
changes to paragraphs (a)(2), (b)(1), (b)(2), (d)(1), and (d)(2) of 
Sec.  5.538.
    In Sec.  5.538(a)(1)(ii), we propose to add the words, ``based on a 
report of actual death'' to be consistent with current Sec.  
3.400(c)(1), the part 3 equivalent to this section, and to correct an 
omission from the initially proposed rule. We also propose to add the 
words, ``any of the veteran's following military entitlements'' and 
reformat the sentence. This revision will ensure that there is no 
confusion between military

[[Page 71128]]

entitlements and other benefits titled allowances, allotments, or 
service pay.
    In Sec.  5.538(d)(2), we propose to change cross-references to 
Sec. Sec.  5.230 and 5.696 to exceptions, in order to be as specific as 
possible and eliminate confusion. We begin the proposed rule by stating 
``Except as otherwise provided in this part'' and end with the cross-
references in an attempt to imply that the cross-references are the 
exceptions.
    In Sec.  5.538(e), we propose to add Sec.  5.230 as an exception to 
correct an omission from the initially proposed rule.

Sec.  5.539 Discontinuance of Dependency and Indemnity Compensation to 
a Person No Longer Recognized as the Veteran's Surviving Spouse

    In Sec.  5.539 (initially proposed 5.568), we propose to revise 
paragraph (a) so that it clearly requires the discontinuance of DIC 
payments to a former payee when VA recognizes that a new payee is 
eligible for DIC based on the same veteran. In the initially proposed 
rule, we inadvertently addressed the effective date of such 
discontinuance without also directing that such discontinuance occur.
    We propose to delete from paragraph (b) language referring to 
periods on or after December 1, 1962. Because part 5 will apply only 
prospectively, not retroactively, the language is unnecessary.
    We also propose to revise the language in paragraph (b)(1) that had 
stated that ``the award to the former payee will be terminated the day 
preceding the effective date of the award to the new payee'' to state 
instead that ``the award to the former payee will be discontinued on 
the effective date of the new payee's DIC award''. We propose to revise 
the language to conform to our practice in part 5 of referring to the 
first date that a new rate or benefit is paid, instead of referring to 
the last date on which a prior rate or benefit is paid.
    We propose to delete paragraph (b)(3), which had contained an 
exception to the effective-date provisions when the discontinuance of 
DIC payments is due to a change in, or in the interpretation of, the 
law or an administrative issue, from this regulation. That provision 
was redundant of Sec.  5.152, which was published as proposed on May 
22, 2007. See 72 FR 28769.

Sec.  5.540 Effective Date and Payment Adjustment Rules for Award or 
Discontinuance of Dependency and Indemnity Compensation to a Surviving 
Spouse Where Payments to a Child Are Involved

    In Sec.  5.540 (initially proposed 5.569), We propose to reorganize 
this section for clarity by incorporating much of the introductory 
material initially proposed in paragraph (a) into the paragraphs that 
follow. This revision simplifies the section without changing the 
meaning or intent.

Sec.  5.541 Effective Date of Reduction of a Surviving Spouse's 
Dependency and Indemnity Compensation Due to Recertification of Pay 
Grade

    In Sec.  5.541, (initially proposed 5.570), we propose to delete 
paragraphs (a) and (b) because those paragraphs were redundant of 
Sec. Sec.  5.197, ``Effective date of reduction or discontinuance of 
Improved Pension, compensation, or dependency and indemnity 
compensation due to marriage or remarriage'', and 5.231, ``Effective 
date of reduction or discontinuance: child reaches age 18 or 23'', 
which were published as proposed on September 20, 2006. 71 FR 55052, 
55067, 55073. We also propose to change the title of the regulation to 
accurately describe the revised content.
    One commenter suggested that VA should add language to Sec.  5.541 
(initially proposed Sec.  5.570(c)) to inform readers that the 
reduction of DIC based on recertification of a pay grade to a level 
lower than the one originally certified would not result in an 
overpayment of monthly DIC benefits paid to a veteran's survivors based 
on the pay grade previously in effect. We did not include such language 
in the initially proposed rule because a reduction under Sec.  5.541 
will always involve a future and not a retroactive adjustment in DIC 
benefit payments. No overpayment is created because of the prospective 
nature of the reduction. However, we propose to reword the provision to 
clarify that the reduction will be ``effective the first day of the 
month after the month for which VA last paid the greater benefit''.

Sec.  5.542 Effective Date of an Award or an Increased Rate Based on 
Decreased Income: Parents' Dependency and Indemnity Compensation

    In initially proposed Sec.  5.571(c), we referred to time limits 
contained in a ``regulation that [would] be published in a future 
Notice of Proposed Rulemaking'' based on current Sec.  3.660(b)(1). 
That regulation, Sec.  5.535, was published as proposed on October 21, 
2005. See 70 FR 61326. To simplify the material and eliminate 
redundancy, we propose to combine proposed Sec. Sec.  5.535 and 5.571 
into a single section, Sec.  5.542.

Sec.  5.543 Effective Date of Reduction or Discontinuance Based on 
Increased Income: Parents' Dependency and Indemnity Compensation

    In proposed Sec.  5.543 (initially proposed 5.572), we propose to 
reorganize the material into two paragraphs instead of four to simplify 
the structure of the regulation. Also, we propose to change the 
language in initially proposed paragraph (b) stating that a reduction 
or discontinuance would be effective at ``the end of the month in which 
income increased'' to refer instead to ``the first day of the month 
after the month in which the income increased or is expected to 
increase''. We propose to revise the language to conform with our 
practice in part 5 of referring to the first date a new rate is paid 
instead of referring to the last date on which a prior rate is paid.

Sec. Sec.  5.544 Dependency and Indemnity Compensation Rate Adjustments 
When an Additional Survivor Files a Claim, and 5.545 Effective Dates of 
Awards and Discontinuances of Special Monthly Dependency and Indemnity 
Compensation

    When these initially proposed rules were published in the Federal 
Register on October 1, 2004, we proposed to reserve Sec. Sec.  5.573 
and 5.574 for future regulations. 69 FR 59072. In the second package of 
proposed rules for this subpart G published on October 21, 2005, we 
designated Sec.  5.573 as ``Effective date of dependency and indemnity 
compensation rate adjustments when an additional survivor files an 
application'', and Sec.  5.574 as ``Effective dates of awards and 
discontinuances of special monthly dependency and indemnity 
compensation.'' 70 FR 61326, 61348. We received no comments regarding 
these two sections. As discussed above, we propose to renumber the 
sections, initially proposed as Sec. Sec.  5.573 and 5.574, as 
Sec. Sec.  5.544 and 5.545 respectively.
    We propose to move the exception (stated in initially proposed 
Sec.  5.573(e)) referring to Sec.  5.524 to the introductory paragraph 
of Sec.  5.544. This prominent position will more effectively alert 
readers to the exception.
    Also in Sec.  5.544, we propose to delete paragraph (a)(2) and 
reorganize the remainder of paragraph (a) into a single paragraph. The 
condition contained in initially proposed paragraph (a)(2)--that

[[Page 71129]]

payment to the additional survivor would reduce the benefit being paid 
to the other survivors--is always true when the benefit is DIC; 
therefore, stating it as a condition is unnecessary in proposed Sec.  
5.544. The language proposed in paragraph (a)(2) is derived from 
current Sec.  3.650(a) and is necessary in that section because it 
applies to pension and compensation as well as DIC.
    In Sec.  5.545(a)(2), we propose to delete the word ``basic'' from 
before ``DIC''. Part 5 will not use the term ``basic DIC'' to 
distinguish DIC from special monthly DIC because use of the term 
``basic DIC'', which is not used elsewhere in part 5, was likely to 
confuse a reader. Instead, we will distinguish the benefits by 
referring to ``DIC'' and ``special monthly DIC''. We also propose to 
simplify the paragraph by eliminating initially proposed paragraph 
(a)(2)(i). Initially proposed paragraph (a)(2) provided that the 
effective date would be ``the later of the following dates: (i) [t]he 
effective date of the . . . DIC award, or (ii) [t]he date entitlement 
to special monthly DIC arose.'' Unless the two dates are the same, the 
date entitlement to special monthly DIC arose will always be the later 
date, so it is unnecessary to refer to the effective date of the DIC 
award.
    We propose to redesignate initially proposed Sec.  5.574(a)(3), 
which was based on current Sec.  3.402(c)(2) and the last sentence of 
Sec.  3.404, as a new paragraph Sec.  5.545(c). We have also reworded 
the paragraph in order to specify that special monthly dependency and 
indemnity compensation based on the need for aid and attendance will 
not be paid if the surviving parent or surviving spouse is receiving 
hospital care in his or her own right as a veteran. The rewording of 
this paragraph is made for clarity.

Changes From Proposed Sec. Sec.  5.550 Through 5.559 Based Upon a 
Change in the Implementation of Part 5

    When we began writing part 5, we planned to remove part 3 from 
title 38, CFR, such that all claims for benefits, and the 
administration of such benefits, would be governed by part 5. 
Accordingly, many of the part 5 regulations were written and proposed 
with that concept in mind. Since then, we determined that it would be 
better to retain the part 3 regulations for the adjudication of claims 
received before the applicability date of the part 5 regulations. Thus, 
we would apply the part 5 regulations only to claims received on or 
after the applicability date of the part 5 regulations.
    Specifically, when we initially proposed the accrued-benefits 
regulations, we anticipated that they would apply to all claims, 
including those filed before December 16, 2003, and those in which 
death of the beneficiary occurred before December 16, 2003. The 
proposed rules distinguished claims for accrued benefits filed before 
December 16, 2003, from claims for accrued benefits filed on or after 
that date. The rules also contained effective dates relevant to the 
distinction between claims filed before versus after December 16, 2003. 
We received comments concerning the substance of these issues, but 
these comments are no longer relevant because we have removed the 
provisions.
    Part 5 will not be in effect before 2013. A claim for accrued 
benefits must be filed no later than 1 year after the date of the 
beneficiary's death. Therefore, part 5 will not apply to claims for 
accrued benefits based on a death before 2004. We propose to revise the 
rules accordingly.
    For the above reason, we propose to revise the definition of 
``accrued benefits'' (initially proposed in Sec.  5.550, now in 
proposed Sec.  5.1) and delete initially proposed Sec. Sec.  5.556, 
5.558, and 5.559. As discussed further below, we also propose to delete 
initially proposed Sec.  5.554. Because we are proposing to delete 
initially proposed Sec. Sec.  5.554 and 5.556, we propose to renumber 
proposed Sec.  5.555 as Sec.  5.554, and proposed Sec.  5.557 as Sec.  
5.555. We propose to reserve Sec. Sec.  5.556, 5.557, 5.558, and 5.559.
    One comment pertained to initially proposed Sec.  5.556 and its 2-
year limitation on the payment of accrued benefits on cases in which 
the beneficiary had died before December 16, 2003. The commenter 
explained that she was a surviving spouse receiving dependency and 
indemnity compensation under 38 U.S.C. 1151 because of a death caused 
by VA medical treatment and that the veteran had been receiving VA 
disability compensation during his lifetime. The commenter felt that 
where VA medical care had hastened a veteran's death so that the 
veteran did not live until December 16, 2003, VA should pay the full 
amount of accrued benefits without regard to the 2-year limitation. The 
Veterans Benefits Act of 2003, Public Law 108-183, sec. 104, 117 Stat. 
2651, 2657, was signed into law on December 16, 2003, and removed the 
2-year limitation on payment of accrued benefits with respect to deaths 
occurring on or after that date. See 38 U.S.C. 5121. VA has no 
authority to pay more than 2 years of accrued benefits for deaths 
occurring before December 16, 2003. We propose to make no changes based 
on this comment because we do not have the authority to change the 
regulations as the commenter wants. However, as discussed above, we 
propose to delete initially proposed Sec.  5.556 because it was 
intended to apply only to claims based upon the death of a beneficiary 
occurring before December 16, 2003.

Sec.  5.550 [Reserved]

    In Sec.  5.550, we initially proposed several definitions. We have 
determined that the definitions are either unnecessary or more 
appropriately placed elsewhere in part 5. So we propose to delete the 
initially proposed text and reserve Sec.  5.550.
    We propose to move the definition of ``accrued benefits'' to Sec.  
5.1, the definition of ``claim for benefits pending on the date of 
death'' to Sec.  5.1, and the definition of ``evidence in the file on 
the date of death'' to Sec.  5.1 because these definitions apply to all 
of part 5.
    We initially proposed a definition of ``deceased beneficiary'' to 
distinguish that person from the living beneficiary claiming survivor's 
benefits. See 69 FR 59076, Oct. 1, 2004. We have since concluded that 
the definition is superfluous because it adds nothing to the plain 
meaning of the term ``deceased beneficiary''. Where the regulations 
refer to a ``deceased beneficiary'', the term is clear in context.
    The initially proposed definitions of ``child'' and ``dependent 
parent'' contained references to the general definitions of those terms 
(contained elsewhere in part 5) and rules limiting the application of 
the general definitions for purposes of accrued benefits. The 
references to the general definitions are unnecessary, and the rules 
limiting the definitions are more appropriately placed in Sec.  
5.551(a). We therefore propose to revise the rule limiting the 
definition of ``child'' to more accurately reflect the content of 
current Sec.  3.1000(d)(2) upon which the rule is based.
    Similarly, the initially proposed definition of ``surviving 
spouse'' contained a reference to the general definition contained 
elsewhere in part 5 and a rule limiting the application of the general 
definition for purposes of accrued benefits. The reference to the 
general definition is unnecessary, and the rule limiting the definition 
is more appropriately placed in Sec. Sec.  5.551(b) and 5.566(d)(1). In 
relocating the rule, we propose to not repeat the language contained in 
initially proposed Sec.  5.550(h)(2)(i) regarding date-of-marriage 
requirements for DIC and

[[Page 71130]]

death compensation. Although initially proposed Sec.  5.550(h)(2)(i) 
was based on a reference to date-of-marriage requirements in Sec.  
3.1000(d)(1), a surviving spouse could never claim accrued benefits 
based on DIC, so the language was superfluous.
    As stated in the preamble of the AL71 NPRM, the U.S. Court of 
Appeals for Veterans Claims in Bonny v. Principi, 16 Vet. App. 504 
(2002) interpreted 38 U.S.C. 5121(a) as establishing a class of 
benefits known as ``benefits awarded, but unpaid at death''. 69 FR 
59072, 59074, Oct. 1, 2004. Although we initially proposed to define 
``benefits awarded, but unpaid at death'' in proposed Sec.  5.550, we 
have determined that it is unnecessary to include rules on such 
benefits in part 5. As stated in the preamble to RIN 2900-AL71, ``These 
proposed rules also apply to claims for benefits awarded, but unpaid at 
death, if the deceased beneficiary died prior to December 16, 2003, and 
a claim for such benefits was pending on December 16, 2003.'' Any claim 
pending on that date would be processed under part 3, not part 5, so 
there is no need to include such provisions in part 5. We therefore 
propose to remove all references to ``benefits awarded, but unpaid at 
death'' from part 5.

Sec.  5.551 Persons Entitled to Accrued Benefits

    In Sec.  5.551(c)(2) and (d)(1), we propose to add the sentence, 
``[i]f there is no eligible claimant, such accrued benefits are payable 
to the extent provided in paragraph (f) of this section.'' We propose 
to add this sentence for consistency with paragraphs Sec.  5.551(e)(1) 
and (f) and to ensure proper disposition of the accrued benefits.
    We propose to clarify initially proposed Sec.  5.551(e), now 
redesignated as paragraph (f). Title 38 CFR 3.1000(a)(5) uses the 
phrase ``last sickness or burial'' instead of ``last sickness and 
burial''. However, in initially proposed Sec.  5.551(e), we used the 
phrase ``last illness and/or burial'' without providing an explanation 
for this change. Title 38 U.S.C. 5121(a)(6) states, ``accrued benefits 
may be paid . . . to reimburse the person who bore the expense of last 
sickness and burial.'' VA interprets the word ``and'' as used in the 
statute to mean ``or''. We do not believe that Congress intended to 
require that a person have paid expenses of both the last illness and 
burial in order to qualify for some reimbursement. For example, if a 
person expended their savings paying for health care bills resulting 
from the veteran's last illness and therefore could not pay for the 
burial, it would be unfair not to reimburse them for the health care 
bills. We are changing the initially proposed language from ``and/or'' 
to simply ``or'' because this term includes ``and''. For this same 
reason, we are making similar changes in proposed Sec. Sec.  
5.566(d)(4), and 5.567(a)(4).
    We propose to clarify Sec.  5.551(g) to reflect VA's long-standing 
policy that if a preferred potential claimant fails to file a claim, VA 
will not pay his or her share of accrued benefits to a person having an 
equal or lower preference. Similarly, if a preferred potential claimant 
waives rights to accrued benefits, VA will not pay his or her share of 
accrued benefits to a person having an equal or lower preference. VA 
will only pay the accrued benefits to someone else if, within the 1-
year period to file a claim for accrued benefits, the preferred 
potential claimant dies, forfeits entitlement, or otherwise becomes 
disqualified. In such a case, the next-in-line (or equal) person must 
file a timely claim.
    The statute, 38 U.S.C. 5121, authorizes VA to pay accrued benefits 
only to ``the living person first listed'' in the hierarchy set forth 
in section 5121(a)(2). VA has consistently interpreted ``the living 
person first listed'' as an instruction to pay only that person, so 
long as he or she is alive. Because a claim for accrued benefits may be 
filed up to 1 year after the veteran's death, however, we permit a 
claimant lower in the hierarchy to file a claim if the person above 
them dies during that 1 year. We also liberally interpret the statute 
to authorize payment of accrued benefits to a person lower in the 
hierarchy when the person(s) above them is involuntarily disqualified, 
not withstanding that the person is still alive because, as a legal 
matter, such person is treated as if he or she were dead for purposes 
of determining entitlement to benefits.
    We propose to make similar revisions to Sec.  5.566(e)(3) based on 
VA's consistent interpretation of ``the following persons living at the 
time of settlement, and in the order named'' as used in the authorizing 
statute, 38 U.S.C. 5502(d).

Sec.  5.552 Claims for Accrued Benefits

    In initially proposed Sec.  5.552(a), we noted that Sec.  5.552 did 
not apply to claims for the proceeds of a benefit check that the 
deceased beneficiary did not negotiate before death or to awards under 
the Nehmer court orders for disability or death caused by a condition 
presumptively associated with herbicide exposure. These scope 
provisions are unnecessary because they are redundant of material 
contained in Sec. Sec.  5.564, ``Cancellation of checks mailed to 
deceased payee; payment of such funds as accrued benefits'', and 5.592, 
``Awards under Nehmer Court orders for disability or death caused by a 
condition presumptively associated with herbicide exposure.'' We 
therefore propose to delete Sec.  5.552(a) and redesignate the other 
paragraphs accordingly.
    We also propose to delete the cross reference to Sec.  3.152(b) 
that was contained in initially proposed Sec.  5.552(c)(3). Cross-
referencing Sec.  3.152, or its part 5 counterpart, Sec.  5.52, would 
not be useful to the reader. The portions of those regulations 
pertinent to claims for accrued benefits are incorporated in Sec.  
5.552(b).

Deletion of Proposed Sec.  5.554

    We propose to delete initially proposed Sec.  5.554. First, we 
propose to move the material from initially proposed Sec.  5.554 
concerning school vacation periods to Sec.  5.551(a)(1)(ii). We propose 
to revise the provision to more clearly and simply state the rule.
    We propose to eliminate the provision in the initially proposed 
rule which stated that ``school confirmation of evidence of school 
attendance is not required to support a claim''. This provision was 
intended to prevent VA employees from requiring proof of school 
attendance in claims for accrued benefits where such evidence was 
already of record. This might occur, for example, when the child was 
already listed as a dependent on the veteran's award or was receiving 
educational benefits under 38 U.S.C. chapter 35. There are no similar 
provisions regarding other types of proof in claims for accrued 
benefits, and it is unnecessary to have a regulation instructing VA 
employees to refrain from requesting duplicate evidence.

Sec.  5.554 VA Benefits Payable as Accrued Benefits

    We propose to revise the heading of Sec.  5.554 (initially proposed 
as Sec.  5.555) so that it is no longer phrased as a question, and so 
that it more completely identifies the subject matter of the section.
    In Sec.  5.554(a)(10), we propose to correct the citation to 10 
U.S.C. chapter 1606 (as initially proposed, it was ``10 U.S.C. 1606''), 
and we propose to add veterans' educational assistance under 10 U.S.C. 
chapter 1607 to the list of potentially qualifying benefits. Section 
527 of Public Law 108-375 established an additional educational 
assistance program, educational assistance for certain reserve 
component members who performed active military service

[[Page 71131]]

under the provisions of 10 U.S.C. chapter 1607. See 118 Stat. 1811, 
1890-94 (2004). This new program results in periodic monthly benefits 
that are paid under laws administered by the Secretary.

Sec.  5.555 Relationship Between Accrued-Benefits Claims and Claims 
Filed by the Deceased Beneficiary

    We propose to revise paragraph (a) of this renumbered section 
(initially proposed as Sec.  5.557) to clarify the distinction between, 
and relationship of, accrued-benefits claims and claims filed by the 
deceased beneficiary.

Sec. Sec.  5.560-5.563 [Reserved]

    We propose to delete the initially proposed rules concerning death 
compensation (proposed Sec. Sec.  5.560 through 5.562) and reserve 
Sec. Sec.  5.560 through 5.562 for later use. There are fewer than 300 
beneficiaries currently receiving death compensation. VA has not 
received a claim for death compensation in over 10 years, and we do not 
expect to receive any more claims. However, should VA receive such a 
claim, it could process the claim under the controlling statute, 38 
U.S.C. 1121 (for survivors of wartime veterans) or 1141 (for survivors 
of peacetime veterans). Except for one small group of beneficiaries, 
death compensation is payable only if the veteran died before January 
1, 1957. Because of the small number of beneficiaries of death 
compensation, the provisions concerning death compensation do not need 
to be carried forward to part 5.
    Additionally, we have determined that the rule initially proposed 
as Sec.  5.563, ``Special rules when a beneficiary dies while receiving 
apportioned benefits'', relates to apportionments more than to accrued 
benefits so we propose to move it to subpart M, ``Apportionments to 
Dependents and Payments to Fiduciaries and Incarcerated 
Beneficiaries''. We propose to reserve Sec.  5.563 for later use.

Sec.  5.564 Cancellation of Checks Mailed to a Deceased Payee; Payment 
of Such Funds as Accrued Benefits

    Under 38 U.S.C. 5122, VA must pay, in accordance with the hierarchy 
of payments of accrued benefits, the amount of benefits represented in 
a ``check received by a payee in payment of accrued benefits . . . if 
the payee died on or after the last day of the period covered by the 
check.'' In addition, VA may pay such benefits if the check was wrongly 
negotiated, but the funds are recovered. In all other cases, 38 U.S.C. 
5121(c) would apply, such that a person wishing to receive accrued 
benefits must file a claim for such benefits.
    We propose to revise the title and paragraph (a) of Sec.  5.564. 
First, we propose to clarify that VA is only authorized to pay the 
accrued benefits represented in a check mailed to a deceased payee for 
a period during which the payee was alive up to at least the last day 
of the period. As initially proposed, the regulation stated that it did 
not apply to benefits for ``the month in which the beneficiary died'', 
but did not clearly identify the periods to which the regulation could 
apply. Moreover, this language was not technically correct, because a 
payee could die on the last day of the period and still be covered by 
the statute, which explicitly applies when the payee died ``on . . . 
the last day of the period.''
    Second, we propose to clarify that this regulation may apply to 
multiple checks received by the deceased payee. This is clear in the 
current rule, 38 CFR 3.1003(a)(1), but was not clear in Sec.  5.564 as 
initially proposed.
    Third, the initially proposed rule referred several times to ``non-
negotiated'' checks, which could have been read to be unnecessarily 
limiting because VA may also pay funds that are recovered after a check 
was negotiated by someone other than the payee. (In the one remaining 
instance, we use the term ``unnegotiated'' instead of ``non-
negotiated'' to be consistent with prior opinions by VA's Office of 
General Counsel. See, for example, VA General Counsel's Opinion, 
VAOPGCPREC 8-96, 61 FR 66749 (Sept. 26, 1996).
    Finally, we propose to move initially proposed paragraph (d), 
concerning payment to the deceased payee's estate, into paragraph (a), 
for organizational reasons.
    As revised, paragraph (a) will more closely track the statutory 
language and accurately represent the current rule in 38 CFR 3.1003; it 
will not represent a departure from VA's current practice and 
interpretation of 38 U.S.C. 5122.
    We also propose to delete initially proposed paragraph (b) and 
redesignate the remaining paragraphs accordingly. As initially 
proposed, paragraph (b) was comprised of two unnecessary negative 
propositions, based on current Sec.  3.1003(a)(1). First, proposed 
paragraph (b) provided that there is no limit on the retroactive period 
for which payment of the amount represented by the checks may be made. 
It is unnecessary to state this negative proposition, and this language 
might mislead readers into believing that there is an unstated time 
limit on the retroactive period of an award under other sections, when 
in fact there is no such time limit. Second, proposed paragraph (b) 
provided that there is no time limit for filing a claim to obtain the 
proceeds of the checks or for furnishing evidence to perfect a claim. 
It is unnecessary to state this negative proposition (that is, that 
there is no deadline) because this language might mislead readers into 
believing that there is a requirement to file a claim for the proceeds 
of VA checks under Sec.  5.564, when in fact there is no such 
requirement.

Sec.  5.565 Special Rules for Payment of VA Benefits on Deposit in a 
Special Deposit Account When a Payee Living in a Foreign Country Dies

    In Sec.  5.565(b)(1) and (2), we propose to add the words ``in 
equal shares'' at the end of each paragraph, to clarify that payment to 
the children of the veteran or children of the surviving spouse is to 
be in equal shares. The authorizing statute, 31 U.S.C. 3330, is not 
specific in this regard, but payment in equal shares is consistent with 
VA practice and provides a simple and fair rule for administering 
payments.
    Current Sec.  3.1008, on which initially proposed Sec.  5.565 was 
based, contains no statutory authority. In our initially proposed rule, 
we listed 31 U.S.C. 3329 and 3330 and 38 U.S.C. 6104 as the authority 
citations. In reviewing this rule, we have determined that section 6104 
does not provide statutory authority for Sec.  5.565 and that 
additional authority is provided by 38 U.S.C. 5309. We propose to 
correct this authority citation appropriately.

Sec.  5.566 Special Rules for Payment of Gratuitous VA Benefits 
Deposited in a Personal Funds of Patients Account When an Incompetent 
Veteran Dies

    We propose to clarify Sec.  5.566(d)(3) by adding ``on the date of 
the veteran's death''. Similar language is contained in current Sec.  
3.1009(a)(3) upon which the initially proposed rule was based, and the 
phrase should have been included in the proposed rule.
    Paragraph 7 of VA General Counsel's opinion VAOPGCPREC 06-91, 56 FR 
25156 (June 3, 1991), states that:

    7. Interim Issue (CONTR-169), dated January 13, 1960, providing 
necessary instructions for the fiscal implementation of PL 86-146, 
provides in paragraph D.3 in pertinent part:
    ``a. Immediately upon death of a veteran who has been adjudged 
or rated incompetent, the balance in the Personal Funds of Patients 
account will be analyzed to determine the source thereof, i.e., 
funds derived from gratuitous benefits deposited by the VA under 
laws administered by the VA or from other sources. For this purpose 
gratuitous benefits are defined as all benefit payments

[[Page 71132]]

under laws administered by the VA except insurance payments 
(Servicemen's Indemnity benefits are not insurance payments).''

    We therefore propose to replace ``gratuitous benefits'' with the 
phrase ``all benefits except insurance payments'' in Sec.  5.556. For 
this same reason, we propose to make this change throughout part 5.

Sec. Sec.  5.567 Special Rules for Payment of Old-Law Pension When a 
Hospitalized Competent Veteran Dies, and 5.568 Non-Payment of Certain 
Benefits Upon Death of an Incompetent Veteran

    In the initially proposed rule for subpart G, we did not include 
the provisions from part 3 concerning payment of Old-Law Pension 
benefits withheld from hospitalized competent and incompetent veterans 
who die before payment is made, as found in Sec. Sec.  3.1001 and 
3.1007. This omission was inadvertent and we now propose to include 
these provisions as Sec. Sec.  5.567 and 5.568.
    In Sec.  5.567(b), we are not including language equivalent to 
current Sec.  3.1001(b)(1) stating, ``[t]here is no time limit on the 
retroactive period of an award''. It is unnecessary to state this 
negative proposition, and this language might mislead readers into 
believing that there is an unstated time limit on the retroactive 
period of an award under other sections when there is no such time 
limit.
    Current Sec.  3.1007 states that, ``The term `dies before payment' 
includes cases in which a check was issued and the veteran died before 
negotiating the check''. Although there is no such provision in Sec.  
3.1001, VA's practice has been to apply this principle to that section 
as well. This is reflected by the fact that payments under both 
Sec. Sec.  3.1001 and 3.1007 are excluded from VA's general rule on 
unnegotiated checks. See 38 CFR 3.1003(c). We therefore propose to add 
paragraph (d) to Sec.  5.567 stating that the rule applies to ``cases 
in which a check was issued and the veteran died before negotiating the 
check.''

Changes in Terminology

    We propose to make several changes to the wording throughout this 
portion of the regulations. For example, we propose to change both 
``prior to'' and ``preceding'' to ``before'', and we propose to change 
``prior'' to ``previous''.
    We propose to change ``day following the date of last payment to 
the beneficiary'' to ``first day of the month after the month for which 
VA last paid benefits to the beneficiary'', where ``beneficiary'' 
represents either a child, parent, spouse, or the veteran. This 
phrasing is easier to understand and apply.

XIII. Subpart H: Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors

    In a document published in the Federal Register on March 9, 2007, 
we proposed to revise VA regulations governing special and ancillary 
benefits for veterans, dependents, and survivors, to be published in a 
new 38 CFR part 5. 72 FR 10860. We provided a 60-day comment period 
that ended May 8, 2007. We received submissions from two commenters: 
the Disabled American Veterans and a member of the general public.

Misdirected Comment

    One commenter submitted a comment that states that it is intended 
for this regulatory package, RIN 2900-AL84, but it actually applies to 
RIN 2900-AL71. The issues raised in this comment are addressed in the 
portion of this preamble relating to RIN 2900-AL71.

Sec.  5.580 Medal of Honor Pension

    Section 5.580 concerns Medal of Honor pension. Throughout Sec.  
5.580, we propose to change the initially proposed word ``person'' to 
``servicemember or veteran'', because only servicemembers and veterans 
can qualify for that benefit.
    The second sentence of initially proposed Sec.  5.580(a) stated, 
``After a person has been placed on the Medal of Honor Roll, and if 
such person has indicated a desire to receive the Medal of Honor 
pension, the Secretary concerned will provide VA with a certified copy 
of the certificate setting forth such person's right to the Medal of 
Honor pension.'' We propose to delete this sentence, which seemed to 
delineate administrative duties of the service departments. The 
sentence did not require or provide for any VA action. We leave it to 
those departments to establish appropriate procedures to administer 
these duties as, for example, 32 CFR 578.9(c) does for the Department 
of the Army. For VA's purposes, it is necessary to note only that VA 
receipt of a certified copy of the certificate from the service 
department is a prerequisite to an award of Medal of Honor pension.
    We propose to move initially proposed paragraph (b) into paragraph 
(a) to emphasize that VA cannot adjudicate entitlement to placement on 
the Medal of Honor Roll or to a certificate establishing the right to 
Medal of Honor pension. VA adjudicates only the amount of the initial 
payment (that is, the lump-sum payment) and of the effective date of 
the monthly pension, which is set forth in the next paragraph. We were 
concerned that as written, initially proposed paragraph (b), which 
stated that ``Medal of Honor pension will be awarded by VA once the 
certification under paragraph (a) of this section is provided to VA'', 
could have been misinterpreted to provide an effective date.
    In paragraph (b), we assign the effective date of monthly payment 
of such pension based on the date that the servicemember or veteran 
entitled to the pension files the appropriate form with the appropriate 
service department. Although we have generally interpreted 38 U.S.C. 
5101(a) to require claimants for VA benefits to file a claim in the 
form prescribed by VA, that statute does not apply to claimants for the 
Medal of Honor pension, because the Secretary of the appropriate 
service department, and not VA, authorizes payment of the Medal of 
Honor pension. 38 U.S.C. 1561(c). Therefore, no additional claim to VA 
is necessary to establish entitlement to the Medal of Honor pension.
    We propose to redesignate initially proposed paragraph (c) as (b), 
initially proposed paragraph (d) as (c), and initially proposed 
paragraph (e) as (d). We changed a phrase in proposed (c)(1) [now 
(b)(1)] from ``application for placement on the Medal of Honor Roll'' 
to ``form requesting placement on the Medal of Honor Roll''. We have 
previously proposed, for VA purposes, that ```application' means a 
specific form required by the Secretary that a claimant must file to 
apply for a benefit'' (Sec.  5.1). The statute authorizing the Medal of 
Honor Roll provides for placement on the roll ``[u]pon written 
application,'' 38 U.S.C. 1560(b), ``in the form . . . prescribed by the 
Secretary concerned''. Although either ``application'' or ``form'' 
would be reasonable and accurate terms derived from the statute, we 
propose to change ``application'' to ``form'' in paragraph (b)(1) to 
preserve the distinction between ``application'' as we define it for VA 
purposes and any other use of the term.
    Initially proposed Sec.  5.580(c)(3) stated that VA would pay a 
lump sum ``to each person who is receiving or who in the future 
receives a Medal of Honor pension''. If a veteran ``is receiving'' a 
Medal of Honor pension at the time that this regulation becomes 
effective, then he or she will already have received the lump-sum 
payment. We therefore propose to revise the sentence to provide a lump-
sum payment ``to each servicemember or veteran who receives a Medal of 
Honor pension''. This change is needed because part 5 will apply only

[[Page 71133]]

to new claims, and not to existing entitlements.
    The initially proposed text also stated that the lump-sum payment 
``will be based on the monthly Medal of Honor pension rates [in effect 
during a prescribed period].'' The phrase ``will be based on'' was 
potentially confusing. We propose to change the text to read, ``VA will 
calculate the amount of the lump-sum payment using the Medal of Honor 
pension rates in effect for each year of the period for which the 
retroactive payment is made.''

Sec.  5.581 Awards of VA Benefits Based on Special Acts or Private Laws

    In initially proposed Sec.  5.581(b)(2), we had included the 
parenthetical definition of ``pending claim''. We propose to delete 
this definition as we have already defined ``pending claim'' in Sec.  
5.57(d). In addition, we clarified that the claim must be pending ``at 
the time that the special act becomes effective.'' This change makes 
the provision more explicit.
    We propose to change Sec.  5.581(c)(1) to improve readability.
    We propose to change Sec.  5.581(c)(2) to make clear that the rule 
pertains to a period of service rather than to a specific date.
    Initially proposed Sec.  5.581(d)(1) stated, ``VA will apply and 
will not change, . . . the rate, effective date, and discontinuance 
date that is specified in a special act.'' We propose to remove ``and 
will not change'' because it merely restates the fact that ``we will 
apply'' the elements of the special act addressed in paragraph (d)(1). 
This will make the rule more readable without changing its meaning.
    The initially proposed text in Sec.  5.581(d)(2) stated that the 
effective date is determined in accordance with the applicable law, but 
it did not state which law. We propose to include a cross reference to 
Sec.  5.152, which implements 38 U.S.C. 5110(g), to clarify what date 
to apply in these situations.
    In Sec.  5.581(e)(1), we propose to add the terms, ``hospital, 
domiciliary, or nursing home care'' to more accurately describe the 
content of several sections cited. Similarly, in Sec.  5.581(e)(2), we 
propose to add the phrase, ``or . . . while a fugitive felon'' to more 
accurately describe the content of several sections cited. We also 
propose to include in Sec.  5.581(e)(2) that payments will be suspended 
while the veteran is a fugitive felon. We also propose to add 38 U.S.C. 
5313B, governing fugitive felons, to the authority citation for the 
section.

Sec.  5.583 Special Allowance Under 38 U.S.C. 1312

    In Sec.  5.583(d), we propose to add, ``after VA receives a claim'' 
to clarify that the claimant must file a claim to obtain the benefit.
    We propose to make a few changes to Sec.  5.583(e) to enhance 
clarity and reduce ambiguity. We also propose to correct the reference 
to Subpart E, so that the text will correctly direct the reader to 
Subpart K. We also propose to add the statutory authority 38 U.S.C. 
107, which is the statutory authority for Sec.  5.583(b)(2).

Sec.  5.584 Loan Guaranty for a Surviving Spouse: Eligibility 
Requirements

    In Sec.  5.584, we propose to change the initially proposed phrase 
``may be extended'' to ``will be extended'' to clarify that the action 
is not discretionary. We also propose to insert the phrase, ``all of 
the following conditions are met'' at the end of the introductory 
sentence and redesignate the paragraphs to enhance clarity and reduce 
ambiguity of the section.
    In Sec.  5.584(b)(2), we propose to add that a veteran's death 
treated by VA ``as if'' it were service connected, under 38 U.S.C. 
1318, does not qualify the veteran's surviving spouse for loan guaranty 
certification.
    We also propose to revise initially proposed Sec.  5.584(e) to 
clarify that this section does not apply if the claimant is a surviving 
spouse who is eligible for a loan guaranty benefit as a veteran in his 
or her own right.

Sec.  5.586 Certification for Dependents' Educational Assistance

    In Sec.  5.586, ``Certification for dependents' educational 
assistance'', paragraph (c)(2), we propose to change the reference to 
38 CFR 3.361 to its part 5 counterpart, Sec.  5.350. Current Sec. Sec.  
3.358 and 3.800 apply to claims under 38 U.S.C. 1151(a) that VA 
received before October 1, 1997. Because part 5 will apply only to 
future claims, we will not repeat the provisions of current Sec. Sec.  
3.358 and 3.800 in part 5.
    Initially proposed Sec.  5.586(a) failed to state who is 
potentially eligible to receive dependents' educational assistance. 
Accordingly, we propose to add ``payable to a veteran's spouse, 
surviving spouse, or child,'' after ``education benefit'' to clarify 
who is potentially eligible for this benefit.
    Also in Sec.  5.586, we propose to remove paragraph (d)(2) and (3), 
which merely cross referenced the definitions of ``spouse'' and 
``surviving spouse''. Because these terms are defined for purposes of 
all benefits administered under part 5, there is no need to include 
this paragraph. We propose to move the language of (d)(1) into 
paragraph (a).

Sec.  5.587 Minimum Income Annuity and Gratuitous Annuity

    We propose to revise the regulation text of initially proposed 
Sec.  5.587 for clarity.
    In initially proposed Sec.  5.587(a)(1), the reference to the 
citations to the sections of Public Law 92-425 were mistakenly written 
as ``4(a)(2) and (3)''. We propose to correct this error by changing 
the citations to ``4(a)(1) and (2)'', as stated in 38 CFR 3.811(a)(1). 
Further, we propose to reword the end of paragraph (c) to clarify its 
meaning. The initially proposed rule read, ``An individual . . . shall 
be considered eligible for pension for purposes of determining 
eligibility for the minimum income annuity even though as a result of 
adding the amount of the minimum income annuity authorized under Public 
Law 92-425 as amended to any other countable income, no amount of 
pension is due.'' The reworded version reads, ``A person . . . will 
still be considered eligible for pension for purposes of determining 
eligibility for the minimum income annuity, even though no amount of 
pension is payable after adding the minimum income annuity, authorized 
under Public Law 92-425, 86 Stat. 706, as amended, to any other 
countable income.''
    Public Law 92-425 authorizes payment of benefits for commissioned 
officers of the Public Health Service and the National Oceanic and 
Atmospheric Administration. The two agencies that govern these officers 
were not referenced in part 3. We propose to correct this omission in 
part 5 by adding the Department of Health and Human Services as well as 
the Department of Commerce in Sec.  5.587(a)(1).

Sec.  5.588 Special Allowance Payable Under Section 156 of Public Law 
97-377

    In Sec.  5.588(a)(1), we propose to change the regulation text to 
clarify that VA makes the determination of eligibility.
    In Sec.  5.588(e), we propose to eliminate the terms ``formal and 
informal'' from the initially proposed title. We have already defined 
the term ``claim'' in Sec.  5.1 as a formal or informal communication 
requesting a determination of entitlement. Likewise, we refer to filing 
an ``application'' rather than ``Formal claims . . . on a form 
prescribed by the Secretary'', because we have already defined 
``application'' in Sec.  5.1.
    We propose to remove the last sentence of initially proposed Sec.  
5.588(e), because it would impose a restriction

[[Page 71134]]

not authorized by the governing statute. See Cole v. Derwinski, 2 Vet. 
App. 400 (1992), aff'd, 35 F.3d 551 (Fed. Cir. 1994). The effective 
date of payment of this special allowance is not based on the date of 
the claim, except that the date of payment cannot be prior to August 
13, 1981. The last sentence of initially proposed Sec.  5.588(e), based 
on current Sec.  3.812(e), limits retroactive payment of the special 
allowance contrary to the governing statute. Current VA practice is 
consistent with this interpretation of the statute.
    We propose to update the statutory authority citations contained in 
initially proposed Sec. Sec.  5.589 and 5.590 to reflect that sec. 
102(a)(1) of Public Law 108-183, 117 Stat. 2651, 2653, redesignated 38 
U.S.C. 1822, 1823, and 1824 as 38 U.S.C. 1832, 1833, and 1834, 
respectively.

Sec.  5.589 Monetary Allowance for a Vietnam Veteran or a Veteran With 
Covered Service in Korea Whose Child Was Born With Spina Bifida

    In Sec.  5.589, we propose to replace the term ``individual'' with 
``person'' to maintain consistency in our usage throughout the 
regulations. We have also modified the wording of initially proposed 
Sec.  5.589(b) to clarify any ambiguity resulting from this change.
    On January 25, 2011, VA published Final Rule AN27, ``Herbicide 
Exposure and Veterans with Covered Service in Korea'' to implement the 
Veterans Benefits Act of 2003, Public Law 108-183, 117 Stat. 2651. 76 
FR 4245. We propose to incorporate these provisions as a new paragraph 
(c)(2) in Sec.  5.589 and make conforming amendments to Sec. Sec.  
5.57(b), 5.150(a), 5.152(a) and (d), 5.228(a), 5.262(a)(1)(ii), 
5.589(a) and (e), 5.590(i), and 5.591.
    In redesignated Sec.  5.589(c)(3) we propose to change the last 
sentence of initially proposed Sec.  5.589(c)(2) for clarification 
purposes.

Sec.  5.590 Monetary Allowance for a Female Vietnam Veteran's Child 
With Certain Birth Defects

    In Sec.  5.590, we propose to replace the term ``individual'' with 
``person'' to maintain consistency in our usage throughout the 
regulations. We have also modified the wording of initially proposed 
Sec.  5.590(b) to clarify any ambiguity resulting from this change. We 
also propose to clarify the regulation text of Sec.  5.590(b) to 
reflect that that provision is subject to Sec.  5.590(a)(3), which 
governs the payment of monetary allowance where a covered birth defect 
is spina bifida. We propose to add the phrase, ``[e]xcept as provided 
in paragraph (a)(3) of this section''.
    In proposed Sec. Sec.  5.589(a) and 5.590(a), we propose to add 
language from Sec.  3.27(c), providing for an increase in monthly 
allowance rates under 38 U.S.C. chapter 18 whenever there is a cost-of-
living increase in benefit amounts payable under the Social Security 
Act. We inadvertently failed to add this language in the initially 
proposed rule and propose to add it now.

Sec.  5.591 Effective Date of Award for a Disabled Child of a Vietnam 
Veteran or a Veteran With Covered Service in Korea

    We propose to delete initially proposed Sec.  5.591(a)(6). 
Paragraph (a)(6) stated a general rule applicable to all effective 
dates. Because this general rule is stated in Sec.  5.152(a), there is 
no need to restate it here.

Sec.  5.592 Awards Under Nehmer Court Orders for Disability or Death 
Caused by a Condition Presumptively Associated with Herbicide Exposure

    We propose to add Sec.  5.592. It is the counterpart to current 
Sec.  3.816, which we inadvertently omitted from the March 9, 2007, 
notice of proposed rulemaking for these rules. 72 FR 10860. We intend 
to insert it here.
    Paragraph (b)(2) of Sec.  3.816 states, in pertinent part, 
``Covered herbicide disease means a disease for which the Secretary of 
Veterans Affairs has established a presumption of service connection 
before October 1, 2002 pursuant to the Agent Orange Act of 1991, Public 
Law 102-4, other than chloracne.'' In July 2007, the U.S. Court of 
Appeals for the Ninth Circuit rejected VA's position that its duties 
under the Nehmer stipulation have ended and held that VA's duties 
extend through at least 2015. Nehmer v. U.S. Dept. of Veterans Affairs, 
494 F.3d 846, 862-63 (9th Cir. 2007). Accordingly, the requirements of 
the Nehmer court orders for review of previously denied claims and for 
retroactive payment apply to new presumptions. We therefore propose to 
omit the phrase ``before October 1, 2002,'' from Sec.  5.592. We also 
propose to update Sec.  5.592(b)(2) to encompass the presumptive 
diseases listed in Sec.  3.309(e), by cross referencing Sec.  5.262(e). 
38 CFR part 3 has already been amended to remove this date and the 
removal of the date from part 5 conforms to the part 3 change. 78 FR 
54763, Sept. 6, 2013.

Sec.  5.603 Financial Assistance To Purchase a Vehicle or Adaptive 
Equipment

    One commenter stated that ``proposed Sec.  5.603(b)(1)(ii) 
establishes limitations on the types of adaptive equipment for which an 
eligible person may receive financial assistance from VA to purchase.'' 
The commenter was concerned that the list of adaptive equipment found 
in initially proposed Sec.  5.603(b)(1)(ii) would exclude any equipment 
not listed in that section.
    The commenter pointed out that parts of the authorizing statutes 
and parts of current VA regulations use ``but is not limited to'' in 
conjunction with ``includes''. Further, other regulations in the 
initially proposed rule used language such as ``including, but not 
limited to''.
    In order to eliminate any confusion, we propose to adopt the 
commenter's suggestion and add the ``but is not limited to'' language 
to Sec.  5.603(b)(1)(ii), to read, ``Adaptive equipment includes, but 
is not limited to: ''. For the same reason, we propose to add similar 
language to Sec. Sec.  5.589(d)(2), 5.590(d)(1)(xii), 5.590(d)(2), 
5.590(d)(6)(ii), 5.590(e)(1)(ii)(B), 5.590(e)(1)(iii)(B), 
5.590(e)(1)(iv)(D), 5.590(e)(1)(v)(C), 5.590(e)(2)(i), 5.606(b)(1), and 
5.606(b)(2).
    We propose to change the regulation text in initially proposed 
Sec.  5.603(b)(1)(i) to conform with the language of current Sec.  
3.808(e). The initially proposed text did not include part of the 
required text. The text will read, ```Adaptive equipment' means 
equipment that must be part of or added to a vehicle manufactured for 
sale to the general public to:''.
    Initially proposed paragraph (b)(1)(ii)(A) said, ``Automatic 
transmission as to an eligible person who has lost, or lost the use of, 
a limb''. We propose to delete ``as to an eligible person who has lost, 
or lost the use of, a limb'', because with that phrase in the 
regulation the eligible person with ankylosis of the knees or hips 
would not qualify for VA assistance to obtain an automatic 
transmission.
    We propose to combine initially proposed Sec.  5.603(b)(1)(ii)(D) 
and (F) (which were based on 38 CFR 3.808(e)(2) and (3)) as paragraph 
(b)(1)(ii)(D). They were substantially redundant. It was the intent of 
both Sec.  3.808(e)(2) and (3) to set limits on the amount of 
assistance that VA may pay for adaptive equipment. We have always 
interpreted these two regulations in this way. This interpretation is 
also in accordance with 38 CFR 17.158(b), which also sets the same 
limitations on the amount of assistance for adaptive equipment.
    We propose to delete initially proposed Sec.  5.603(b)(1)(ii)(C) 
and redesignate initially proposed Sec.  5.603(b)(1)(ii)(E) as Sec.  
5.603(b)(1)(ii)(C).

[[Page 71135]]

The requirement that an air conditioner be included in the list of 
adaptive equipment is no longer necessary. The vast majority of new 
cars have air conditioners included in their standard equipment 
package. If VA were to receive a claim for an air conditioner, this 
claim could be granted because Sec.  5.603(b)(1)(ii) contains the 
phrase ``includes, but is not limited to'', which advises the reader 
that this is not an exclusive list.
    In paragraph (c)(2), we propose to change the phrase ``loss or 
permanent loss of use [of a named body part]'' to ``Anatomical loss or 
permanent loss of use [of a named body part].'' We intend to make this 
change throughout part 5. Part 3 uses both phrases interchangeably, 
sometimes in a single regulation and this resulted in confusion. See, 
for example, 38 CFR 3.350.
    The statute defining the disabilities a person must have to be 
eligible for an automobile or adaptive equipment requires ``loss or 
permanent loss of use'' of particular body parts, 38 U.S.C. 3901, and 
VA interprets ``loss'' in that phrase as meaning anatomical loss. This 
interpretation is consistent with the qualification for certain levels 
of special monthly compensation for ``anatomical loss or loss of use''. 
See 38 U.S.C. 1114(k) through (n) and (p). We propose to change ``loss 
of'' to ``anatomical loss or'' in Sec.  5.606, paragraph (b), for the 
same reason. We note that 38 CFR 3.810(a)(1) pertains to clothing 
allowance for veterans with disabilities rated as specified in Sec.  
3.350(a), (b), (c), (d), and (f), which implement provisions of 38 
U.S.C. 1114 that authorize special monthly compensation for anatomical 
loss or loss of use [of a named body part]. Therefore, this change is 
consistent with statutory intent.
    We propose to revise initially proposed paragraph (c)(2)(iv) to 
make clear that a person with ankylosis of one or both knees, or one or 
both hips may only receive financial assistance to purchase adaptive 
equipment.
    Section 803 of Public Law 111-275, 124 Stat. 2864, 2889 (2010) 
amended 38 U.S.C. 3901 which lists the disabilities that qualify a 
veteran for VA assistance to purchase a vehicle or adaptive equipment 
for a vehicle. We propose to add paragraph (c)(2)(v) to implement the 
statutory amendment by adding ``[s]evere burn injury'' as a qualifying 
disability. Section 803 indicated that what qualifies as a ``severe 
burn injury'' for purposes of obtaining automobile or adaptive 
equipment will be ``determined pursuant to regulations prescribed by 
the Secretary.'' VA's Compensation Service is drafting a rulemaking to 
comply with that provision in 38 CFR part 3. Once that has been 
completed, the new regulatory language will be incorporated into Sec.  
5.603.
    We propose to redesignate paragraph (c)(3) as paragraph (d)(1), 
because the content of paragraph (c)(3) is more relevant to the subject 
of paragraph (d), ``Limitations on assistance'', than to paragraph (c), 
``Eligibility criteria.'' We also propose to add a provision to 
paragraph (d)(1)(i) based on 38 U.S.C. 3902(d), that VA will assist a 
person who cannot qualify to operate a vehicle to purchase a vehicle, 
if another person will drive the vehicle for him or her.
    As a result of redesignating initially proposed paragraph (c)(3) as 
paragraph (d)(1), we propose to redesignate initially proposed 
paragraphs (d)(1) and (d)(2) as paragraphs (d)(2) and (d)(3). We 
propose to clarify the text in redesignated Sec.  5.603(d)(3). As 
written, the initially proposed text failed to include the reference to 
circumstances beyond the control of the eligible person. We propose to 
revise the text by inserting the phrase, ``due to circumstances beyond 
the eligible person's control,'' between ``a 4-year period unless,'' 
and ``one of the adapted vehicles''. We also propose to add to the 
second sentence the words ``or reimbursements'' after ``payments'', 
because we unintentionally omitted it from the original text. We 
therefore propose to revise the sentence to read, ``The Under Secretary 
for Health or designee may authorize payments or reimbursements for the 
repair, replacement, or reinstallation of adaptive equipment deemed 
necessary for the operation of the vehicle.'' We also propose to delete 
``Sec. Sec.  17.156 through'' from the cross reference, which is now 
only to Sec.  17.158, because Sec. Sec.  17.156 and 17.157 do not 
pertain to the subject of the cross reference.
    We have determined that initially proposed Sec.  5.603(f), 
``Redemption of certificate of eligibility'', was inaccurate. 
Therefore, we propose to restructure this paragraph to encompass both 
the purchase of the vehicle and the purchase of adaptive equipment. 
Paragraphs (f)(1)(i) and (2)(i) address redemption of a certificate of 
eligibility by the seller, and paragraphs (f)(1)(ii) and (2)(ii) 
address redemption of a certificate of eligibility by the eligible 
person. Together, these paragraphs cover the scenarios where the 
vehicle or adaptive equipment was purchased prior to an eligible person 
acquiring the certificate of eligibility.

Sec.  5.604 Specially Adapted Housing Under 38 U.S.C. 2101(a)

    In our proposed rulemaking, 72 FR 10860, Mar. 9, 2007, we had 
reserved Sec. Sec.  5.604 and 5.605 while VA completed a rulemaking to 
implement housing provisions of the Veterans Benefits Act of 2003, the 
Veterans Benefits Improvement Act of 2004, the Veterans' Housing 
Opportunity and Benefits Improvement Act of 2006, and the Housing and 
Economic Recovery Act of 2008. VA has now amended 38 CFR 3.809, 
``Specially Adapted Housing under 38 U.S.C. 2101(a)'', and Sec.  
3.809a, ``Special Home Adaptation Grants under 38 U.S.C. 2101(b)''. 75 
FR 57859, Sept. 23, 2010. We now propose to incorporate Sec. Sec.  
3.809 and 3.809a, as amended, into part 5 with several stylistic 
changes.

Sec.  5.606 Clothing Allowance

    We propose to clarify initially proposed Sec.  5.606(a) to state: 
``VA will pay an annual clothing allowance to a veteran with a 
qualifying disability. However, VA will pay more than one annual 
clothing allowance if VA determines that the veteran has more than one 
qualifying disability.'' This is consistent with the decision in 
Sursely v. Peake, 551 F.3d 1351, (Fed. Cir. 2009). The court held that 
Congress intended to allow each eligible veteran one clothing allowance 
per year per qualifying disability. On February, 2, 2011 VA proposed a 
rule, AN64 Clothing Allowance, to implement Sursely. 76 FR 5733. Once 
the Final Rule has been published, it will be incorporated into Sec.  
5.606.
    We also propose to clarify the term ``veteran'' as it applies to a 
person who is eligible for clothing allowance. VA General Counsel's 
opinion VAOPGCPREC 4-2010, (May 25, 2010), held that the ``term 
[veteran] includes individuals who have returned to active duty after 
previously meeting the definition of `veteran.' '' We propose to 
incorporate this holding in proposed Sec.  5.606(a).
    We propose to consolidate initially proposed Sec.  5.606(a), (b), 
and (b)(1) for clarity and simplicity, without changing the meaning.
    Initially proposed Sec.  5.606(b)(2) addressed all service-
connected disabilities for which the veteran wears or uses a prosthetic 
or orthopedic appliance that wears or tears clothing. Current Sec.  
3.810 distinguishes disabilities compensated at a rate specified in 
Sec.  3.350(a) through (d) or (f) and other service-connected 
disabilities that require an appliance. We propose to revise the 
paragraph to maintain the

[[Page 71136]]

distinction in the current regulation. We propose to address the 
disabilities compensated at the rate specified in Sec. Sec.  5.322 
through 5.329, 5.331, or Sec.  5.332 and redesignate the paragraph as 
(b)(1).
    Initially proposed Sec.  5.606(b)(2) did not distinguish between 
applications for clothing allowance that VA can grant after a required 
examination and those that require certification by the Under Secretary 
for Health or designee, as does current Sec.  3.810. We propose to 
revise the paragraph to maintain this distinction, and redesignate it 
as paragraphs (b)(1) through (3).
    In initially proposed Sec.  5.606(b)(2), we used the term ``VA 
determines'' in place of the term ``Chief Medical Director or 
designee'', which part 3 uses for the VA office now designated as Under 
Secretary for Health. We propose to revise paragraph (b)(2) to use 
``Under Secretary for Health or designee''. This change eliminates any 
ambiguity about who makes the determination.
    We propose to change Sec.  5.606(c)(1) and (2) to state the 
circumstances in which the veteran need not file the claim for a 
clothing allowance annually. VA has provided for the annual clothing 
allowance without requiring the filing of an annual claim, as stated in 
paragraphs (c)(1) and (2), since the inception of the clothing 
allowance benefit in 1972. VA form 10-8678, ``Application for Annual 
Clothing Allowance (Under 38 U.S.C. 1162)'', implements this long-
standing practice.
    We propose to rewrite initially proposed Sec.  5.606(d) for 
clarity. We propose to delete the term ``anniversary date''. Although 
we had defined the term, we have determined that it is confusing to the 
reader, and have opted to use the actual date of August 1 instead. We 
also propose to define the ``payment year'' for which VA pays the 
annual clothing allowance as the ``12-month period beginning August 1 
and ending July 31 of the following year.'' For this reason, we propose 
to delete the term ``anniversary date'' in Sec.  5.606(e) as well.
    We propose to rewrite initially proposed Sec.  5.606(e) for 
clarity. We propose to change ``within 1 year of'' and ``within 1 year 
from'' to ``no later than 1 year after''. This change makes clear that 
the time to file a claim relative to August 1 means the year after 
August 1. We also propose to remove the term ``initial anniversary 
date'' and instead, describe the first period for which VA pays a 
veteran a clothing allowance as the ``initial year of payment 
eligibility''.
    We propose to remove initially proposed Sec.  5.606(f). Paragraph 
(f) contained information already in Subpart I of part 5, which 
pertains to Filipino veterans. One purpose of proposed Subpart I is to 
assemble in one place all of the adjudication regulations dealing with 
benefits for certain Filipino veterans. It would be redundant to repeat 
that information in Sec.  5.606. Additionally, paragraph (f) stated 
that claims for clothing allowance by Filipino veterans are processed 
in Manila. This is purely a matter of internal VA administration of 
claims. The paragraph conferred no benefit on the veteran, and it did 
not require the claimant to take any action. We propose to remove the 
paragraph as an unnecessary regulation.
    We propose to remove initially proposed Sec.  5.606(g). Paragraph 
(g) informed the veteran living abroad that the VA Medical Center 
(VAMC) with jurisdiction over his permanent address has jurisdiction 
over a claim for a clothing allowance. The assignment of claims to 
specific facilities is purely a matter of internal VA administration of 
claims. The paragraph conferred no benefit on the veteran. We propose 
to remove the paragraph as an unnecessary regulation. As a result of 
removing paragraphs (f) and (g), we will redesignate paragraph (h) as 
paragraph (f).

Technical Corrections

    In addition to considering any necessary changes to proposed part 5 
regulations based on comments received from the public, we propose to 
make certain additional changes in this reproposed rule: adding, 
updating, and moving some authority citations, correcting a citation, 
and correcting citation format. For example, proposed Sec.  5.584, 
``Loan guaranty for a surviving spouse: eligibility requirements'', 
lacked an authority citation at the end of the section. We intend to 
correct this omission by adding the authority citation, 38 U.S.C. 
3701(b)(2). We also propose to add to the authority citation for Sec.  
5.587.

Changes in Terminology

    For consistency of terminology throughout part 5, we propose to 
replace the term ``evaluation'' with the term ``rating'', and 
``evaluated'' with ``rated'', whenever either appears in Sec. Sec.  
5.589(d), 5.590(a)(3), and 5.590(e).
    We also propose to correct our use of the terms ``claim'' and 
``application''. Under 38 CFR 3.1(p), ``Claim-Application'' is defined 
as ``a formal or informal communication in writing requesting a 
determination of entitlement or evidencing a belief in entitlement, to 
a benefit.'' Under Sec.  5.1, ``Claim'' is defined as ``a formal or 
informal communication in writing requesting a determination of 
entitlement, or evidencing a belief in entitlement, to a benefit.'' 
Under Sec.  5.1, ``Application'' is defined as ``a specific form 
required by the Secretary that a claimant must file to apply for a 
benefit.'' Accordingly, the following changes are proposed to be made. 
We propose that the words ``formal application'' be replaced with the 
word ``claim'' every time they appear in Sec.  5.581(b), and the phrase 
``in the form prescribed by VA'' be removed. We also propose that the 
phrase ``on a form prescribed'' be removed from Sec.  5.583(c). We also 
propose that the words ``an application'' be replaced with the words 
``a claim'' in the introductory text of Sec.  5.584. In addition, we 
propose that the phrases and word ``on a form prescribed by the 
Secretary of Veterans Affairs'', ``form'', and ``on the prescribed 
form'' be removed from Sec.  5.588(e). Finally, we propose that the 
words ``application form'' and ``application'' be replaced with the 
word ``claim'' in every place they appeared in initially proposed 
Sec. Sec.  5.603(d)(1), 5.606(b)(3), and 5.606(e).

XIV. Subpart I: Benefits for Certain Filipino Veterans and Survivors

    In a document published in the Federal Register on June 30, 2006, 
we proposed to revise VA's regulations governing benefits for certain 
Filipino veterans and their survivors, to be published in a new 38 CFR 
part 5. 71 FR 37790. The title of this proposed rulemaking was, 
``Benefits for Certain Filipino Veterans and Survivors'' (RIN: 2900-
AL76). We provided a 60-day comment period that ended August 29, 2006. 
We did not receive any submissions from commenters pertaining to this 
proposed rule.
    Although no comments were received regarding our publication on 
June 30, 2006, an internal review of proposed Subpart I revealed minor 
typographical errors and a need for further clarification in several 
areas. Accordingly, based on the rationale set forth in the initially 
proposed rule and this proposed document, we propose to adopt the 
provisions of proposed Subpart I, with the following changes discussed 
below.

Publication of Revisions to Subparts

    The publication for proposed Subpart I also contained minor 
revisions to Subpart B, ``Service Requirements for Veterans'', and 
Subpart E, ``Claims for Service Connection and Disability 
Compensation'', which had been previously published in proposed 
rulemaking packages. Those revisions will be contained in this proposed 
rule segment. The package for Subpart I was

[[Page 71137]]

one of two packages that contained revisions to other subparts, and 
since then we have decided to publish all revisions to the various 
subparts together in this proposed rule in order to facilitate an 
easier referencing process.

Sec.  5.610 Eligibility for VA Benefits Based on Philippine Service

    Initially proposed Sec.  5.610(b)(3) incorrectly stated that 
service as an officer commissioned in connection with administration of 
Public Law 79-190 is not active military service for purposes of VA 
benefits. Administrator's Decision 778 (Mar. 5, 1948) concluded that 
service as a commissioned officer in connection with administration of 
Public Law 79-190 would constitute regular active military service--
that is, it would qualify for all benefits available to U.S. veterans. 
Among other things, that opinion noted that because such commissioned 
service was not service pursuant to section 11 of Public Law 79-190 
(relating to enlistments), it was not subject to the limitations 
currently codified in 38 U.S.C. 107(b). Therefore, we propose to 
correct this error in paragraph (a) of Sec.  5.610.
    In Sec.  5.610(c)(1), we propose to change ``General Officer, U.S. 
Army'' to ``Commander-in-Chief, Southwest Pacific Area, or other 
competent authority in the Army of the U.S.'' to further specify the 
type of authority needed to establish active military service in the 
Commonwealth Army of the Philippines.

Sec.  5.613 Payment of Disability Compensation or Dependency and 
Indemnity Compensation at the Full Dollar Rate for Certain Filipino 
Veterans or Their Survivors Residing in the U.S.

    In order to clarify the list of acceptable items of evidence in 
regards to a veteran's or veteran's survivor's eligibility for 
compensation at the full-dollar rate under Sec.  5.613(c)(2) and a 
veteran's burial benefits at the full-dollar rate under Sec.  
5.617(c)(2), a valid original or a valid copy of any of the enumerated 
items, such as a U.S. passport, is required. In both instances, we 
propose to add the modifier word ``valid'' to the terms ``copy'' and 
``original'', and remove the unnecessary word ``valid'' in front of 
``U.S. passport''.

Sec.  5.614 Effective Dates of Benefits at the Full-Dollar Rate for a 
Filipino Veteran and His or Her Survivor

    We propose to divide initially proposed Sec.  5.614(b)(3) into 
paragraphs (b)(3) and (b)(4) and clarify these provisions. First, we 
propose to insert the word ``veteran's'' before ``survivor'' in both 
places where the term ``survivor'' is used. Second, we propose to 
clearly set out the rules for the following classes of beneficiaries: 
those who were absent from the U.S. for a total of 183 days or more and 
returned to the U.S. during the same calendar year, and those who were 
absent from the U.S. for a total of 183 days or more and returned to 
the U.S. in a later calendar year but less than 183 days after the 
beginning of such calendar year. This revision does not reflect a new 
policy; rather it is a clarification of current Sec.  3.405(b)(2). We 
also propose to redesignate the remaining paragraphs under Sec.  
5.614(b) accordingly.

Technical Corrections

    We propose to make several changes to certain provisions describing 
the dates relevant to eligibility for burial benefits at the full-
dollar rate. Initially proposed Sec.  5.610(b)(1) and the chart in 
initially proposed Sec.  5.612 referred to deaths occurring ``on or 
after December 16, 2003''. We propose to revise this to refer to deaths 
occurring ``after December 15, 2003'' in order to conform to the format 
used in current 38 CFR 3.43 and the format generally used for dates 
throughout part 5. Initially proposed Sec.  5.617(b) referred to deaths 
occurring ``after November 1, 2000''. However, the corresponding 
provisions of the chart in proposed Sec.  5.612 inaccurately referred 
to deaths occurring ``on or after 11/1/00''. As stated in the notice of 
proposed rulemaking, the chart in Sec.  5.612 is intended only to 
summarize the provisions in Subpart I and not to confer any additional 
rights. Accordingly, we propose to correct the inadvertent error in the 
chart by replacing ``on or after 11/1/00'' with ``after 11/1/00'' to 
ensure that the chart accurately reflects the applicable rule.

XV. Subpart J: Burial Benefits

    In a document published in the Federal Register on April 08, 2008, 
we proposed to revise Department of Veterans Affairs (VA) regulations 
governing burial benefits, to be published in a new 38 CFR part 5. 73 
FR 19021. The title of this proposed rulemaking was ``Burial Benefits'' 
(RIN: 2900-AL72). We provided a 60-day comment period that ended June 
9, 2008. We received submissions from two commenters: two members of 
the general public.

General Comment

    One commenter expressed satisfaction with the rewritten provisions 
in proposed RIN 2900-AL72, ``Burial Benefits''. The commenter explained 
that veterans have a right to these more detailed regulations with a 
``plain layout'' that one ``can read . . . without any 
misunderstanding.'' The commenter went on to say that ``there is 
nothing wrong with being more straight forward with the provisions 
especially when it comes to burial provisions. Pass the rule and be 
done with it, let the confusion be dismissed.'' No changes to the 
proposed rule were suggested. Although we are pleased that the 
commenter finds these rules an improvement over part 3, we regret that 
we cannot accelerate the effective date of one subpart of part 5 
because, administratively, it would be too cumbersome and costly to 
establish part 5 in stages. We propose not to make any changes based on 
this comment.

Sec.  5.630 Types of VA Burial Benefits

    We propose to add a definition of ``burial'' as new paragraph (b) 
to ensure that readers know that VA pays burial benefits for all the 
legal methods of disposing of the remains of deceased persons, 
including, but not limited to, cremation, burial at sea, and medical 
school donation.
    We propose to revise this paragraph by adding the phrase ``or 
interment'' after ``memorialization'' to clarify the distinction 
between interment and memorialization. Interment refers to placing a 
body into the ground. Memorialization honors a person whose remains 
have not been found.
    In addition, to avoid potential confusion for readers, we propose 
to clarify that the burial regulations in part 5 do not apply to the 
benefit programs listed in paragraph (c), which operate under separate 
statutes and regulations.

Sec.  5.631 Deceased Veterans for Whom VA May Provide Burial Benefits

    We propose to redesignate the paragraphs of this rule according to 
the revisions described below. First, we propose to delete initially 
proposed paragraph (b), which had required that the veteran upon whom a 
claim for burial benefits is based to have been discharged or released 
from service under conditions other than dishonorable, and added such a 
requirement to what is now proposed paragraph (a). This makes the rule 
simpler to read and easier to apply.
    Second, we propose to delete initially proposed paragraph Sec.  
5.631(c). This paragraph was derived from current 38 CFR 3.1600(d). The 
paragraph was ambiguously written, but was intended to state merely 
that VA can reopen a claim for service-connected death if new and 
material evidence is presented. This rule is not a rule concerning 
burial

[[Page 71138]]

benefits, but is a more general rule that can affect the provision of 
any benefit based on a service-connected death. We propose to delete 
initially proposed Sec.  5.631(c) for these reasons, and because it is 
redundant of the new-and-material-evidence rule found in Sec.  5.55.

Sec.  5.633 Claims for Burial Benefits

    We propose to revise Sec.  5.633(a)(1) to clarify that a claim to 
reopen nonservice-connected burial allowance must be filed no later 
than 2 years after the date of the veteran's burial. This revision is 
consistent with Sec.  3.1600(b), and current VA practice.
    In paragraph (a)(2), we propose to revise the first sentence to 
eliminate any reference to the nonservice-connected burial allowance. 
Neither the law nor VA policy prevents providing the service-connected 
burial allowance to a person whose discharge is upgraded posthumously. 
The initially proposed regulation had not provided for such a 
limitation because, although this specific provision had applied only 
to nonservice-connected burial benefits, there was no time limit to 
file a claim for service-connected burial benefits and, therefore, 
there was no bar against filing a claim (or a claim to reopen) for a 
service-connected burial allowance at any time after the veteran's 
death. However, the regulation is clearer without the reference to 
nonservice-connected burial benefits in the first sentence because it 
cannot be misinterpreted as a rule that limits to the nonservice-
connected burial allowance the applicability of an award based on a 
posthumously upgraded character of discharge.
    In initially proposed Sec.  5.633(b)(1), we stated, ``Evidence 
required to substantiate a claim for burial benefits must be submitted 
no later than 1 year after the date VA requests such evidence.'' This 
sentence was based on current Sec.  3.1601(b), which was intended to 
implement 38 U.S.C. 2304. That statute provides, in pertinent part:

    If a claimant's application is incomplete at the time it is 
originally submitted, the Secretary shall notify the applicant of 
the evidence necessary to complete the application. If such evidence 
is not received within one year from the date of such notification, 
no [non-service connected burial] allowance may be paid.


Instead of using Sec.  3.1601(b)'s term, ``complete a claim'', we 
mistakenly used ``substantiate a claim''. The rule on filing of 
evidence to ``substantiate [a] claim'' is contained in the portion of 
Sec.  5.90 that is based on current Sec.  3.159(b)(1). See also Sec.  
5.136, which is based on current Sec.  3.158(a). The rules on filing an 
``incomplete application'' are contained in the portion of Sec.  5.90 
that is based on current Sec. Sec.  3.109(a)(1) and 3.159(b)(2). 
Because these rules are already contained elsewhere in part 5, there is 
no need to repeat them in subpart J and so we propose to delete the 
above referenced sentence from Sec.  5.633(b)(1).
    One commenter suggested that Sec.  5.633(b)(1)(iii), regarding the 
information needed in a statement of account, should read ``the dates 
of expenses incurred for services rendered'' and not ``the dates and 
expenses incurred for services rendered''. We disagree with the 
commenter's suggestion. By placing ``of'' instead of ``and'' in this 
part of Sec.  5.633(b)(1)(iii), the meaning of the regulation would be 
changed. Using the word ``of'' in this context would restrict the 
information that VA requires for a statement of account to only the 
dates on which the expenses were incurred. In contrast, using the word 
``and'' signifies that VA requires the dates as well as the expenses 
incurred for the services rendered. This interpretation is supported by 
the similar language found in Sec.  3.1601(b), upon which Sec.  
5.633(b) is based. However, we propose to clarify the sentence to 
eliminate the possibility that it could be read to refer only to the 
dates of the expenses incurred.
    We propose to revise initially proposed Sec.  5.633(b)(1)(iv) for 
clarity, and to eliminate redundancy.

Sec.  5.634 Reimbursable Burial Expenses: General

    Initially proposed Sec.  5.634(b)(2) had barred reimbursement for 
an item or service ``previously provided or paid for by the U.S. 
Government.'' We propose to clarify this sentence because we will, in 
fact, reimburse for the cost of a uniform if a new uniform was 
purchased because the veteran's service uniform was not in a condition 
suitable for burial.

Sec.  5.635 Reimbursable Transportation Expenses for a Veteran Who is 
Buried in a National Cemetery or Who Died While Hospitalized by VA

    A commenter suggested that the word ``persons'' should be replaced 
by the word ``veterans'' in the introductory sentence of Sec.  5.635. 
The commenter stated that otherwise it is awkward wording since the 
sections referred to in the introduction, Sec. Sec.  5.639 and 5.644, 
do refer to veterans specifically. We understood the commenter's point 
to be that VA will only reimburse expenses connected with the 
transportation of a deceased veteran. To the extent that the 
introductory sentence to the regulation could have been read otherwise 
by use of the word ``persons'', we propose to revise the sentence for 
clarity.
    Proposed paragraphs Sec.  5.635(a) and (b) are not an exclusive 
list of reimbursable transportation expenses. We propose to reword and 
add the phrase ``but are not limited to'' to the introductory sentence 
in Sec.  5.635, in order to be consistent with Sec.  3.1606 and with 
current practice.

Sec. Sec.  5.643 Burial Allowance Based on Nonservice-connected Death, 
and 5.644 Burial Allowance for a Veteran Who Died While Hospitalized by 
VA

    A commenter suggested that we replace ``based upon'' with ``for'' 
in Sec. Sec.  5.643(b) and 5.644(b). The commenter believes that the 
revision would make the regulatory language plainer, simpler, and more 
reader-focused. We agree with the suggestion and propose to replace the 
words ``based upon'' with ``for'' in the introductory sentences of 
Sec. Sec.  5.643(b) and 5.644(b).

Sec.  5.644 Burial Allowance for a Veteran Who Died While Hospitalized 
by VA

    One commenter questioned the reasoning behind referring to the 
Canal Zone in Sec.  5.644(d). The commenter stated that since the U.S. 
returned ownership of the Canal Zone to Panama, the location should not 
be listed. Section 5.644 listed the Canal Zone because it is included 
in the applicable statute (see 38 U.S.C. 101(20)). However, we now 
propose to include the Canal Zone in our definition of ``State'' in 
Sec.  5.1, as stated above. Therefore, we propose to remove all 
references to the Canal Zone in proposed Sec.  5.644(d), and simply use 
the term ``State''.
    We received one comment regarding a proposal not to include a part 
5 counterpart to Sec.  3.1605(b), which denies eligibility for 
transportation expenses to ``retired persons hospitalized under section 
5 of Executive Order 10122 . . . issued pursuant to Public Law 351, 
81st Congress, and not as Department of Veterans Affairs 
beneficiaries''. Section 5 of Executive Order 10122 relates to current 
and former servicemembers who had been hospitalized for chronic 
diseases between May and October of 1950. The commenter noted that, in 
a preliminary draft, VA proposed to delete this section. The commenter 
approved removing this section, but only if there was evidence that 
removing it would not affect any veteran's benefits.
    As stated in the AL72 NPRM preamble, we proposed not to include in 
part 5 the rule in current Sec.  3.1605(b) that denies eligibility for 
transportation expenses to ``retired persons

[[Page 71139]]

hospitalized under section 5 of Executive Order 10122 . . . issued 
pursuant to Pub. L. 351, 81st Congress, and not as Department of 
Veterans Affairs beneficiaries.'' Section 5 of Executive Order 10122 
related to current and former servicemembers who had been hospitalized 
for chronic diseases between May and October of 1950. Executive Order 
10122 is more than half a century old and applied to a very small group 
of veterans. The reference is outdated and no longer necessary. In 
response to the comment, we note that if any such claim arises in the 
future, VA will process it under Public Law 351, 81st Congress, and 
Executive Order 10122, so no veterans benefits will be affected by the 
omission from part 5.

Sec.  5.649 Priority of Payments When There is More Than One Claimant

    We propose to clarify initially proposed Sec.  5.649(e) to state 
that ``Any claimant may waive his or her right to receive burial 
benefits in favor of assigning his or her right to another claimant.'' 
This change is consistent with current VA practice.

Sec.  5.651 Effect of Contributions by Government, Public, or Private 
Organizations

    In Sec.  5.651(c)(2), we propose to use active voice to clarify 
that VA will not pay burial allowance in the circumstances stated. We 
also propose to improve readability by changing ``in'' to ``occurring 
during'' before ``active military service'', and removing the comma 
after ``service''.

Technical Corrections

    One commenter pointed out several necessary technical changes and a 
correction that we propose to make. First, we propose to move the 
misplaced opening parenthesis in Sec.  5.636(a)(2)(ii). Second, we 
propose to correct the grammar when referring to interment in 
Sec. Sec.  5.638(c)(2) and 5.643(e)(2) by adding the word ``a'' before 
``State veterans cemetery'', both places these words appear. Finally, 
we propose to correct the date in Sec.  5.653 from ``December 1, 1957'' 
to correctly read ``December 31, 1957'', as provided in the enabling 
statute, 38 U.S.C. 2305.
    In addition to considering any necessary changes to proposed part 5 
regulations based on comments received from the public, we propose to 
make certain technical corrections. For example, we propose to replace 
``in line of duty'' with ``in the line of duty''. In addition, the 
initially proposed rule used ``at the time of death'' interchangeably 
with ``on the date of death''. In most VA claims, the time of death is 
not relevant, only the date of death. The only exception is Sec.  
5.644(b)(6), which discusses whether a veteran was hospitalized by VA 
but was not at the VA facility at the time of death. We therefore 
propose to replace ``at the time of death'' with ``on the date of 
death'' throughout the burial regulations. These changes are meant to 
achieve consistency throughout the part 5 regulations.

XVI. Subpart K: Matters Affecting the Receipt of Benefits

    In a document published in the Federal Register on May 31, 2006, we 
proposed to revise VA regulations governing matters affecting the 
receipt of benefits, to be published in a new 38 CFR part 5. 71 FR 
31056. The title of this proposed rulemaking was ``Matters Affecting 
the Receipt of Benefits'' (RIN: 2900-AM05). We provided a 60-day 
comment period that ended on July 31, 2006. We received submissions 
from four commenters: American Psychiatric Association, Disabled 
American Veterans, the National Organization of Veterans' Advocates, 
and Vietnam Veterans of America.

Sec.  5.660 In the Line of Duty

    Initially proposed Sec.  5.660(a) stated, ``Except as provided in 
Sec.  3.310 of this chapter, VA may grant service connection only for 
an injury, disease, or cause of death that was incurred or aggravated 
in line of duty.'' This was a misstatement of the language in Sec.  
3.301(a) that states, ``. . . service connection may be granted only 
when a disability or cause of death was incurred or aggravated in line 
of duty, and not the result of the veteran's own willful misconduct. . 
.'' Under its authorizing statutes, VA service connects disability or 
death, not injury or disease per se, so we propose to correct Sec.  
5.660(a) to read, ``. . . VA may grant service connection only for a 
disability or death that was incurred or aggravated in the line of 
duty.''
    Initially proposed Sec.  5.660(c)(4) provided that an injury was 
not incurred in the line of duty if it was incurred while the veteran 
was ``Confined under a sentence of civil court for a felony as 
determined under the laws of the jurisdiction where the veteran was 
convicted by such court.'' A virtually identical rule appears in 38 
U.S.C. 105(b). However, we were concerned that the phrase ``civil 
court'' could be misconstrued to exclude a criminal court. Clearly, 
such an interpretation is incorrect as shown by the statutory and 
regulatory references to a felony. We interpret the statutory reference 
to a ``civil'' court to be a reference to a court other than a U.S. 
military court, that is, it refers to a ``civilian'' court, and propose 
to modify the paragraph accordingly.
    Initially proposed Sec.  5.660(d) read, ``A service department 
finding that injury, disease, or death occurred in line of duty will be 
binding on VA unless the finding is patently (clearly) inconsistent 
with the laws administered by VA.'' In responding to our proposed rule, 
a commenter opined that use of the terms ``patently'' and ``clearly'' 
created a new evidentiary standard, and suggested that VA ``stick with 
evidentiary standards for which there are precedents in VA law.''
    Under our current regulation, 38 CFR 3.1(m), a service department 
line-of-duty finding is binding on VA unless it is ``patently 
inconsistent with'' VA law. The purpose of this regulatory presumption 
is pro-veteran; VA does not intend to question a service department 
line-of-duty finding unless that finding would lead to a result that is 
contrary to the laws concerning the provision of veterans' benefits. An 
example of such an inconsistent finding might be that a veteran's 
injury was incurred as a result of the abuse of alcohol, but 
nevertheless was in the line of duty. VA could not accept such a 
finding because we are barred from providing service-connected 
disability compensation if ``the disability is the result of . . . 
abuse of alcohol''. 38 U.S.C. 1110.
    The binding nature of a service-department line-of-duty finding is 
a regulatory interpretation of 38 U.S.C. 105(b), which reads that, 
``The requirement for line of duty will not be met'' if the veteran was 
avoiding duty, confined under sentence of court martial or for felony 
charges in a civil court, etcetera. These are all legal issues where, 
as a matter of law, the veteran was not performing a duty for the 
military. There is no need to weigh evidence under such circumstances 
because, as a matter of law, the evidence cannot overcome the statutory 
bar. For this reason, we reject the commenter's suggestion that we use 
a common evidentiary standard of proof in this situation; the question 
is neither about the quality of the evidence, nor the weight of the 
evidence. For these reasons, we also do not describe the evidentiary 
rule as a ``presumption.'' Therefore, we propose not to revise the rule 
to include a standard of proof.
    However, based on the comment, we understand that addition of the 
word ``(clearly)'' caused confusion, leading the commenter to believe 
that this regulation does in fact establish an evidentiary burden. 
Therefore, we

[[Page 71140]]

propose to use the language in current Sec.  3.1(m), which uses the 
word ``patently'', without ``(clearly)''.
    We note that the above analysis does not apply in the same way to 
Sec.  5.661(f), which also proposed to use the phrase, ``patently 
(clearly)'', as discussed below.

Sec.  5.661 Willful Misconduct

    We have determined that the definitions of ``willful misconduct'', 
``proximately caused'', and ``drugs'' proposed in the NPRM should be 
moved into Sec.  5.1, ``General definitions'', because they relate to 
other sections in addition to those found in this subpart.
    One commenter suggested that VA should adjudicate claims in the 
following manner:
     Identify the act that was the proximate cause of the 
disability; and then,
     Determine whether that act constituted willful misconduct.


For the reasons stated below, we propose to make no changes based on 
this comment.
    A chronic disability first shown in service or aggravated by 
service is considered to have been incurred in the line of duty unless 
(1) it is not an injury or disease ``within the meaning of applicable 
legislation'', see 38 CFR 3.303(c); or (2) the evidence shows that the 
disability was due to willful misconduct. A determination of whether 
willful misconduct is the proximate cause of a claimed disability is 
only made when the evidence shows or indicates the disability may have 
been caused by the veteran's willful misconduct. If there is evidence 
that the disability may have been due to willful misconduct, the 
adjudicator develops for additional evidence, if needed. The entire 
body of evidence is reviewed and the determination concerning proximate 
cause and willful misconduct are made at the same time based on the 
same evidence. If the claimed disability was not proximately caused by 
willful misconduct, service connection is granted. We propose to make 
no changes based on this comment because it might lead a reader to 
mistakenly believe that VA develops the issue of willful misconduct in 
every claim for service connection. In addition, we do not believe it 
is generally appropriate to mandate the precise order in which VA 
adjudicators must consider the evidence in a particular adjudication, 
because the most effective order may depend on the facts of the case.
    One commenter expressed the opinion that the words ``substance,'' 
``alcohol,'' ``addiction,'' and ``frequent'' should be defined. We 
decline to do so by regulation because these words have commonly 
understood meanings. We propose to make no changes based on this 
comment.
    One commenter noted that VA referred to alcohol and drugs 
separately, which could cause confusion because, the commenter 
asserted, alcohol is also a drug. In 38 U.S.C. 105(a), Congress 
identified the use of alcohol and drugs, separately. 38 U.S.C. 105(a) 
(barring a line-of-duty finding where injury or disease was a result of 
``abuse of alcohol or drugs''). Our regulation uses both terms for 
consistency with the statute.
    One commenter was concerned with whether the frequency of use or 
the addiction of the user was to be used by VA to determine willful 
misconduct. The commenter suggested the regulation be amended to 
clarify which standard was to be used. There are two issues here. 
First, whether the addiction itself may be service connected, and 
second, whether a disability that was proximately caused by frequency 
of use or addiction to alcohol or drugs may be service-connected. The 
law is clear that primary disability of addiction, at least when such 
addiction is due to alcohol or drug abuse, cannot be service connected. 
38 U.S.C. 1110. We propose to make no changes based on this portion of 
the comment.
    Neither frequency of use nor addiction of the user determines 
whether an event is due to willful misconduct. Rather, the 
determination is based on whether the veteran was intoxicated by drugs 
or alcohol at the time of the event that caused the disability, and 
whether that intoxication was the proximate cause of the disability. 
See Sec.  5.661(c)(1)(i) and (ii), (c)(2)(i) and (ii). Because VA 
considers neither addiction nor frequency of use to determine whether 
the specific event that caused the disability was due to use of 
alcohol, drugs, or other substances, we propose to remove initially 
proposed paragraph (c)(2)(i), renumber the remaining paragraphs in (c), 
and remove the reference to addiction from proposed (c)(2)(v).
    A commenter asserted that the use of the phrase ``isolated and 
infrequent'', in initially proposed paragraph (c)(2)(i), was 
contradictory because ``isolated'' suggests a one-time use and 
``infrequent'' means multiple uses. One commenter recommended that 
there be a regulatory requirement that addiction to alcohol, drugs, or 
other substances, or other use disorders, be determined by a 
psychiatrist on a medical basis. Because we are removing paragraph 
(c)(2)(i) and the reference to addiction in proposed paragraph 
(c)(2)(v) (now (c)(2)(iv)), these comments are moot and we propose to 
make no changes based upon them.
    One commenter felt the regulation should be revised conceptually, 
and modernized to preclude a finding of ``willful misconduct'' on the 
basis of a claimant's medically documented drug addiction or drug 
abuse. The commenter noted that the influence of drug addiction or 
abuse affects a veteran's ability to formulate sufficient intent and to 
appreciate the consequences of his or her actions. Another commenter 
expressed the opinion that the determination of proximate cause should 
be separated in the regulatory scheme from willful misconduct and that 
the determination should focus on the act causing the disability. We 
are prohibited from amending the regulations to comply with these 
comments. The prohibition against granting service connection for 
willful misconduct and the prohibition against granting service 
connection for disability caused by alcohol or drug abuse is contained 
in 38 U.S.C. 105(a), which reads, ``An injury or disease incurred 
during active military . . . service will be deemed to have been 
incurred in line of duty . . . unless such injury or disease was a 
result of the person's own willful misconduct or abuse of alcohol or 
drugs.'' Thus, we cannot make any changes based on these comments 
because the suggested changes are beyond our statutory authority.
    One commenter discussed Sec.  5.661(c), stating that after VA 
determines that a person was intoxicated at the time of committing a 
particular act, the next step should be a determination of whether the 
person was mentally capable of committing the act in a deliberate or 
intentional manner with knowledge of, or wanton and reckless disregard 
of, its probable consequences. The commenter speculated that an 
intoxicated person may not be capable of forming the intent. While 
intent is an element in willful misconduct determinations, intent is 
not an element in determining whether alcohol or drug abuse was the 
proximate cause of the disability. In 38 U.S.C. 105, Congress made a 
distinction between willful misconduct, an act with an intent element, 
and abuse of alcohol or drugs, an act without an intent element. Since 
abuse of alcohol or drugs has no intent element, we propose to make no 
changes based on this comment.
    One commenter stated that initially proposed ``[Sec.  ] 5.661(c) 
provides that `intoxication' can be considered `willful misconduct' if 
it is the `proximate cause' of the claimed disability or death.'' The 
commenter then opined that under the

[[Page 71141]]

proposed regulation VA would use an indirect finding of intoxication in 
order to find willful misconduct, instead of basing that finding on the 
act causing the disability or death. This is not correct. In Sec.  
5.661(c)(1)(i), we stated, ``If a person consumes alcoholic beverages 
to the point of intoxication and that intoxication proximately causes 
injury, disease, or death, VA will consider the injury, disease, or 
death to have been proximately caused by willful misconduct.'' Alcohol 
or drug abuse that does not cause a disability or death is not willful 
misconduct. Alcohol or drug abuse that causes disability or death, 
whether because of impaired physical capability or judgment, or both, 
is willful misconduct. We therefore propose to make no changes based on 
this comment.
    One commenter expressed the opinion that the provisions of Sec.  
5.661(a) and (b) that prohibit granting service connection, and because 
of that prohibition dependency and indemnity compensation, as a result 
of a veteran's misconduct, were an expansion of the current prohibition 
and unfair to innocent survivors. This commenter noted that this issue 
was being litigated, at the time of the preparation of the commenter's 
comment. However, after the commenter submitted the comment, the U.S. 
Court of Appeals for the Federal Circuit (Federal Circuit) decided 
Myore v. Nicholson, 489 F.3d 1207 (Fed. Cir. 2007). In Myore, the 
Federal Circuit held that ``38 U.S.C. 1310 authorizes DIC for the 
survivors of a servicemember who dies while on active duty if the death 
is not the result of the servicemember's own willful misconduct.'' Id. 
at 1212. The Federal Circuit agreed with VA's long-standing 
interpretation of the statutes that willful misconduct, for purposes of 
death benefits and as the cause of death, prohibits the servicemember's 
survivors from being granted benefits. Because the part 5 rule is 
consistent with Myore, we propose to make no changes based on this 
comment.
    Initially proposed Sec.  5.661(d)(2)(iii) read, ``A reasonable, 
adequate motive for suicide may be established by affirmative evidence 
showing circumstances which could lead a rational person to self-
destruction.'' In Sec.  5.3(e), we propose to state that ``VA may 
consider the weight of an absence of evidence in support of, or 
against, a particular fact or issue.'' Although we are not aware of any 
particular cases in which VA reversed a service department finding of 
mental unsoundness based on the absence of any evidence of record 
corroborating such finding of mental unsoundness, our regulation should 
not foreclose the possibility. We therefore propose to remove the word 
``affirmative'' from Sec.  5.661(d)(2)(iii) and insert the word 
``competent'' in its place. We note as well that although this may be 
viewed as a restrictive change, in fact and practice, VA never intended 
a result other than that which is compelled by the revision.
    The same commenter opined that the requirement in Sec.  
5.661(d)(2)(iii) that suicide not be considered an act of mental 
unsoundness if the evidence shows that the deceased had a ``reasonable, 
adequate motive for suicide'' is a ``heretofore unknown[ ] standard of 
evidence'' that requires VA to make ``grim, heartless, and at their 
center, irrational decisions.'' First, the requirement of a showing of 
a ``reasonable, adequate motive'' is not ``heretofore unknown''. 
Section 5.661(d)(2)(iii) restates current Sec.  3.302(b)(2), which also 
uses the phrase ``reasonable adequate motive''. Second, this 
evidentiary rule has not led VA to make irrational decisions in 
determinations concerning suicide, and most cases involving suicide 
are, quite understandably, ``grim''. We see no reason to change VA 
policy based on this comment. However, we propose to add a comma after 
the second word of the paragraph, changing the wording from ``A 
reasonable adequate motive'' to ``A reasonable, adequate motive''. We 
propose this change in order to clarify that the word, ``reasonable'' 
modifies ``motive'' and not ``adequate.''
    The same commenter argued against the use of the ``affirmative 
evidence'' standard in Sec.  5.661(d)(2)(iii) because the commenter 
believed that ``affirmative evidence'' was a quantitative level of 
proof that is less than a preponderance. The commenter opined that the 
standard of proof was too low to determine whether suicide was due to 
willful misconduct, and urged VA to adopt a ``clear and convincing 
evidence'' standard. We propose to make no changes based on this 
comment for several reasons. First, as explained above, we are 
eliminating the reference to ``affirmative evidence''. Second, that 
standard is a qualitative one--it describes the nature of the 
evidence--and not a quantitative one. Thus, it has no effect on the 
burden of proof and could not be read to permit VA to find that suicide 
was not evidence of mental unsoundness based on less than a 
preponderance of the evidence. To the extent that the commenter 
believes that such a finding ought to be based on more than a 
preponderance of the evidence, we note, as discussed in the preamble to 
Sec.  5.3, that the statutory default standard for rebutting findings 
favorable to a claimant is the preponderance standard. The application 
of a higher standard is appropriate only when a law mandates that 
higher standard.
    In initially proposed Sec.  5.661(e) we repeated current Sec.  
3.301(c)(1) which states, ``[W]hether the veteran complied with service 
regulations and directives for reporting the disease and undergoing 
treatment is immaterial after November 14, 1972, and the service 
department characterization of acquisition of the disease as willful 
misconduct or as not in the line of duty will not govern.'' We have 
determined that this provision is unnecessary because it potentially 
conflicts with the first sentence of Sec.  5.661(e) (based on the first 
sentence of Sec.  3.301(c)(1)), which simply states, ``VA will not 
consider the residuals of venereal disease to be the result of willful 
misconduct.'' Moreover, it has been decades since the military services 
penalized servicemembers for failing to promptly report venereal 
disease (see 37 FR 20336 (Sep. 29, 1972)), so the sentence is outdated. 
We therefore propose not to include it in Sec.  5.661(e).
    Finally, regarding Sec.  5.661(f), we address the proposal to 
replace the ``patently (clearly) inconsistent'' standard to rebut a 
service-department finding that a particular injury, disease, or death 
was not due to willful misconduct. As to the line-of-duty presumption 
in Sec.  5.660(d), discussed above, we removed the word ``(clearly)'' 
because it gave the wrong impression that that rule established an 
evidentiary presumption. But unlike Sec. Sec.  5.660(d) and current 
3.1(m), Sec. Sec.  5.661(f) and current 3.1(n) do in fact establish an 
evidentiary presumption. The current rule reads: ``A service department 
finding that injury, disease or death was not due to misconduct will be 
binding on [VA] unless it is patently inconsistent with the facts and 
the requirements of laws administered by [VA].'' Because the 
presumption must be consistent with both fact and law, determining 
whether it has been rebutted requires factual determinations, weighing 
evidence, and applying the law to those factual determinations. Indeed, 
the mere process of determining a cause of an injury is quite different 
from the question presented in a line-of-duty determination, as to 
which the only relevant inquiry is whether there is a legal bar to VA's 
adoption of the service department's finding. Here, then, it does make 
sense for VA to adopt an evidentiary standard.
    We note that Sec. Sec.  3.1(n) and 5.661(f) apply only where there 
has been a service department finding that would tend to be favorable 
to a claimant, that

[[Page 71142]]

is, that a particular injury, disease, or death was not due to willful 
misconduct. In cases where there has been no such finding, or where the 
service department found that an injury, disease, or death was due to 
willful misconduct, VA must review the evidence as it does any other 
factual issue, and determine whether the preponderance of the evidence 
shows that the veteran's claimed condition is service connected, with 
misconduct being one relevant factual question. Cf. Thomas v. 
Nicholson, 423 F.3d 1279, 1280 (Fed. Cir. 2005) (``concluding that a 
`preponderance of evidence' establishing willful misconduct is 
sufficient to rebut a presumption of service-connection for peacetime 
disabilities under Sec.  105(a)''). Additionally, this pro-claimant 
presumption is not created by statute, and we are free to establish by 
regulation an appropriate standard of proof.
    In this case, we mean to adopt the elevated ``clearly and 
unmistakably'' standard suggested by the commenter. Although the 
general standard for rebutting a presumption is the preponderance 
standard (see Sec.  5.3, ``Standards of Proof''), in this case, VA is 
rebutting a finding made by another agency based on that agency's 
specific review of the veteran's circumstances. Thus, unlike, for 
example, a presumption that a veteran who served in Vietnam was exposed 
to herbicides, which applies to all veterans, the service department's 
willful misconduct finding is particular to one veteran, and is based 
on the facts of that veteran's case. Therefore, it is appropriate here 
to raise the evidentiary threshold to rebut that finding.

Sec.  5.662 Alcohol and Drug Abuse

    We propose to delete from the definition of alcohol abuse in Sec.  
5.662(a)(1), the requirement that the abuse be ``sufficient to 
proximately cause injury, disease, or death to the person consuming 
such beverages.'' The proximate cause requirement is addressed in 
paragraph (b), and it was redundant to include it in the definition. 
This makes the definition consistent with the definition of ``drug 
abuse'' in paragraph (a)(2), and with the use of the term ``abuse of 
alcohol'' throughout the regulation.

Sec.  5.663 Homicide as a Bar to VA Benefits

    One commenter wanted VA to consider mercy killings of terminally 
ill veterans as a justifiable homicide. This commenter equated a mercy 
killing with a veteran's suicide. We propose to make no changes based 
on this comment. Federal law prohibits mercy killings. See 18 U.S.C. 
Chapter 51, Homicide. As a matter of policy, VA will not make 
regulations which would encourage anyone to violate Federal law.
    One commenter objected to Sec.  5.663(d), noting that many states 
permit a finding of guilty of homicide where the killing happened 
during the commission of another crime (the felony murder rule), or 
where an intoxicated person causes an automobile accident that kills 
someone else. The commenter suggested that we amend Sec.  5.663(d) to 
accept only a court of law conviction of intentional homicide as 
binding on VA.
    We agree that such a change would be consistent with Sec.  
5.663(a), where we define homicide as ``intentionally causing the death 
of a person without excuse or justification.'' We therefore propose to 
insert the phrase, ``Subject to the requirement of intent in paragraph 
(a),'' before the phrase, ``VA will accept a court of law conviction of 
homicide as binding'' in paragraph (d)(1).
    A commenter noted that while we allow insanity as a defense to 
homicide, we did not define insanity. The commenter urged VA to revise 
the regulatory language to include all legally permissible excuses for 
homicide culpability, such as from intoxication, mental immaturity, low 
intelligence, and other factors. We agree that a regulatory definition 
of insanity is needed, but we have already provided one elsewhere in 
proposed Part 5. In Sec.  5.1, RIN 2900-AL87, General Provisions, 71 FR 
16461, Mar. 31, 2006, now proposed Sec.  5.1, we proposed to define 
``insanity,'' as a defense to commission of an act, as meaning a person 
was laboring under such a defect of reason resulting from injury, 
disease, or mental deficiency as not to know or understand the nature 
or consequence of the act, or that what he or she was doing was wrong. 
Behavior that is attributable to a personality disorder does not 
satisfy the definition of insanity. This definition excuses mental 
immaturity and low intelligence, as urged by the commenter, to the 
extent that these qualities prevent the affected person from knowing or 
understanding the nature or consequences of their act or that what he 
or she was doing was wrong.
    We propose to decline to include intoxication as a legally 
permissible excuse for homicide in the definition of insanity. 
Congress, in 38 U.S.C. 105 and 1110, specifically prohibited VA from 
paying compensation for disabilities due to abuse of alcohol or drugs. 
It would be inconsistent with Congress' intent if we were to prohibit 
granting service connection to a veteran because of a disability 
proximately due to the abuse of alcohol or drugs, but to allow the 
abuse of alcohol or drugs to be an excuse for homicide or to be 
included in the definition of insanity for any purpose. While Congress 
has not prohibited VA from including abuse of alcohol or drugs in our 
definition of insanity, allowing the abuse of alcohol or drugs to be 
used as an excuse in those determinations requiring the formation of an 
intent to do an act would be inconsistent with Congressional intent and 
VA policy. This is a reasonable gap-filling decision within the 
Secretary's power under 38 U.S.C. 501(a) to promulgate regulations to 
carry out the laws administered by the Department. We therefore propose 
to make no changes based on this comment.
    One commenter asked that VA consider including regulatory language 
to allow all legally permissible excuses for homicide culpability, 
reasoning that if intent is required to bar benefits for homicide, a 
lack of intent for any reason should excuse the homicide and allow 
eligibility for benefits. As we stated in the proposed regulation, 
``homicide means intentionally causing death''. This language requires 
that the person who caused the death have the intent to do so, and 
therefore we propose not to make any changes based on this comment.
    One commenter suggested that we accept as binding all court 
decisions, civil as well as criminal, in Sec.  5.663(d)(1). As 
explained in the NPRM, we chose to accept as binding a conviction in a 
criminal judicial proceeding because of the higher standard of proof 
required for a criminal conviction, which is guilt beyond a reasonable 
doubt. We noted in the NPRM that this is a higher standard than is 
applicable in civil matters. As stated in the NPRM, we chose not to use 
a finding of liability in a civil court proceeding because of the lower 
standard used in those proceedings. We therefore propose to make no 
changes based on this comment.
    This commenter noted that, in Sec.  5.663(e), concerning the effect 
of a court of law proceeding on VA findings of insanity at the time of 
the killing, we did not specify what type of finding must be made. The 
commenter noted that the finding of insanity could be expressed as a 
verdict, for example, not guilty by reason of insanity, or be a finding 
of fact within the court's decision. In Sec.  5.663(e), we stated, ``VA 
will accept as binding a court's determination that a person was insane 
at the time of the killing.'' It is immaterial whether the 
determination is

[[Page 71143]]

announced in the verdict or in the body of the written decision. If a 
court determines the person was insane at the time of the killing, VA 
will accept that determination in whatever form the court chooses to 
issue the determination. We propose to make no changes based on this 
comment.
    This commenter then stated that if a court does not make the 
determination, then VA will need to make the determination. The 
commenter opined that, that determination should be based on a 
psychiatrist's objective review and an independent medical opinion, not 
solely on VA's consultation with a psychiatrist or an opinion from a 
psychiatrist employed by the VA. While an independent medical opinion 
is an option we may use when needed, one is not required in all cases. 
In Sec.  5.92, we explained the situations in which VA will request an 
independent medical opinion. Absent a medical problem of such obscurity 
or complexity, or one that has generated such controversy in the 
medical community at large, we need not solicit an independent medical 
opinion. VA will determine on a case-by-case basis whether an 
independent medical opinion is needed for us to decide whether the 
veteran's actions constituted willful misconduct. As to the requirement 
of a non-VA psychiatric opinion, VA's psychiatrists and psychologists 
are experts, and we have no reason to believe that their opinions are 
biased against providing benefits to veterans. We propose to make no 
changes based on this comment because VA has an adequate system for 
obtaining medical opinions from VA psychiatrists or psychologists as 
needed, or obtaining an independent medical opinion when one is needed.
    One commenter opposed the Sec.  5.663(c)(2) requirement that the 
person have ``no way to escape or retreat in order to'' justify a 
finding that a killing was in self-defense. The commenter felt that 
this may create an unjust hardship on claimants and may deprive some 
claimants of benefits, even though they did not violate their state's 
laws or any federal criminal statute. The commenter noted that some 
states do not require a threatened person to flee and have ``stand your 
ground'' laws that allow a person to defend himself or herself without 
requiring the person to attempt to escape or retreat from the 
situation.
    While some states have enacted ``stand your ground'' laws, many 
others have not. We note that, according to Corpus Juris Secundum, 
``generally, one who seeks to excuse a homicide on the ground of self-
defense must show that he did all he reasonably could to avoid the 
killing; before resorting to the use of deadly force the person 
attacked must retreat if he or she is consciously aware of an open, 
safe, and available avenue of escape.'' 40 C.J.S. 133 (2008). VA has 
applied the duty-to-retreat requirement for many years and has not 
found that it produces unjust results. Moreover, it is appropriate for 
VA to continue to apply this duty because it is still followed in most 
jurisdictions.
    One commenter was concerned that this regulation does not establish 
procedures or standards for adjudicating whether the homicide was 
intentional. This issue would not be adjudicated any differently than 
any other factual issue presented in a particular case. There are no 
special procedures applicable to a finding of intentional homicide, and 
we propose not to adopt any based on this comment.
    However, we do propose to make certain revisions based on this 
comment and our review of this regulation. We have determined that an 
elevated standard of proof should apply to determinations of 
intentional homicide because the generally applicable ``preponderance 
of the evidence'' standard does not afford the claimant sufficient 
protection. As noted in the NPRM for this regulation, we accept a 
criminal conviction as proof that the person convicted did the killing 
because of the high standard of proof (``beyond a reasonable doubt'') 
used in criminal prosecutions. It is inconsistent with this high 
standard of proof to require only a preponderance of the evidence to 
support a finding that a claimant intentionally committed homicide in 
cases where the claimant was not convicted of such a crime. Thus, we 
propose to adopt the ``clearly and unmistakably'' standard of proof in 
the revised regulation.
    Additionally, in initially proposed Sec.  5.663(d)(2), we stated 
that we will ``determine whether the person was guilty'' of homicide. 
But this is not correct. VA does not make determinations of guilt or 
innocence; VA makes administrative determinations concerning benefit 
entitlement. Hence, we propose to remove this statement from the 
regulation.
    Additionally, Sec.  5.663(e) stated that ``VA will develop the 
necessary evidence'' to determine whether a person is guilty. This 
instruction was redundant because there are other provisions of part 5 
that adequately address the development of claims. We therefore propose 
to remove the phrase, ``will develop the necessary evidence and'' from 
the sentence.
    One commenter felt that VA adjudicators were not trained and 
experienced enough in criminal or tort law to properly adjudicate 
claims involving homicide. This commenter felt that the regulation was 
vague and implied that this vagueness violated the due process rights 
of claimants. The commenter was also concerned that this regulation did 
not specifically provide for development of evidence except for that 
relied on in a court hearing. The commenter felt that documentary 
evidence is inherently hearsay evidence (citing the Federal Rules of 
Evidence, sec. 801(c)) and was not a proper basis for making a 
determination of this complexity and gravity, and that VA intended to 
make a decision based only on a paper or record review. The commenter 
also noted that the claimant in such a situation lacks the ability to 
confront an adverse witness under oath. The commenter expressed the 
opinion that this type of claim may only properly be determined in an 
adversarial proceeding with formal rules of evidence. For the following 
reasons, we propose to make no changes based on these comments.
    This regulation is an expansion of 38 CFR 3.11, ``Homicide'', and 
incorporates the provisions of 38 CFR 3.11 and long-standing VA 
procedures for determining entitlement to benefits when a killing is 
involved. While it does not include specific provisions for the 
procedures to be followed in making the determination of whether the 
claimant intentionally killed another without excuse or justification, 
the procedures in Sec.  5.90 for developing and adjudicating a claim 
will be followed. There is no reason to include the procedures in this 
regulation when they are included elsewhere. Proposed Sec.  5.663 is 
not intended to be a replacement for any criminal or civil legal 
proceeding concerning the death of a veteran or other beneficiary and 
we decline to adopt the standards applicable to a criminal or civil 
court proceeding. This regulation is not intended to function as a 
stand-alone regulation but is to be read in conjunction with the other 
applicable regulations concerning the provision of VA benefits. We 
propose not to create special provisions for procedures for this type 
of claim since no special procedures are needed.
    We disagree that this regulation is vague. It is very specific 
concerning what constitutes a homicide, what is an excuse or 
justification for a homicide, and what impact a homicide has on 
claimants. The regulation provides specific notice to claimants that a 
killing that would otherwise provide or increase the killer's benefits, 
unless excused or with justification, will result

[[Page 71144]]

in a denial of benefits. This regulation, when applied in concert with 
the other applicable VA regulations governing provision of benefits, 
provides full due process rights to the claimant.
    We disagree that we will make decisions based only on paper 
evidence. While documentary evidence is normally what VA uses in 
adjudicating a claim, every claimant has a right to a hearing and to 
present evidence at that hearing. Determinations concerning homicide 
are not excluded from the right to a hearing and to present testimony 
and evidence at the hearing. We also disagree that documentary evidence 
is inherently hearsay evidence and therefore not appropriate for 
deciding a matter of this complexity and gravity. The Federal Rules of 
Evidence, in addition to the definition of hearsay cited by the 
commenter, also provide in sections 803, 804, and 807 exceptions to the 
hearsay rule. Fed. R. Evid. 803, 804, and 807. Most evidence considered 
by VA in adjudicating claims falls within one of these exceptions. 
However, even if the evidence does not fall within one of these 
exceptions, VA is still required to ``consider all information and lay 
and medical evidence of record in a case before the Secretary with 
respect to benefits under laws administered by the Secretary.'' 38 
U.S.C. 5107(b).
    We also disagree that VA adjudicators are not trained and 
experienced enough to properly adjudicate claims involving homicide. 
First, VA adjudicators do not adjudicate claims under criminal or tort 
laws, so it is irrelevant whether they are trained to adjudicate such 
matters. VA adjudicators make administrative decisions based on the 
laws and regulations providing for benefits. Second, VA has an 
extensive training program for VA adjudicators, which includes training 
in determining if a killing was a homicide. Additionally, every agency 
of original jurisdiction has an Office of Regional Counsel available to 
advise the adjudicators. If criminal or tort law is involved, VA 
adjudicators may contact the Regional Counsel, or the Office of General 
Counsel, Office of the Inspector General, or other offices as 
appropriate, for advice and guidance. We propose to make no changes 
based on this comment.
    In addition to the changes to Sec.  5.663 discussed above, we 
propose to alphabetically reorder the definitions in paragraph (a) to 
make them easier to find and to be consistent with similar lists within 
part 5. Finally, we propose to remove the references to ``benefits 
awarded, but unpaid at death'' from Sec.  5.663(f)(6). For the reasons 
stated in the preamble to Sec.  5.550, and those that follow, we 
propose not to include that term in part 5.

Sec.  5.676 Forfeiture for Fraud

    Initially proposed Sec.  5.676(b)(5) authorized the suspension of 
benefits when a case is recommended for forfeiture for fraud, but it 
did not clearly state the date that the suspension would begin. We 
propose to revise the rule by adding an effective date that is 
consistent with current part 3 and the manual provisions in the Manual 
M21-1MR. We made a similar provision in Sec.  5.677(b)(5), concerning 
forfeiture for treasonable acts.

Sec.  5.678 Forfeiture for Subversive Activity

    In proposed Sec.  5.678(b)(2)(ii), we propose to change ``first day 
of the month that follows the month for which VA last paid benefits'' 
to ``day benefits were suspended'', to improve readability.

Sec.  5.679 Forfeiture Decision Procedures

    One commenter noted a typographic error in Sec.  5.679(b)(6). We 
propose to correct that error by replacing ``Information about that 
fees'' with ``Information that fees''.
    One commenter objected to the term ``recommendation for 
forfeiture'' used in both Sec. Sec.  5.676 and 5.679, observing that 
the term is not defined. This commenter felt the term, without a 
definition, is overly broad. We propose to make no changes based on 
this comment. While the commenter is correct that we do not define the 
term ``recommendation for forfeiture,'' the term's use in relationship 
to VA benefits is explained in Sec.  5.679. In this regulation, we 
explain who may file a recommendation for forfeiture, what the 
procedures for preparing a recommendation for forfeiture are, and who 
the official is that will make a decision on the recommendation for 
forfeiture. This procedure is largely unchanged from the previous 
regulations and is long-standing VA policy.
    The phrase is self-explanatory. Both ``forfeiture'' and 
``recommendation'' have the meanings commonly assigned them by 
dictionaries of the English language. We do not propose to define the 
phrase since there is no need to define the phrase as it is not overly 
broad or subject to multiple interpretations. We therefore propose to 
make no changes based on this comment.
    One commenter was concerned that Sec.  5.679 would deny the 
claimant due process of law by suspending payments of any benefits 
before a final decision has been made on whether to invoke forfeiture. 
For the following reasons, we propose to make no changes based on this 
comment.
    The forfeiture sections of the new Part 5 regulations, Sec. Sec.  
5.676 and 5.679, do not change VA's procedures for determining 
forfeiture or for suspending payments for forfeiture. Section 
5.676(b)(5) provides that benefits will be suspended if forfeiture for 
fraud is recommended in accordance with Sec.  5.679. Proposed Sec.  
5.679 provides that before a recommendation for forfeiture is made, the 
recommending Regional Counsel, or in the Philippines, the Veterans 
Service Center Manager (VSCM), must provide written notice to the 
beneficiary or claimant of the specific charges against the person, a 
detailed statement of the evidence supporting the charges, a citation 
and discussion of the applicable statute, the right to file a statement 
or evidence within 60 days of the notice, the right to a hearing within 
60 days after the notice with representation of the person's choosing, 
the limitations on fees any representative may charge the beneficiary 
or claimant, and information that fees for representation are limited 
and that VA will not pay expenses incurred by a claimant, his or her 
counsel, or witnesses. Only after all of these procedures are followed 
will a Regional Counsel, or in the Philippines, the VSCM, make a 
recommendation for forfeiture. These procedures provide the person 
subject to the forfeiture with full due process rights.
    The commenter also felt that it would be impossible to determine 
when the suspension of benefit payments would take place since there is 
no definition of ``recommendation for forfeiture''. The commenter also 
asserted that under the proposed rules, it is unclear whether a 
recommendation for forfeiture is different from a final decision on 
forfeiture. We propose to make no changes based on these comments.
    The date of suspension of benefit payments based on a 
recommendation for forfeiture is clearly stated in Sec.  5.676(b)(5) 
(regarding suspension for fraud). Benefit payments will be suspended 
when the recommendation for forfeiture is filed with the Director of 
the Compensation Service or personnel of that service designated by the 
Director to determine whether a claimant or payee has forfeited the 
right to all VA benefits except insurance payments. The regulation is 
clear in explaining that the suspension occurs when the recommendation 
for forfeiture is filed with the appropriate official by Regional 
Counsel or the Manila VSCM.
    Likewise, the regulations are clear in explaining that a 
recommendation for forfeiture is different from a final

[[Page 71145]]

decision on forfeiture. Under Sec.  5.679, a recommendation for 
forfeiture is made by a VA official described in paragraph (a)(2) and 
the final decision is made by a VA official described in paragraph 
(a)(1). Nevertheless, to avoid the possibility of confusion on this 
point, we propose to revise paragraph (a)(2) of Sec.  5.679 by changing 
the phrase ``such official'' to ``an official described in paragraph 
(a)(1) of this section''.

Sec.  5.680 Revocation of Forfeiture

    In Sec.  5.680(b)(1), we propose to change the sentence, ``VA will 
remit a forfeiture upon a showing that the forfeiture decision involved 
clear and unmistakable error'', to replace the word ``involved'' with 
``was the product of'', to clearly show the role that the error must 
have played in leading to the forfeiture decision. This is merely a 
clarification. We also propose to reorganize the contents of paragraph 
(b) for clarity.
    The term ``remission'' (the term used in 38 U.S.C. 6103(d)(2) and 
current VA regulations in part 3) may not be commonly understood by the 
public and we therefore propose to replace it with ``revocation''. We 
propose to make conforming changes of ``remit'' to ``revoke''.

Sec.  5.681 Effective Dates: Forfeiture

    In paragraphs (b)(1) and (3), we propose to change ``starting 
date'' to ``effective date''. We do not use the term ``starting date'' 
in part 5.

Sec.  5.683 Renouncement of Benefits

    One commenter recommended removing this section because in a 
situation where the person renouncing the benefit is not the guardian 
or custodian of the veteran's child, an unjust result may occur and the 
child may lose benefits.
    If a surviving spouse of a veteran is receiving DIC and is not the 
guardian or custodian of the veteran's child, then the veteran's 
child's portion of the DIC would have been or would be apportioned to 
the veteran's child (and paid to the custodian or guardian of the 
child). The surviving spouse's renouncement of benefits would not 
affect the amount paid based on the existence of a child. The commenter 
was incorrect in implying that the renouncement would affect the amount 
paid based on the existence of a child. We therefore propose to make no 
changes based on this comment.
    As initially proposed, Sec.  5.683(b) stated that a fiduciary may 
not renounce benefits on behalf of a beneficiary. The main duties of a 
fiduciary are to preserve and disburse funds that the beneficiary is 
entitled to receive. However, if a fiduciary is court appointed or a 
guardian of a minor child, this person may have the authority to act in 
the stead of the beneficiary and renounce benefits on behalf of the 
beneficiary, if it is to the beneficiary's advantage. In order to avoid 
any confusion as to what type of fiduciary is able to renounce benefits 
on behalf of the beneficiary, we propose to remove the phrase ``by a 
fiduciary'' from initially proposed Sec.  5.683(b).
    In reviewing initially proposed Sec.  5.683, we noted that it did 
not address renouncement by a person who VA has determined is entitled, 
but who is not yet receiving benefits. VA has always permitted such 
persons to renounce benefits, so we propose to change ``beneficiary'' 
to ``a person entitled to that benefit'' in (b) and (d)(1) to clarify 
that point.

XVII. Subpart L: Payments and Adjustments to Payments

A. Payments and Adjustments to Payments AM06

    In a document published in the Federal Register on October 31, 
2008, we proposed to rewrite VA regulations governing payments and 
adjustments to payments, to be published in new 38 CFR part 5. 73 FR 
65212. We provided a 60-day comment period that ended on December 30, 
2008. We received a submission from one commenter, National 
Organization of Veterans' Advocates, Inc.

Sec.  5.690 Where to Find Benefit Rates and Income Limits

    Initially proposed Sec.  5.690 listed benefit programs as a 
continuous series. To aid readability, we have revised this series to 
read as two enumerated lists. Paragraph (a) would list the benefits for 
which VA publishes rates. Paragraph (b) would list the benefits for 
which VA publishes income limitations.
    Although 38 CFR 3.21, from which Sec.  5.690 derives, does not 
include death compensation in its list of benefits for which VA 
publishes rates, it has always been VA's practice to publish death 
compensation rates. We therefore propose to add the term ``death 
compensation'' to proposed Sec.  5.690.

Sec.  5.691 Adjustments for Fractions of Dollars

    The commenter stated, ``For consistency with section 5.691(b), 
section 5.691(c) should also require rounding up, rather than down, to 
the nearest dollar, the amount of Improved Pension or Section 306 
Pension payable.'' Section 5312(c)(2) of title 38 U.S.C., which governs 
the rounding of the rates and income limitations for the benefits 
listed in proposed Sec.  5.691(b). It gives the Secretary discretion to 
round such rates and income limitations in a manner that he or she 
``considers equitable and appropriate for ease of administration.'' 
Another statute, 38 U.S.C. 5123 of title 38 U.S.C. governs rounding of 
payments of the pension benefits to which proposed Sec.  5.691(c) 
applies. It prescribes rounding payments down to the nearest dollar. In 
contrast to section 5312(c)(2), section 5123 does not authorize the 
Secretary to vary from that practice according to his or her 
discretion. Because a statute requires that the pension rates covered 
in Sec.  5.691(c) be rounded down, we propose to make no change based 
on the commenter's suggestion.

Sec.  5.693 Beginning Date for Certain VA Benefit Payments

    The commenter indicated that this section ``should provide for 
payments beginning as of the effective date, rather than as of the 
first day of the month after the month in which the payment becomes 
effective.'' The commenter urged VA to make this change in order to 
``be consistent with section 5.705 which institutes a reduction or 
suspension as of the effective date.'' Pursuant to 38 U.S.C. 5111(a), 
payment of a VA benefit ``may not be made to an individual for any 
period before the first day of the calendar month following the month 
in which the award or increased award became effective.'' Thus, we lack 
the authority to make the change suggested.
    We propose to revise initially proposed Sec.  5.693(b). We propose 
to replace a reference to ``payment'' with ``award or increased award'' 
and add ``or increased award'' to a reference to ``award''. We made the 
former change to correct an error and the latter change to clarify the 
provision. Further, as initially proposed, the title purported to state 
the beginning date of certain benefits, but the regulation text 
actually required the reader to infer the beginning date of payments 
from the negative statement, ``[B]enefits . . . will not be paid for 
any period before the first day of the month after the month in which 
the award or increased award becomes effective.'' This preclusion 
against paying before a certain time does not inform the reader, or 
instruct VA, when payments will begin. We propose to state the rule 
affirmatively: ``VA will pay benefits identified in this paragraph 
beginning the first day of the month after the month in which the award 
or increased award becomes effective,

[[Page 71146]]

except as provided in paragraph (c) of this section.''
    We propose to revise initially proposed paragraph (c) by restating 
it in the active voice. We also propose to delete the statement that 
paragraph (b) does not apply to the benefits listed in paragraph (c). 
It is unnecessary, because paragraph (b) would already state that it 
applies, ``except'' to paragraph (c).
    We propose to revise Sec.  5.693(c)(4)(iii) to reflect the 
terminology used in VA's regulations regarding the reduction of 
compensation and pension based on the receipt of hospital, domiciliary, 
or nursing home care. See Sec. Sec.  5.720 to 5.730. Initially proposed 
Sec.  5.693(c)(4)(iii) referred to ``hospitalization'' and 
``institutionalization''. With respect to specific types of VA care or 
VA facilities, the terms ``institution'', ``institutional'', and 
``institutionalization'' are obsolete. Further, reductions based on the 
receipt of domiciliary care or nursing home care are similar to, and in 
some instances the same as, reductions based on the receipt of hospital 
care.
    Section 605 of Public Law 111-275, 124 Stat. 2864, 2885-86 (2010), 
amended 38 U.S.C. 5111 to create a new exception to the general rule on 
the beginning date for VA benefit payments for veterans who were 
retired or separated from the active military service for a 
catastrophic disability. We propose to incorporate this exception into 
Sec.  5.693 by adding new paragraphs (c)(10) and (e).

Sec.  5.694 Deceased Beneficiary

    In the NPRM AM06, VA inadvertently omitted the provision in current 
38 CFR 3.500(g)(1). To correct this, we propose to add this provision 
as Sec.  5.694. We have renumbered initially proposed Sec.  5.694 as 
Sec.  5.695, and initially proposed Sec.  5.695 as Sec.  5.696. We also 
omitted from the initial NPRMs an equivalent to 38 CFR 3.500(g)(3) 
without an explanation for its exclusion. Section 3.500(g)(3) provides 
an effective date for discontinuance of an award of ``retirement pay'' 
administered by VA upon the death of a veteran. VA no longer 
administers any veteran's benefit titled ``retirement pay.'' VA 
previously paid emergency officers' retirement pay and retirement pay 
under Public Law 77-262, which are no longer active benefits. Although 
military retirement pay may also be discontinued upon the death of a 
veteran, VA does not administer that benefit. Therefore, we propose to 
not include an equivalent to Sec.  3.500(g)(3) in part 5.

Sec.  5.695 Surviving Spouse's Benefit for the Month of the Veteran's 
Death

    The commenter stated:

    We believe that this section should provide that payments to the 
surviving spouse will be for the month of death and for the month 
immediately following the veteran's death. This would provide a more 
equitable transition for the surviving spouse and would not result 
in confusion and inadvertent overpayments where a veteran dies 
during the last days of the month and the notification of the 
veteran's death does not reach the VA or is not processed until the 
weeks following death. Eliminating the cost to the VA of attempting 
to recoup the inadvertent overpayments should cover the costs of the 
additional month's payments.

    The month-of-death benefit is governed by 38 U.S.C. 5111(c) and 
5310, and the proposed regulation is consistent with those statutes. 
Sections 5111 and 5310 do not authorize VA to pay a benefit for both 
the month of death and the next month unless VA awards the surviving 
spouse a death benefit for the month in which the veteran died and the 
amount of that benefit is less than or equal to the amount of 
compensation or pension the veteran would have been entitled to for the 
month of death but for his or her death. Barring this situation, there 
is no statutory authority for issuing payment for the month of the 
veteran's death and the month immediately following the veteran's 
death. We propose to make no change based on the commenter's 
suggestion.
    In initially proposed Sec.  5.694 (b)(2), we used the phrase, 
``then the surviving spouse is entitled to death pension or DIC for the 
month of the veteran's death''. It is more precise to say, ``then VA 
will pay the surviving spouse death pension or DIC for the month of the 
veteran's death''.
    In Sec.  5.695(c), initially proposed as Sec.  5.694(c), we propose 
to add language to provide that the veteran must have been receiving 
disability compensation or pension at the time of death for the 
surviving spouse to be entitled to the month-of-death benefit. Both the 
authorizing statute, 38 U.S.C. 5310(b)(1), and the current part 3 
equivalent, Sec.  3.20(c)(1), require the veteran to have been in 
receipt of disability compensation or pension at the time of death. 
Similar language was incorrectly omitted from the initially proposed 
rule. In Sec.  5.695(c), we also propose to clarify that a provision 
that was inadvertently omitted from the initially proposed rule (Sec.  
5310(b)) does not authorize a month-of-death benefit for the surviving 
spouse of a veteran who died on December 31, 1996. In the initially 
proposed rule, we addressed the deaths of veterans occurring before and 
after that date but not on that date.
    We propose to revise initially proposed Sec.  5.694(d), now Sec.  
5.695(d) to clarify that the payment made to a deceased veteran for the 
month in which the veteran died is a payment of compensation or 
pension, not ``the month-of-death benefit''. We propose to make this 
change because the ``month-of-death benefit'', defined in Sec.  
5.695(a), is ``a payment to a deceased veteran's surviving spouse'', 
not a payment to a veteran.
    Subsequent to the publication of proposed Sec.  5.695, section 507 
of Public Law 112-154 (2012) amended 38 U.S.C. 5310 by making surviving 
spouses whose spouse died on or after August 6, 2012, entitled to a 
benefit for the month of a veteran's death if, at the time of the 
veteran's death: (1) the veteran was receiving disability compensation 
or Improved Pension, or (2) the veteran is determined to have been 
entitled to receive such compensation or pension for such month. The 
amendment also states that if a claim for such benefits was pending on 
the date of a veteran's death and the pending claim is subsequently 
granted, any additional benefits for that month would be paid as 
accrued VA benefits.

Sec.  5.696 Payments to or for a Child Pursuing a Course of Instruction 
at an Approved Educational Institution

    We have renumbered initially proposed Sec.  5.695 as Sec.  5.696. 
Initially proposed paragraph (a) defined ``approved educational 
institution''. Because that term is already defined in Sec.  
5.220(b)(2), we now propose to simply cross reference that definition 
rather than repeat it in paragraph (a).
    We propose to reorganize initially proposed paragraph (b) to 
enhance clarity and to note the statutory requirement under 38 U.S.C. 
1115 that additional disability compensation will only be paid for a 
qualifying child where the veteran has a service-connected disability 
rated at least 30 percent disabling.
    We propose to reorganize initially proposed paragraph (c), 
pertaining to payment of dependency and indemnity compensation (DIC) 
directly to a child, to clarify the relationship between proposed 
paragraphs (c)(1) and (3). The proposed paragraphs were both derived 
from current Sec.  3.667(a)(3), which applies to a child pursuing a 
course of instruction at an approved educational institution upon 
reaching age 18. Initially proposed paragraph (c)(3) has now been 
redesignated as Sec.  5.696(c)(1)(i). Initially proposed paragraph 
(c)(1) has now been

[[Page 71147]]

redesignated as Sec.  5.696(c)(1)(ii). The distinction between the two 
paragraphs is that under paragraph (c)(1)(i), the child was a dependent 
on a surviving spouse's DIC award immediately before the child's 18th 
birthday. Under paragraph (c)(1)(ii), he or she was not.
    As initially proposed, a reference to an exception for paragraph 
(f)(2) was placed incorrectly in paragraph (g)(1) instead of in 
paragraph (g)(2). We propose to correct this in paragraph (g). Further, 
we propose to revise paragraph (g), which pertains to the 
discontinuance of benefits to a child pursuing a course of instruction 
at an approved educational institution, consistent with the part 5 
convention for describing how VA implements a reduction or 
discontinuance of benefits.
    We propose to add 38 U.S.C. 3562 as the specific statutory 
authority for Sec.  5.696(i)(1), which bars the payment of Improved 
Pension, additional disability compensation, and DIC to or for a child 
pursuing a course of instruction at an approved educational institution 
who has elected educational assistance under 38 U.S.C. chapter 35.

Sec.  5.696 Awards of Dependency and Indemnity Compensation When Not 
All Dependents Apply

    As proposed in the NPRM, Sec.  5.696, ``Awards of dependency and 
indemnity compensation when not all dependents apply'', pertained only 
to awards of dependency and indemnity compensation. Therefore, we now 
propose to renumber it as Sec.  5.525 in subpart G of this part under 
the undesignated center heading ``Dependency and Indemnity 
Compensation--Eligibility and Payment Rules for Surviving Spouses and 
Children''.

Sec.  5.697 Exchange Rates for Income Received or Expenses Paid in 
Foreign Currencies

    Initially proposed Sec.  5.697(b) and (c) provided the same general 
rule and exception to the payment of benefits under subpart J of this 
part and under Sec.  5.551(e). The same general rule and exception also 
apply to funds paid in accordance with Sec. Sec.  5.565(b)(4), 
5.566(d)(4), and 5.567(a)(4). Therefore, we propose to combine 
initially proposed Sec.  5.697(b) and (c) into paragraph (b) and expand 
the applicability of paragraph (b) to include the payment of these 
other funds. We also propose to make changes to the general rule and 
the exception, paragraphs (b)(2) and (3) respectively, to improve 
readability or simplify language.
    Also in new Sec.  5.697(b), we propose to clarify language from 
initially proposed paragraph (c). In initially proposed Sec.  5.697(c), 
we used the phrase ``last illness and/or burial''. Title 38 U.S.C. 
5121(a)(6) states, ``[A]ccrued benefits may be paid . . . to reimburse 
the person who bore the expense of last sickness and burial.'' VA 
interprets the word ``and'' as used in the statute to mean ``or''. We 
do not believe that Congress intended to require that a person have 
paid expenses of both the last illness and burial to qualify for some 
reimbursement. For example, if a person expended his or her savings 
paying for health care bills resulting from the veteran's last illness 
and therefore could not pay for the burial, it would be unfair not to 
reimburse him or her for the health care bills. We propose to change 
the proposed language from ``and/or'' to simply ``or'' because this 
term includes ``and''. Furthermore, this change is consistent with 
current Sec.  3.1000(a)(5), which uses the phrase ``last sickness or 
burial''.

Sec.  5.705 General Effective Dates for Reduction or Discontinuance of 
Benefits

    The commenter indicated that for ``similar reasons as what is now 
proposed section 5.694 [now proposed 5.695], the effective date for 
reduction or discontinuation of benefits should be the month following 
the triggering event for the reduction or discontinuance.'' The 
effective dates for reductions and discontinuances are governed by 38 
U.S.C. 5112. Under section 5112, in most circumstances reductions and 
discontinuances of disability compensation, pension, or dependency and 
indemnity compensation must be on the last day of the month in which a 
described event occurs. We note as well that the effect of this rule is 
that any new benefit that may be paid as a result of the reduction or 
discontinuance, such as a newly elected but exclusive benefit or a 
benefit to a survivor or an apportionee, can be paid in the month 
immediately after the month in which the benefit is reduced or 
discontinued. Moreover, VA reduces or discontinues benefits only when 
the beneficiary is no longer entitled by law to receive the benefits. 
The commenter's suggestion is that we continue to pay such benefits for 
a full month after we determined that the beneficiary is not entitled 
to receive them. We have no authority to adopt the commenter's 
suggestion.

Sec.  5.707 Deductible Medical Expenses

    Section 5.707 describes the medical expenses that VA will deduct 
for purposes of three of VA's benefit programs that are based on 
financial need. Paragraph (c) lists six categories of such expenses and 
then lists subcategories within some of them. Certain expenses may fall 
within more than one category or subcategory. In order to ensure that 
VA makes decisions that grant every benefit that the laws supports, we 
have added to the introductory text of paragraph (c), ``If there is 
more than one way to categorize a medical expense under this paragraph 
(c), VA will categorize it in the way that is most favorable to the 
claimant or beneficiary.'' See 38 CFR 3.103(a) (``[I]t is the 
obligation of VA . . . to render a decision which grants every benefit 
that can be supported in law.''); see also 71 FR 16475, Mar. 31, 2006 
(proposed 38 CFR 5.4(b), based on 38 CFR 3.103(a)).
    As initially proposed, the text of paragraph (c)(1) listed care 
typically provided by a licensed health care provider but failed to 
specify that in order for payments for the care to be deducted as 
medical expenses under paragraph (c)(1), the care must have been 
provided by a licensed health care provider. That requirement was 
intended in the proposed rule, as shown by the heading of paragraph 
(c)(1), ``Care by a licensed health care provider''; nevertheless, we 
propose to add the requirement to the text of the paragraph for 
clarity.
    In initially proposed Sec.  5.707(c)(4), we specified the mileage 
rate for deductible medical expenses as 20 cents per mile traveled. 
Following the publication of the proposed rule, VA raised that mileage 
rate. VA publishes that mileage rate on VA Form 21-8416, Medical 
Expense Report, which is updated periodically. In order to ensure that 
the public has the most current information, we propose to change Sec.  
5.707(c)(4) to refer to ``the amount stated on VA Form 21-8416, Medical 
Expense Report'' rather than a specific rate. We also inform the reader 
that this form is available on the VA Web site.
    Initially proposed Sec.  5.707(c)(6) began, ``The following 
payments are `medical expenses' that will be deducted from income:''. 
We determined that this introductory language is redundant because it 
is already stated in the introductory text of paragraph (c): ``The 
following payments are `medical expenses' that will be deducted from 
income if they are not reimbursed''. We therefore propose to remove the 
introductory language from paragraph (c)(6).
    We further propose to revise paragraph (c)(6) to more accurately 
describe current VA practice. In paragraph (c)(6)(ii), regarding 
payments for an in-home attendant, we propose to

[[Page 71148]]

clarify the circumstances under which the attendant must be a licensed 
health care provider. We also propose to remove the initially proposed 
language that states that the attendant may be a family member. 
Although the proposed language was accurate, it was superfluous, and 
including the language might confuse a reader regarding whether the 
attendant could be someone from another general class, such as a friend 
or a neighbor.
    In paragraph (c)(6)(iv), regarding payments for custodial care, we 
propose to delete language providing that payments made strictly for 
custodial care were not deductible. That language does not accurately 
describe VA's practice. Payments for custodial care (including room and 
board) are deductible if the other requirements of the paragraph are 
met. We also propose to add conditions that clarify the circumstances 
under which the paragraph permits described payments to be deducted as 
medical expenses.
    In paragraph (c)(6)(v), regarding payments for custodial care in a 
government institution, we propose to add conditions to clarify the 
circumstances under which the paragraph permits described payments to 
be deducted as medical expenses.
    In paragraph (c)(6)(vi), regarding payments to an adult day care 
facility, rest home, group home, or similar facility, we propose to 
delete initially proposed language stating that if the individual is 
not in need of regular aid and attendance and is not housebound, VA 
will deduct all reasonable fees paid to the facility, but only to the 
extent that they are for medical treatment provided by a licensed 
health care provider. Such language is unnecessary in paragraph 
(c)(6)(vi) because payments for medical treatment provided by a 
licensed health care provider are always deductible under paragraph 
(c)(1).
    We also propose to delete paragraph (c)(6)(vi)(C), which provided 
that if the adult day care or similar facility was a government 
facility, paragraph (c)(6)(v) applied. The proposed revisions to 
paragraph (c)(6) clarify the circumstances under which each of the 
paragraphs applies in order to be consistent with and accurately 
describe VA's current practice. More specific direction is unnecessary 
and could be confusing or inaccurate. As discussed above regarding the 
introductory text of paragraph (c), to the extent that the categories 
and subcategories of medical expenses in paragraph (c) may overlap, VA 
will always categorize a medical expense in the way that is most 
favorable to the claimant or beneficiary.
    We also propose to make a few changes to initially proposed Sec.  
5.707 to improve readability or simplify language.

Sec.  5.708 Eligibility Verification Reports

    Initially proposed Sec.  5.708(a) incorrectly referred only to 
Improved Pension and parents' dependency and indemnity compensation 
(DIC). We propose to revise Sec.  5.708(a) to clarify that eligibility 
verification reports (EVRs) pertain to all three VA pension programs--
Old-Law Pension, Section 306 Pension, and Improved Pension--as well as 
parents' DIC.
    Initially proposed Sec.  5.708(b)(1) incorrectly indicated that VA 
may require claimants to complete an EVR annually. Only beneficiaries 
may be required to file an EVR annually. We have deleted the term 
``annually'' from Sec.  5.708(b)(1).
    Initially proposed Sec.  5.708(c) incorrectly implied that certain 
parents receiving parents' DIC were never required to file an EVR. 
Paragraph (c) should have made clear that it was an exception to the 
general requirement that such parents file an EVR annually. 
Accordingly, we propose to delete initially proposed paragraph (c) and 
place the material proposed in paragraph (c) in a note to revised 
paragraph (b)(2)(i) pertaining to the requirement for beneficiaries to 
file an EVR annually. We have not included in that note the sentence 
from initially proposed paragraph (c) stating, ``However, a parent 
receiving parents' DIC must notify VA whenever there is a material 
change in his or her annual income.'' That sentence is unnecessary 
given that similar information is provided in Sec. Sec.  
5.708(b)(2)(ii) and 5.709. In the note to paragraph (b)(2)(i), we 
propose to add two more groups who are exempted from the annual EVR 
requirement, beneficiaries of Old-Law Pension and Section 306 Pension 
and certain beneficiaries of Improved Pension. This change is 
consistent with current practice and facilitates VA's efficient 
administration of these programs.
    The third sentence of initially proposed paragraph (d), 
redesignated as paragraph (c), described the action VA takes when 
expected income is uncertain. The sentence referred to other more 
specific provisions elsewhere in part 5. In order to avoid confusion 
about the purpose and meaning of the sentence, as well as its 
relationship to the first sentence in the paragraph, we propose to 
delete the sentence and provide instead a clear cross reference to the 
relevant specific provisions to which the deleted sentence referred. We 
also propose to clarify the cross reference to Sec.  5.478 to describe 
more accurately the circumstances under which that provision applies. 
The initially proposed language described Sec.  3.260(b), upon which 
Sec.  5.478(a) is based, but it would not accurately describe the 
content of Sec.  5.478(a).
    We propose to clarify Sec.  5.708(e)(2), redesignated from 
initially proposed paragraph (f)(2). As initially proposed, the 
paragraph stated that VA would notify a beneficiary that an EVR was 
incomplete and inform the beneficiary of the information needed to 
complete the EVR. We have simplified the paragraph. If VA notifies a 
beneficiary of additional information needed to complete an EVR, it is 
implicit in that notice that the EVR, as filed, is incomplete.
    We propose to clarify initially proposed Sec.  5.708(g)(1)(ii) and 
redesignate it as initially proposed paragraph (f)(1)(ii). As initially 
proposed, the rule was limited to instances in which the discontinuance 
of payments was effective before the date on which benefits were 
suspended. Such a limitation on the rule is misleading. Whether or not 
discontinuance of benefits was effective before the date on which 
benefits were suspended is irrelevant; in either case, the effective 
date of resumption under this paragraph is the date the benefits were 
discontinued. This change is consistent with current practice.
    Initially proposed Sec.  5.708(h), redesignated as Sec.  5.708(g), 
stated, ``A former beneficiary who owes or owed money to VA because VA 
discontinued payments for failure to file an EVR within the time limit 
. . . may submit the EVR at any time'', and further stated, ``If, based 
on information in the EVR, VA decides that the former beneficiary was 
entitled to benefits for any part of the period of time in which 
payment had been discontinued for failure to file an EVR, VA will 
offset the debt for that part of the period.'' We have determined that 
in some instances, a former beneficiary might file a new claim after VA 
has discontinued his or her benefits. If such a claim were granted, 
that person would become a current beneficiary. Nevertheless, he or she 
might still file the previously requested EVR, which could reduce or 
eliminate the debt. Therefore, in contemplation of that scenario, we 
propose to add the term ``beneficiary'' before ``former beneficiary'' 
in each sentence where ``former beneficiary'' was initially proposed.
    We also propose to clarify paragraph (g) to state that an EVR may 
be accepted

[[Page 71149]]

for purpose of reducing or eliminating a debt. Finally, to be 
consistent with the rest of the paragraph, we propose to replace 
``offset'' with ``reduce'' and ``completely offset'' with 
``eliminated''. The new terms more accurately describe the action that 
VA takes and are easier for the public and VA personnel to understand.

Sec.  5.710 Adjustments in Benefits Due to Reduction or Discontinuance 
of a Benefit to Another Payee

    Section 5.710 was initially proposed as a plain language rewrite of 
current Sec.  3.651. For clarity, we propose to revise Sec.  5.710 to 
describe more specifically the procedures VA uses to adjust awards of 
benefits that result from the reduction or discontinuance of the same 
benefit to another payee. Initially proposed Sec.  5.710(b) referred to 
VA requesting information or evidence but failed to explain when or why 
VA would make such a request. We propose to revise paragraph (b) to 
explain that if there is sufficient information and evidence for VA to 
award or increase the benefit to the payee, then VA will do so. If 
there is not, then VA will request additional information or evidence. 
We also clearly state the effective date rules for the various 
scenarios.

Sec.  5.711 Payment to Dependents Due to the Disappearance of a Veteran 
for 90 Days or More

    Like current Sec.  3.656(a), initially proposed Sec.  5.711 
provided that when a veteran who was receiving or entitled to receive 
disability compensation, Section 306 Pension, or Improved Pension 
disappears for 90 days or more, benefits will be paid to the veteran's 
dependent(s). However, neither the current rule nor the initially 
proposed rule defines the term ``entitled to receive''. The relevant 
statutory authorities only refer to a veteran who is ``receiving 
compensation'' (38 U.S.C. 1158) or ``receiving pension'' (38 U.S.C. 
1507). VA has interpreted such statutory language liberally so that 
``under certain circumstances'' actual physical receipt of the benefit 
is not required. See VAOPGCPREC 7-91, 56 FR 25156 (June 3, 1991); see 
also VAOPGCPREC 21-92, 58 FR 12449 (Mar. 4, 1993) (``Certain opinions 
interpreting the terms `receiving' or `in receipt' of compensation or 
pension as found in . . . portions of title 38, United States Code . . 
. have . . . recognized limited exceptions to the literal meaning of 
the terms.''). Consistent with that interpretation, we propose to add a 
definition of the term ``entitled to receive'' in paragraph (a): ``For 
purposes of this section, entitled to receive means that VA has granted 
a claim for one of the benefits listed in paragraph (a)(1) of this 
section but has not yet paid the veteran.''
    We propose to revise initially proposed paragraphs (b) and (c), 
which provided similar rules, to refer to the ``rate'' of payment 
rather than the ``amount'' of a payment to be more consistent with 
terminology actually used by VA personnel. We also propose to revise 
these paragraphs, so that the rules are phrased similarly. In these 
paragraphs, we also propose to delete the initially proposed phrases 
``for benefits under this section'' and ``for benefits'' in reference 
to a claim for benefits under Sec.  5.711. We had used (or not used) 
the phrases inconsistently in initially proposed Sec.  5.711. The uses 
of ``claim'' to refer to a claim for benefits under Sec.  5.711 are 
clear in context without the deleted phrases.
    We propose to add a note to initially proposed paragraph (b)(1), 
which states, ``Note to paragraph (b)(1): If there is a dependent 
parent, then the rate for parents' DIC may vary depending on the 
parent's annual income.'' By law, the amount payable for parents' DIC 
is based on the parent's annual income. This is different from other 
DIC programs, which are not income-based. We propose to add the note to 
ensure that readers are aware of this distinction.
    In initially proposed Sec.  5.711(b)(1)(ii), we stated, ``If VA 
pays disability compensation pursuant to this paragraph, then it will 
pay benefits in equal amounts to the dependents.'' However, on further 
review, we note that 38 U.S.C. 1158 does not permit such an equal 
distribution of benefits. Rather, it states that, payments to each 
dependent ``shall not exceed the [rate of DIC] payable to each if the 
veteran had died from service-connected disability.'' If benefits were 
distributed equally, it is likely that the rate payable to some 
dependents would exceed the rate authorized by the statute. 
Accordingly, we propose to revise Sec.  5.711(b)(1)(ii) to remove the 
provision regarding ``equal amounts''. In its place, we propose to 
provide that VA will pay benefits to each dependent in the same 
proportion as if the DIC rate were being paid. Although this revised 
method is more complex than the method we initially proposed, it is 
fair to the dependents, and it complies with section 1158 because the 
rate payable can never exceed the maximum rate authorized by that 
statute.
    We propose to add two paragraphs, (c)(1)(i) and (ii), to initially 
proposed Sec.  5.711(c) so that it is organized like Sec.  5.711(b). 
For the same reason we have used a proportional formula for 
compensation benefits in paragraph (b)(1)(ii), we propose to add 
paragraph (c)(1)(ii) stating that pension paid under paragraph (c) at 
the veteran's rate will be paid using the proportional formula. Like 38 
U.S.C. 1158 discussed above, 38 U.S.C. 1507 states, ``Where a veteran 
receiving pension . . . disappears, the Secretary may pay the pension 
otherwise payable to such veteran's spouse and children . . . Payments 
made to a spouse or child under this section shall not exceed the 
amount to which each would be entitled if the veteran died of a non-
service-connected disability.'' The proportional payment method is fair 
to the dependents, and it complies with section 1507.
    Initially proposed Sec.  5.711(d)(1) stated the effective date for 
the discontinuance of payments to a veteran's dependent(s), as a result 
of the veteran's whereabouts being known. However, initially proposed 
paragraph (d)(2) did not provide information about the effective date 
for the discontinuance of the dependent's benefits if the veteran is 
presumed dead. We propose to correct this omission by stating that the 
date of the veteran's death is presumed to be 7 years after the date 
the veteran was last known to be alive. This is consistent with the 
provisions of paragraph (b) of Sec.  5.503, ``Establishing the date of 
death'', as well as the statute, 38 U.S.C. 108. We also propose to add 
a reference to Sec.  5.694, which provides the effective date for the 
discontinuance of benefits based upon the death of a beneficiary.

Sec.  5.712 Suspension of VA Benefits Due to the Disappearance of a 
Payee

    In Sec.  5.712(a), we propose to add the effective date for the 
suspension of benefits. Paragraph (a) would state that upon the 
disappearance of a payee, benefits will be suspended effective the 
first day of the month after the month for which VA last paid benefits 
to the payee. This revision is based on current Sec.  3.500(t).

Sec.  5.713 Restriction on VA Benefit Payments to an Alien Located in 
Enemy Territory

    Initially proposed Sec.  5.713(a) did not provide an effective date 
for discontinuance of benefits due to an alien being located in an 
enemy territory. We propose to correct this omission by adding a 
sentence stating that ``VA will discontinue benefits to an alien 
located in territory described in this paragraph (a) of this section, 
effective the first day of the month after the month for which VA last 
paid benefits.'' This statement is consistent with current VA practice, 
as well as the

[[Page 71150]]

statute 38 U.S.C. 5308(a), which requires VA to discontinue benefits 
``forthwith''.

Sec.  5.714 Restriction on Delivery of VA Benefit Payments to Payees 
Located in Countries on Treasury Department List

    Initially proposed Sec.  5.714(a)(1) defined ``payee'' (for 
purposes of part 5) as a person to whom a VA benefit check is payable. 
However, Sec.  5.1 defines ``payee'' as ``a person to whom monetary 
benefits are payable.'' We believe that the general definition of 
``payee'' in Sec.  5.1 properly defines ``payee'' for purposes of Sec.  
5.714. Having two different but very similar definitions of ``payee'' 
in part 5 might cause confusion, so we propose to remove the definition 
from Sec.  5.714.

Sec.  5.715 Claims for Undelivered or Discontinued Benefits

    We propose to change ``may'' in initially proposed Sec.  5.715, 
referring to claims for undelivered or discontinued benefits, to 
``must'' in paragraph (b)(1) to clarify that filing a claim is 
necessary for the payment of benefits under Sec.  5.715. In initially 
proposed Sec.  5.715(b)(1), we had restated the provisions of Sec.  
3.653 using ``may'' because a claim need not be filed by a payee who 
requests the alternative means of delivery under Sec.  5.714(d). In 
using ``may'', we unintentionally suggested that filing a claim was 
permissive, not mandatory. We propose to revise Sec.  5.715(b)(1) to 
clearly state that a claim is necessary unless the exception for 
alternative means of delivery applies. We also propose to clarify 
paragraph (b)(1) to specify that, for benefits discontinued under Sec.  
5.713, the paragraph applies to both the retroactive restoration of 
benefits not paid and the prospective resumption of benefits.
    In initially proposed Sec.  5.715(b)(2), we stated, ``There is no 
time limit for filing such a claim.'' We have determined that it is 
unnecessary to state this negative proposition and this language might 
mislead readers into believing that there is an unstated time limit for 
filing claims under other sections, when in fact there is no such time 
limit. Accordingly, we propose to delete proposed paragraph (b)(2).
    Initially proposed paragraphs (b)(3)(ii) and (iii) respectively 
stated that amounts that were not delivered under Sec.  5.714 will be 
released or a discontinued benefit resumed only if ``the payee is no 
longer subject to the restriction in Sec.  5.714(c)'' or ``the country 
in which the payee is located is removed from the Treasury Department 
list''. We have determined that with regard to any payee described in 
paragraph (b)(3)(iii), paragraph (b)(3)(ii) would have the same effect. 
Any payee described in paragraph (b)(3)(iii) would by definition no 
longer be subject to the restriction in Sec.  5.714(c), which only 
applies if a payee is located in a country on the Treasury Department 
list. Paragraph (b)(3)(ii) (which we propose to redesignate as 
(b)(2)(ii)) encompasses other scenarios in addition to the one 
addressed in initially proposed paragraph (b)(3)(iii). Therefore, we 
propose to delete initially proposed paragraph (b)(3)(iii) as 
unnecessary.

Sec.  5.720 Adjustments to Special Monthly Compensation Based on the 
Need for Regular Aid and Attendance While a Veteran is Receiving 
Hospital, Domiciliary, or Nursing Home Care

    Our proposal to rewrite the VA regulations governing hospital, 
domiciliary, and nursing home care reductions and resumptions in new 38 
CFR part 5 (proposed Sec. Sec.  5.720--5.730) was included in a 
document published in the Federal Register on January 14, 2011, that 
also proposed to rewrite VA regulations governing apportionments to 
dependents and payments to fiduciaries and incarcerated beneficiaries. 
76 FR 2766. We provided a 60-day comment period that ended on March 15, 
2011. We received submissions from four commenters; however, only the 
submission from the National Organization of Veterans' Advocates, Inc., 
pertained to the regulations governing hospital, domiciliary, and 
nursing home care reductions and resumptions.
    Concerning initially proposed Sec.  5.720, one commenter stated 
that the language in current 38 CFR 3.556(f) defining a ``regular 
discharge'' as occurring when the veteran has ``received maximum 
hospital benefits'' is clearer than the new language in Sec.  
5.720(a)(3), i.e., when ``there is no medical reason to continue 
care.'' The commenter asserted that the proposed definition is 
problematic because it ``could interject administrative or budget 
issues into what is intended to be a medical decision concerning 
necessary and reasonable medical care.''
    We disagree that our proposed definition would have the effect 
suggested by the commenter. To the contrary, we have clarified that a 
``medical professional'' must make the determination, and we specify 
that the decision must be based on whether there is a ``medical 
reason'' to continue care. Our proposed language would reduce, not 
increase, the risk that the commenter describes. We therefore propose 
to make no change based on this comment. More fundamentally, we note 
that neither current Sec.  3.556(f), nor initially proposed Sec.  
5.720(a)(3) or (4), regulate the practice or procedures of VA medical 
staff regarding the discharge of patients. Rather, they are intended to 
guide VA Regional Offices staff in determining how to adjust benefits 
when a beneficiary is receiving hospital, domiciliary, or nursing home 
care.
    Current 38 CFR 3.556(f) defines ``irregular discharge'' as ``[a] 
discharge for disciplinary reasons or because of the patient's refusal 
to accept, neglect of or obstruction of treatment; refusal to accept 
transfer, or failure to return from authorized absence''. In initially 
proposed Sec.  5.720(a)(4), we merely restated these reasons in an 
easier to read format. The commenter urged that we revise our 
definition to:

incorporate language which reflects actions indicative of 
intentional and unreasonable refusal of treatment such as ``refusal 
to accept reasonable and necessary treatment, which refusal is not 
the result of a mental condition,'' ``intentional and unreasonable 
neglect of treatment, which is not the result of a mental 
condition,'' ``intentional and unreasonable obstruction of 
treatment, which is not the result of a mental condition,'' 
``refusal to accept medically indicated transfer to another 
facility, which is not the result of a mental condition,'' and 
``intentional and unreasonable failure to return from unauthorized 
or authorized absence, which is not the result of a mental 
condition.''


The commenter asserted these changes are ``especially important in view 
of the large number of VA patients who suffer from organic brain damage 
or mental illness and whose symptoms might include being resistant to 
treatment.''

    The purpose of the Regulation Rewrite Project is to make VA's 
compensation and pension regulations more logical, claimant-focused, 
and user-friendly, not to serve as a vehicle for making major changes 
to VA policies. Thus, because proposed Sec.  5.720(a)(4) is merely a 
restatement of the current regulations, the comment is outside the 
scope of this rulemaking.

5.721 Resumption of Special Monthly Compensation Based on the Need for 
Regular Aid and Attendance After a Veteran Is on Temporary Absence From 
Hospital, Domiciliary, or Nursing Home Care or Is Discharged or 
Released From Such Care

    Initially proposed Sec.  5.721(b) stated:
    Discharge or release. If a veteran is discharged or released 
from hospital, domiciliary, or nursing home care, VA will resume any 
payment reduced or discontinued under Sec.  5.720 effective the date 
the veteran was discharged or released. Payment will be resumed at 
the rate in effect

[[Page 71151]]

before the reduction based on hospital, domiciliary, or nursing home 
care, unless the evidence of record shows that a different rate is 
required.
    One commenter urged VA to revise this paragraph to require ``clear 
and convincing evidence'' to resume benefits at a lower rate than the 
rate which had been in effect prior to the reduction or 
discontinuation. We note that pursuant to the language ``unless the 
evidence of record shows that a different rate is required'' (which we 
also use in Sec. Sec.  5.721(b), 5. 725(c)(1) and (2), 5.729(d)(1), and 
5.730(c) and (d)), VA might increase or reduce a beneficiary's payment. 
Such a change would be based on a change in disability level or income, 
or other relevant factors. The change might be based on newly 
discovered evidence or the discovery of clear and unmistakable error in 
a prior decision. (In a reduction case, VA would of course comply with 
all applicable regulations concerning due process before making a 
reduction.) Since there are different situations where VA might change 
benefit payments, and these could involve various standards of proof, 
it would be erroneous to specify one standard of proof here. Moreover, 
in part 5 we have stated the default standards of proof in Sec.  5.3 
and the other standards in the appropriate specific sections (e.g., 
clear and unmistakable error in Sec.  5.162). We therefore propose to 
make no change based on this comment.

Sec.  5.723 Reduction of Improved Pension While a Veteran, Surviving 
Spouse, or Child Is Receiving Medicaid-Covered Care in a Nursing 
Facility

    Section 3.551(i) states, ``Effective November 5, 1990, and 
terminating on September 30, 2011, if a veteran having neither spouse 
nor child, or a surviving spouse having no child, is receiving 
Medicaid-covered nursing home care, no pension or death pension in 
excess of $90 per month shall be paid to or for the veteran or the 
surviving spouse for any period after the month in which the Medicaid 
payments begin.'' Section 601 of Public Law 111-275, 124 Stat. 2864, 
2884 (2010) amended 38 U.S.C. 5503(d)(7) to extend that delimiting date 
through May 31, 2015, but we inadvertently failed to include the new 
date in initially proposed Sec.  5.723(a). Subsequently, section 262 of 
Public Law 112-56 (2011) amended 38 U.S.C. 5503(d)(7) to extend that 
delimiting date through September 30, 2016. Subsequent to that, section 
203 of Public Law 112-260 extended the date to November 30, 2016. We 
propose to update paragraph (a) to reflect this most recent amendment.
    We also propose to add ``surviving child'' where appropriate in 
Sec.  5.723 to state that the Medicare reduction pertains to a 
surviving child claiming or receiving pension in his or her own right, 
as required by section 601 of Public Law 111-275, 124 Stat. 2864, 2884 
(2010).

B. Payments to a Beneficiary Who is Eligible for More Than One Benefit

    In a document published in the Federal Register on October 2, 2007, 
we proposed to establish in a new 38 CFR part 5 VA regulations 
governing payments to beneficiaries who are eligible for more than one 
benefit, based on regulations currently contained in 38 CFR part 3. 72 
FR 56136. The title of this proposed rulemaking was, ``Payments to 
Beneficiaries Who Are Eligible for More than One Benefit'' (RIN: AL95). 
We provided a 60-day comment period that ended on December 3, 2007. We 
received one comment from a member of the general public.

Sec.  5.740 Definitions Relating to Elections of Benefits

    In initially proposed Sec.  5.740(a), we stated: ``Election means 
any writing, signed by a person authorized by Sec.  5.741, `Persons who 
may make an election,' expressing a choice between two or more VA 
benefits to which the person is entitled, or between VA and other 
Federal benefits to which the person is entitled.'' This language may 
confuse the concept of what an election is with the concept of who may 
file an election. An election is the written expression of choice. 
However, VA will only ``accept'' elections in accordance with Sec.  
5.741. We therefore propose to remove the language, ``signed by a 
person authorized by Sec.  5.741, `Persons who may make an election,''' 
from this section. For the same reason, we propose to remove all 
references to Sec.  5.741 from Sec.  5.740.

Sec.  5.742 Finality of Elections of Benefits; Cancellation of Certain 
Elections

    The election finality rules in 38 CFR part 3 pertain to reelections 
as well. To ensure that this concept is clear in part 5, we propose to 
add to the introductory paragraph on Sec.  5.742, the sentence, 
``Reelections are subject to the finality rules stated in paragraphs 
(a) through (e) of this section.''
    When provisions similar to proposed Sec.  5.742(d) and (e) were 
previously proposed as Sec.  5.461(b)(2) and (3), they provided that a 
request to cancel the election must be received within 1 year from the 
date that the election had become effective. Following internal 
reconsideration of this provision, we have determined that this 
limitation might be overly narrow in some cases. Therefore, we now 
propose that Sec.  5.742(d) and (e) contain no such limitation.

Sec.  5.743 General Effective Dates for Awarding, Reducing, or 
Discontinuing VA Benefits Because of an Election

    In initially proposed Sec.  5.743(a)(1), we stated:

    Unless otherwise provided in this part, when a claim is pending 
and an election is timely filed under Sec.  5.740(d), the effective 
date for an award of an elected benefit shall be the same as the 
effective date VA would assign for the awarded benefit if no 
election were required.


We have determined this paragraph can be shortened by removing the 
phrase ``when a claim is pending and an election is timely filed under 
Sec.  5.740(d)''.

Sec.  5.745 Entitlement to Concurrent Receipt of Military Retired Pay 
and VA Disability Compensation

    In Sec.  5.745(a), we propose to clarify the references to ``the 
Coast and Geodetic Survey'' (C&GS) and ``the Environmental Science 
Services Administration'' (ESSA), because both entities became part of 
the National Oceanic and Atmospheric Administration (NOAA). See 
Reorganization Plan No. 4 of 1970, July 9, 1970. See Dane Konop, ``175 
years of service to the Nation: The History of NOAA's National Ocean 
Survey--1807-1982.'' (Editor's Preface to the 1981 National Ocean 
Survey Annual Report). May 1982. Unpublished. We therefore propose to 
revise initially proposed Sec.  5.745(a) to refer to NOAA, ``(including 
its predecessor agencies, the Coast and Geodetic Survey and the 
Environmental Science Services Administration).''
    In the proposed rulemaking, we stated in proposed Sec.  
5.745(c)(1)(ii) that, ``For veterans receiving disability compensation 
based on a VA determination of individual unemployability, the phase-in 
period ends on December 30, 2009.'' According to statute 10 U.S.C. 
1414, this phase-in period actually ends on September 30, 2009. We 
intend to correct paragraph (c)(1)(ii) to accurately reflect the 
statute.
    We propose to revise the various provisions of Sec.  5.745 
regarding entitlement to full concurrent receipt of military retired 
pay and veterans disability compensation based on a VA determination of 
individual unemployability (IU). These proposed revisions are intended 
to implement section 642 of the National Defense

[[Page 71152]]

Authorization Act of 2008, Public Law 110-181, 122 Stat. 3, 157 (2008), 
which provides that veterans who are entitled to receive veterans 
disability compensation based on a VA determination of IU are no longer 
subject to a phase-in period. On March 16, 2009, VA published a final 
rule that amended 38 CFR 3.750 by removing language that made veterans 
who receive disability compensation based on a VA determination of IU 
subject to a phase-in period. See 74 FR 11646. To avoid confusion, the 
final rule also made changes that clarified that both veterans who are 
rated 100 percent disabled under the VA rating schedule and veterans 
who are entitled to receive 100 percent disability compensation based 
on a VA determination of IU do not need to file a waiver of military 
retired pay. The proposed revisions of Sec.  5.745 are therefore 
necessary to incorporate the amendments to Sec.  3.750 outlined in 74 
FR 11646.
    In initially proposed Sec.  5.745(d)(2), we stated that, ``An 
election filed within 1 year from the date of notification of VA 
entitlement will be considered as `timely filed' for effective date 
purposes.'' We are concerned that this provision could be read out of 
context to apply to all elections. Because it applies only to elections 
involving military retired pay and VA disability compensation, we 
propose to insert the phrase, ``between military retired pay and 
disability compensation under this section that is'' after ``An 
election'' in the above-quoted sentence. Similarly, we note that the 
preamble to initially proposed Sec.  5.740 cited Sec.  3.750(b) for the 
definition of a ``timely filed'' election; however, Sec.  3.750 was 
amended on November 20, 2006. See 71 FR 67061. That rulemaking did not 
change the definition of ``timely filed'', but it redesignated the 
paragraphs in that section so that the correct citation to the 
definition of ``timely filed'' should have read Sec.  3.750(d).

Sec.  5.746 Prohibition Against Receipt of Active Military Service Pay 
and VA Benefits for the Same Period

    The commenter requested that the proposed regulation address 
situations where a veteran who is receiving VA disability compensation 
fails to notify VA when he or she returns to active duty and is later 
assessed with an overpayment due to the prohibition against concurrent 
receipt of active military service pay and VA disability compensation. 
In the commenter's example, a veteran receiving VA disability 
compensation benefits returned to active duty for two periods of 
service but never informed VA. He continued to receive VA disability 
compensation benefits during these active duty periods and for several 
years after discharge, at which time he notified VA of his return to 
active duty. The commenter said that the VA regional office, citing 38 
CFR 3.654(b)(2), discontinued the veteran's disability compensation 
retroactively to the date of the veteran's first return to active duty, 
which resulted in a large overpayment. Moreover, the regional office 
did not reestablish entitlement to disability compensation after the 
veteran's discharge but before his second period of active duty because 
the veteran had not requested that VA do so. According to the 
commenter, because the veteran had continued to receive his disability 
compensation during his return to active military service, he obviously 
had no reason to request reinstatement of that compensation. The 
commenter said VA should have only created an overpayment in the 
veteran's account for the period he/she was actually receiving both 
active military service pay and VA disability compensation benefits. 
The commenter also felt that VA and the Department of Defense should do 
a better job in working together to ensure these types of cases do not 
occur. The commenter noted that VA benefits are intended to be 
dispersed in a clear and consistent manner and a veteran should not be 
adversely affected by creating an overpayment for periods the veteran 
is not receiving both active military service pay and VA disability 
compensation benefits.
    For the following reasons, we propose not to make any changes based 
on this comment. First, we note that when VA awards disability 
compensation, VA regularly instructs veterans to inform VA if they 
return to active duty, so that VA can properly adjust their benefits. 
Moreover, VA annually sends letters to all veterans receiving 
disability compensation notifying them whenever there is a legislative 
increase in the amount of their benefits for the following year. In 
that letter, we remind them to inform VA if they return to active duty, 
so that VA can properly adjust their benefits. Thus, veterans are 
clearly informed of their duty to notify VA.
    Second, the types of cases described by the commenter are very 
rare. This is because, in light of the procedures described above, most 
veterans notify VA in advance of their return to active duty in order 
to avoid an overpayment. Moreover, VA exchanges data with the 
Department of Defense, showing which veterans have returned to active 
duty, on a quarterly basis. VA uses this information to discontinue the 
disability compensation of any veteran who failed to notify VA in 
advance. It is not clear why this did not happen in the particular case 
described by the commenter, but, again, this type of oversight is very 
rare.
    Third, VA may waive an overpayment when collection would be against 
``equity and good conscience''. See 38 CFR 1.965. This relief was 
apparently provided to the veteran described by the commenter. For 
these reasons, we respectfully propose to decline to make any changes 
based on this comment.

Sec.  5.747 Effect of Military Readjustment Pay, Disability Severance 
Pay, and Separation Pay on VA Benefits

    Proposed paragraph (a) of Sec.  5.747 informs the reader when lump-
sum readjustment pay is available to a veteran. We propose to change 
``on or after September 15, 1981'' to ``after September 14, 1981'' in 
order to conform to the format generally used for dates throughout part 
5.
    In addition, we propose to add Sec.  5.747(b)(3) to implement the 
National Defense Authorization Act for Fiscal Year 2008, Public Law 
110-181, sec. 1646(b), 122 Stat. 3. Public Law 110-181 amended 10 
U.S.C. 1212 to provide that no deduction may be made from VA disability 
compensation for disability severance pay received for disabilities 
incurred in a combat zone or in combat-related operations as designated 
by the Department of Defense (DoD). Also, initially proposed Sec.  
5.747(b) and (d) included as an authority citation, 10 U.S.C. 1212(c). 
This citation is no longer accurate based on the changes enacted by 
Public Law 110-181. We propose to correct the authority citations in 
Sec.  5.747(b) and (d) to correctly reflect 10 U.S.C. 1212(d).
    In initially proposed Sec.  5.747(d), concerning recoupment from VA 
disability compensation for veterans who received lump-sum readjustment 
pay, disability severance pay, separation pay, or special separation 
pay, we inadvertently omitted language which appears in 38 CFR 
3.700(a). We now propose to add the language to Sec.  5.747.

Sec.  5.750 Election Between VA Benefits and Compensation Under the 
Federal Employees' Compensation Act for Death or Disability Due to 
Military Service

    Initially proposed Sec.  5.750(a)(1) described an election as 
``irrevocable''. To be consistent with the other sections in this 
subpart using the term ``irrevocable'', and to ensure clarity, we 
propose to add the parenthetical ``(there is no right of reelection)'' 
to this paragraph.

[[Page 71153]]

Sec.  5.757 Elections Between VA Disability Compensation and VA Pension

    Initially proposed Sec.  5.757(b) stated ``A person who is entitled 
to receive both death compensation and death pension may elect or 
reelect at any time to receive either benefit unless otherwise provided 
in this part, . . . '' The reference to death compensation here refers 
to dependency and indemnity compensation (DIC). Once a spouse or parent 
elects out of death compensation, they cannot elect back into the 
program because DIC has replaced death compensation. We therefore 
propose to change the term ``death compensation'' with ``dependency and 
indemnity compensation''.
    We propose to add the phrase ``at any time'' in the first sentence 
of Sec.  5.757(c), so that it now reads, ``A person who is entitled to 
receive both disability compensation and Old-Law Pension or Section 306 
Pension may elect at any time to receive either benefit.'' This is 
necessary to clarify that, consistent with current Sec.  3.701(a), 
there is no time limit for either election or reelection under this 
paragraph.
    Initially proposed Sec.  5.757(f) omitted an exception to the rule 
of elections between VA benefits, found in Sec.  3.666(d). Such 
exception states that ``an election to receive disability compensation 
in lieu of pension is not required for an incarcerated veteran who does 
not have a dependent spouse or child.'' We propose to correct this 
omission by adding Sec.  5.757(f)(2).

Sec.  5.760 Electing Improved Death Pension Instead of Dependency and 
Indemnity Compensation

    Initially proposed Sec.  5.760 stated that a surviving spouse who 
is entitled to receive dependency and indemnity compensation (DIC) may 
elect to receive Improved Death Pension instead of DIC. However, it did 
not explicitly state that the election was revocable. Generally, all 
elections are revocable unless specifically stated otherwise. To 
clarify this point, we propose to add the sentence, ``Such surviving 
spouse may subsequently reelect either benefit'' to this section.

Sec.  5.762 Payment of Multiple VA Benefits to a Surviving Child Based 
on the Service of More Than One Veteran

    Initially proposed Sec.  5.762(c)(4) stated that a child has the 
right to elect or reelect one or more times to receive benefits based 
on the death of either parent in the same parental line. We propose to 
remove the phrase ``one or more times'' because it is unnecessary and 
possibly confusing in light of the general rule that there is no limit 
on the number of times a person may reelect a different benefit. 
However, this general rule is subject to exceptions stated in certain 
sections in this subpart.

Sec.  5.764 Payment of Survivors' and Dependents' Educational 
Assistance and VA Death Pension or Dependency and Indemnity 
Compensation for the Same Period

    In initially proposed Sec.  5.764, ``Payment of Survivors' and 
Dependents' Educational Assistance and VA death pension or dependency 
and indemnity compensation for the same period'', we proposed to 
restate current Sec.  3.707(a) and (b) and add the statement that a 
child who is eligible for death pension and dependents' educational 
assistance (DEA), ``must elect between VA death pension and DEA''. We 
now propose to consolidate the rule on dependency and indemnity 
compensation (initially proposed Sec.  5.764(a)(1)(i)) with the rule on 
death pension (initially proposed Sec.  5.764(a)(1)(ii)) to improve 
readability. We note that current Sec.  3.707(a) and (b) refers to 
``compensation'' as one of the benefits to a child or spouse that 
cannot be paid concurrently with DEA. In the initially proposed rule, 
we had simply eliminated the reference to ``compensation'' because a 
dependent of a veteran has no right to disability compensation. Further 
review indicated that in Sec.  3.707(a) and (b) the references to 
``compensation'' are to the additional disability compensation payable 
to a veteran based on a dependent. Hence, we propose to insert into 
Sec.  5.764(a)(1)(ii) and (iii), rules governing this issue.

Sec.  5.765 Payment of Compensation to a Parent Based on the Service or 
Death of Multiple Veterans

    In the initially proposed rule, we reserved Sec.  5.765. However, 
we inadvertently omitted Sec.  3.700(b)(3) and now propose to add it as 
Sec.  5.765, ``Payment of compensation to a parent based on the service 
or death of multiple veterans.''

Technical Corrections

    Other technical corrections will include changes based on 
typographical errors or changes in wording that are necessary to 
maintain consistency throughout part 5. For example, we mean to add 
either ``disability'' or ``death'' in front of the term 
``compensation,[rdquo,] where doing so would specify the type of 
compensation at issue. We also propose to replace the term 
``helpless,[rdquo,] as it relates to a child, with the more descriptive 
term, ``became permanently incapable of self-support before reaching 
age 18'' for purposes of conformity with Sec.  5.227. Section 5.227 
pertains to the considerations that VA will use in determining whether 
a person can be recognized as a ``child'' for benefit purposes. As 
another example, we propose to substitute the word ``if'' for ``when'' 
where appropriate and vice versa. We use the word ``when'' to describe 
instances where an event is certain to occur, such as the eventual 
death of a veteran. We use the word ``if'' to describe instances where 
an event is not certain to occur, such as the marriage or divorce of a 
veteran.

XVIII. Subpart M: General Provisions AL74 Apportionments to Dependents 
and Payments to Fiduciaries and Incarcerated Beneficiaries

    In a document published in the Federal Register on January 14, 
2011, we proposed to rewrite VA regulations governing apportionments to 
dependents and payments to fiduciaries and incarcerated beneficiaries, 
to be published in new 38 CFR part 5. 76 FR 2766. We provided a 60-day 
comment period that ended on March 15, 2011. We received submissions 
from four commenters, the National Organization of Veterans' Advocates, 
Inc.; Swords to Plowshares; and two private individuals.

Sec.  5.770 Apportionment Claims

    The preamble to initially proposed Sec.  5.770 discussed the 
omission of death compensation provisions from part 5. The preamble 
said that 3.450(d) refers to Sec.  3.459, a death compensation 
provisions to which part 5 would have no counterpart. We failed to 
state that Sec.  5.770(d) would restate the Sec.  3.450(d) rule of 
apportionment among children, for DIC benefits.

Sec.  5.790 Determinations of Incompetency and Competency

    Two of the commenters addressed initially proposed Sec. Sec.  
5.790(c) and (d). In the AL74 preamble to initially proposed Sec.  
5.790, ``Determinations of incompetency and competency,[rdquo,] we 
stated:

    Proposed Sec.  5.790 is based on current Sec. Sec.  3.353 and 
3.400(x) and (y). Proposed Sec.  5.790(c) is based on current 38 CFR 
3.353(c) which begins, ``Unless the medical evidence is clear, 
convincing and leaves no doubt as to the person's incompetency, the 
[agency of original jurisdiction] will make no determination of 
incompetency without a definite expression regarding the question by 
the responsible medical authorities.'' The phrase ``clear, 
convincing and leaves no doubt'' is inconsistent with traditional 
legal evidentiary standards. Traditionally, ``clear

[[Page 71154]]

and convincing'' is a distinct standard. ``Leaves no doubt,[rdquo,] 
however, suggests a significantly higher standard. Further, if 
compared to the standard for conviction in a criminal case (``beyond 
a reasonable doubt''), ``leaves no doubt'' could be considered an 
even higher standard that is inconsistent with other areas of the 
law. Therefore, we are removing the term ``leaves no doubt'' and 
instead simply specifying a ``clear and convincing'' standard. 
``Clear and convincing'' is a high evidentiary standard that will 
permit VA to make a determination of incompetency without requesting 
an essentially unnecessary medical opinion. Further, the standard is 
sufficiently high to prevent unwarranted determinations of 
incompetency. See Thomas v. Nicholson, 423 F.3d 1279, 1283 (Fed. 
Cir. 2005) (``The `clear and convincing' standard is `reserved to 
protect particularly important interests in a limited number of 
civil cases' where there is a clear liberty interest at stake, such 
as commitment for mental illness, deportation, or 
denaturalization.'') (citations omitted).

    Initially proposed Sec.  5.790(d) was an exact restatement of 
current 38 CFR 3.353(d), except that we had proposed to update the 
citation from the part 3 citation, Sec.  3.102, to the part 5 
equivalent, Sec.  5.3(b)(2) (now Sec.  5.3(b)(3)).
    Regarding initially proposed Sec.  5.790(c), the first commenter 
asserted that VA should never make a determination of incompetency 
without medical evidence that the claimant is mentally incompetent to 
manage his or her affairs. The commenter also urged that VA establish a 
higher burden of proof for incompetency: ``beyond a reasonable doubt.'' 
The commenter asserted that this standard is necessary to preserve 
consistency with the evidentiary standard in initially proposed Sec.  
5.790(d), which stated, ``Where reasonable doubt arises regarding a 
beneficiary's mental capacity to contract or to manage his or her own 
affairs, including the disbursement of funds without limitation, such 
doubt will be resolved in favor of competency.'' The commenter also 
asserted that the higher standard was needed ``to protect claimants 
from incorrect administrative incompetency decisions made by lay VA 
employees.'' The commenter asserted that a declaration of incompetency 
has implications for many activities, including potentially 
criminalizing firearms ownership.
    The second commenter similarly urged VA not to omit ``leaves no 
doubt'' from its rewrite of Sec.  3.353(c) and ``to maintain `leaves no 
doubt' as a standard for showing incompetence.'' The commenter asserted 
that omitting ``leaves no doubt'' from the standards for determining 
incompetency would prove beneficial only to VA and not to 
beneficiaries. While acknowledging VA's heavy administrative burden, 
the commenter asserted that allowing VA to ``independently determine'' 
whether an individual is incompetent to receive benefits without 
requiring a medical examination would be a violation of the 
individual's constitutional due process rights. Citing Mathews v. 
Eldridge, 424 U.S. 319 (1976), to support that assertion, the commenter 
stated that ``[i]n Mathews . . ., the Supreme Court acknowledged the 
legitimacy of a medical examination as an appropriate procedural 
indicator of eligibility for welfare benefits.''
    These comments demonstrate an apparent misunderstanding of proposed 
Sec.  3.353(c) and (d) and initially proposed Sec. Sec.  5.790(c) and 
(d). Both commenters appear to mistakenly think that ``clear, 
convincing and leaves no doubt'' is the general evidentiary standard 
for showing incompetency under current Sec.  3.353. It is not. It is an 
evidentiary standard that VA, under current Sec.  3.353(c), requires 
medical evidence to meet for an agency of original jurisdiction to make 
an incompetency determination without first obtaining ``a definite 
expression regarding the question by the responsible medical 
authorities.'' In accordance with Sec.  3.353(d), the standard of proof 
to find a beneficiary incompetent when a medical opinion is of record 
is the preponderance of the evidence. Contrary to the first commenter's 
assertion, the standard in initially proposed Sec.  5.790(c) is not 
inconsistent with the standard in initially proposed paragraph (d). 
Each standard serves a different purpose: the standard in paragraph (c) 
must be met for VA to make an incompetency determination without a 
medical opinion on competency; the standard in paragraph (d) applies to 
weighing all the evidence if a medical opinion is of record.
    Similarly, the comments demonstrate an apparent misinterpretation 
of the language of Sec.  3.353(d) to mean that VA's standard for 
finding incompetency is ``beyond a reasonable doubt'', a standard which 
is used for criminal cases. In fact, the intent of this provision is to 
state that VA's ``reasonable doubt'' (or benefit of the doubt) doctrine 
applies to competency determinations, in the same manner that it 
applies to VA benefit determinations that are the subject of 38 CFR 
3.102. In order to clarify this point, we propose to replace the 
language of initially proposed Sec.  5.790(d) with language that is 
substantially the same as proposed Sec.  5.3(b)(3), so that it would 
read, ``When the evidence is in equipoise regarding a beneficiary's 
mental capacity to contract or to manage his or her own affairs, 
including the disbursement of funds without limitation, VA will give 
the benefit of the doubt to the beneficiary and find that he or she is 
competent.''
    As to the concerns of both commenters about the standard of proof 
in proposed Sec.  5.790(c), for the reasons stated in the AL74 NPRM 
preamble, we decline to include ``leaves no doubt'' in Sec.  5.790(c) 
as a standard of proof of incompetency in addition to clear and 
convincing evidence.
    In this regard, the first commenter does not refute any of the 
statements we made regarding Sec.  5.790(c) in the preamble. We 
construe the second commenter's statement that ``the Supreme Court 
acknowledged the legitimacy of a medical examination as an appropriate 
procedural indicator for welfare benefits'' as an assertion that VA 
violates an individual's due process rights if it makes an incompetency 
determination without requiring a medical examination.
    The second commenter's reliance on Mathews v. Eldridge is 
misplaced. The issue in Mathews was ``whether the Due Process Clause of 
the Fifth Amendment requires that prior to the termination of Social 
Security disability benefit payments the recipient be afforded an 
opportunity for an evidentiary hearing.'' 424 U.S. at 323. The Court 
compared termination of welfare payments with the termination of Social 
Security disability insurance (SSDI) payments. The court held that ``an 
evidentiary hearing is not required prior to the termination of [Social 
Security] disability benefits and that the present administrative 
procedures fully comport with due process.'' 424 U.S. at 349.
    Though a VA incompetency determination is not a termination (or 
even a reduction) of benefits, initially proposed Sec.  5.790(e) 
affords an evidentiary hearing prior to making the determination. We 
cannot agree that initially proposed Sec.  5.790 violates any person's 
right to due process; it would afford beneficiaries the very process 
that the Court determined to be necessary only when the beneficiary of 
a government benefit program is most burdened by termination of the 
benefit. 424 U.S. at 339-43.
    The commenter apparently construes the Court's mention of physical 
examinations in Mathews to mean that due process requires VA to examine 
a person as part of the process in an incompetency determination. We 
disagree. The Court mentioned medical examinations in the context of 
discussing SSA's process in determining continuing entitlement to SSDI. 
424 U.S. at 337 (``If there is a conflict between the information 
provided by

[[Page 71155]]

the beneficiary and that obtained from medical sources such as his 
physician, or between two sources of treatment, the agency may arrange 
for an examination by an independent consulting physician''). Nothing 
in that process requires the agency to examine the beneficiary. 
Likewise, VA is not required to examine a beneficiary under Sec.  
5.790; however, nothing in initially proposed Sec.  5.790 precludes VA 
from arranging for a beneficiary's examination if necessary to 
determine competency.
    To the extent that the second commenter means that VA should simply 
obtain an examination in every incompetency determination, and that 
failure to do so violates constitutional due process, the commenter 
essentially argues for part 5 to create a new requirement for 
incompetency determinations. The purpose of the Regulation Rewrite 
program is to make VA's compensation and pension regulations more 
logical, claimant-focused, and user-friendly, not to serve as a vehicle 
for making major changes to VA policies. Thus, the comment is outside 
the scope of this rulemaking.
    For the sake of complete discussion of the comment, we also 
interpret it to mean that VA violates a beneficiary's right to due 
process to allow an AOJ to make an incompetency determination based on 
merely ``clear and convincing evidence'' without first obtaining a 
medical opinion. The commenter would have us include ``leaves no 
doubt'', asserting that due process requires that the AOJ obtain a 
medical opinion unless the evidence ``leaves no doubt'' about 
incompetency. We disagree.
    Even if the evidentiary standard for when an AOJ must obtain a 
medical opinion prior to making an incompetency determination were a 
matter of due process, the ``clear and convincing evidence'' standard 
is sufficient. ``Leaves no doubt'' would be an excessively high 
evidentiary standard. See Mathews, 424 U.S. at 335 (Factors to 
determine the requirements of due process in various proceedings).
    As we explained in the prior NPRM, 76 FR 2777, ``clear and 
convincing'' and ``leaves no doubt'' are inconsistent evidentiary 
standards, the latter amounting to a standard higher even than that 
required for criminal conviction, that is, beyond a reasonable doubt. 
``Leaves no doubt'' is a higher evidentiary standard than in any other 
regulation governing VA compensation or pension benefits. The Supreme 
Court has held that a ``clear and convincing'' standard of proof meets 
the due process requirements for such significant deprivation of 
liberty as involuntary indefinite commitment to a state mental 
hospital, and that the ``beyond a reasonable doubt'' standard is not 
required. Addington v. Texas, 441 U.S. 418 (1979). In contrast, liberty 
is not at stake in VA incompetency determinations.
    The result of a VA determination of incompetency is appointment of 
a fiduciary to receive VA funds for the beneficiary. Clear and 
convincing medical evidence as to a person's incompetency is sufficient 
for the specific purpose of authorizing the AOJ to make an incompetency 
determination without first obtaining an additional medical opinion. 
The clear and convincing standard provides a beneficiary adequate 
protection against an erroneous finding of incompetency resulting from 
a determination made without obtaining ``a definite expression as to 
the question by the responsible medical authorities.'' We propose to 
make no change in response to an assertion that due process requires 
that the AOJ obtain a medical opinion before determining incompetency 
unless medical the evidence ``leaves no doubt'' of incompetency.
    The second commenter asserted that omitting ``leaves no doubt'' 
would benefit only VA and not beneficiaries. We think the omission 
benefits both VA and its beneficiaries. Including ``leaves no doubt'' 
would cause needless delay in making incompetency determinations that 
conserve the benefits of those who cannot manage them. That delay is a 
detriment to beneficiaries. Eliminating that delay would be a benefit 
to persons who need the protection of a fiduciary to manage their 
funds. Including ``leaves no doubt'' in Sec.  5.790(c) would increase 
administrative costs and consume scarce VA human resources to obtain 
medical opinions that are unlikely to bring helpful new information to 
the determination, and the risk of erroneous determinations without 
those opinions is slight. Consequently, we propose to make no change 
based on this comment.
    Finally, we agree with the first commenter that VA should always 
have medical evidence in order to determine competency. Nothing in 
initially proposed Sec.  5.790 contradicts that premise. Indeed, 
proposed Sec.  5.790(c) and (d) both make clear that medical evidence 
is required to find a beneficiary incompetent. Under these provisions, 
either clear and convincing ``medical evidence'' of incompetency is 
already of record or a medical opinion addressing competency is 
obtained. Accordingly, we need make no change to address this concern 
of the commenter. Further, regarding the first commenter's sweeping 
comment about the need to protect beneficiaries from incorrect 
competency decisions by lay VA employees, we note that there is an 
administrative remedy if a beneficiary believes he or she has been 
wrongly declared incompetent: appeal to the Board of Veterans' Appeals 
and, if he or she disagree with that decision, to the U.S. Court of 
Appeals for Veterans Claims. Accordingly, we make no change based on 
this concern of the commenter.

Sec.  5.810 Incarcerated Beneficiaries--General Provisions and 
Definitions

    One commenter on initially proposed Sec.  5.810 urged VA to include 
felony convictions from foreign countries in the definitions governing 
incarcerations in Sec.  5.810(b) only if the courts of the foreign 
country are subject to a standard Status of Forces Agreement or have 
due process and procedural rights equivalent to those which apply in 
courts in the U.S. As discussed in the AL74 preamble, initially 
proposed Sec.  5.810 incorporates significant protections with regard 
to foreign convictions: it excludes incarceration in a foreign prison 
and includes incarceration in a U.S. prison based on a foreign 
conviction only if the offense is equivalent to a felony (or a 
misdemeanor for purposes of 38 U.S.C. 1505) under the laws of the U.S. 
Moreover, the purpose of the Regulation Rewrite Project is to make VA's 
compensation and pension regulations more logical, claimant-focused, 
and user-friendly, not to serve as a vehicle for making major changes 
to VA policies. Thus, the comment is outside the scope of this 
rulemaking.
    Initially proposed Sec.  5.810(c) stated, ``The 60-day periods of 
incarceration described in Sec. Sec.  5.811 through 5.813 begin on the 
day after the beneficiary is convicted of a felony (or misdemeanor for 
pension), if the beneficiary is incarcerated as of that date, even if 
the beneficiary is not sentenced on that date.'' One commenter urged 
that the incarceration period in paragraph (c) not begin on the date of 
conviction ``in recognition of the realities of sentencing.'' The 
commenter added ``[a]t the sentencing hearing, the trial judge might 
impose an alternate sentence involving no incarceration, such as home 
confinement or probation.''
    As we stated in the preamble to AL74, ``This [paragraph (c)] 
accords with 38 U.S.C. 1505 and 5313, which are concerned with the time 
spent imprisoned for a felony, or for a misdemeanor in pension cases, 
and not with the amount of time that the beneficiary is sentenced to 
serve. It also

[[Page 71156]]

accords with VAOPGCPREC 3-2005, 72 FR 5801, 5802 (Feb. 7, 2007).'' The 
fact that the sentence ultimately imposed by the court might not 
include incarceration does not alter VA's duty to limit payments when a 
beneficiary has been incarcerated for more than 60 days after being 
convicted. We therefore propose to make no change based on this 
comment.
    One commenter objected to the rule set forth in initially proposed 
Sec.  5.810(d), requiring that claimants or beneficiaries inform VA if 
they are incarcerated. The commenter asserted that the rule puts an 
undue burden on incarcerated veterans because they are ``often 
impoverished or unfamiliar with system procedures'' and that VA's 
promulgation of this rule fails to ``take full account of the social, 
educational, and societal contexts that many incarcerated veterans come 
from.'' The commenter also asserted that ``VA should be able to gather 
that information from the Bureau of Prisons or the state.''
    As stated in the preamble to initially proposed Sec.  5.810, we 
believe the rule established in paragraph (d) is logical, fair, and 
consistent with other current provisions that require claimants or 
beneficiaries to inform VA of changes in circumstances affecting 
entitlement to benefits. See Sec.  3.652, ``Periodic certification of 
continued eligibility'', and Sec.  3.660(a)(1), ``Dependency, income 
and estate''. In addition, enabling VA to adjust benefits promptly on 
the 61st day of incarceration would be advantageous to both veterans 
and VA because if benefits are not promptly adjusted, VA must establish 
an overpayment and recoup the debt from the veteran. We do not believe 
that the social or educational background of incarcerated veterans 
prevents them from notifying VA of changes in circumstances. Veterans 
may notify VA via mail, email through www.va.gov, or by calling our 
toll free number, 1-800-827-1000.
    Regarding the suggestion that ``VA should be able to gather that 
information from the Bureau of Prisons or the state,'' we note that VA 
already has data sharing agreements with the Federal Bureau of Prisons 
(BOP) and the Social Security Administration (SSA). Under our agreement 
with BOP, that agency periodically provides VA with a master record of 
all federal prisoners. Under our agreement with SSA, that agency 
provides VA with a master record of all prisoners who are incarcerated 
in state or local facilities. Although these records are intended to be 
comprehensive, errors or delays may prevent VA from learning of a 
veteran's incarceration in a timely manner. Requiring veterans to 
inform VA adds an additional means for VA to obtain this information, 
thus reducing the frequency and amount of erroneous payments. We 
therefore make no change based on this comment.

Sec.  5.811 Limitation on Disability Compensation During Incarceration

    Initially proposed Sec.  5.811 implemented the statutory 
requirement from 38 U.S.C. 5313 that VA limit the amount of disability 
compensation paid to a veteran who has been incarcerated for more than 
60 days after conviction of a felony if the veteran committed the 
felony after October 7, 1980. One commenter noted that VA's 
Adjudication Manual, M21-1MR, requires VA employees to limit payments 
when notified by one of our federal data sharing agreements that a 
veteran is incarcerated. The commenter, a non-profit organization that 
represents veterans in their VA claims, stated that in their 
experience, when VA receives such notice, it presumes that the veteran 
has been convicted of a felony rather than a misdemeanor and remains 
incarcerated 60 days later. The commenter urged VA to add a provision 
to Sec.  5.811(a) stating that VA will not limit benefits ``until it 
receives official verification that the veteran has been incarcerated 
for more than 60 days after a conviction of a felony.''
    As a preliminary matter, we note that VA does not limit benefits 
based on incarceration without providing due process under 38 CFR 
3.103. Under that provision, VA notifies the veteran that it proposes 
to limit benefits based on information indicating that he or she is 
incarcerated. Before VA will take action to limit benefits, the veteran 
has 60 days in which to respond (e.g., provide evidence to VA showing 
that he or she was incarcerated for less than 61 days or incarcerated 
for conviction of a misdemeanor, not a felony).
    Moreover, the purpose of the Regulation Rewrite Project is to make 
VA's compensation and pension regulations more logical, claimant-
focused, and user-friendly, not to serve as a vehicle for making major 
changes to VA policies. Thus, the comment recommending additional, new 
procedures is outside the scope of this rulemaking.

Sec.  5.812 Limitation on Dependency and Indemnity Compensation During 
Incarceration

    Initially proposed Sec.  5.812(d) stated, ``Whenever DIC is awarded 
to an incarcerated person, any amounts due for periods prior to the 
date of reduction under this section shall be paid to the incarcerated 
person.'' This language is restated for compensation (Sec.  5.811(b)). 
It is nearly identical to the wording found in current 38 CFR 3.665(k).
    One commenter urged, ``In order to clarify that there will be no 
reduction for amounts due prior to the date of reduction, the language 
in subsection (d) should read as follows: `Any amounts due for periods 
prior to the date of limitation under this section shall be paid to the 
incarcerated person without the limitation imposed under this section.' 
''
    We believe the language of Sec. Sec.  3.665(k), 5.811(b), and 
5.812(d) are entirely clear that ``amounts due for periods prior to the 
date of reduction under this section'' means the normal amount payable 
to an unincarcerated beneficiary. We therefore propose to make no 
change based on this comment.

Sec.  5.813 Discontinuance of Pension During Incarceration.

    Initially proposed Sec.  5.813(b)(2) stated, in part:

    If the veteran has a spouse or child but elects to receive 
disability compensation after VA has notified the veteran of the 
effect of electing disability compensation on the amount available 
for apportionment, then the award of disability compensation will be 
effective on the later of the date VA received the veteran's 
election or the date of discontinuance of pension under paragraph 
(a) of this section.

    Regarding this proposed language, one commenter stated, ``The 
applicability of the `mailbox rule' is not readily apparent in the 
proposed language'' and suggested that the following language be added: 
``If the veteran's election is submitted by U.S. Mail, the date 
received will be considered to be the postmark date.'' The commenter 
offered no reason why this rule should be incorporated into paragraph 
(b)(2).
    We did not imply nor intend that the ``mailbox rule'' apply in 
Sec.  5.813. Current VA regulations in 38 CFR part 3 do not contain 
such a rule. The purpose of the Regulation Rewrite Project is to make 
VA's compensation and pension regulations more logical, claimant-
focused, and user-friendly, not to serve as a vehicle for making major 
changes to VA policies. Thus, the comment is outside the scope of this 
rulemaking.

Sec.  5.814 Apportionment When a Primary Beneficiary Is Incarcerated.

    One commenter approved of the regulations in AL74 limiting payments 
to incarcerated veterans and urged that VA stop apportioning such 
payments to the families of incarcerated veterans. The commenter did 
not explain the

[[Page 71157]]

basis for the comment that benefits should not be apportioned to the 
incarcerated beneficiary's family.
    Congress specifically authorized VA to make apportionments of 
compensation and dependency and indemnity compensation to dependents of 
incarcerated beneficiaries in 38 U.S.C. 1505(b) and (c) and 5313(b), 
and such apportionments may be important in avoiding hardship to the 
beneficiary's dependents during the beneficiary's incarceration. 
Further, the purpose of the reduction of benefits is not to further 
punish the incarcerated beneficiary, but to prevent unnecessary 
expenditure of government funds to persons otherwise supported at 
government expense and to avoid accumulation of funds with prisoners 
who might use those funds to purchase contraband. Prohibiting 
apportionment to an incarcerated beneficiary's dependents would not 
further those objectives.
    Moreover, the purpose of the Regulation Rewrite Project is to make 
VA's compensation and pension regulations more logical, claimant-
focused, and user-friendly, not to serve as a vehicle for making major 
changes to VA policies. Thus, the comment is outside the scope of this 
rulemaking.

Sec.  5.815 Resumption of Disability Compensation or Dependency and 
Indemnity Compensation Upon a Beneficiary's Release From Incarceration.

Sec.  5.816 Resumption of Pension Upon a Beneficiary's Release From 
Incarceration.

    One commenter urged VA to remove the requirement in initially 
proposed Sec. Sec.  5.815-5.816 that the veteran inform VA when he or 
she is released from incarceration, in order for VA to restore benefits 
by a certain date. The commenter noted that there is a link between 
military service during wartime and subsequent incarceration and asked 
that VA thank veterans for their service by not requiring them ``to re-
legitimize their standing as war veterans.''
    We note that these provisions are not new; they have existed in 38 
CFR 3.665(i) and 3.666(c) for decades. We do not believe it is unduly 
burdensome for veterans to inform VA when they are released from 
incarceration; as stated above regarding proposed Sec.  5.810, this can 
be easily done through a variety of methods--via mail, email through 
www.va.gov, or by calling our toll free number, 1-800-827-1000. 
Moreover, VA's data sharing agreements with BOP and SSA (also discussed 
above regarding Sec.  5.810) do not provide VA with notice when a 
veteran is released from incarceration. For these reasons, we propose 
to make no change based on this comment.

Sec.  5.817 Fugitive Felons

    Consistent with 38 U.S.C. 5313B and current 38 CFR 3.665-3.666, 
initially proposed Sec.  5.817 stated that VA will not pay or apportion 
benefits to, for, or on behalf of a person for any period during which 
that person is a fugitive felon. Also consistent with those provisions, 
initially proposed Sec.  5.817 defined fugitive felon as a person who 
is ``(i) Fleeing to avoid prosecution for a felony or for an attempt to 
commit a felony; (ii) Fleeing custody or confinement after conviction 
of a felony or conviction of an attempt to commit a felony; or (iii) 
Fleeing to avoid custody or confinement for violating a condition of 
probation or parole imposed for commission of a felony under Federal or 
State law.''
    One commenter noted that, although the proposed language mirrors 
the statutory language, VA's Adjudication Manual, M21-1MR, states that 
a person is presumed to be a fugitive felon if there is an outstanding 
arrest warrant against them. This is problematic, the commenter 
asserted, because ``the warrant may be many years old and it is 
possible the veteran has no idea that a warrant was even issued, let 
alone outstanding.'' The commenter noted that the Social Security 
Administration (SSA) has a similar statutory requirement and previously 
operated under such a presumption. The commenter noted that ``multiple 
lawsuits forced SSA to alter enforcement of [its] regulation and pay 
back millions of dollars in benefits to affected individuals.'' The 
commenter urged VA to revise Sec.  5.817 to define a fugitive felon as 
``one who has a specific intent to flee or avoid prosecution for a 
felony, specific intent to flee or avoid custody after conviction of a 
felony, or specific intent to flee or avoid a condition of felony 
probation or parole.''
    As with limitations of benefits for incarcerated benefits under 
Sec.  5.811, VA provides the same type of due process for veterans who 
may be fleeing felons. These due process procedures would mitigate the 
situations that the commenter is concerned with. That is, the veteran 
has the opportunity to present evidence showing that he or she was not 
actually fleeing, and if that is shown, then VA will take no action to 
limit benefits.
    Moreover, the purpose of the Regulation Rewrite Project is to make 
VA's compensation and pension regulations more logical, claimant-
focused, and user-friendly, not to serve as a vehicle for making major 
changes to VA policies. Thus, the comment is outside the scope of this 
rulemaking.

Endnote Regarding Amendatory Language

    We intend to ultimately remove part 3 entirely, but we are not 
including amendatory language to accomplish that at this time. VA will 
provide public notice before removing part 3.

Paperwork Reduction Act

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

Regulatory Flexibility Act

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

Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the 
costs and benefits of available regulatory alternatives and, when 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, and other advantages; distributive impacts; 
and equity). Executive Order 13563 (Improving Regulation and Regulatory 
Review) emphasizes the importance of quantifying both costs and 
benefits, reducing costs, harmonizing rules, and promoting flexibility. 
Executive Order 12866 (Regulatory Planning and Review) defines a 
``significant regulatory action,'' which requires review by the Office 
of Management and Budget (OMB), as ``any regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) Create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) Materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the

[[Page 71158]]

rights and obligations of recipients thereof; or (4) Raise novel legal 
or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in this Executive Order.'' The 
economic, interagency, budgetary, legal, and policy implications of 
this regulatory action have been examined and it has been determined 
not to be a significant regulatory action under Executive Order 12866.
    VA has determined that there are no direct costs or savings 
associated with this proposed rulemaking, because it will neither 
expand nor restrict the rights or benefits of VA claimants or 
beneficiaries and will not change the way VA develops, processes, or 
pays a claim for benefits. VA has not yet determined the exact manner 
in which it will transition from the current part 3 regulations to the 
part 5 regulations. Prior to publication of the final rule, VA will 
determine this and estimate the costs associated with this transition.
    Executive Order 13563 also requires federal agencies to make 
regulations ``accessible, consistent, written in plain language, and 
easy to understand'' and requires ``retrospective analysis of rules 
that may be outmoded, ineffective, insufficient, or excessively 
burdensome, and to modify, streamline, expand, or repeal them . . .'' 
This NPRM is the cornerstone of VA's compliance with this Executive 
Order. See www.whitehouse.gov/21stcenturygov/actions/21st-century-regulatory-system.

Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 
1532, that agencies prepare an assessment of anticipated costs and 
benefits before issuing any rule that may result in the expenditure by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more (adjusted annually for 
inflation) in any 1 year. This proposed rule would have no such effect 
on State, local, and tribal governments, or on the private sector.

Catalog of Federal Domestic Assistance Numbers and Titles

    The Catalog of Federal Domestic Assistance program numbers and 
titles for this proposal are 64.100, Automobiles and Adaptive Equipment 
for Certain Disabled Veterans and Members of the Armed Forces; 64.101, 
Burial Expenses Allowance for Veterans; 64.102, Compensation for 
Service-Connected Deaths for Veterans' Dependents; 64.104, Pension for 
Non-Service-Connected Disability for Veterans; 64.105, Pension to 
Veterans Surviving Spouses, and Children; 64.106, Specially Adapted 
Housing for Disabled Veterans; 64.109, Veterans Compensation for 
Service-Connected Disability; 64.110, Veterans Dependency and Indemnity 
Compensation for Service-Connected Death; 64.115, Veterans Information 
and Assistance; and 64.127, Monthly Allowance for Children of Vietnam 
Veterans Born with Spina Bifida.

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, approved this document on January 30, 2013, 
for publication.

List of Subjects in 38 CFR Parts 3 and 5

    Administrative practice and procedure, Claims, Disability benefits, 
Health care, Pensions, Radioactive materials, Veterans, Vietnam.

William F. Russo,
Deputy Director, Office of Office of Regulations Policy and Management, 
Office of the General Counsel, Department of Veterans Affairs.

    For the reasons set forth in the preamble, VA proposes to amend 38 
CFR part 3 and further amend 38 CFR part 5, as proposed to be added at 
69 FR 4820, Jan. 30, 2004, and as further proposed to be amended at 69 
FR 44614, July 27, 2004; 69 FR 59072, Oct. 1, 2004; 73 FR 19021, Apr. 
8, 2008; 71 FR 37790, June 30, 2006; 70 FR 24680, May 10, 2005; 69 FR 
77578, Dec. 27, 2004, 72 FR 10860, Mar. 9, 2007; 71 FR 16464, Mar. 31, 
2006; 70 FR 61326, Oct. 21, 2005; 71 FR 55052, Sept. 20, 2006; 72 FR 
56136, Oct. 2, 2007; 72 FR 28770, May 22, 2007; 72 FR 54776, Sept. 26, 
2007; 71 FR 31056, May 31, 2006; and 73 FR 20136, Apr. 14, 2008, as 
follows:

PART 3--ADJUDICATION

Subpart A--Pension, Compensation, and Dependency and Indemnity 
Compensation

0
1. The authority citation for 38 CFR part 3, subpart A, continues to 
read as follows:

    Authority: 38 U.S.C. 501(a), unless otherwise noted.

0
2. Add Sec.  3.0 to read as follows:


Sec.  3.0  Scope and applicability.

    This part applies only to claims for benefits filed before 
[EFFECTIVE DATE OF FINAL RULE]. See Sec.  5.0 of this chapter, Scope 
and applicability.
* * * * *
0
3. Add part 5 to read as follows:

PART 5--COMPENSATION, PENSION, BURIAL, AND RELATED BENEFITS

Subpart A: General Provisions

5.0 Scope and applicability.
5.1 General definitions.
5.2 Terms and usage.
5.3 Standards of proof.
5.4 Claims adjudication policies.
5.5 Delegations of authority.
5.6-5.19 [Reserved]
Subpart B: Service Requirements for Veterans

Periods of War and Types of Military Service

5.20 Dates of periods of war.
5.21 Service VA recognizes as active military service.
5.22 Service VA recognizes as active duty.
5.23 How VA classifies Reserve and National Guard duty.
5.24 How VA classifies duty performed by Armed Services Academy 
cadets and midshipmen, attendees at the preparatory schools of the 
Armed Services Academies, and Senior Reserve Officers' Training 
Corps members.
5.25 How VA classifies service in the Public Health Service, in the 
Coast and Geodetic Survey and its successor agencies, and of 
temporary members of the Coast Guard Reserve.
5.26 Circumstances where a person ordered to service, but who did 
not serve, is considered to have performed active duty.
5.27 Individuals and Groups that Qualify as Having Performed Active 
Military Service for purposes of VA Benefits Based on Designation by 
the Secretary of Defense.
5.28 Other groups designated as having performed active military 
service.
5.29 Circumstances under which certain travel periods may be 
classified as military service.
5.30 How VA determines if service qualifies for benefits.

Bars to Benefits

5.31 Statutory bars to benefits.
5.32 Consideration of compelling circumstances when veteran was 
separated for AWOL.
5.33 Insanity as a defense to acts leading to a discharge or 
dismissal from the service that might be disqualifying for benefits.

Military Discharges and Related Matters

5.34 Effect of discharge upgrades by Armed Forces boards for the 
correction of military records (10 U.S.C. 1552) on eligibility for 
VA benefits.
5.35 Effect of discharge upgrades by Armed Forces discharge review 
boards (10 U.S.C. 1553) on eligibility for VA benefits.

[[Page 71159]]

5.36 Effect of certain special discharge upgrade programs on 
eligibility for VA benefits.
5.37 Effect of extension of service obligation due to change in 
military status on eligibility for VA benefits.
5.38 Effect of a voided enlistment on eligibility for VA benefits.

Minimum Service and Evidence of Service

5.39 Minimum active duty service requirement for VA benefits.
5.40 Service records as evidence of service and character of 
discharge that qualify for VA benefits.
5.41-5.49 [Reserved]
Subpart C--Adjudicative Process, General

VA Benefit Claims

5.50 Applications VA Furnishes.
5.51 Filing a claim for disability benefits.
5.52 Filing a claim for death benefits.
5.53 Claims for benefits under 38 U.S.C. 1151 for disability or 
death due to VA treatment or vocational rehabilitation.
5.54 Informal claims.
5.55 Claims based on new and material evidence.
5.56 Report of examination, treatment, or hospitalization as a 
claim.
5.57 Claims definitions.
5.58-5.79 [Reserved]

Rights of Claimants and Beneficiaries

5.80 Right to representation.
5.81 Submission of information, evidence, or argument.
5.82 Right to a hearing.
5.83 Right to notice of decisions and proposed adverse actions.
5.84 Restoration of benefits following adverse action.
5.85-5.89 [Reserved]

Duties of VA

5.90 VA assistance in developing claims.
5.91 Medical evidence for disability claims.
5.92 Independent medical opinions.
5.93 Service records which are lost, destroyed, or otherwise 
unavailable.
5.94--5.98 [Reserved]

Responsibilities of Claimants and Beneficiaries

5.99 Extensions of Certain Time Limits.
5.100 Time limits for claimant or beneficiary responses.
5.101 Requirement to provide Social Security numbers.
5.102 Reexamination requirements.
5.103 Failure to report for VA examination or reexamination.
5.104 Certifying continuing eligibility to receive benefits.
5.105-5.129 [Reserved]

General Evidence Requirements

5.130 Submission of statements, evidence, or information affecting 
entitlement to benefits.
5.131 Applications, claims, and exchange of evidence with Social 
Security Administration--death benefits.
5.132 Claims, statements, evidence, or information filed abroad; 
authentication of documents from foreign countries.
5.133 Information VA may request from financial institutions.
5.134 VA acceptance of signature by mark or thumbprint.
5.135 Statements certified or under oath or affirmation.
5.136 Abandoned Claims.
5.137-5.139 [Reserved]

Evidence Requirements for Former Prisoners of War (POWs)

5.140 Determining former prisoner of war status.
5.141 Medical evidence for former prisoner of war disability 
compensation claims.
5.142-5.149 [Reserved]

General Effective Dates for Awards

5.150 General effective dates of awards or increased benefits.
5.151 Date of receipt.
5.152 Effective dates based on change of law or VA issue.
5.153 Effective date of awards based on receipt of evidence prior to 
end of appeal period or before a final decision.
5.154-5.159 [Reserved]

General Rules on Revision of Decisions

5.160 Binding effect of VA decisions.
5.161 Review of benefit claims decisions.
5.162 Revision of agency of original jurisdiction decisions based on 
clear and unmistakable error.
5.163 Revision of decisions based on difference of opinion.
5.164 Standard of proof for reducing or discontinuing a benefit 
payment or for severing service connection based on a beneficiary's 
act of commission or omission.
5.165 Service department records as new and material evidence.
5.166 Effective dates for revision of decisions based on difference 
of opinion.
5.167 Effective dates for reducing or discontinuing a benefit 
payment, or for severing service connection, based on omission or 
commission, or based on administrative error or error in judgment.
5.168-5.169 [Reserved]

General Rules on Protection or Reduction of Existing Ratings

5.170 Calculation of 5-year, 10-year, and 20-year periods to qualify 
for protection.
5.171 Protection of 5-year stabilized ratings.
5.172 Protection of continuous 20-year ratings.
5.173 Protection against reduction of disability rating when VA 
revises the Schedule for Rating Disabilities.
5.174 Protection of entitlement to benefits established before 1959.
5.175 Severance of service connection.
5.176 [Reserved]
5.177 Effective dates for reducing or discontinuing a benefit 
payment or for severing service connection.
5.178-5.179 [Reserved]
Subpart D: Dependents and Survivors

General Dependency Provisions

5.180 [Reserved]
5.181 Evidence needed to establish a dependent.
5.182 Change in status of dependents.
5.183 Effective date of award of benefits for a dependent.
5.184 Effective date of reduction or discontinuance based on changes 
in dependency status.
5.185-5.190 [Reserved]

Marriage, Divorce, and Annulment

5.191 Marriages VA recognizes as valid.
5.192 Evidence of marriage.
5.193 Proof of marriage termination where evidence is in conflict or 
termination is contested.
5.194 Acceptance of divorce decrees.
5.195 [Reserved]
5.196 Void or annulled marriages.
5.197 Effective date of reduction or discontinuance of Improved 
Pension, disability compensation, or dependency and indemnity 
compensation due to marriage or remarriage.
5.198-5.199 [Reserved]

Surviving Spouse Status

5.200 Surviving spouse: requirement of valid marriage to veteran.
5.201 Surviving spouse: requirements for relationship with the 
veteran.
5.202 [Reserved]
5.203 Effect of remarriage on a surviving spouse's benefits.
5.204 [Reserved]
5.205 Effective date of resumption of benefits to a surviving spouse 
due to termination of a remarriage.
5.206-5.219 [Reserved]

Child Status

5.220 Status as a child for VA benefit purposes.
5.221 Evidence to establish a parent/natural child relationship.
5.222 Evidence to establish an adopted child relationship.
5.223 Child adopted after a veteran's death.
5.224 Child status despite adoption out of the veteran's family.
5.225 Child status based on adoption into a veteran's family under 
foreign law.
5.226 Child status based on being a veteran's stepchild.
5.227 Child status based on permanent incapacity for self-support.
5.228 Exceptions applicable to termination of child status based on 
marriage of the child.
5.229 Proof of age or birth.

Effective Dates of Changes in Child Status

5.230 Effective date of award of pension or dependency and indemnity 
compensation to or for a child born after the veteran's death.
5.231 Effective date of reduction or discontinuance: child reaches 
age 18 or 23.
5.232 Effective date of reduction or discontinuance: terminated 
adoptions.
5.233 Effective date of reduction or discontinuance: stepchild no 
longer a member of the veteran's household.
5.234 Effective date of an award, reduction, or discontinuance of 
benefits based on child status due to permanent incapacity for self-
support.

[[Page 71160]]

5.235 Effective date of an award of benefits due to termination of a 
child's marriage.
5.236-5.237 [Reserved]

Parent Status

5.238 Status as a veteran's parent.
5.239 [Reserved]
Subpart E: Claims for Service Connection and Disability Compensation

Service-Connected And Other Disability Compensation

5.240 Disability compensation.
5.241 Service-connected disability.
5.242 General principles of service connection.
5.243 Establishing service connection.
5.244 Presumption of sound condition on entry into military service.
5.245 Service connection based on aggravation of preservice injury 
or disease.
5.246 Secondary service connection--disability that is due to or the 
result of service-connected disability.
5.247 Secondary service connection--nonservice-connected disability 
aggravated by service-connected disability.
5.248 Service connection for cardiovascular disease secondary to 
service-connected lower extremity amputation.
5.249 Special service connection rules for combat-related injury or 
disease.
5.250 Service connection for posttraumatic stress disorder.
5.251 Current disabilities for which VA cannot grant service 
connection.
5.252-5.259 [Reserved]

Presumptions of Service Connection for Certain Diseases, Disabilities, 
and Related Matters

5.260 General rules governing presumptions of service connection.
5.261 Certain chronic diseases VA presumes are service connected.
5.262 Presumption of service connection for diseases associated with 
exposure to certain herbicide agents.
5.263 Presumption of service connection for non-Hodgkin's lymphoma 
based on service in Vietnam.
5.264 Diseases VA presumes are service connected in a former 
prisoner of war.
5.265 Tropical diseases VA presumes are service connected.
5.266 Disability compensation for certain qualifying chronic 
disabilities.
5.267 Presumption of service connection for conditions associated 
with full-body exposure to nitrogen mustard, sulfur mustard, or 
Lewisite.
5.268 Presumption of service connection for diseases associated with 
exposure to ionizing radiation.
5.269 Direct service connection for diseases associated with 
exposure to ionizing radiation.
5.270 Presumption of service connection for amyotrophic lateral 
sclerosis.
5.271 Presumption of service connection for infectious diseases.
5.272-5.279 [Reserved]

Rating Service-Connected Disabilities

5.280 General rating principles.
5.281 Multiple 0 percent service-connected disabilities.
5.282 Special consideration for paired organs and extremities.
5.283 Total and permanent total ratings and unemployability.
5.284 Total disability ratings for disability compensation purposes.
5.285 Discontinuance of total disability ratings.
5.286-5.299 [Reserved]

Additional Disability Compensation Based on a Dependent Parent

5.300 Establishing dependency of a parent.
5.301 [Reserved]
5.302 General income rules--parent's dependency.
5.303 Deductions from income--parent's dependency.
5.304 Exclusions from income--parent's dependency.
5.305-5.310 [Reserved]

Disability Compensation Effective Dates

5.311 Effective dates--award of disability compensation.
5.312 Effective dates--increased disability compensation.
5.313 Effective dates--discontinuance ofcompensation for a total 
disability rating based on individual unemployability.
5.314 Effective dates--discontinuance of additional disability 
compensation based on parental dependency.
5.315 Effective dates--additional disability compensation based on 
decrease in the net worth of a dependent parent.
5.316-5.319 [Reserved]

Special Monthly Compensation: General

5.320 Determining need for regular aid and attendance.
5.321 Additional disability compensation for a veteran whose spouse 
needs regular aid and attendance.
5.322 Special monthly compensation: general information and 
definitions of disabilities.

Special Monthly Compensation: Specific Statutory Bases

5.323 Special monthly compensation under 38 U.S.C. 1114(k).
5.324 Special monthly compensation under 38 U.S.C. 1114(l).
5.325 Special monthly compensation at the intermediate rate between 
38 U.S.C. 1114(l) and (m).
5.326 Special monthly compensation under 38 U.S.C. 1114(m).
5.327 Special monthly compensation at the intermediate rate between 
38 U.S.C. 1114(m) and (n).
5.328 Special monthly compensation under 38 U.S.C. 1114(n).
5.329 Special monthly compensation at the intermediate rate between 
38 U.S.C. 1114(n) and (o).
5.330 Special monthly compensation under 38 U.S.C. 1114(o).
5.331 Special monthly compensation under 38 U.S.C. 1114(p).
5.332 Additional allowance for regular aid and attendance under 38 
U.S.C. 1114(r)(1) or for a higher level of care under 38 U.S.C. 
1114(r)(2).
5.333 Special monthly compensation under 38 U.S.C. 1114(s).
5.334 Special monthly compensation tables.

Special Monthly Compensation: Effective Dates

5.335 Effective dates: special monthly compensation under Sec. Sec.  
5.332 and 5.333.
5.336 Effective dates: additional compensation for regular aid and 
attendance payable for a veteran's spouse under Sec.  5.321.
5.337-5.339 [Reserved]

Tuberculosis

5.340 Pulmonary tuberculosis shown by X-ray in active military 
service.
5.341 Presumption of service connection for tuberculous disease; 
wartime and service after December 31, 1946.
5.342 Initial grant following inactivity of tuberculosis.
5.343 Effect of diagnosis of active tuberculosis.
5.344 Determination of inactivity (complete arrest) of tuberculosis.
5.345 Changes from activity in pulmonary tuberculosis pension cases.
5.346 Tuberculosis and compensation under 38 U.S.C. 1114(q) and 
1156.
5.347 Discontinuance of a total disability rating for service-
connected tuberculosis.
5.348-5.349 [Reserved]

Injury or Death Due to Hospitalization or Treatment

5.350 Benefits under 38 U.S.C. 1151(a) for additional disability or 
death due to hospital care, medical or surgical treatment, 
examination, training and rehabilitation services, or compensated 
work therapy program.
5.351 Effective dates of awards of benefits under 38 U.S.C. 1151(a) 
for additional disability or death due to hospital care, medical or 
surgical treatment, examination, training and rehabilitation 
services, or compensated work therapy program.
5.352 Effect of Federal Tort Claims Act compromises, settlements, 
and judgments entered after November 30, 1962, on benefits awarded 
under 38 U.S.C. 1151(a) for additional disability or death due to 
hospital care, medical or surgical treatment, examination, training 
and rehabilitation services, or compensated work therapy program.
5.353 Effect of Federal Tort Claims Act administrative awards, 
compromises, settlements, and judgments finalized before December 1, 
1962, on benefits awarded under 38 U.S.C. 1151(a).
5.354-5.359 [Reserved]

Ratings for Health-Care Eligibility Only

5.360 Service connection of dental conditions for treatment 
purposes.
5.361 Health-care eligibility of a person administratively 
discharged under other-than-honorable conditions.
5.362 Presumption of service incurrence of active psychosis for 
purposes of hospital, nursing home, domiciliary, and medical care.

[[Page 71161]]

5.363 Determination of service connection for a former member of the 
Armed Forces of Czechoslovakia or Poland.
5.364 [Reserved]

Miscellaneous Service-Connection Regulations

5.365 Claims based on the effects of tobacco products.
5.366 Disability due to impaired hearing.
5.367 Civil service preference ratings for employment in the U.S. 
Government.
5.368 Basic eligibility determinations: home loan and education 
benefits.
5.369 [Reserved]
Subpart F: Nonservice-Connected Disability Pensions and Death Pensions

Improved Pension Requirements: Veteran, Surviving Spouse, and Surviving 
Child

5.370 Definitions for Improved Pension.
5.371 Eligibility and entitlement requirements for Improved Pension.
5.372 Wartime service requirements for Improved Pension.
5.373 Evidence of age in Improved Pension claims.
5.374-5.379 [Reserved]

Improved Disability Pension: Disability Determinations and Effective 
Dates

5.380 Disability requirements for Improved Disability Pension.
5.381-5.382 [Reserved]
5.383 Effective dates of awards of Improved Disability Pension.
5.384-5.389 [Reserved]

Special Monthly Pension Eligibility for a Veteran and Surviving Spouse

5.390 Special monthly pension for a veteran or surviving spouse 
based on the need for regular aid and attendance.
5.391 Special monthly pension for a veteran or surviving spouse at 
the housebound rate.
5.392 Effective dates of awards of special monthly pension.
5.393-5.399 [Reserved]

Maximum Annual Pension Rates

5.400 Maximum annual pension rates for a veteran, surviving spouse, 
or surviving child.
5.401 Automatic adjustment of maximum annual pension rates.
5.402-5.409 [Reserved]

Improved Pension Income, Net Worth, and Dependency

5.410 Countable annual income.
5.411 Counting a child's income for Improved Pension payable to a 
child's parent.
5.412 Income exclusions for calculating countable annual income.
5.413 Income deductions for calculating adjusted annual income.
5.414 Net worth determinations for Improved Pension.
5.415 Effective dates of changes in Improved Pension benefits based 
on changes in net worth.
5.416 Persons considered as dependents for Improved Pension.
5.417 Child custody for purposes of determining dependency for 
Improved Pension.
5.418-5.419 [Reserved]

Improved Pension: Income Reporting periods, Payments, Effective Dates, 
and Time Limits

5.420 Reporting periods for Improved Pension.
5.421 How VA calculates an Improved Pension payment amount.
5.422 Effective dates of changes to annual Improved Pension payment 
amounts due to a change in income.
5.423 Improved Pension determinations when expected annual income is 
uncertain.
5.424 Time limits to establish entitlement to Improved Pension or to 
increase the annual Improved Pension amount based on income.
5.425 Frequency of payment of Improved Pension benefits.
5.426-5.429 [Reserved]

Improved Death Pension Marriage Date Requirements and Effective Dates

5.430 Marriage date requirements for Improved Death Pension.
5.431 Effective dates of Improved Death Pension.
5.432 Deemed valid marriages and contested claims for Improved Death 
Pension.
5.433 Effective date of discontinuance of Improved Death Pension 
payments to a beneficiary no longer recognized as the veteran's 
surviving spouse.
5.434 Award or discontinuance of award of Improved Death Pension to 
a surviving spouse where Improved Death Pension payments to a child 
are involved.
5.435 Calculating annual Improved Pension amounts for a surviving 
child.
5.436-5.459 [Reserved]

Choosing Improved Pension Over Other VA Pension Programs

5.460 Definitions of certain VA pension programs.
5.461-5.462 [Reserved]
5.463 Effective dates of Improved Pension elections.
5.464 Multiple pension benefits not payable.
5.465-5.469 [Reserved]

Continuing Entitlement to Old-Law Pension or Section 306 Pension

5.470 Reasons for discontinuing or reducing Old-Law Pension or 
Section 306 Pension.
5.471 Annual income limits and rates for Old-Law Pension and Section 
306 Pension.
5.472 Rating of income for Old-Law Pension and Section 306 Pension.
5.473 Counting a dependent's income for Old-Law Pension and Section 
306 Pension.
5.474 Deductible expenses for Section 306 Pension only.
5.475 Gaining or losing a dependent for Old-Law Pension and Section 
306 Pension.
5.476 Net worth for Section 306 Pension only.
5.477 Effective dates of reductions and discontinuances of Old-Law 
Pension and Section 306 Pension.
5.478 Time limit to establish continuing entitlement to Old-Law 
Pension or Section 306 Pension.
5.479-5.499 [Reserved]
Subpart G: Dependency and Indemnity Compensation, Accrued Benefits, and 
Special Rules Applicable Upon Death of a Beneficiary

General Provisions

5.500 Proof of death.
5.501 Proving death by other means.
5.502 Proving death after 7 years of continuous, unexplained 
absence.
5.503 Establishing the date of death.
5.504 Service-connected cause of death.
5.505--5.509 [Reserved]

Dependency and Indemnity Compensation--General

5.510 Dependency and indemnity compensation--basic entitlement.
5.511 Special monthly dependency and indemnity compensation.
5.512 Eligibility for death compensation or death pension instead of 
dependency and indemnity compensation.
5.513--5.519 [Reserved]

Dependency and Indemnity Compensation--Eligibility Requirements and 
Payment Rules for Surviving Spouses and Children

5.520 Dependency and indemnity compensation--time of marriage 
requirements for surviving spouses.
5.521 Dependency and indemnity compensation benefits for survivors 
of certain veterans rated totally disabled at time of death.
5.522 Dependency and indemnity compensation benefits for survivors 
of certain veterans rated totally disabled at time of death--offset 
of wrongful death damages.
5.523 Dependency and indemnity compensation rate for a surviving 
spouse.
5.524 Awards of dependency and indemnity compensation benefits to 
children when there is a retroactive award to a schoolchild.
5.525 Awards of dependency and indemnity compensation when not all 
dependents apply.
5.526--5.529 [Reserved]

Dependency and Indemnity Compensation--Eligibility Requirements and 
Payment Rules for a Parent

5.530 Eligibility for, and payment of, a parent's dependency and 
indemnity compensation.
5.531 General income rules for parent's dependency and indemnity 
compensation
5.532 Deductions from income for parent's dependency and indemnity 
compensation.
5.533 Income not counted for parent's dependency and indemnity 
compensation.

[[Page 71162]]

5.534 When VA counts a parent's income for parent's dependency and 
indemnity compensation.
5.535 Adjustments to a parent's dependency and indemnity 
compensation when income changes.
5.536 A parent's dependency and indemnity compensation rates.
5.537 Payment intervals for parent's dependency and indemnity 
compensation.

Effective Dates

5.538 Effective date of dependency and indemnity compensation award.
5.539 Discontinuance of dependency and indemnity compensation to a 
person no longer recognized as the veteran's surviving spouse.
5.540 Effective date and payment adjustment rules for award or 
discontinuance of dependency and indemnity compensation to a 
surviving spouse where payments to a child are involved.
5.541 Effective date of reduction of a surviving spouse's dependency 
and indemnity compensation due to recertification of pay grade.
5.542 Effective date of an award or an increased rate based on 
decreased income: parents' dependency and indemnity compensation.
5.543 Effective date of reduction or discontinuance based on 
increased income: parents' dependency and indemnity compensation.
5.544 Dependency and indemnity compensation rate adjustments when an 
additional survivor files a claim.
5.545 Effective dates of awards and discontinuances of special 
monthly dependency and indemnity compensation.
5.546-5.550 [Reserved]

Accrued Benefits

5.551 Persons entitled to accrued benefits.
5.552 Claims for accrued benefits.
5.553 Notice of incomplete applications for accrued benefits.
5.554 benefits payable as accrued benefits.
5.555 Relationship between accrued-benefits claims and claims filed 
by the deceased beneficiary.
5.556-5.563 [Reserved]

Special Provisions

5.564 Cancellation of checks mailed to a deceased payee; payment of 
such funds as accrued benefits.
5.565 Special rules for payment of benefits on deposit in a special 
deposit account when a payee living in a foreign country dies.
5.566 Special rules for payment of all benefits except insurance 
payments deposited in a personal-funds-of-patients account when an 
incompetent veteran dies.
5.567 Special rules for payment of Old-Law Pension when a 
hospitalized competent veteran dies.
5.568 Non-payment of certain benefits upon death of an incompetent 
veteran.
5.569-5.579 [Reserved]
Subpart H: Special and Ancillary Benefits for Veterans, Dependents, and 
Survivors

Special Benefits for Veterans, Dependents, and Survivors

5.580 Medal of Honor pension.
5.581 Awards of benefits based on special acts or private laws.
5.582 Naval pension.
5.583 Special allowance under 38 U.S.C. 1312.
5.584 Loan guaranty for a surviving spouse: eligibility 
requirements.
5.585 Certification for death gratuity.
5.586 Certification for dependents' educational assistance.
5.587 Minimum income annuity and gratuitous annuity.
5.588 Special allowance payable under section 156 of Public Law 97-
377.
5.589 Monetary allowance for a Vietnam veteran or a veteran with 
covered service in Korea whose child was born with spina bifida.
5.590 Monetary allowance for a female Vietnam veteran's child with 
certain birth defects.
5.591 Effective date of award for a disabled child of a Vietnam 
veteran or a veteran with covered service in Korea.
5.592 Awards under Nehmer Court orders for disability or death 
caused by a condition presumptively associated with herbicide 
exposure.
5.593-5.599 [Reserved]

Ancillary Benefits for Certain Service-Connected Veterans and Certain 
Members of the Armed Forces Serving on Active Duty

5.600-5.602 [Reserved]
5.603 Financial assistance to purchase a vehicle or adaptive 
equipment.
5.604 Specially adapted housing under 38 U.S.C. 2101(a).
5.605 Special home adaptation grants under 38 U.S.C. 2101(b).
5.606 Clothing allowance.
5.607-5.609 [Reserved]
Subpart I: Benefits for Certain Filipino Veterans and Survivors

Philippine Service

5.610 Eligibility for benefits based on Philippine service.
5.611 Philippine service: determination of periods of active 
military service, including, but not limited to, periods of active 
military service while in prisoner of war status.

Benefits and Effective Dates of Certain Filipino Veterans and Survivors

5.612 Overview of benefits available to a Filipino veteran and his 
or her survivor.
5.613 Payment of disability compensation or dependency and indemnity 
compensation at the full dollar rate for certain Filipino veterans 
or their survivors residing in the U.S.
5.614 Effective dates of benefits at the full-dollar rate for a 
Filipino veteran and his or her survivor.
5.615 Parents' dependency and indemnity compensation based on 
certain Philippine service.
5.616 Hospitalization in the Philippines.
5.617 Burial benefits at the full-dollar rate for certain Filipino 
veterans residing in the U.S. on the date of death.
5.618 Effective dates of reductions and discontinuances for benefits 
at the full-dollar rate for a Filipino veteran and his or her 
survivor.
5.619-5.629 [Reserved]
Subpart J: Burial Benefits

Burial Benefits: General

5.630 Types of VA burial benefits.
5.631 Deceased veterans for whom VA may provide burial benefits.
5.632 Persons who may receive burial benefits.
5.633 Claims for burial benefits.
5.634 Reimbursable burial expenses: general.
5.635 Reimbursable transportation expenses for a veteran who is 
buried in a national cemetery or who died while hospitalized by VA.
5.636 Burial of a veteran whose remains are unclaimed.
5.637 [Reserved]

Burial Benefits: Allowances & Expenses Paid By VA

5.638 Burial allowance based on service-connected death.
5.639 Transportation expenses for burial in a national cemetery.
5.640-5.642 [Reserved]
5.643 Burial allowance based on nonservice-connected death.
5.644 Burial allowance for a veteran who died while hospitalized by 
VA.
5.645 Plot or interment allowance.
5.646-5.648 [Reserved]

Burial Benefits: Other

5.649 Priority of payments when there is more than one claimant.
5.650 Escheat (payment of burial benefits to an estate with no 
heirs).
5.651 Effect of contributions by government, public, or private 
organizations.
5.652 Effect of forfeiture on payment of burial benefits.
5.653 Eligibility based on status before 1958.
5.654-5.659 [Reserved]
Subpart K: Matters Affecting the Receipt of Benefits

Bars to Benefits

5.660 In the line of duty.
5.661 Willful misconduct.
5.662 Alcohol and drug abuse.
5.663 Homicide as a bar to benefits.
5.664-5.674 [Reserved]

Forfeiture and Renouncement of the Right to VA Benefits

5.675 General forfeiture provisions.
5.676 Forfeiture for fraud.
5.677 Forfeiture for treasonable acts.
5.678 Forfeiture for subversive activity.
5.679 Forfeiture decision procedures.
5.680 Revocation of forfeiture.
5.681 Effective dates: forfeiture.
5.682 Presidential pardon for offenses causing forfeiture.
5.683 Renouncement of benefits.

[[Page 71163]]

5.684-5.689 [Reserved]
Subpart L: Payments and Adjustments to Payments

General Rate-Setting and Payments

5.690 Where to find benefit rates and income limits.
5.691 Adjustments for fractions of dollars.
5.692 Fractions of one cent not paid.
5.693 Beginning date for certain benefit payments.
5.694 Deceased beneficiary.
5.695 Surviving spouse's benefit for the month of the veteran's 
death.
5.696 Payments to or for a child pursuing a course of instruction at 
an approved educational institution.
5.697 Exchange rates for income received or expenses paid in foreign 
currencies.
5.698-5.704 [Reserved]

General Reductions, Discontinuances, and Resumptions

5.705 General effective dates for reduction or discontinuance of 
benefits.
5.706 Payments excluded in calculating income or net worth.
5.707 Deductible medical expenses.
5.708 Eligibility verification reports.
5.709 Claimant and beneficiary responsibility to report changes.
5.710 Adjustment in benefits due to reduction or discontinuance of a 
benefit to another payee.
5.711 Payment to dependents due to the disappearance of a veteran 
for 90 days or more.
5.712 Suspension of benefits due to the disappearance of a payee.
5.713 Restriction on benefit payments to an alien located in enemy 
territory.
5.714 Restriction on delivery of benefit payments to payees located 
in countries on Treasury Department list.
5.715 Claims for undelivered or discontinued benefits.
5.716-5.719 [Reserved]

Hospital, Domiciliary, and Nursing Home Care Reductions and Resumptions

5.720 Adjustments to special monthly compensation based on the need 
for regular aid and attendance while a veteran is receiving 
hospital, domiciliary, or nursing home care.
5.721 Resumption of special monthly compensation based on the need 
for regular aid and attendance after a veteran is on temporary 
absence from hospital, domiciliary, or nursing home care or is 
discharged or released from such care.
5.722 Adjustment of Improved Pension while a veteran is receiving 
domiciliary or nursing home care.
5.723 Adjustment of Improved Pension while a veteran, surviving 
spouse, or child is receiving Medicaid-covered care in a nursing 
facility.
5.724 Adjustment or discontinuance of Improved Pension based on the 
need for regular aid and attendance while a veteran is receiving 
hospital, domiciliary, or nursing home care.
5.725 Resumption of Improved Pension and Improved Pension based on 
the need for regular aid and attendance after a veteran is on 
temporary absence from hospital, domiciliary, or nursing home care 
or is discharged or released from such care.
5.726 Reduction of Section 306 Pension while a veteran is receiving 
hospital, domiciliary, or nursing home care.
5.727 Reduction of Old-Law Pension while a veteran is receiving 
hospital, domiciliary, or nursing home care.
5.728 Reduction of Old-Law Pension or Section 306 Pension based on 
the need for regular aid and attendance while a veteran is receiving 
hospital, domiciliary, or nursing home care.
5.729 Resumption of Section 306 Pension and Section 306 Pension 
based on the need for regular aid and attendance during a veteran's 
temporary absence from hospital, domiciliary, or nursing home care 
or after released from such care.
5.730 Resumption of Old-Law Pension and Old-Law Pension based on the 
need for regular aid and attendance after a veteran is on temporary 
absence from hospital, domiciliary, or nursing home care or is 
discharged or released from such care.
5.731-5.739 [Reserved]

Payments to a Beneficiary Who Is Eligible for More Than One Benefit: 
General Provisions

5.740 Definitions relating to elections of benefits.
5.741 Persons who may make an election of benefits.
5.742 Finality of elections; cancellation of certain elections of 
benefits.
5.743 General effective dates for awarding, reducing, or 
discontinuing VA benefits because of an election.
5.744 [Reserved]

Payments From Service Departments and the Effects of Those Payments on 
VA Benefits

5.745 Entitlement to concurrent receipt of military retired pay and 
VA disability compensation.
5.746 Prohibition against receipt of active military service pay and 
VA benefits for the same period.
5.747 Effect of military readjustment pay, disability severance pay, 
and separation pay on VA benefits.
5.748 Concurrent receipt of VA disability compensation and retired 
pay by certain officers of the Public Health Service.
5.749 [Reserved]

Payments From Other Federal Agencies and the Effects of Those Payments 
on VA Benefits for a Veteran and Survivor

5.750 Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
military service.
5.751 Election between VA benefits and compensation under the 
Federal Employees' Compensation Act for death or disability due to 
Federal civilian employment.
5.752 Procedures for elections between VA benefits and compensation 
under the Federal Employees' Compensation Act.
5.753 Payment of VA benefits and civil service retirement benefits 
for the same period.
5.754 Effect of payment of compensation under the Radiation Exposure 
Compensation Act of 1990 on payment of certain VA benefits.
5.755 [Reserved]

Rules Concerning the Receipt of Multiple VA Benefits

5.756 Prohibition against concurrent receipt of certain VA benefits 
based on the service of the same veteran.
5.757 Elections between VA disability compensation and VA pension.
5.758 Electing Improved Pension instead of Old-Law Pension or 
Section 306 Pension.
5.759 Election between death compensation and dependency and 
indemnity compensation.
5.760 Electing Improved Death Pension instead of dependency and 
indemnity compensation.
5.761 Concurrent receipt of disability compensation, pension, or 
death benefits by a surviving spouse based on the service of more 
than one veteran.
5.762 Payment of multiple VA benefits to a surviving child based on 
the service of more than one veteran.
5.763 Payment of multiple VA benefits to more than one child based 
on the service of the same veteran.
5.764 Payment of Survivors' and Dependents' Educational Assistance 
and VA death pension or dependency and indemnity compensation for 
the same period.
5.765 Payment of compensation to a parent based on the service or 
death of multiple veterans.
5.766-5.769 [Reserved]
Subpart M--Apportionments to Dependents and Payments to Fiduciaries and 
Incarcerated Beneficiaries

Determining Eligibility for Apportionments

5.770 Apportionment claims.
5.771 Special apportionments.
5.772 Veteran's benefits apportionable.
5.773 Veterans disability compensation.
5.774 Benefits not apportionable.
5.775-5.779 [Reserved]
5.780 Eligibility for apportionment of pension.
5.781 Eligibility for apportionment of a surviving spouse's 
dependency and indemnity compensation.
5.782 Effective date of apportionment grant or increase.
5.783 Effective date of reduction or discontinuance of 
apportionment.
5.784 Special rules for apportioned benefits on death of beneficiary 
or apportionee.
5.785-5.789 [Reserved]

Incompetency and Payments to Fiduciaries and Minors

5.790 Determinations of incompetency and competency.
5.791 General fiduciary payments.
5.792 Institutional awards.
5.793 Limitation on payments for a child.
5.794 Beneficiary rated or reported incompetent.
5.795 Change of name of fiduciary.
5.796 Child's benefits to a fiduciary of an incompetent surviving 
spouse.

[[Page 71164]]

5.797 Testamentary capacity for VA insurance purposes.
5.798 Payment of disability compensation previously not paid because 
an incompetent veteran's estate exceeded $25,000.
5.799-5.809 [Reserved]

Payments to Incarcerated Beneficiaries

5.810 Incarcerated beneficiaries--general provisions and 
definitions.
5.811 Limitation on disability compensation during incarceration.
5.812 Limitation on dependency and indemnity compensation during 
incarceration.
5.813 Discontinuance of pension during incarceration.
5.814 Apportionment when a primary beneficiary is incarcerated.
5.815 Resumption of disability compensation or dependency and 
indemnity compensation upon a beneficiary's release from 
incarceration.
5.816 Resumption of pension upon a beneficiary's release from 
incarceration.
5.817 Fugitive felons.

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

Subpart A--General Provisions


Sec.  5.0  Scope and applicability.

    (a) Scope. Except as otherwise provided, this part applies only to 
benefits governed by this part.
    (b) Applicability. This part will apply prospectively, not 
retroactively.
    (1) This part will apply to all claims for benefits VA receives on 
or after [INSERT THE EFFECTIVE DATE OF THE FINAL RULE].
    (2) This part will apply to new actions VA or a claimant or 
beneficiary initiated on or after [EFFECTIVE DATE OF THE FINAL RULE] 
that pertain to either a running award of benefits or, subject to Sec.  
5.162, to a prior final decision. Such new actions include, but are not 
limited to, actions involving reduction or discontinuance of benefits, 
pension maintenance, adjustment of awards based on dependents, and 
apportionments.
    (3) Part 3 of this chapter will continue to apply to all claims VA 
received before [EFFECTIVE DATE OF THE FINAL RULE] and all actions VA 
or a claimant or beneficiary initiated before that date that were not 
finally decided by that date.
    (4) Part 3 of this chapter will continue to apply to death 
compensation and Spanish-American War benefits.

(Authority: 38 U.S.C. 501(a))

Sec.  5.1  General definitions.

    The following definitions apply to this part:
    Accrued benefits means unpaid periodic monetary benefits to which a 
person was entitled, based on the evidence in the file on the date of 
his or her death, from a claim for benefits pending on the date of 
death.
    Cross Reference: Sec.  5.554(a) (identifying benefits that VA may 
pay as accrued benefits).
    Active military service means active military, naval, or air 
service, as defined in 38 U.S.C. 101(24) and as described in Sec.  
5.21.
    Agency of original jurisdiction means the Department of Veterans 
Affairs activity or administration, that is, the Veterans Benefits 
Administration, Veterans Health Administration, or National Cemetery 
Administration, that made the initial determination on a claim.
    Alien means any person not a citizen or national of the U.S.
    Application means a specific form the Secretary requires a claimant 
to file to apply for a benefit.
    Armed Forces means the U.S. Army, Navy, Marine Corps, Air Force, 
and Coast Guard, including their reserve components.

(Authority: 38 U.S.C. 101(10))


    Beneficiary means a person in receipt of benefits under this part. 
Under certain circumstances, a beneficiary may also meet the definition 
of a claimant (for example, when seeking an increased compensation 
rating or contesting a proposed reduction in benefits).
    Benefit means any VA payment, service, commodity, function, or 
status, entitlement to which is determined under this part, except as 
otherwise provided.
    Certified statement means a statement made and signed by a person 
who affirms that the statement is true and accurate to the best of that 
person's knowledge and belief.
    Child born of the marriage and child born before the marriage. A 
child born of the marriage means a child of a deceased veteran born on 
or after the date of a marriage that is the basis of a surviving 
spouse's entitlement to benefits. A child born before the marriage 
means a child of a deceased veteran born before the date of a marriage 
that is the basis of a surviving spouse's entitlement to benefits. 
Neither of these terms includes an adopted child or a stepchild.

(Authority: 38 U.S.C. 103)


    Claim means a formal or informal communication in writing 
requesting a determination of entitlement, or evidencing a belief in 
entitlement, to a benefit under this part.

(Authority: 38 U.S.C. 5101)


    Claim for benefits pending on the date of death means a claim filed 
with VA which had not been finally adjudicated by VA on or before the 
date of death. Such a claim may include a deceased claimant's claim to 
reopen a finally denied claim based upon new and material evidence or a 
deceased claimant's claim of clear and unmistakable error in a prior 
rating or decision. Any new and material evidence submitted to reopen 
the claim must have been in VA's possession on or before the date of 
the beneficiary's death.
    Claimant means a person applying for, or filing a claim for, any 
benefit under this part.

(Authority: 38 U.S.C. 5100)


    Competent evidence means competent expert evidence or competent lay 
evidence.
    (1) Competent expert evidence. Expert evidence is a statement or 
opinion based all or in part on scientific, medical, technical, or 
other specialized knowledge. Examples include, but are not limited to, 
medical or scientific opinions. Expert evidence is competent if the 
person upon whose knowledge the evidence is based is qualified through 
education, training, or experience to offer the statement or opinion 
comprising the evidence.
    (2) Competent lay evidence. Lay evidence is a statement or opinion 
offered by a lay person. A lay person is a person without relevant 
specialized education, training, or experience. Lay evidence is 
competent if it is provided by a person who has personal knowledge of 
facts or circumstances described in the statement or opinion comprising 
the evidence and if those facts or circumstances can be observed and 
described by a lay person.

    Note to the definition of competent evidence: In VA's 
nonadversarial system, all evidence is admitted into the record. VA 
does not exclude from the record evidence that is not ``competent'' 
under this section; however, such evidence may not be probative 
because it is not competent.

    Custody of a child means that a person or institution is legally 
responsible for the welfare of a child and has the legal right to 
exercise parental control over the child. Such a person or institution 
is the ``custodian'' of the child.
    Direct service connection means that the evidence proves that the 
veteran's injury or disease resulting in disability or death was 
incurred or aggravated in the line of duty during active military 
service without application of the presumptions of service connection 
in subpart E of this part; or of secondary service connection under 
Sec.  5.246, or Sec.  5.247.

[[Page 71165]]

    Discharged or released from active military service includes, but 
is not limited to, either of the following events:
    (1) Retirement from the active military service; or
    (2) Completion of active military service for the period of time a 
person was obligated to serve at the time of entry into that period of 
service in cases where both of the following elements are true:
    (i) The person was not discharged or released at the end of that 
period of time due to an intervening change in military status, as 
defined in Sec.  5.37; and
    (ii) The person would have been eligible for a discharge or release 
under conditions other than dishonorable at the end of that period of 
time except for the intervening change in military status.

(Authority: 38 U.S.C. 101(18))


    Drugs means chemical substances that affect the processes of the 
mind or body and that may cause intoxication or harmful effects if 
abused. This includes prescription and non-prescription drugs, whether 
obtained legally or illegally.
    Effective the date of the last payment means that VA's action is 
effective as of the first day of a month in which it is possible to 
suspend, reduce, or discontinue a benefit payment without creating an 
overpayment.
    Evidence in the file on the date of death means evidence in VA's 
possession on or before the date of the deceased beneficiary's death, 
even if such evidence was not physically located in the VA claims 
folder on or before the date of death.

(Authority: 38 U.S.C. 501(a), 5121(a); Sec. 104, Pub. L. 108-183, 
117 Stat. 2656)


    Final decision means a decision on a claim for benefits of which VA 
sent the claimant written notice as required by Sec.  5.83, and:
    (1) The claimant did not file a timely Notice of Disagreement in 
compliance with Sec.  20.302(a) of this chapter or, with respect to 
simultaneously contested claims, in compliance with Sec.  20.501(a) of 
this chapter;
    (2) The claimant filed a timely Notice of Disagreement, but did not 
file a timely Substantive Appeal in compliance with Sec.  20.302(b) of 
this chapter or, with respect to simultaneously contested claims, in 
compliance with Sec.  20.501(b) of this chapter; or
    (3) In the case of a decision by the Board of Veterans' Appeals, 
the decision is final under Sec.  20.1100 of this chapter.

(Authority: 38 U.S.C. 7105)


    Fraud means any of the following, as applicable:
    (1) As used in Sec.  5.676, fraud means an act committed when a 
person knowingly makes or causes to be made or conspires, combines, 
aids, or assists in, agrees to, arranges for, or in any way procures 
the making or presentation of a false or fraudulent affidavit, 
declaration, certificate, statement, voucher, or paper, concerning any 
benefit except insurance payments.
    (2) As used in Sec. Sec.  5.196 and 5.203, fraud means an 
intentional misrepresentation of fact, or the intentional failure to 
disclose pertinent facts, for purpose of obtaining, or assisting a 
person to obtain, an annulment or divorce, with knowledge that the 
misrepresentation or failure to disclose may result in the erroneous 
granting of an annulment or divorce.
    (3) As used in Sec. Sec.  5.172, 5.174, and 5.175, fraud means an 
intentional misrepresentation of fact, or the intentional failure to 
disclose pertinent facts, for purpose of obtaining or retaining, or 
assisting a person to obtain or retain, eligibility for benefits, with 
knowledge that the misrepresentation or failure to disclose may result 
in the erroneous award or retention of such benefits.

(Authority: 38 U.S.C. 103, 110, 1159, 6103(a))


    Insanity, as a defense to commission of an act, means a person had 
such a defect of reason resulting from injury, disease, or mental 
deficiency that he or she did not know or understand the nature or 
consequence of the act, or that what he or she was doing was wrong. 
Behavior that is attributable to a personality disorder does not 
satisfy the definition of insanity.
    Nonservice-connected means, with respect to disability or death, 
that such disability was not incurred or aggravated, or that the death 
did not result from a disability incurred or aggravated, in the line of 
duty in active military service.
    Notice means either:
    (1) A written communication VA sends a claimant or beneficiary at 
his or her latest address of record, and to his or her designated 
representative and fiduciary, if any; or
    (2) An oral communication VA conveys to a claimant or beneficiary.
    Nursing home means any of the following facilities:
    (1) Any extended care facility licensed by a State to provide 
skilled or intermediate-level nursing care;
    (2) A nursing home care unit in a State veterans' home approved for 
payment under 38 U.S.C. 1742, Inspections of such homes; restrictions 
on beneficiaries; or
    (3) A VA Nursing Home Care Unit.

(Authority: 38 U.S.C. 101(28))


    Payee means a person to whom monetary benefits are payable.
    Political subdivision of the U.S. means a State, as defined in this 
section, and the counties (or parishes), cities, or municipalities of a 
State.
    Proximately caused means that the event resulted directly from the 
cause and would not have occurred without that cause.
    Psychosis means any of the following disorders listed in 
``Diagnostic and Statistical Manual of Mental Disorders'', Fourth 
Edition, Text Revision, of the American Psychiatric Association (DSM-
IV-TR):
    (1) Brief Psychotic Disorder;
    (2) Delusional Disorder;
    (3) Psychotic Disorder Due to General Medical Condition;
    (4) Psychotic Disorder Not Otherwise Specified;
    (5) Schizoaffective Disorder;
    (6) Schizophrenia;
    (7) Schizophreniform Disorder;
    (8) Shared Psychotic Disorder; and
    (9) Substance-Induced Psychotic Disorder.

(Authority: 38 U.S.C. 1101, 1112(a) and (b))


    Reserve, or reservist, means a member of a reserve component.

(Authority: 38 U.S.C. 101(26))


    Reserve component means the Army, Naval, Marine Corps, Air Force, 
and Coast Guard Reserves and the Army National Guard and Air National 
Guard of the U.S.

(Authority: 38 U.S.C. 101(27))


    Secretary concerned means:
    (1) The Secretary of the Army, with respect to matters concerning 
the Army;
    (2) The Secretary of the Navy, with respect to matters concerning 
the Navy or the Marine Corps;
    (3) The Secretary of the Air Force, with respect to matters 
concerning the Air Force;
    (4) The Secretary of Homeland Security, with respect to matters 
concerning the Coast Guard;
    (5) The Secretary of Health and Human Services, with respect to 
matters concerning the Public Health Service; or
    (6) The Secretary of Commerce, with respect to matters concerning 
the Coast and Geodetic Survey, the Environmental Science Services 
Administration, and the National Oceanic and Atmospheric 
Administration.

(Authority: 38 U.S.C. 101(25))


    Service-connected means, with respect to disability or death, that 
such

[[Page 71166]]

disability was incurred or aggravated, or that the death resulted from 
a disability incurred or aggravated, in the line of duty in active 
military service.
    Service treatment records means, regarding an applicant for 
membership in, or a member of, the Armed Forces, records of medical 
treatment and examinations conducted by the Armed Forces or by a 
civilian health care provider at Armed Forces' expense.
    State means each of the several States, Territories, and 
possessions of the U.S.; the District of Columbia; and the Commonwealth 
of Puerto Rico. For purposes of 38 U.S.C. 101(20), and 38 U.S.C. 
chapters 34 and 35, ``State'' will also include the Canal Zone.

(Authority: 38 U.S.C. 101(20))


    Uniformed services means the Armed Forces; the Army National Guard 
and the Air National Guard when engaged in active duty for training, 
inactive duty training, or full-time federal National Guard duty; the 
commissioned corps of the Public Health Service; and any other category 
of persons designated by the President in time of war or national 
emergency.
    VA means all organizational units of the Department of Veterans 
Affairs.
    Veteran means any of the following persons, as applicable:
    (1) A person who had active military service and who was discharged 
or released under conditions other than dishonorable.

(Authority: 38 U.S.C. 101(2))


    (2) A person who died in active military service and whose death 
was not due to willful misconduct.

(Authority: 38 U.S.C. 1101(1), 1301)


    (3) For death pension purposes, a person who died in active 
military service under conditions that prevent payment of service-
connected death benefits. The person must have completed at least 2 
years of honorable military service, as certified by the Secretary 
concerned. See subpart F of this part for eligibility information.

(Authority: 38 U.S.C. 1541(h))


    Willful misconduct, for purposes of this part, means an act 
involving deliberate or intentional wrongdoing with knowledge, or 
wanton and reckless disregard, of its probable consequences. Civil 
infractions (such as mere technical violation of police regulations or 
other ordinances) will not, by themselves, constitute willful 
misconduct.


Sec.  5.2  Terms and usage.

    Unless otherwise provided, a singular noun in this part that refers 
to a person also includes the plural of that noun (for example, 
``child'' includes ``children''). Nouns that follow this rule include, 
but are not limited to, the following:
    (a) Veteran;
    (b) Claimant;
    (c) Beneficiary;
    (d) Dependent;
    (e) Spouse;
    (f) Child;
    (g) Parent; and
    (h) Survivor.


Sec.  5.3  Standards of proof.

    (a) Applicability. This section states the general standards of 
proof to prove a fact or resolve an issue material to deciding a claim 
and to rebut presumptions. These standards apply unless a statute or 
another section of this part specifically provides otherwise.
    (b) Proving a fact or issue--(1) Weight of the evidence. Weight of 
the evidence means the persuasiveness of some evidence in comparison 
with other evidence.
    (2) Equipoise. Equipoise means that there is an approximate balance 
between the weight of the evidence in support of and the weight of the 
evidence against a particular finding of fact or the resolution of a 
particular issue.
    (3) Benefit of the doubt rule. When the evidence is in equipoise 
regarding a particular fact or issue, VA will give the benefit of the 
doubt to the claimant and the fact or issue will be resolved in the 
claimant's favor. A fact or issue that would tend to disprove a claim 
must be established by a preponderance of the evidence. The benefit of 
the doubt rule applies even in the absence of official records. For 
example, in applying the standard, VA will consider that no official 
records may have been kept in cases where an alleged incident arose 
under combat or similarly strenuous conditions if the incident is 
consistent with the probable results of such known hardships.
    (4) Preponderance of evidence. A fact or issue is established by a 
``preponderance of evidence'' when the weight of the evidence in 
support of that fact or issue is greater than the weight of the 
evidence against it.
    (5) Weighing the evidence. In determining whether the evidence is 
in equipoise, VA will consider whether evidence favoring the existence, 
or nonexistence, of a relevant fact or issue is supported or 
contradicted by the evidence as a whole and by known facts. Objectively 
unsupported personal speculation, suspicion, or doubt on the part of a 
person adjudicating a claim is not a sufficient basis for concluding 
that the evidence is not in equipoise.
    (6) Reopening claims. The standards of proof otherwise provided in 
this section do not apply when determining if evidence is new and 
material, but do apply after the claim has been reopened. In 
determining whether to reopen a claim based on new and material 
evidence, the evidence need not be in equipoise. VA will reopen a claim 
when the new and material evidence merely raises a reasonable 
possibility of substantiating the claim. See Sec.  5.55.
    (c) Rebuttal of a presumption. A presumption is rebutted if the 
preponderance of evidence is contrary to the presumed fact. In 
rebutting a presumption under Sec.  5.260(c), affirmative evidence 
means evidence supporting the existence of certain facts.
    (d) Quality of evidence to be considered. VA does not simply count 
the pieces of evidence for or against the existence, or nonexistence, 
of a relevant fact or issue when it is determining whether the 
applicable standard of proof has been met. VA will assess the 
credibility and probative value of each piece of evidence and then 
weigh all the relevant evidence for and against the fact or issue. Not 
all pieces of evidence will carry equal weight.
    (e) Absence of evidence may be evidence. VA may consider the weight 
of an absence of evidence in support of, or against, a particular fact 
or issue.

(Authority: 38 U.S.C. 501(a), 5107(b))

Sec.  5.4  Claims adjudication policies.

    (a) Ex parte proceedings and assistance. VA conducts its 
proceedings ex parte, which means that VA is not an adversary of the 
claimant. VA will assist a claimant or beneficiary in developing his or 
her claim as provided in Sec.  5.90.
    (b) VA decision-making. VA will base its decisions on a review of 
the entire record, including material pertaining to the claimant or 
decedent in a death benefit claim. It is VA's defined and consistently 
applied policy to administer the law under a broad interpretation, 
consistent with the facts shown in every case. VA will make decisions 
that grant every benefit that the law supports while at the same time 
protecting the interests of the Government.

(Authority: 38 U.S.C. 501(a))

Sec.  5.5  Delegations of authority.

    (a) Entitlement to benefits. Authority to make findings and 
decisions under the applicable laws, regulations, precedents, and 
instructions, as to entitlement to benefits under this part 5 is 
delegated to the Under Secretary for Benefits, and to supervisory or 
adjudicative personnel within the

[[Page 71167]]

Veterans Benefits Administration who are designated by the Under 
Secretary for Benefits.
    (b) Forfeiture. Authority to determine whether a claimant or payee 
has forfeited the right to benefits or to remit a forfeiture under 38 
U.S.C. 6103 or 6104 is delegated to the Director, Compensation Service, 
the Director, Pension and Fiduciary Service, and to personnel 
designated by the Directors. See Sec.  5.679.

(Authority: 38 U.S.C. 512(a))

Sec.  5.6-5.19  [Reserved]

Subpart B--Service Requirements for Veterans

Periods of War and Types of Military Service


Sec.  5.20  Dates of periods of war.

    This section explains what periods of service VA recognizes as 
wartime service, beginning with World War I. See 38 U.S.C. 101 for 
information concerning earlier periods of war. A veteran who served 
during one of these periods had wartime service.

----------------------------------------------------------------------------------------------------------------
              Period                           Dates             Exceptions/Special Rules         Authority
----------------------------------------------------------------------------------------------------------------
(a) World War I...................  April 6, 1917, through      (1) April 6, 1917, through  38 U.S.C. 101(7),
                                     November 11, 1918.          April 1, 1920, for U.S.     1101(2)(A),
                                                                 Armed Forces serving in     1501(2).
                                                                 Russia.
                                                                (2) April 6, 1917, through
                                                                 July 1, 1921, for a
                                                                 veteran who served in the
                                                                 active military service
                                                                 after April 5, 1917, and
                                                                 before November 12, 1918.
                                                                 This extension is limited
                                                                 to matters concerning
                                                                 benefits under 38 U.S.C.
                                                                 chapter 11 (disability
                                                                 compensation and death
                                                                 compensation) and
                                                                 benefits under 38 U.S.C.
                                                                 chapter 15 (``Pension for
                                                                 Non-Service-Connected
                                                                 Disability or Death or
                                                                 for Service'').
(b) World War II..................  December 7, 1941, through   World War II service also   38 U.S.C. 101(8),
                                     December 31, 1946.          includes any period of      1101(2)(B).
                                                                 continuous service after
                                                                 December 31, 1946, and
                                                                 before July 26, 1947, if
                                                                 that period of service
                                                                 began before January 1,
                                                                 1947. This extension is
                                                                 limited to matters
                                                                 concerning benefits under
                                                                 38 U.S.C. chapter 11
                                                                 (disability compensation
                                                                 and death compensation).
(c) Korean Conflict...............  June 27, 1950, through      None......................  38 U.S.C. 101(9).
                                     January 31, 1955.
(d) Vietnam Era...................  August 5, 1964, through     The Vietnam Era also        38 U.S.C. 101(29).
                                     May 7, 1975.                includes February 28,
                                                                 1961, through August 4,
                                                                 1964, in the case of a
                                                                 veteran who served in the
                                                                 Republic of Vietnam
                                                                 during that period.
(e) Persian Gulf War..............  August 2, 1990, through a   ..........................  38 U.S.C. 101(33).
                                     date to be prescribed by
                                     Presidential proclamation
                                     or by law.
(f) Future periods of war.........  Beginning on the date of    ..........................  38 U.S.C. 101(11).
                                     any future declaration of
                                     war by the Congress and
                                     ending on a date
                                     prescribed by
                                     Presidential proclamation
                                     or concurrent resolution
                                     of the Congress.
----------------------------------------------------------------------------------------------------------------

Sec.  5.21  Service VA recognizes as active military service.

    (a) Definition. Active military service includes any of the 
following kinds of service:
    (1) Active duty: See Sec.  5.22.
    (2) The service of a person certified by the Secretary of Defense 
as serving on active military service. See Sec.  5.27.
    (3) The service of a group listed in Sec.  5.28.
    (4) Active duty for training during which the person was disabled 
or died from an injury or disease incurred or aggravated in the line of 
duty.
    (5) Inactive duty training during which the person was disabled or 
died from an injury incurred or aggravated in the line of duty or from 
an acute myocardial infarction, a cardiac arrest, or a cerebrovascular 
accident.
    (6) Active or Reserve duty for a person who was injured or died 
while assigned to the Postmaster General for the aerial transportation 
of mail from February 10, 1934, through March 26, 1935.

(Authority: Pub. L. 73-140, 48 Stat. 508)


    (b) Determination of period of active military service. In 
determining the period of active military service for service-connected 
or nonservice-connected benefits, VA will not count:
    (1) Time spent on industrial, agricultural, or indefinite furlough;
    (2) Time lost when absent without leave and without pay;
    (3) Time while under arrest without a subsequent acquittal or 
dismissal of charges;
    (4) Time during desertion; or
    (5) Subject to 10 U.S.C. 875 (concerning the restoration of rights, 
privileges, and property affected by certain court-marital sentences 
that are set aside or disapproved), time while serving a sentence of 
confinement imposed by a court-martial.

(Authority: 38 U.S.C. 101(24), 501(a).


    Cross Reference: Sec.  5.1(ee), for the definition of ``reserve''.


Sec.  5.22  Service VA recognizes as active duty.

    (a) Definition. Active duty means:
    (1) Full-time duty in the Armed Forces, other than active duty for 
training.
    (2) Certain duty performed by:
    (i) Reserve and National Guard members. See Sec.  5.23.
    (ii) Armed Services Academy cadets, midshipmen, attendees at the 
preparatory schools of the Armed

[[Page 71168]]

Services Academies, and Senior Reserve Officers' Training Corps 
members. See Sec.  5.24.
    (iii) Commissioned officers of the Public Health Service, Coast and 
Geodetic Survey and its successor agencies, and temporary members of 
the Coast Guard Reserves. See Sec.  5.25.
    (3) Certain service of persons ordered to service but who did not 
serve. See Sec.  5.26.
    (b) Termination of active duty. Active duty continues until 
midnight of the date of discharge or release from active duty.
    (c) Certain travel periods. Active duty includes certain travel as 
provided in Sec.  5.29.

(Authority: 38 U.S.C. 101(21))


    Cross Reference: Sec.  5.1, for the definition of ``reserve''.


Sec.  5.23  How VA classifies Reserve and National Guard duty.

    (a) Reserve duty--(1) Active duty. Full-time duty in the Armed 
Forces performed by a Reservist, other than active duty for training, 
is active duty.
    (2) Active duty for training. Full-time duty in the Armed Forces 
performed by a Reservist for training purposes is active duty for 
training.
    (3) Inactive duty training. Duty that is not full-time duty and 
that the Secretary concerned prescribes for a Reservist to participate 
in as a regular period of instruction or appropriate duty is inactive 
duty training. See 37 U.S.C. 206, ``Reserves; members of National 
Guard: inactive-duty training''. Special additional duties authorized 
for a Reservist by an authority designated by the Secretary concerned 
and performed on a voluntary basis in connection with prescribed 
training maintenance activities of the unit to which the Reservist is 
assigned is also inactive duty training.
    (b) National Guard--(1) Active duty. Full-time duty in the Armed 
Forces performed by a member of the National Guard serving under title 
10, United States Code, other than active duty for training, is active 
duty.
    (2) Active duty for training. Full-time duty performed by a member 
of the National Guard of any State under any of the following six 
circumstances is active duty for training:
    (i) When detailed as a rifle instructor for civilians (see 32 
U.S.C. 316);
    (ii) During required drills and field exercises (see 32 U.S.C. 
502);
    (iii) While participating in field exercises as directed by the 
Secretary of the Army or the Secretary of the Air Force (see 32 U.S.C. 
503);
    (iv) While attending schools or small arms competitions as 
prescribed by the Secretary of the Army or the Secretary of the Air 
Force (see 32 U.S.C. 504);
    (v) While attending any service school (except the U.S. Military 
Academy or the U.S. Air Force Academy), or attached to an organization 
of the Army or the Air Force for routine practical instruction during 
field training or other outdoor exercise (see 32 U.S.C. 505); or
    (vi) When performed under prior provisions of law that correspond 
to 32 U.S.C. 316, 502, 503, 504, or 505, for each of paragraphs 
(b)(2)(i) through (v) of this section.
    (3) Inactive duty training. Duty, other than full-time duty, 
performed by a member of the National Guard of any State under any of 
the following six circumstances is inactive duty training:
    (i) When detailed as a rifle instructor for civilians (see 32 
U.S.C. 316);
    (ii) During required drills and field exercises (see 32 U.S.C. 
502);
    (iii) While participating in field exercises as directed by the 
Secretary of the Army or the Secretary of the Air Force (see 32 U.S.C. 
503);
    (iv) While attending schools or small arms competitions as 
prescribed by the Secretary of the Army or the Secretary of the Air 
Force (see 32 U.S.C. 504);
    (v) While attending any service school (except the U.S. Military 
Academy or the U.S. Air Force Academy), or attached to an organization 
of the Army or the Air Force for routine practical instruction during 
field training or other outdoor exercise (see 32 U.S.C. 505); or
    (vi) When performed under prior provisions of law that correspond 
to 32 U.S.C. 316, 502, 503, 504, or 505, for each of paragraphs 
(b)(3)(i) through (v) of this section.
    (4) Exception. Inactive duty training does not include work or 
study performed in connection with correspondence courses, or 
attendance at an educational institution in an inactive status.
    (c) Certain travel periods. For issues involving travel of a 
reservist or member of the National Guard, see Sec.  5.29.

(Authority: 38 U.S.C. 101(21)-(23), 106, 501(a))


    Cross Reference: Sec.  5.1, for the definition of ``reserve''.


Sec.  5.24  How VA classifies duty performed by Armed Services Academy 
cadets and midshipmen, attendees at the preparatory schools of the 
Armed Services Academies, and Senior Reserve Officers' Training Corps 
members.

    (a) Service as a cadet or midshipman. Service as a cadet at the 
U.S. Air Force Academy, U.S. Military Academy, or U.S. Coast Guard 
Academy, or as a midshipman at the U.S. Naval Academy qualifies as 
active duty. The period of such duty continues until midnight of the 
date of discharge or release from the respective service academy.
    (b) Preparatory school attendance--(1) Active duty. Attendance at 
the preparatory schools of the U.S. Air Force Academy, the U.S. 
Military Academy, or the U.S. Naval Academy is considered active duty 
if:
    (i) The person was an enlisted active-duty member who was 
reassigned to a preparatory school without a release from active duty; 
or
    (ii) The person has a commitment to perform active duty in the 
Armed Forces that would be binding upon disenrollment from the 
preparatory school.
    (2) Active duty for training. Except as provided in paragraph 
(b)(1)(ii) of this section, attendance at the preparatory schools of 
the U.S. Air Force Academy, the U.S. Military Academy, or the U.S. 
Naval Academy by a person who enters the preparatory school directly 
from the Reserves, National Guard, or civilian life is active duty for 
training.
    (c) Senior Reserve Officers' Training Corps--(1) Active duty for 
training. Duty performed by a member of a Senior Reserve Officers' 
Training Corps program when ordered to duty for purpose of training or 
a practice cruise under statutes and regulations governing the Armed 
Forces conduct of the Senior Reserve Officers' Training Corps is active 
duty for training.

(Authority: 10 U.S.C. chapter 103)


    (i) Paragraph (c)(1) of this section is effective October 1, 1982, 
for death or disability resulting from injury or disease incurred or 
aggravated after September 30, 1982.
    (ii) Paragraph (c)(1) of this section is effective October 1, 1983, 
for death or disability resulting from injury or disease incurred or 
aggravated before October 1, 1982.
    (iii) For duty after September 30, 1988, the duty must be a 
prerequisite to the member being commissioned and must be for at least 
4 continuous weeks.
    (2) Inactive duty training. Training by a member of, or an 
applicant for membership (a student enrolled, during a semester or 
other enrollment term, in a course that is part of Reserve Officers' 
Training Corps instruction at an educational institution) in, the 
Senior Reserve Officers' Training Corps prescribed under 10 U.S.C. 
Chapter 103, ``Senior Reserve Officers' Training Corps'', is inactive 
duty training.
    (3) Drills. Time spent by a member of the Senior Reserve Officers' 
Training Corps in drills as part of his or her activities as a member 
of the corps is not active military service.

[[Page 71169]]

    (d) Travel. For issues involving travel under this section, see 
Sec.  5.29.

(Authority: 38 U.S.C. 101, 106, 501(a))


    Cross Reference: Sec.  5.1, for the definition of ``reserve''.


Sec.  5.25  How VA classifies service in the Public Health Service, in 
the Coast and Geodetic Survey and its successor agencies, and of 
temporary members of the Coast Guard Reserve.

    (a) Public Health Service--(1) Active duty. (i) Full-time duty, 
other than for training purposes, as a commissioned officer of the 
Regular or Reserve Corps of the Public Health Service is active duty if 
performed:
    (A) After July 28, 1945;
    (B) Before July 29, 1945, under circumstances affording entitlement 
to full military benefits; or
    (C) At any time, for purposes of dependency and indemnity 
compensation (DIC).
    (ii) Such active duty continues until midnight of the date of 
discharge or release from active duty.
    (2) Active duty for training. Full-time duty for training purposes 
performed as a commissioned officer of the Reserve Corps of the Public 
Health Service is active duty for training if performed:
    (i) After July 28, 1945;
    (ii) Before July 29, 1945, under circumstances affording 
entitlement to full military benefits, as determined by the Secretary 
of the Department of Defense; or
    (iii) At any time, for purposes of DIC.
    (3) Inactive duty training. Either of the following kinds of 
service is inactive duty training:
    (i) Duty, other than full-time duty, prescribed for a commissioned 
officer of the Reserve Corps of the Public Health Service by the 
Secretary of Health and Human Services under 37 U.S.C. 206, ``Reserves; 
members of National Guard: inactive-duty training'', or any other 
provision of law; or
    (ii) Special additional duties authorized for a commissioned 
officer of the Reserve Corps of the Public Health Service by an 
authority designated by the Secretary of Health and Human Services and 
performed by him or her on a voluntary basis in connection with the 
prescribed training or maintenance activities of the units to which he 
or she is assigned.
    (b) Coast and Geodetic Survey and successor agencies--(1) Active 
duty. Full-time duty as a commissioned officer in the Coast and 
Geodetic Survey and its successor agencies, the Environmental Science 
Services Administration and the National Oceanic and Atmospheric 
Administration, is active duty if performed:
    (i) After July 28, 1945;
    (ii) Before July 29, 1945, while on transfer to one of the Armed 
Forces;
    (iii) Before July 29, 1945, in time of war or National emergency 
declared by the President, while assigned to duty on a project for one 
of the Armed Forces in an area that the Secretary of Defense has 
determined to be of immediate military hazard;
    (iv) In the Philippine Islands on December 7, 1941, and 
continuously in such islands thereafter until July 29, 1945; or
    (v) At any time, for purposes of DIC.
    (2) Such active duty continues until midnight of the date of 
discharge or release from active duty.
    (c) Temporary member of the Coast Guard Reserve. Duty performed as 
a temporary member of the Coast Guard Reserve is not active duty for 
training or inactive duty training.
    (d) Travel. For issues involving travel by a member of the Public 
Health Service, a member of the Coast and Geodetic Survey and its 
successor agencies, or a reservist under this section, see Sec.  5.29.

(Authority: 38 U.S.C. 101, 106, 501(a))


    Cross Reference: Sec.  5.1, for the definitions of ``reserve'' and 
``reservist''.


Sec.  5.26  Circumstances where a person ordered to service, but who 
did not serve, is considered to have performed active duty.

    (a) Persons included. The persons described in paragraph (a) of 
this section who meet the requirements of paragraphs (a) and (b) of 
this section will be considered to have performed active duty for 
purpose of entitlement to benefits.
    (1) Volunteers. Volunteers are included, provided they have applied 
for enlistment or enrollment in the active military service and have 
been provisionally accepted and directed or ordered to report to a 
place for final acceptance into the service.
    (2) Draftees. Persons selected or drafted for enrollment in the 
active military service are included if they report, before being 
rejected for service, according to a call from their local draft board.
    (3) National Guard. Members of the National Guard are included when 
they have been called into Federal active service, but have not yet 
been enrolled in such service, and when reporting to a designated 
rendezvous.
    (b) Injury or disease. This section applies only if a person 
described in paragraph (a) of this section suffers an injury or 
contracts a disease in the line of duty while going to, coming from, or 
at a place designated for final acceptance or entry upon active duty. 
This applies to a draftee or selectee when reporting for preinduction 
examination or for final induction into active duty. This section does 
not apply to an injury or disease suffered during a period of inactive 
duty status or period of waiting after a final physical examination and 
prior to beginning the trip to report for induction. The injury or 
disease must be due to some factor relating to compliance with proper 
orders.

(Authority: 38 U.S.C. 106(b))


Sec.  5.27  Individuals and Groups that Qualify as Having Performed 
Active Military Service for purposes of VA Benefits Based on 
Designation by the Secretary of Defense.

    (a) Designation by the Secretary of Defense. Service performed by 
certain persons and groups for the Armed Forces of the U.S. in a 
capacity considered civilian employment or contractual service when the 
service was performed is active military service for purpose of VA 
benefits, if the Secretary of Defense, or his or her designee, 
certifies it as active military service and issues a discharge under 
honorable conditions.
    (b) Individuals and groups included. The Secretary of Defense, or 
his or her designee, has certified as active military service the 
service of the following individuals and groups:
    (1) American Merchant Marine in Oceangoing Service any time during 
the period December 7, 1941, to August 15, 1945. Recognized effective 
January 19, 1988.
    (2) The approximately 50 Chamorro and Carolinian former native 
policemen who received military training in the Donnal area of central 
Saipan and were placed under the command of Lt. Casino of the 6th 
Provisional Military Police Battalion to accompany U.S. Marines on 
active, combat-patrol activity any time during the period August 19, 
1945 to September 2, 1945. Recognized effective September 30, 1999.
    (3) Civilian Crewmen of the U.S. Coast and Geodetic Survey 
(U.S.C.GS) vessels, who performed their service in areas of immediate 
military hazard while conducting cooperative operations with and for 
the U.S. Armed Forces any time during the period December 7, 1941, to 
August 15, 1945. Qualifying U.S.C.GS vessels specified by the Secretary 
of Defense, or his or her designee, are the Derickson, Explorer, 
Gilbert, Hilgard, E. Lester Jones, Lydonia, Patton, Surveyor, 
Wainwright,

[[Page 71170]]

Westdahl, Oceanographer, Hydrographer, and Pathfinder. Recognized 
effective April 8, 1991.
    (4) Civilian employees of Pacific Naval Air Bases who actively 
participated in Defense of Wake Island during World War II. Recognized 
effective January 22, 1981.
    (5) Civilian Navy Identification Friend or Foe (IFF) Technicians, 
who served in the Combat Areas of the Pacific any time during the 
period December 7, 1941, to August 15, 1945. Recognized effective 
August 2, 1988.
    (6) Civilian personnel assigned to the Secret Intelligence Element 
of the Office of Strategic Services (OSS). Recognized effective 
December 27, 1982.
    (7) Engineer Field Clerks (WWI). Recognized effective August 31, 
1979.
    (8) Guam Combat Patrol. Recognized effective May 10, 1983.
    (9) Honorably discharged members of the American Volunteer Group 
(Flying Tigers), who served any time during the period December 7, 
1941, to July 18, 1942. Recognized effective May 3, 1991.
    (10) Honorably discharged members of the American Volunteer Guard, 
Eritrea Service Command, who served any time during the period June 21, 
1942, to March 31, 1943. Recognized effective June 29, 1992.
    (11) Male Civilian Ferry Pilots. Recognized effective July 17, 
1981.
    (12) The Operational Analysis Group of the Office of Scientific 
Research and Development, Office of Emergency Management, which served 
overseas with the U.S. Army Air Corps any time during the period 
December 7, 1941, to August 15, 1945. Recognized effective August 
27,1999.
    (13) Quartermaster Corps Female Clerical Employees serving with the 
AEF (American Expeditionary Forces) in World War I. Recognized 
effective January 22, 1981.
    (14) Quartermaster Corps Keswick Crew on Corregidor (WWII). 
Recognized effective February 7, 1984.
    (15) Reconstruction Aides and Dietitians in World War I. Recognized 
effective July 6, 1981.
    (16) Signal Corps Female Telephone Operators Unit of World War I. 
Recognized effective May 15, 1979.
    (17) Three scouts/guides, Miguel Tenorio, Penedicto Taisacan, and 
Cristino Dela Cruz, who assisted the U.S. Marines in the offensive 
operations against the Japanese on the Northern Mariana Islands from 
June 19, 1944, through September 2, 1945. Recognized effective 
September 30, 1999.
    (18) U.S. civilian employees of American Airlines, who served 
overseas as a result of American Airlines' contract with the Air 
Transport Command any time during the period December 14, 1941, to 
August 14, 1945. Recognized effective October 5, 1990.
    (19) U.S. civilian female employees of the U.S. Army Nurse Corps 
while serving in the defense of Bataan and Corregidor any time during 
the period January 2, 1942, to February 3, 1945. Recognized effective 
December 13, 1993.
    (20) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of Braniff Airways, who served overseas in the North Atlantic 
or under the jurisdiction of the North Atlantic Wing, Air Transport 
Command (ATC), as a result of a contract with the ATC any time during 
the period February 26, 1942, to August 14, 1945. Recognized effective 
June 2, 1997.
    (21) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of Consolidated Vultree Aircraft Corporation (Consairway 
Division), who served overseas as a result of a contract with the Air 
Transport Command any time during the period December 14, 1941, to 
August 14, 1945. Recognized effective June 29, 1992.
    (22) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of Northeast Airlines Atlantic Division, who served overseas 
as a result of Northeast Airlines' Contract with the Air Transport 
Command any time during the period December 7, 1941, to August 14, 
1945. Recognized effective June 2, 1997.
    (23) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of Northwest Airlines, who served overseas as a result of 
Northwest Airline's contract with the Air Transport Command any time 
during the period December 14, 1941, to August 14, 1945. Recognized 
effective December 13, 1993.
    (24) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of Pan American World Airways and Its Subsidiaries and 
Affiliates, who served overseas as a result of Pan American's Contract 
with the Air Transport Command and Naval Air Transport Service any time 
during the period December 14, 1941, to August 14, 1945. Recognized 
effective July 16, 1992.
    (25) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of Transcontinental and Western Air (TWA), Inc., who served 
overseas as a result of TWA's contract with the Air Transport Command 
any time during the period December 14, 1941, to August 14, 1945. The 
``Flight Crew'' includes pursers. Recognized effective May 13, 1992.
    (26) U.S. Civilian Flight Crew and Aviation Ground Support 
Employees of United Air Lines (UAL), who served overseas as a result of 
UAL's contract with the Air Transport Command any time during the 
period December 14, 1941, to August 14, 1945. Recognized effective May 
13, 1992.
    (27) U.S. civilian volunteers, who actively participated in the 
Defense of Bataan. Recognized effective February 7, 1984.
    (28) U.S. civilians of the American Field Service (AFS), who served 
overseas operationally in World War I any time during the period August 
31, 1917, to January 1, 1918. Recognized effective August 30, 1990.
    (29) U.S. civilians of the American Field Service (AFS), who served 
overseas under U.S. Armies and U.S. Army Groups in World War II any 
time during the period December 7, 1941, to May 8, 1945. Recognized 
effective August 30, 1990.
    (30) U.S. Merchant Seamen who served on blockships in support of 
Operation Mulberry. Recognized effective October 18, 1985.
    (31) Wake Island Defenders from Guam. Recognized effective April 7, 
1982.
    (32) Women's Air Forces Service Pilots (WASP). Recognized effective 
November 23, 1977.
    (33) Women's Army Auxiliary Corps (WAAC). Recognized effective 
March 18, 1980.
    (c) Effective dates of awards--(1) Scope. This paragraph (c) 
establishes the effective date of an award of any of the following 
benefits based on service in a group listed in this section:
    (i) Pension;
    (ii) Disability compensation;
    (iii) Dependency and indemnity compensation; and
    (iv) Monetary allowances for a child of:
    (A) A Vietnam veteran under Sec.  5.589;
    (B) A Vietnam veteran under Sec.  5.590; or
    (C) A veteran of covered service in Korea under 38 U.S.C. 1821, 
``Benefits for a child of certain Korea service veterans born with 
spina bifida''.
    (2) Claim received 1 year or less after the effective date of 
recognition. If VA receives the claim no later than 1 year after the 
effective date of recognition, then the effective date of the award is 
the later of:
    (i) The date entitlement arose, as defined in Sec.  5.150; or
    (ii) The effective date of recognition.
    (3) Claim received more than 1 year after the effective date of 
recognition. If VA receives the claim more than 1 year after the 
effective date of recognition, the effective date of the award or 
increase is the later of:

[[Page 71171]]

    (i) The date entitlement arose, as defined in Sec.  5.150; or
    (ii) One (1) year prior to the date of receipt of the claim.
    (4) Effective dates of awards based on a review on VA's initiative 
1 year or less after the effective date of recognition. If VA awards 
benefits no later than 1 year after the effective date of recognition, 
the effective date of the award is the later of:
    (i) The date entitlement arose, as defined in Sec.  5.150; or
    (ii) The effective date of recognition.
    (5) Effective dates of awards based on a review on VA's initiative 
more than 1 year after the effective date of the change. If VA awards 
benefits more than 1 year after the effective date of recognition, the 
effective date of the award is the later of:
    (i) The date entitlement arose, as defined in Sec.  5.150; or
    (ii) One (1) year before the date of the VA rating decision 
awarding the benefit, or if no rating decision is required, 1 year 
before the date VA otherwise determines that the claimant is entitled 
to the benefit.

(Authority: 38 U.S.C. 501(a), 1832(b)(2), 5110(g); Sec. 401, Pub. L. 
95-202, 91 Stat. 1449-50)

Sec.  5.28  Other groups designated as having performed active military 
service.

    The following groups are considered to have performed active 
military service:
    (a) Alaska Territorial Guard during World War II. (1) Service in 
the Alaska Territorial Guard during World War II, for any person who 
the Secretary of Defense determines was honorably discharged, is 
included.
    (2) Benefits cannot be paid for this service for any period prior 
to August 9, 2000.
    (b) Army field clerks. Army field clerks are included as enlisted 
personnel.
    (c) Army Nurse Corps, Navy Nurse Corps, and female dietetic and 
physical therapy personnel. Army Nurse Corps, Navy Nurse Corps, and 
female dietetic and physical therapy personnel are included, as 
follows:
    (1) Nurse Corps. Female Army and Navy nurses on active service 
under order of the service department; or
    (2) Female dietetic and physical therapy personnel. Female dietetic 
and physical therapy personnel, excluding students and apprentices, 
appointed with relative rank after December 21, 1942, or commissioned 
after June 21, 1944.
    (d) Aviation camps. Students who were enlisted men in Aviation 
camps during World War I are included.
    (e) Coast Guard. Active service in the Coast Guard after January 
27, 1915, while under the jurisdiction of the Treasury Department, the 
Navy Department, the Department of Transportation, or the Department of 
Homeland Security is included. This does not include temporary members 
of the Coast Guard Reserves.
    (f) Contract surgeons. Contract surgeons are included for 
disability compensation and dependency and indemnity compensation, if 
the disability or death was the result of injury or disease contracted 
in the line of duty during a period of war while actually performing 
the duties of assistant surgeon or acting assistant surgeon with any 
military force in the field, or in transit, or in a hospital.
    (g) Field clerks, Quartermaster Corps. Field clerks of the 
Quartermaster Corps are included as enlisted personnel.
    (h) Lighthouse service personnel. Lighthouse service personnel who 
were transferred to the service and jurisdiction of the War or Navy 
Departments by Executive order under the Act of August 29, 1916, are 
included. Effective July 1, 1939, service was consolidated with the 
Coast Guard.
    (i) Male nurses. Male nurses who were enlisted in a Medical Corps 
are included.
    (j) Persons previously having a pensionable or compensable status. 
Persons having a pensionable or compensable status before January 1, 
1959, are included.
    (k) Insular Forces--(1) Philippine forces. Service in certain 
Philippine forces constitutes active military service for purposes of 
certain benefits as specified in Sec.  5.610.
    (2) Other insular forces. Service in the Insular Force of the Navy, 
Samoan Native Guard, or Samoan Native Band of the Navy constitutes 
active military service for purposes of entitlement to pension, 
disability compensation, dependency and indemnity compensation, and 
burial benefits at the full-dollar rate.
    (l) Revenue Cutter Service. The Revenue Cutter Service is included 
while serving under direction of the Secretary of the Navy in 
cooperation with the Navy. Effective January 28, 1915, the Revenue 
Cutter Service was merged into the Coast Guard.
    (m) Russian Railway Service Corps. Service during World War I in 
the Russian Railway Service Corps as certified by the Secretary of the 
Army is included.
    (n) Training camps. Members of training camps authorized by section 
54 of the National Defense Act (Pub. L. 64-85, 39 Stat. 166), are 
included, except for members of Student Army Training Corps Camps at 
the Presidio of San Francisco; Plattsburg, New York; Fort Sheridan, 
Illinois; Howard University, Washington, DC; Camp Perry, Ohio; and Camp 
Hancock, Georgia, from July 18, 1918 to September 16, 1918.
    (o) Women's Army Corps (WAC). Service in the WAC after June 30, 
1943, is included.
    (p) Women's Reserve of Navy, Marine Corps, and Coast Guard. Service 
in the Women's Reserve of the Navy, Marine Corps, and Coast Guard is 
included and provides the same benefits as members of the Officers 
Reserve Corps or enlisted men of the U.S. Navy, Marine Corps, or Coast 
Guard.

(Authority: 38 U.S.C. 101, 106, 107, 501(a), 1152, 1504)


    Cross Reference: Sec.  5.1, for the definition of ``reserve''.


Sec.  5.29  Circumstances under which certain travel periods may be 
classified as military service.

    (a) Active duty--(1) Travel time to and from active duty. Travel to 
or from any period of active duty is active duty if the travel is 
authorized by the Secretary concerned.
    (2) Travel on discharge or release. Travel time consisting of the 
period between the date of discharge or release and arrival at the 
person's residence by the most direct route is active duty.
    (3) Persons ordered to service but who did not serve. For 
information about the travel of certain persons ordered to service who 
did not serve, see Sec.  5.26(b).
    (b) Active duty for training or inactive duty training--(1) Travel 
time for active duty for training or inactive duty training. Any person 
proceeding directly to, or returning directly from, a period of active 
duty for training or inactive duty training will be considered to be on 
active duty for training or inactive duty training if the person was:
    (i) Authorized or required by competent authority designated by the 
Secretary concerned to perform such duty; and
    (ii) Disabled or died from an injury, an acute myocardial 
infarction, a cardiac arrest, or a cerebrovascular accident incurred 
during that travel.
    (2) Determination of status. VA will determine whether such a 
person was authorized or required to perform such duty and whether the 
person was disabled or died from an injury, an acute myocardial 
infarction, a cardiac arrest, or a cerebrovascular accident incurred 
during that travel. In making these determinations, VA will take into 
consideration:

[[Page 71172]]

    (i) The hour at which the person began to proceed to or return from 
the duty;
    (ii) The hour at which the person was scheduled to arrive for, or 
at which the person ceased to perform, such duty;
    (iii) The method of travel employed;
    (iv) The itinerary;
    (v) The manner in which the travel was performed; and
    (vi) The immediate cause of disability or death.
    (3) Burden of proof. Whenever any claim is filed alleging that the 
claimant is entitled to benefits because of travel for active duty for 
training or inactive duty training, the burden of proof will be on the 
claimant.

(Authority: 38 U.S.C. 101(21) and (22), 106(c) and (d))

Sec.  5.30  How VA determines if service qualifies for benefits.

    (a) Purpose. Except for a servicemember who died in service, a 
requirement for veteran status is discharge or release under other than 
dishonorable conditions. See Sec.  5.1 (defining ``veteran''). This 
section sets out how VA determines whether the servicemember's 
discharge or release was under other than dishonorable conditions.
    (b) Limitation to period of service concerned--(1) General rule. A 
determination under this section that a servicemember was discharged or 
released under dishonorable conditions applies only to the period of 
service to which the discharge or release applies. It does not preclude 
veteran status with respect to other periods of service from which the 
servicemember was discharged or released under other than dishonorable 
conditions. See also Sec.  5.37 (concerning certain cases where a 
servicemember was not discharged or released at the end of the period 
of time for which he or she was obligated to serve when entering a 
period of service because of a change in his or her military status 
during that period of service).
    (2) Forfeiture not precluded. The provisions of paragraph (b)(1) of 
this section do not preclude forfeiture of benefits under 38 U.S.C. 
6103, ``Forfeiture for fraud''; under 38 U.S.C. 6104, ``Forfeiture for 
treason''; under 38 U.S.C. 6105, ``Forfeiture for subversive 
activities''; or under similar statutes governing forfeiture of 
benefits.
    (c) Discharges and releases VA recognizes as being under other than 
dishonorable conditions. For purposes of making determinations 
concerning character of discharge for VA purposes, a military discharge 
that is characterized by the service department as being either 
honorable or under honorable conditions is binding on VA. Subject to 
Sec.  5.36 any of the following is a discharge or release under other 
than dishonorable conditions for VA purposes:
    (1) An honorable discharge;
    (2) A general discharge under honorable conditions; or
    (3) An uncharacterized administrative entry level separation in the 
case of separation of enlisted personnel based on administrative 
proceedings begun after September 30, 1982.
    (d) Discharges VA recognizes as being under dishonorable 
conditions. For VA purposes, a dishonorable discharge is a discharge 
under dishonorable conditions, except as provided in Sec.  5.33.
    (e) Discharges and releases for which VA will make the character of 
discharge determination. Subject to Sec.  5.36, VA will determine 
whether the following types of discharges are discharges under other 
than dishonorable conditions for VA purposes, based on the facts and 
circumstances surrounding separation:
    (1) An other than honorable discharge (formerly an ``undesirable'' 
discharge);
    (2) A bad conduct discharge; or
    (3) In the case of separation of enlisted personnel based on 
administrative proceedings begun after September 30, 1982, 
uncharacterized administrative separations for:
    (i) A void enlistment or induction; or
    (ii) Dropped from the rolls (that is, administrative discontinuance 
of military status and pay).
    (f) Offenses or events leading to discharge or release being 
recognized as a discharge under dishonorable conditions. For purposes 
of VA's character of discharge determination under paragraph (e) of 
this section, a discharge or release because of one or more of the 
offenses or events specified in this paragraph (f) is a discharge or 
release under dishonorable conditions for VA purposes:
    (1) Acceptance of an other than honorable discharge (formerly an 
``undesirable'' discharge) to avoid trial by general court-martial.
    (2) Mutiny or spying.
    (3) Commission of one or more offenses involving moral turpitude. 
For purposes of this section, an offense involves ``moral turpitude'' 
if it is unlawful, it is willful, it is committed without justification 
or legal excuse, and it is an offense which a reasonable person would 
expect to cause harm or loss to person or property. This includes, 
generally, conviction of a felony.
    (4) Engaging in willful and persistent misconduct during military 
service. A discharge because of a minor offense will not be considered 
willful and persistent misconduct if service was otherwise honest, 
faithful, and meritorious. If the misconduct includes absences without 
leave, see also Sec.  5.32.
    (5) Sexual acts involving aggravating circumstances or other 
factors affecting the performance of duty. Examples of sexual acts 
involving aggravating circumstances or other factors affecting the 
performance of duty include child molestation, prostitution, sexual 
acts or conduct accompanied by assault or coercion, and sexual acts or 
conduct taking place between servicemembers of disparate rank, grade, 
or status when the servicemember has taken advantage of his or her 
superior rank, grade, or status.

(Authority: 38 U.S.C. 101(2), 501(a), 1301)


    Cross Reference: Sec.  5.1, for the definition of ``willful 
misconduct''.

Bars to Benefits


Sec.  5.31  Statutory bars to benefits.

    (a) Purpose. By Federal statute, commission of certain acts leading 
to discharge or dismissal from the Armed Forces bars the grant of 
benefits (statutory bars). This section describes those acts and 
exceptions to the statutory bars.
    (b) Limitation to period of service concerned--(1) General rule. A 
determination under this section that veterans benefits are statutorily 
barred applies only to the period of service to which the relevant 
discharge or dismissal applies. It does not preclude the grant of 
benefits based upon other periods of service. See also Sec.  5.37 
(concerning certain cases in which a servicemember was not discharged 
or released at the end of a period of his or her service obligation 
because of a change in his or her military status during that period of 
service).
    (2) Forfeiture not precluded. The provisions of paragraph (b)(1) of 
this section do not preclude forfeiture of benefits under 38 U.S.C. 
6103, ``Forfeiture for fraud''; under 38 U.S.C. 6104, ``Forfeiture for 
treason''; under 38 U.S.C. 6105, ``Forfeiture for subversive 
activities''; or under similar statutes governing forfeiture of 
benefits.
    (c) Acts barring benefits. Benefits are not payable based upon a 
period of service from which the servicemember was discharged or 
dismissed from the Armed Forces under one or more of the following 
conditions:
    (1) Court-martial. By reason of the sentence of a general court-
martial. Substitution of an administrative form of discharge for a 
discharge or dismissal executed in accordance with the sentence of a 
court-martial under 10 U.S.C. 874(b) (granting the authority for

[[Page 71173]]

such substitutions) does not remove this bar to benefits.
    (2) Conscientious objector. As a conscientious objector who refused 
to perform military duty, wear the uniform, or comply with lawful 
orders of competent military authorities.
    (3) Deserter. As a deserter.
    (4) Absence without leave (AWOL). By reason of AWOL for a 
continuous period of at least 180 days. This bar is subject to Sec.  
5.32 and to paragraph (f) of this section (concerning limitations on 
the creation of overpayments). It applies to any person so discharged 
who was awarded a discharge under other than honorable conditions and 
who:
    (i) Was awarded an honorable or general discharge under one of the 
programs listed in Sec.  5.36(a) (concerning certain special 1970s-era 
discharge upgrades) prior to October 8, 1977; or
    (ii) Had not otherwise established basic eligibility to receive VA 
benefits prior to October 8, 1977. For purposes of this paragraph 
(c)(4)(ii), the term established basic eligibility to receive VA 
benefits means either a VA determination that the service department 
issued an other than honorable discharge under conditions other than 
dishonorable, or an upgraded honorable or general discharge issued 
prior to October 8, 1977, under criteria other than those prescribed by 
one of the programs listed in Sec.  5.36. However, if the service 
department discharged or released a person by reason of the sentence of 
a general court-martial, only a finding of insanity (see Sec.  5.33), 
or a decision of a board of correction of records established under 10 
U.S.C. 1552 (see Sec.  5.34) can establish basic eligibility to receive 
VA benefits.
    (5) Resignation. By reason of resignation by an officer for the 
good of the service.
    (6) Discharge due to alienage. At the request of a servicemember, 
by reason of discharge due to alienage during a period of hostilities. 
However, VA will not bar benefits in the absence of affirmative 
evidence establishing such a request.
    (d) Bars inapplicable to certain insurance. This section does not 
apply to war-risk insurance, Government (converted) insurance, or 
National Service Life Insurance policies.
    (e) Discontinuance of awards. Subject to the provisions of Sec.  
5.177, any award contrary to the provisions of paragraph (c) of this 
section will be discontinued.
    (f) Limitation on creation of overpayments when veteran was 
separated for AWOL. Awards made after October 8, 1977, in cases in 
which the bar in paragraph (c)(4) of this section applies, will be 
discontinued effective the first day of the month after the month for 
which VA last paid benefits.

(Authority: 38 U.S.C. 501(a), 5303; Pub. L. 95-126, 91 Stat. 1106, 
as amended by Pub. L. 102-40, 105 Stat. 239)


    Cross Reference: Sec.  5.1, for the definition of ``alien'' and 
Sec.  5.1, for the definition of ``insanity''.


Sec.  5.32  Consideration of compelling circumstances when veteran was 
separated for AWOL.

    (a) Compelling circumstances considered. Separation for absence 
without leave (AWOL) will not preclude veteran status under Sec.  5.30, 
and will not bar benefit entitlement under Sec.  5.31(c)(4) (concerning 
AWOL as a statutory bar to benefits) if VA determines that there were 
compelling circumstances to warrant unauthorized absence(s).
    (b) Factors considered. VA will evaluate all of the relevant 
evidence of record to determine whether there were compelling 
circumstances to warrant unauthorized absence(s), including, but not 
limited to, the following factors:
    (1) Length of absence without leave and character of service. VA 
will consider the length of the period(s) of AWOL in comparison to the 
length and character of service exclusive of the period(s) of AWOL. 
Service exclusive of the period(s) of AWOL should have been of such 
quality and length that it can be characterized as honest, faithful, 
meritorious, and of benefit to the nation.
    (2) Examples of circumstances VA will consider. Reasons offered for 
being AWOL that VA will consider include family emergencies, compelling 
family obligations, or similar types of compelling obligations or 
duties owed to third parties. In evaluating the reasons for being AWOL, 
VA will consider how the situation appeared to the servicemember in 
light of the servicemember's age, cultural background, educational 
level, and judgmental maturity. VA will also consider evidence showing 
that hardship or suffering during overseas service, combat wounds or 
other service-incurred or aggravated disability, adversely affected the 
servicemember's state of mind at the time AWOL began.
    (3) Valid legal defense. VA may find that compelling circumstances 
existed if the absence could not have been validly charged as, or lead 
to a conviction of, an offense under the Uniform Code of Military 
Justice.

(Authority: 38 U.S.C. 501(a), 5303(a))

Sec.  5.33  Insanity as a defense to acts leading to a discharge or 
dismissal from the service that might be disqualifying for benefits.

    If VA determines that a servicemember was insane at the time of the 
commission of an act, or acts, leading to separation from the service, 
the commission of such act(s) will not be a basis for denying status as 
a veteran under Sec.  5.30, or for barring the payment of benefits 
under Sec.  5.31.

(Authority: 38 U.S.C. 501(a), 5303(b))


    Cross Reference: Sec.  5.1, for the definition of ``insanity''.

Military Discharges and Related Matters


Sec.  5.34  Effect of discharge upgrades by Armed Forces boards for the 
correction of military records (10 U.S.C. 1552) on eligibility for VA 
benefits.

    (a) Purpose. This section describes the effect of a discharge 
upgrade by a board established under 10 U.S.C. 1552, ``Correction of 
military records: claims incident thereto'' on a VA determination that 
a servicemember's discharge or dismissal was under dishonorable 
conditions or that the servicemember is statutorily barred from 
receiving VA benefits.
    (b) Definitions. For purposes of this section, any applicable new 
determination means a determination under Sec.  5.30 or Sec.  5.31. 
Applicable previous VA discharge findings means findings by VA, based 
upon a previous discharge issued for the same period of service, that a 
servicemember's discharge or dismissal was under dishonorable 
conditions or that the servicemember is statutorily barred from 
receiving benefits.
    (c) Effect of discharge upgrades. An honorable discharge, or 
discharge under honorable conditions, issued through a board for 
correction of military records is final and conclusive and is binding 
on VA as to characterization based on the period covered by such 
service. Such a discharge supersedes a previous discharge issued for 
the same period of service. It will be the basis for making any 
applicable new determination and sets aside any applicable previous VA 
discharge findings.
    (d) Effective date. If entitlement to benefits is established 
because of the change, modification, or correction of a discharge or 
dismissal by a board for the correction of military records, the award 
of such benefits will be effective from the latest of these dates:
    (1) The date of filing with the service department of the request 
for change, modification, or correction of the discharge or dismissal 
in the case of either an original claim filed with VA or

[[Page 71174]]

a previously denied claim filed with VA;
    (2) The date VA received a previously denied claim; or
    (3) One (1) year prior to the date of reopening of the previously 
denied VA claim.

(Authority: 10 U.S.C. 1552(a)(4); 38 U.S.C. 501(a), 5110(i))

Sec.  5.35  Effect of discharge upgrades by Armed Forces discharge 
review boards (10 U.S.C. 1553) on eligibility for VA benefits.

    (a) Purpose. This section describes the effect of a discharge 
upgrade by a board established under 10 U.S.C. 1553, ``Review of 
discharge or dismissal'' on a VA determination that a servicemember's 
discharge or dismissal was under dishonorable conditions or that the 
servicemember is statutorily barred from receiving VA benefits.
    (b) Upgrades issued before October 8, 1977. This paragraph (b) 
concerns the effect of an honorable or general discharge (upgraded 
discharge) issued by a discharge review board before October 8, 1977.
    (1) General rule. The upgraded discharge will be the basis for 
making any new determination under Sec.  5.30 or Sec.  5.31. The 
upgraded discharge will also set aside any VA finding that a 
servicemember's discharge or dismissal was under dishonorable 
conditions, or that he or she is statutorily barred from receiving 
benefits, if the upgraded discharge concerned the same period of 
service.
    (2) Exception. The rule in paragraph (b)(1) of this section does 
not apply if:
    (i) The previous discharge was executed by reason of the sentence 
of a general court-martial, or
    (ii) The discharge review board was acting under the authority of 
one of the programs specified in Sec.  5.36.
    (c) Upgrades issued after October 7, 1977--effect on statutory 
bars. VA will make any new determinations under Sec.  5.31 without 
regard to an honorable or general discharge (upgraded discharge) that a 
discharge review board issued after October 7, 1977. The upgraded 
discharge will not set aside any VA findings, based upon a previous 
discharge issued for the same period of service, that a servicemember 
is statutorily barred from receiving VA benefits.
    (d) Upgrades issued after October 7, 1977--effect on character of 
discharge determinations--(1) General rule. Any new determinations VA 
makes under Sec.  5.30 will be made without regard to an honorable or 
general discharge (upgraded discharge) issued by a discharge review 
board after October 7, 1977. The upgraded discharge will not set aside 
any VA findings, based upon a previous discharge issued for the same 
period of service, that a servicemember's discharge or dismissal was 
under dishonorable conditions.
    (2) Exceptions. The rule in paragraph (d)(1) of this section does 
not apply if all of the following conditions are met:
    (i) The discharge was upgraded as a result of an individual case 
review;
    (ii) The discharge was upgraded under uniform published standards 
and procedures that generally apply to all persons administratively 
discharged or released from active military service under conditions 
other than honorable; and
    (iii) Such published standards are consistent with standards for 
determining honorable service historically used by the service 
department concerned and do not contain any provision for automatically 
granting or denying an upgraded discharge. VA will accept a report of 
the service department concerned that the discharge review board 
proceeding met these conditions.
    (e) Effective date. If entitlement to benefits is established 
because of the change, modification, or correction of a discharge or 
dismissal by a discharge review board, the award of such benefits will 
be effective from the latest of these dates:
    (1) The date of filing with the service department of the request 
for change, modification, or correction of the discharge or dismissal 
in the case of either an original claim filed with VA or a previously 
denied claim filed with VA;
    (2) The date VA received a previously denied claim; or
    (3) One (1) year before the date of reopening of the previously 
denied VA claim.

(Authority: 38 U.S.C. 501(a), 5110(i), 5303(e))

Sec.  5.36  Effect of certain special discharge upgrade programs on 
eligibility for VA benefits.

    (a) Programs involved. Except as provided in Sec.  5.35(d)(2), an 
honorable or general discharge awarded by a discharge review board 
under one of the following programs does not remove any bar to benefits 
imposed under Sec.  5.30 or Sec.  5.31:
    (1) The President's directive of January 19, 1977, implementing 
Presidential Proclamation 4313 of September 16, 1974;
    (2) The Department of Defense's special discharge review program 
effective April 5, 1977; or
    (3) Any discharge review program implemented after April 5, 1977, 
that does not apply to all persons administratively discharged or 
released from active military service under other than honorable 
conditions.
    (b) Discontinuance of awards. Subject to the provisions of Sec.  
5.177, any award of benefits made contrary to paragraph (a) of this 
section will be discontinued.
    (c) No overpayments to be created. No overpayments will be created 
as a result of payments made after October 8, 1977, based on an 
upgraded honorable or general discharge issued under one of the 
programs listed in paragraph (a) of this section which would not be 
awarded under the standards set forth in Sec.  5.35(d)(2). Such 
payments will be discontinued effective the first day of the month 
after the month for which VA last paid benefits.

(Authority: 38 U.S.C. 5303(e); Pub. L. 95-126, 91 Stat. 1106)

Sec.  5.37  Effect of extension of service obligation due to change in 
military status on eligibility for VA benefits.

    (a) Purpose. Except for persons who die in military service, status 
as a veteran requires that a servicemember be discharged or released 
from active military service under conditions other than dishonorable. 
See Sec.  5.1, defining ``veteran''. This section describes how VA will 
determine whether a servicemember has met this requirement when, 
because of a change in his or her military status, he or she was not 
discharged or released at the end of the period of time for which he or 
she was initially obligated to serve.
    (b) Definitions--(1) Change in military status. For purposes of 
this section, a change in military status means a change in status that 
extends the period that a servicemember is obligated to serve. Examples 
of such a change in military status include, but are not limited to:
    (i) A discharge for acceptance of an appointment as a commissioned 
officer or warrant officer;
    (ii) Change from a Reserve commission to a Regular commission;
    (iii) Change from a Regular commission to a Reserve commission;
    (iv) Reenlistment; or
    (v) Voluntary or involuntary extensions of a period of obligated 
service.
    (2) Combined periods of service. For purposes of this section, 
combined periods of service means the period of service immediately 
prior to the change in military status combined with the period of 
service immediately following the change in military status.
    (c) Combined periods of service ending under conditions other than 
dishonorable. If the combined periods of service ended with discharge 
or release

[[Page 71175]]

under conditions other than dishonorable, then VA will consider the 
entire period of service as other than dishonorable.
    (d) Combined periods of service ending under dishonorable 
conditions. When a servicemember's combined period of service ended 
under dishonorable conditions and he or she was not discharged or 
released at the end of the period that he or she was initially 
obligated to serve, he or she is eligible to receive VA benefits based 
on that period of service if that servicemember:
    (1) Completed active military service for the period he or she was 
initially obligated to serve; and
    (2) Due to an intervening change in military status was not 
discharged or released at the end of the initial period but would have 
been eligible for a discharge or release under conditions other than 
dishonorable at the end of the initial period if not for the 
intervening change in military status.

(Authority: 38 U.S.C. 101(18))


    Cross Reference: Sec.  5.1, for the definition of ``reserve''.


Sec.  5.38  Effect of a voided enlistment on eligibility for VA 
benefits.

    (a) Purpose. This section describes whether a claimant is eligible 
for VA benefits if the service department has voided the 
servicemember's enlistment.
    (b) Service considered valid for establishing eligibility for 
benefits. A servicemember's enlistment that is voided by the service 
department for reasons other than those stated in paragraph (c) of this 
section is valid from the date of entry upon active duty to the date of 
voidance by the service department. In the case of an enlistment voided 
for concealment of age or misrepresentation of age, service is valid 
from the date of entry upon active duty to the date of discharge.
    (c) Service considered not valid for establishing eligibility for 
benefits. A servicemember's enlistment that is voided by the service 
department for any of the reasons specified in this paragraph (c) is 
void from the date of entry. A servicemember is not eligible for VA 
benefits based on this period of service, if enlistment was voided for 
any of the following reasons:
    (1) Lack of legal capacity to contract, other than on the basis of 
minority, such as a lack of mental capacity to contract; or
    (2) A statutory prohibition to enlistment, including, but not 
limited to:
    (i) Desertion; or
    (ii) Conviction of a felony.

(Authority: 10 U.S.C. 501(a), 505; 38 U.S.C. 101(2), 501(a))

Minimum Service and Evidence of Service


Sec.  5.39  Minimum active duty service requirement for VA benefits.

    (a) Requirement. Any person listed in paragraph (b) of this section 
will not be eligible for VA benefits based on a particular period of 
active duty service unless that period of service met the requirement 
for a minimum period of active duty described in paragraph (c) of this 
section, or the person qualifies for an exclusion under paragraph (d) 
of this section.
    (b) Applicability. The minimum active duty service requirement 
applies to:
    (1) Any person who originally enlisted in a regular component of 
the Armed Forces and entered on active duty after September 7, 1980 
(time spent during temporary assignment to a reserve component awaiting 
entrance on active duty because of a delayed entry enlistment contract 
does not count; this section applies if the actual date of entry on 
active duty is after September 7, 1980); and
    (2) Any other person (enlisted or officer) who entered on active 
duty after October 16, 1981, who had not previously completed a 
continuous period of active duty of at least 24 months.
    (c) Minimum active duty service requirement. (1) Except for persons 
excluded in paragraph (d) of this section, a person must have served 
the shorter of:
    (i) Twenty-four (24) months of continuous active duty; or
    (ii) The full period of service for which the person was called or 
ordered to active duty.
    (2) If it appears that a person has not met the length of service 
requirement, VA will request service department records to determine if 
any of the exclusions described in paragraph (d) of this section apply.
    (d) Exclusions. The minimum active duty service requirement of this 
section does not apply to:
    (1) Any person who was discharged under an early out program 
described in 10 U.S.C. 1171.
    (2) Any person who was discharged because of a hardship as 
described in 10 U.S.C. 1173.
    (3) Any person who was discharged or released from active duty 
because of a disability incurred or aggravated in the line of duty:
    (i) That, at the time of discharge or release, was determined to be 
service connected without presumptive provisions of law; or
    (ii) That, at the time of discharge, was documented in official 
service records and, in VA's medical judgment, would have justified a 
discharge.
    (4) Any person who has any disability that is currently compensable 
under 38 U.S.C. chapter 11 because:
    (i) VA evaluates the disability as 10 percent or more disabling 
according to the Schedule for Rating Disabilities in part 4 of this 
chapter;
    (ii) Special monthly compensation is payable for the disability; or
    (iii) The disability, together with one or more other disabilities, 
is compensable under Sec.  5.282 for paired organs and extremities, of 
this chapter.
    (5) The provision of a benefit for or in connection with a service-
connected disability, condition, or death.
    (6) Insurance benefits under 38 U.S.C. chapter 19.
    (7) Any person who performed active military service under the 
provisions of Sec.  5.21(a)(4) or (5), VA recognizes as active military 
service.
    (e) Temporary breaks in service. Temporary breaks in active duty 
service for any of the reasons listed below will not be considered to 
have interrupted the ``continuous service'' requirement of paragraph 
(c)(1)(i) of this section; however, time lost due to these breaks must 
be subtracted from the total service time because these times do not 
count towards the minimum active duty service requirement:
    (1) Time lost due to an industrial, agricultural, or indefinite 
furlough;
    (2) Time lost while absent without leave and without pay;
    (3) Time lost while under arrest (without acquittal or a dismissal 
of charges);
    (4) Time lost while a deserter; or
    (5) Subject to 10 U.S.C. 875(a) (concerning the restoration under 
certain circumstances of ``all rights, privileges, and property 
affected by an executed part of a court-martial sentence which has been 
set aside or disapproved''), time lost while serving a court-martial 
sentence.
    (f) Effect on eligibility for benefits for survivors and 
dependents--(1) General rule. If a person is ineligible for VA benefits 
because he or she did not meet the minimum active duty service 
requirement, the person's dependents and survivors are ineligible for 
benefits based on that service.
    (2) Exceptions. Paragraph (f)(1) of this section does not bar 
entitlement to any of the following VA benefits to which a dependent or 
survivor may otherwise be entitled:
    (i) Insurance benefits under 38 U.S.C. chapter 19;
    (ii) Housing or small business loans under 38 U.S.C. chapter 37;

[[Page 71176]]

    (iii) Benefits described in paragraph (d)(5) of this section; or
    (iv) Dependency and indemnity compensation based on the person's 
death in service.

(Authority: 38 U.S.C. 5303A)


    Cross Reference: Sec.  5.1, for the definition of ``reserve 
component''.


Sec.  5.40  Service records as evidence of service and character of 
discharge that qualify for VA benefits.

    (a) Acceptable evidence of service. To establish entitlement to 
pension, disability compensation, dependency and indemnity 
compensation, or burial benefits, VA must have evidence of qualifying 
service and character of discharge from the service department 
concerned. Documents VA will accept as evidence of service and 
character of discharge include, but are not limited to, the following 
documents:
    (1) A DD Form 214; or
    (2) A Certificate of Release or Discharge from Active Duty.
    (b) Content of documents. The document establishing service must 
contain information which demonstrates:
    (1) The length of service;
    (2) The dates of service; and
    (3) The character of discharge or release.
    (c) When service department verification is not required. VA will 
accept one or more documents issued by a U.S. service department as 
evidence of service and character of discharge without verifying their 
authenticity, provided that VA determines that the document is genuine 
and accurate. The document can be a copy of an original document if the 
copy:
    (1) Was issued by a service department;
    (2) Is certified by a public custodian of records as a true and 
exact copy of a document in the custodian's possession; or
    (3) Is certified by an accredited agent, attorney, or service 
organization representative as a true and exact copy of either an 
original document or of a copy issued by the service department or a 
public custodian of records. This accredited agent, attorney, or 
service organization representative must have successfully completed 
VA-prescribed training on military records.
    (d) When service department verification is required. VA will 
request verification of service from the appropriate service department 
if:
    (1) The record does not include satisfactory evidence showing the 
information described in paragraph (b) of this section;
    (2) The evidence of record does not meet the requirements of 
paragraph (c) of this section; or
    (3) There is a material discrepancy in the evidence of record.

(Authority: 38 U.S.C. 501(a))

Sec. Sec.  5.41-5.49  [Reserved]

Subpart C--Adjudicative Process, General

VA Benefit Claims


Sec.  5.50  Applications VA furnishes.

    (a) VA will furnish an application upon request. Upon request, VA 
will furnish the appropriate application to a person claiming, or 
expressing intent to claim, benefits under the laws administered by VA.
    (b) VA will furnish an application to a survivor upon the death of 
a veteran. Upon the receipt of information of the death of a veteran, 
VA will furnish the appropriate application to any survivor with 
apparent entitlement to death pension or dependency and indemnity 
compensation (DIC). If the available evidence does not indicate that 
any person has apparent entitlement to death pension or DIC, but an 
accrued benefit is payable, VA will furnish the appropriate application 
to the preferred survivor. The letter accompanying the application will 
state that the claimant has 1 year after the date of the veteran's 
death to file a claim for accrued benefits, in accordance with Sec.  
5.552.
    (c) Claims under 38 U.S.C. 1151. A claimant may apply in any 
written form for disability or death benefits due to hospital 
treatment, medical or surgical treatment, examination, or training 
under the provisions of 38 U.S.C. 1151. VA does not have an application 
for such a claim. See Sec.  5.53 for the requirements for filing a 
claim pursuant to 38 U.S.C. 1151.

(Authority: 38 U.S.C. 501(a), 5101, 5102)

Sec.  5.51  Filing a claim for disability benefits.

    (a) Requirements for claims for disability benefits. A person must 
file a specific claim that is in the form prescribed by the Secretary 
for VA to grant a claim for disability benefits. If an individual has 
not attained the age of 18 years, is mentally incompetent, or is 
physically unable to sign a form, a form filed for the individual may 
be signed by a court-appointed representative, a person who is 
responsible for the care of the individual, including a spouse or other 
relative, or an attorney in fact or agent authorized to act on behalf 
of the individual under a durable power of attorney. If the individual 
is in the care of an institution, the manager or principal officer of 
the institution may sign the form. For purposes of this section, the 
term mentally incompetent means that the individual lacks the mental 
capacity to provide substantially accurate information needed to 
complete a form or to certify that the statements made on a form are 
true and complete.
    (b) Effect of claims for disability compensation or pension. VA may 
consider a claim for disability compensation as a claim for pension, 
and VA may consider a claim for pension as a claim for disability 
compensation. VA will award the greater benefit, unless the claimant 
specifically elects the lesser benefit.

(Authority: 38 U.S.C. 501(a), 5101(a))


    Cross Reference: Sec. Sec.  5.1, for the definition of ``claim''; 
5.54, ``Informal claims''.


Sec.  5.52  Filing a claim for death benefits.

    (a) Requirements for claims for death benefits. A person must file 
a specific claim for death benefits by completing and filing the 
application prescribed by the Secretary (or jointly with the 
Commissioner of Social Security, as prescribed by Sec.  5.131(a)), or 
on any document indicating an intent to apply for survivor benefits, 
for VA to grant death benefits. See Sec. Sec.  5.431 and 5.538.

(Authority: 38 U.S.C. 501(a), 5101(a))


    (b) Effects of claims for death benefits. A surviving spouse's or a 
child's claim:
    (1) For DIC is also a claim for death pension; and
    (2) For death pension is also a claim for DIC.


(Authority: 38 U.S.C. 501(a), 5101(b)(1))


    (c) Claims for death benefits filed by or for a child--(1) Child 
turns 18 years old. If a child's entitlement to DIC arises because the 
child turns 18 years old, the child must file a claim for DIC unless 
the child is included on the surviving spouse's DIC award. VA will 
consider a child included on the surviving spouse's DIC award to have 
filed a DIC claim on his or her 18th birthday. See Sec.  5.696.
    (2) Discontinuance of a surviving spouse's right to DIC or to death 
pension. Except as otherwise provided in paragraph (c) of this section, 
if VA discontinues an award of DIC or death pension to a surviving 
spouse, a child may file a claim in his or her own right. If VA 
discontinues an award to a surviving spouse because he or she remarries 
or dies, VA will consider any child included on the surviving spouse's 
award to have filed a claim for such benefit in his or her own right on

[[Page 71177]]

the date VA discontinued the award to the surviving spouse.
    (3) If a surviving spouse is not entitled to DIC or death pension. 
If VA denies a surviving spouse's claim for DIC or death pension, VA 
will consider the claim to be a claim for a child in the surviving 
spouse's custody, if the child was named as a dependent in the 
surviving spouse's application. If VA grants death benefits to the 
child, the award will be effective as though the child had filed the 
surviving spouse's denied claim. See Sec. Sec.  5.431 and 5.538.

(Authority: 38 U.S.C. 501(a), 5110(e))

Sec.  5.53  Claims for benefits under 38 U.S.C. 1151 for disability or 
death due to VA treatment or vocational rehabilitation.

    VA will consider any communication in writing indicating an intent 
to file a claim for disability compensation or dependency and indemnity 
compensation for disability or death due to VA hospital care, medical 
or surgical treatment, examination, training and rehabilitation 
services, or compensated work therapy program to be a claim for 
benefits under 38 U.S.C. 1151 and Sec.  5.350.

(Authority: 38 U.S.C. 1151)


    Cross Reference: Sec. Sec.  5.350-5.353.


Sec.  5.54  Informal claims.

    (a) Definition. Informal claim means any written communication VA 
receives that seeks an identified benefit and that is not on an 
application.
    (b) Who may file an informal claim. An informal claim may be filed 
by:
    (1) The claimant;
    (2) The claimant's accredited or authorized representative, if 
appointed before VA received the informal claim (see Sec. Sec.  14.630 
and 14.631 of this chapter for criteria for authorization of 
representatives);
    (3) A Member of Congress; or
    (4) A person acting as next friend of the claimant if the claimant 
does not have the capacity to manage his or her affairs.
    (c) Effect of filing informal claim--(1) No application filed 
previously. If the claimant has not previously filed an application for 
the benefit sought, VA will furnish an appropriate application to a 
person who files an informal claim. If the claimant files the completed 
application no later than 1 year after VA provided it, VA will treat it 
as if filed on the date VA received the informal claim. VA will take no 
action on the informal claim until the claimant files the completed 
application. If VA does not require an application for the benefit 
sought, VA may accept the informal claim as sufficient without regard 
to the procedures in this paragraph (c). See, for example, Sec.  5.53.
    (2) Application filed previously--(i) Disability benefits. If a 
claimant previously filed an application for disability benefits that 
met the requirements of Sec.  5.51, VA will accept an informal claim to 
increase or to reopen a claim for disability benefits without requiring 
another application, except as provided in Sec.  5.56.
    (ii) Death benefits. If a claimant previously filed an application 
for death benefits that met the requirements of Sec.  5.52, VA will 
accept an informal claim to increase or to reopen a claim for death 
benefits without requiring any other application, except as provided in 
Sec.  5.588.

(Authority: 38 U.S.C. 501(a), 5102(a))

Sec.  5.55  Claims based on new and material evidence.

    (a) Reopening a claim. A claimant may reopen a claim if VA has made 
a final decision denying the claim. See Sec.  5.1 for the definition of 
``final decision''.
    (b) New and material evidence. To reopen a claim, the claimant must 
present or VA must secure new and material evidence. If VA receives a 
claim to reopen, it will determine whether evidence presented or 
secured to reopen the claim is new and material.
    (c) Merits of a claim. If the claimant has presented or VA has 
secured new and material evidence, VA will reopen and decide the claim 
on its merits.
    (d) Definitions. New and material evidence meets the following 
criteria:
    (1) New evidence is:
    (i) Evidence the claimant presented or VA secured since VA last 
made a final decision denying the claim the claimant seeks to reopen; 
and
    (ii) Not cumulative or redundant of evidence of record at that 
time.
    (2) For purposes of paragraph (d)(1)(i) of this section, evidence 
that was submitted with, but not considered by, the Board of Veterans' 
Appeals (the Board) under the circumstances described in Sec.  
20.1304(b)(1) of this chapter will be treated as evidence received 
after VA last made a final decision on the claim.
    (3) Material evidence is evidence that, by itself or when 
considered with evidence of record when VA made the final decision,
    (i) Relates to an unestablished fact necessary to substantiate the 
claim; and
    (ii) Raises a reasonable possibility of substantiating the claim.
    (e) Effective date. Except as otherwise provided in this chapter, 
if VA reopens a claim based on new and material evidence and grants the 
benefit sought, the award is effective on the date entitlement arose or 
the date that VA received the claim to reopen, whichever is later.

(Authority: 38 U.S.C. 501(a), 5103A(f), 5108, 5110(a))


    Cross Reference: Sec.  20.1304(b)(1)(i) of this chapter for the 
rule on effective date assigned when evidence is submitted to the Board 
during a pending appeal.


Sec.  5.56  Report of examination, treatment, or hospitalization as a 
claim.

    (a) Scope. This section describes situations in which VA will 
accept certain medical evidence as a claim for benefits that meets the 
requirement that a claimant file a claim.
    (b) Claims excluded. VA's receipt of a report of examination, 
treatment, or hospitalization is a claim under this section only under 
the circumstances described in paragraph (c) of this section. VA will 
not accept a report of examination, treatment, or hospitalization as a 
claim for service connection.
    (c) Claims included. For purposes of this section, VA's receipt of 
evidence as described in paragraph (d) of this section is a claim under 
any of the following circumstances:
    (1) Veteran previously granted service connection. If VA previously 
granted service connection in a final decision, even if a 0 percent 
rating was assigned, VA's receipt of evidence will be considered a 
claim for increased compensation if the evidence relates to the 
service-connected condition(s).
    (2) VA previously granted pension. If VA previously granted a claim 
for pension, VA's receipt of evidence will be considered a claim for 
increased pension.
    (3) VA previously granted a claim for service connection but the 
veteran elected retired pay, or VA denied a claim for pension because 
the veteran was receiving retired pay. If VA previously granted service 
connection but the veteran elected retired pay, or VA previously denied 
a claim for pension because of the veteran's receipt of retired pay, 
VA's receipt of evidence will be considered a claim for pension or 
compensation.
    (4) VA previously denied a claim for pension because the veteran 
was not permanently and totally disabled. If VA previously denied a 
claim for pension in a final decision because the veteran was not 
permanently and totally disabled, VA's receipt of evidence will be 
considered a claim for pension.
    (d) Evidence--(1) Report of examination, treatment, or 
hospitalization at a VA or uniformed

[[Page 71178]]

services facility, or at any other facility at VA expense.
    (i) General rule. VA will consider an examination, treatment, or 
hospitalization report at a VA or uniformed services medical facility, 
or at any other medical facility where the veteran was maintained at VA 
expense, to be a claim under the circumstances described in paragraph 
(c) of this section.
    (ii) Date of claim. The date of receipt of a claim under paragraph 
(c) of this section is:
    (A) The date of a veteran's examination, treatment, or 
hospitalization at a VA or uniformed services medical facility;
    (B) The date of pre-authorized admission to a non-VA hospital at VA 
expense;
    (C) The date of a uniformed service examination that is the basis 
for granting severance pay to a former member of the Armed Forces on 
the temporary disability retired list; or
    (D) The date VA received notice of admission to a non-VA hospital, 
if VA authorized the admission at VA expense after the date of 
admission.
    (2) Evidence from a private physician or lay person--(i) General 
rule. VA will consider evidence from a private physician or lay person 
to be a claim under paragraph (c) of this section if the evidence is 
within the competence of the physician or lay person and it shows a 
reasonable probability of entitlement to benefits.
    (ii) Date of claim. The date VA receives the evidence from a 
private physician or lay person will be the date of the claim.
    (3) Evidence from State and other institutions--(i) General rule. 
VA will consider examination reports, clinical records, or transcripts 
of records from State, county, municipal, or recognized private 
institutions, or other Government hospitals to be a claim for benefits 
under paragraph (c) of this section, except those described in 
paragraph (d)(1) of this section. An appropriate official of the 
institution must authenticate these records. VA will grant benefits if 
the records are adequate for rating purposes and demonstrate 
entitlement to an increased rating, to pension, or to special monthly 
pension; otherwise findings must be verified by VA examination. The VA 
Under Secretary for Health or his or her physician designee must 
certify reports received from private institutions not listed by the 
American Hospital Association.
    (ii) Date of claim. If filed by or for the veteran, the date VA 
receives such evidence will be the date of the claim.
    (e) Liberalizing law or VA issue. The provisions of Sec.  5.152 
apply to claims accepted under this section in the same manner as they 
apply to other formal and informal claims.

(Authority: 38 U.S.C. 501(a))

Sec.  5.57  Claims definitions.

    The following definitions apply to claims for disability benefits, 
death benefits, and monetary allowance under 38 U.S.C. chapter 18.
    (a) Informal claim. See Sec.  5.54.
    (b) Original claim means the first claim VA receives from a person 
for disability benefits, for death benefits, or for monetary allowance 
under 38 U.S.C. chapter 18. See Sec. Sec.  5.51, 5.52, 5.589, and 
5.590.
    (c) Pending claim means a claim in which VA has not made a final 
decision. See Sec.  5.1 for the definition of ``final decision.''
    (d) Claim for increase means any claim for an increase in the rate 
of a benefit VA is paying under a current award, or for resumption of 
payments previously discontinued.

(Authority: 38 U.S.C. 501(a))

Sec. Sec.  5.58-5.79  [Reserved]

Rights of Claimants and Beneficiaries


Sec.  5.80  Right to representation.

    Subject to the provisions of Sec. Sec.  14.626 through 14.637 of 
this chapter, a claimant or beneficiary is entitled to the 
representation of his or her choice at every stage in the claims 
process. When VA initially contacts a claimant or beneficiary by mail, 
VA will also include written notice of his or her right to 
representation.

(Authority: 38 U.S.C. 501(a), 5901-5904)


    Cross Reference: Sec.  19.25 of this chapter, ``Notification by 
agency of original jurisdiction of right to appeal,'' which includes 
notification of the right to representation.


Sec.  5.81  Submission of information, evidence, or argument.

    VA will include in the evidence of record any document, testimony, 
argument, or other information in any form that a claimant provides VA 
in support of a claim or of an issue raised in the claim.

(Authority: 38 U.S.C. 501(a), 5107(b))

Sec.  5.82  Right to a hearing.

    (a) General. This section pertains only to hearings in matters 
under the jurisdiction of a VA agency of original jurisdiction. See 
Sec. Sec.  20.700 and 20.1304 of this chapter for the provisions 
concerning a claimant's or beneficiary's right to a hearing with the 
Board of Veterans' Appeals. See Sec.  14.633 of this chapter for the 
provisions concerning an accredited representative's right to request a 
hearing.
    (1) The one-hearing rule. Except as provided in paragraph (f) of 
this section, upon request, a claimant or beneficiary is entitled to 
one hearing before the agency of original jurisdiction at any time on 
any issue or issues involved in a pending matter. When VA sends written 
notice of a decision to a claimant or of a proposed reduction, 
discontinuance, or other adverse action under Sec.  5.83 to a 
beneficiary, VA will also include notice of the right to a hearing. 
Except as provided in paragraph (a)(2) of this section, a claimant or 
beneficiary who had a hearing before the Board of Veterans' Appeals 
(Board) reviewed the matter is not entitled to an additional hearing 
after that matter is remanded by the Board to the agency of original 
jurisdiction.
    (2) Exception to the one-hearing rule. A claimant or beneficiary 
will be provided one additional hearing at the agency of original 
jurisdiction on any issue involved in a matter when the claimant or 
beneficiary asserts all of the following:
    (i) He or she has discovered a new witness or new evidence to 
substantiate the claim;
    (ii) He or she can present that witness or evidence only at an oral 
hearing; and
    (iii) The witness or evidence could not have been presented at the 
original hearing.
    (b) Purpose of hearings. The purpose of a hearing under this 
section is to provide the claimant or beneficiary with an opportunity 
to introduce into the record, in person, any available evidence or 
arguments that he or she considers important to the matter.
    (c) Where VA will conduct hearings. VA will conduct the hearing in 
the VA office that has jurisdiction over the matter or in the VA office 
with adjudicative functions nearest the claimant's or beneficiary's 
residence. Subject to available resources and solely at the option of 
VA, VA may hold the hearing at any other VA facility or federal 
building with suitable facilities.
    (d) VA responsibilities in conjunction with hearings. (1) VA will 
provide advance written notice to a claimant or beneficiary of the time 
and place of the hearing at least 10 days before the scheduled hearing 
date. The claimant or beneficiary may waive the 10-day advance notice 
requirement. If the hearing arises in the context of a proposed 
reduction, discontinuance, other adverse action, or in an appeal, a VA 
employee or employees having

[[Page 71179]]

decision-making authority and who did not previously participate in the 
case will conduct the hearing. The employee or employees will establish 
a record of the hearing and will issue a decision after the hearing.
    (2) The VA employee or employees conducting the hearing will 
explain fully the issues and suggest the submission of evidence the 
claimant or beneficiary may have overlooked that would tend to prove 
the matter. To ensure clarity and completeness of the hearing record, 
questions directed to the claimant or beneficiary, or to witnesses, 
will be framed to explore fully the basis for entitlement rather than 
with intent to refute evidence or to discredit testimony. The employee, 
or employees, conducting the hearing will ensure that all testimony is 
given under oath or affirmation.
    (3) If a hearing is conducted, VA will make a decision based upon 
evidence and testimony presented during the hearing in addition to all 
other evidence of record.
    (e) Claimant's and beneficiary's rights and responsibilities in 
conjunction with hearings. (1) The claimant or beneficiary is entitled 
to have witnesses testify. The claimant or beneficiary, and witnesses, 
must appear at the hearing, in person or by videoconferencing. 
Normally, VA will not schedule a hearing for the sole purpose of 
receiving argument from a representative, but VA may grant a request 
for such a hearing if good cause is shown.
    (2) All expenses incurred by the claimant or beneficiary in 
conjunction with the hearing are the responsibility of the claimant or 
beneficiary.
    (3) If a claimant or beneficiary is unable to attend a scheduled 
hearing, he or she may contact VA in advance to reschedule the hearing 
for a date and time which is acceptable to both parties.
    (4) If a claimant or beneficiary fails to report for a scheduled 
hearing
    (i) Without good cause, VA will decide the claim based on the 
evidence of record without a hearing.
    (ii) With good cause, VA will reschedule the hearing after the 
claimant or beneficiary informs VA that the cause of the failure to 
report has resolved and requests that VA reschedule the hearing. 
Examples of good cause include, but are not limited to, illness or 
hospitalization of the claimant or beneficiary, or death of an 
immediate family member.
    (f) Additional requirements for hearings before proposed adverse 
actions. Except as otherwise provided in Sec.  5.83(c), VA will provide 
written notice of the right to a hearing before VA reduces, 
discontinues, or otherwise adversely affects benefits. VA will conduct 
a hearing before the adverse action only if VA receives a request for 
one no later than 30 days after the date of the notice of the proposed 
action.
    (1) If the beneficiary does not timely request a hearing, or fails 
without good cause to report for a scheduled hearing, VA will make the 
decision on the proposed action based on the evidence of record.
    (2) If VA receives a request for a hearing no later than 30 days 
after the date of the notice of the proposed action, VA will send the 
beneficiary written notice of the time and place for the hearing.
    (3) VA will send the written notice of the time and place of the 
hearing at least 10 days before the scheduled hearing date. The 
beneficiary may waive the 1