[Federal Register Volume 79, Number 231 (Tuesday, December 2, 2014)]
[Proposed Rules]
[Pages 71366-71369]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28374]
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DEPARTMENT OF VETERANS AFFAIRS
38 CFR Part 3
RIN 2900-AP18
Additional Compensation on Account of Children Adopted Out of
Veteran's Family
AGENCY: Department of Veterans Affairs.
ACTION: Proposed rule.
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SUMMARY: The Department of Veterans Affairs (VA) proposes to amend its
adjudication regulations to clarify that a veteran will not receive the
dependent rate of disability compensation for a child who is adopted
out of the veteran's family. This action is necessary because
applicable VA adjudication regulations are currently construed as
permitting a veteran, whose former child was adopted out of the
veteran's family, to receive the dependent rate of disability
compensation for the adopted-out child, which constitutes an
unwarranted award of benefits not supported by the applicable statute
and legislative history.
DATES: Comments must be received on or before February 2, 2015.
ADDRESSES: Written comments may be submitted through
www.Regulations.gov; by mail or hand-delivery to Director, Regulation
Policy and Management (02REG), Department of Veterans Affairs, 810
Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202)
273-9026. Comments should indicate that they are submitted in response
to ``RIN 2900-AP18--Additional Compensation on Account of Children
Adopted Out of Veteran's Family.'' Copies of comments received will be
available for public inspection in the Office of Regulation Policy and
Management, Room 1068, between the hours of 8:00 a.m. and 4:30 p.m.,
Monday through Friday (except holidays). Please call (202) 461-4902 for
an appointment. (This is not a toll-free number.) In addition, during
the comment period, comments may be viewed online through the Federal
Docket Management System (FDMS) at www.Regulations.gov.
FOR FURTHER INFORMATION CONTACT: Stephanie Li, Section Chief,
Regulations Staff (211D), Compensation Service, Department of Veterans
Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 461-9700.
(This is not a toll-free telephone number.)
SUPPLEMENTARY INFORMATION: Pursuant to 38 U.S.C. 1115, a veteran
entitled to compensation based on a service-connected disability rated
not less than 30 percent is entitled to an additional rate of
disability compensation for each of his or her children. Section
101(4)(A) of title 38, United States Code, defines ``child'' to include
an unmarried person under the age of 18 years who is a legitimate
child, a legally adopted child, a stepchild who is a member of the
veteran's household or was a member of the veteran's household at the
time of the veteran's death, or an illegitimate child. See also 38 CFR
3.57. The statute also provides some exceptions for individuals who are
permanently incapable of self-support and individuals who are pursuing
an education. See 38 U.S.C. 101(4)(A); see also 38 CFR 3.57.
Additionally, 38 CFR 3.58 provides that ``[a] child of a veteran
adopted out of the family of the veteran . . . is nevertheless a child
within the meaning of that term as defined by Sec. 3.57 and is
eligible for benefits payable under all laws administered by the
Department of Veterans Affairs.'' See VA Op. Gen. Couns. Prec. 16-94
(1994) (``pursuant to [Sec. 3.58] a child adopted out of a veteran's
family may remain a child of the veteran for VA purposes''). Therefore,
under current regulations, VA is required to pay a veteran additional
disability compensation for a child who otherwise meets the
requirements under Sec. 3.57 but has been adopted out of the veteran's
family.
However, VA believes its longstanding interpretation in Sec. 3.58
as it applies to 38 U.S.C. 1115 is inconsistent with the statute's
clear purpose to provide for payments to a
[[Page 71367]]
veteran that are based primarily upon the veteran's needs for purposes
of supporting his or her dependent family members. This purpose is
evident from the statute's language, structure, and legislative
history. VA believes Congress did not intend for section 1115 to
provide additional disability compensation to a veteran on account of a
child who is adopted out of the veteran's family. In such cases, it is
clear that any payment to the veteran on account of the adopted-out
child would rarely, if ever, fulfill the clear purpose of section 1115
to provide for the expense of supporting that child. As such, VA
proposes to amend its regulations, particularly 38 CFR 3.57, 3.58, and
3.458, to eliminate this additional compensation paid to veterans for
such children.
I. History of 38 U.S.C. 1115 and Bases for Rulemaking
The definition of ``child'' in 38 U.S.C. 101(4)(A), which refers to
legitimate, illegitimate, adopted, and certain stepchildren, is
ambiguous as to whether it encompasses a biological child who has been
legally adopted out of the veteran's family. As noted above, VA
historically has concluded that an adopted-out child will be considered
the veteran's child for purposes of all benefits administered by VA.
However, providing payments to a veteran under 38 U.S.C. 1115 on the
basis of an adopted-out child creates an anomaly that undermines the
clear purpose of that statute.
Section 1115 provides that certain veterans entitled to disability
compensation ``shall be entitled to additional compensation for
dependents in the following monthly amounts.'' (Emphasis added.) The
term ``dependent'' is not defined for purposes of title 38 generally or
section 1115 specifically, but is commonly understood to refer to a
person who is legally or factually reliant upon the veteran for
support. Although a veteran ordinarily will have a legal and moral
obligation to support his or her biological child, that is not the case
when the child has been adopted out of the veteran's family. A child-
parent relationship typically ``does not exist between an [adopted-out
child] and the [adopted-out child's] genetic parents.'' See Astrue v.
Capato ex rel. B.N.C., 132 S. Ct. 2021, 2030 (2012) (quoting Unif.
Probate Code Sec. 2-119(a), 8 U.L.A. 55 (Supp. 2011)). Accordingly, we
believe an adopted-out child generally would not be a ``dependent''
within the meaning of 38 U.S.C. 1115.
Further, section 1115(1) provides that the dependents' allowance
will be paid, in monthly amounts, ``[i]f and while [the veteran] . . .
has . . . one or more children.'' The statute thus clearly refers to
the present existence of a parent-child relationship. Even if the
child's biological relationship or pre-adoption legal relationship to
the veteran may provide a basis for certain types of VA benefits, it
would not provide a basis for payment under section 1115 if the parent-
child relationship has been severed at the time relevant to current
payments.
The payments authorized by 38 U.S.C. 1115 are paid in addition to
payments authorized by 38 U.S.C. 1114 as payment for the level of
impairment caused by the veteran's service-connected disability.
Because payments under section 1115 are in addition to payments for
impairment due to disability and because they are paid ``for
dependents,'' the clear purpose of section 1115 is to provide payments
to the disabled veteran because of the economic burden associated with
providing for dependents. See Rose v. Rose, 481 U.S. 619, 630-31 (1987)
(citing 38 U.S.C. 315 (now codified as 38 U.S.C. 1115) and concluding
that ``Congress clearly intended veterans' disability benefits to be
used, in part, for the support of veterans' dependents''). We do not
believe that Congress intended to authorize payment to the veteran of a
dependents' allowance in cases where the veteran does not have a
present parent-child relationship with the adopted-out child and thus
would not incur the economic burdens the statute is designed to
address.
The legislative history of the statute further supports this
interpretation. The current version of 38 U.S.C. 1115 originated in
1958 under Public Law 85-857, 72 Stat. 1121. However, ``[t]he
additional compensation for dependents was first authorized by Public
Law 877, 80th Congress, approved July 2, 1948.'' Letter from Bradford
Morse, Dep. Adm. U.S. Vet. Adm., to Rep. Olin E. Teague, Chair, H.
Comm. on Veterans Affairs, contained in H.R. Rep. No. 86-1541, at 3
(1960). By enacting this statute, Congress intended that a veteran
entitled to compensation based on a service-connected disability rated
not less than a designated level would receive additional compensation
on account of his or her children.
Additionally, ``the legislative history [of Public Law 80-877]
indicates that one of the reasons for limiting the benefits provided by
the act to persons 60 percent or more disabled was based on the fact
that this group of veterans because of the serious nature of their
disabilities are not generally in a position to supplement their
compensation payments by income from steady employment'' and ``veterans
with disabilities rated less than 50 percent are generally able to
supplement their compensation payments with other income.'' See H.R.
Rep. No. 86-1541, at 3-4. In view of section 1115's legislative
history, VA believes Congress intended the section 1115 allowance to
only supplement a veteran's income, that is, to provide additional
budgetary support within the veteran's household expense framework.
Section 101(13) of title 38, U.S.C., in part, defines the term
``compensation'' as a ``monthly payment made by the Secretary to a
veteran because of service-connected disability'' (emphasis added),
which may be supplemented by ``other income'' to support the veteran's
family, see H.R. Rep. No. 1541, at 4. Compare with 38 U.S.C. 101(14)
(defining the term ``dependency and indemnity compensation'' as ``a
monthly payment made by the Secretary to a . . . child'') (emphasis
added). Thus, the section 1115 allowance was provided for those
veterans who likely were unable to supplement their compensation
payments to support their family with ``other income'' due to their
service-connected disabilities.
The Secretary, however, does not interpret the legislative history
to support, nor intend this rulemaking, to restrict to any degree a
child's right to receive VA benefits in the child's own right, such as
dependency and indemnity compensation (DIC), which is not necessarily
dependent upon a continuing, legally based parent-child relationship.
See 38 CFR 3.5 (referring to a child's entitlement to DIC); 38 U.S.C.
101(14) (defining DIC as ``a monthly payment made by the Secretary to a
. . . child'') (emphasis added). The U.S. Court of Appeals for the
Federal Circuit has held that the dependent's allowance, or child's
allowance under section 1115, is provided to the veteran, not to the
veteran's children (or other dependents). See Sharp v. Nicholson, 403
F.3d 1324, 1327 (Fed. Cir. 2005) (``[T]he reference [in 38 U.S.C. 1115]
to `additional compensation' . . . indicates that the veteran, who is
already entitled to some degree of compensation for his service-
connected disability, is also entitled to a supplementary amount
because he or she has dependents.''). See also H.R. Rep. No. 1541, at
3-4. We find it significant that payments under section 1115 are
payments to the veteran based on the veteran's relationship to the
purported child, whereas DIC and certain other benefits are paid to the
child in his or her own right.
[[Page 71368]]
VA's current regulation at 38 CFR 3.58 derives from a line of VA
legal opinions consistently holding that a child's adoption out of a
veteran's family does not affect the child's right to receive DIC or
similar benefits payable to the child in his or her own right. One of
the earliest of these opinions, which was relied upon in part to
support VA's current policy in Sec. 3.58, was issued by the Bureau of
War Risk Insurance, a predecessor agency to VA, in 1919 and prior to
enactment of section 1115. This opinion stated, ``An adopted child, is
in a legal sense, the child both of its natural and of its adopting
parents, and is not, because of the adoption, deprived of its rights of
inheritance from its natural parents, unless the statute of the state
of its domicile expressly so provides.'' See Memorandum, Bureau of War
Risk Insurance, General Counsel (Apr. 5, 1919). The Secretary notes
that, similar to DIC and unlike additional compensation under section
1115, inheritance rights of a child who is adopted from the biological
parents are not contingent on an existing child-parent relationship or
financial dependency on the biological parents and may survive a legal
adoption, depending upon the laws of individual states. See Child
Welfare Information Gateway, U.S. Dept. of Health & Human Services,
Interstate Inheritance Rights for Adopted Persons 2 (2012), available
at https://www.childwelfare.gov/systemwide/laws_policies/statutes/inheritance.pdf. Because the additional compensation payable to a
veteran for a child under 38 U.S.C. 1115 is the benefit of the veteran,
not the child, the logic of the prior VA opinions and the analogy to
the child's right to inherit from the veteran who is the child's
biological parent are not relevant to section 1115.
We recognize that this interpretation may be viewed as treating an
adopted-out child's status as the veteran's ``child'' differently for
purposes of section 1115 in comparison to other benefits. However, we
believe our interpretation is warranted by the specific requirements
and clear purpose of section 1115, which distinguish that statute from
statutes governing DIC and other benefits, and by the rationale in
prior VA opinions for finding that adoption out of the veteran's family
does not terminate the child's right to receive benefits in his or her
own right. We believe our interpretation is reasonable and logically
comports with the intent of Congress.
II. Proposed Regulatory Amendments
For the reasons discussed above, VA proposes to implement this
interpretation of section 1115 by modifying 38 CFR 3.57, 3.58, and
3.458.
The proposed amendment to Sec. 3.57 would add a third exception to
the definition of child in Sec. 3.57(a) to provide that the definition
of child does not include a child who is adopted out of a veteran's
family in connection with any benefits that are provided to a veteran
pursuant to 38 U.S.C. 1115. The amended regulation would state that
this limitation would not apply to any VA benefit payable directly to a
child in the child's own right, such as DIC under 38 CFR 3.5. The same
limitation would be added to Sec. 3.58, the regulation governing a
child adopted out of a family. Both proposed amendments would be
consistent with the legislative intent of section 1115 to provide
supplemental income to a veteran to enhance the veteran's efforts to
provide financial support to the veteran's then constituted family.
Congress recognized that this supplemental income was necessary because
the veteran's service-connected disability or disabilities would hinder
the veteran's ability to generate earned income. Once a child is no
longer a member of the veteran's family, the veteran's corresponding
family-related expenses would presumably and proportionately decrease,
so the veteran should no longer receive increased compensation due to
the child, who would no longer be financially dependent on the veteran.
Consistent with the intent of Congress, specifically that the
additional benefits that are provided under section 1115 are intended
to supplement the veteran's income, VA also proposes to amend 38 CFR
3.458, which sets forth limitations on the apportionment of a veteran's
benefits. VA proposes to amend Sec. 3.458 to exclude the apportionment
of section 1115 benefits in the case of an adopted-out child because
section 1115 benefits would no longer be payable in the case of an
adopted-out child.
Executive Orders 12866 and 13563
Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, when
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, and other advantages; distributive impacts;
and equity). Executive Order 13563 (Improving Regulation and Regulatory
Review) emphasizes the importance of quantifying both costs and
benefits, reducing costs, harmonizing rules, and promoting flexibility.
Executive Order 12866 (Regulatory Planning and Review) defines a
``significant regulatory action'' requiring review by the Office of
Management and Budget (OMB), unless OMB waives such review as, ``any
regulatory action that is likely to result in a rule that may: (1) Have
an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities; (2)
Create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) Materially alter the budgetary
impact of entitlements, grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) Raise novel legal
or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this Executive Order.''
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's impact analysis can be found as a supporting document at
http://www.regulations.gov, usually within 48 hours after the
rulemaking document is published. Additionally, a copy of the
rulemaking and its impact analysis are available on VA's Web site at
http://www.va.gov/orpm/, by following the link for ``VA Regulations
Published From FY 2004 Through Fiscal Year to Date.''
Regulatory Flexibility Act
The Secretary hereby certifies that this proposed rule would 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. 601-12). This proposed rule would not directly affect small
entities. Therefore, pursuant to 5 U.S.C. 605(b), this rulemaking is
exempt from the initial and final regulatory flexibility analysis
requirements of sections 603 and 604.
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
[[Page 71369]]
governments, in the aggregate, or by the private sector, of $100
million or more (adjusted annually for inflation) in any one year. This
proposed rule would have no such effect on State, local, and tribal
governments, or on the private sector.
Paperwork Reduction Act
This proposed rule contains no provisions constituting a collection
of information under the Paperwork Reduction Act of 1995 (44 U.S.C.
3501-21).
Catalog of Federal Domestic Assistance
The Catalog of Federal Domestic Assistance numbers and titles for
the programs affected by this document are 64.102, Compensation for
Service-Connected Deaths for Veterans' Dependents; 64.105, Pension to
Veterans, Surviving Spouses, and Children; 64.109, Veterans
Compensation for Service-Connected Disability; and 64.110, Veterans
Dependency and Indemnity Compensation for Service-Connected Death.
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. Jose D.
Riojas, Chief of Staff, Department of Veterans Affairs, approved this
document on November 21, 2014, for publication.
List of Subjects in 38 CFR Part 3
Administrative practice and procedure, Claims, Disability benefits,
Health care, Pensions, Radioactive materials, Veterans, Vietnam.
Dated: November 26, 2014.
William F. Russo,
Acting Director, Office of Regulation Policy & Management, Office of
the General Counsel, U.S. Department of Veterans Affairs.
For the reasons set out in the preamble, the Department of Veterans
Affairs proposes to amend 38 CFR part 3 as follows:
PART 3--ADJUDICATION
Subpart A--Pension, Compensation, and Dependency and Indemnity
Compensation
0
1. The authority citation for part 3, subpart A continues to read as
follows:
Authority: 38 U.S.C. 501(a), unless otherwise noted.
0
2. Amend Sec. 3.57 by:
0
a. In paragraph (a)(1) introductory text, removing the phrase
``paragraphs (a)(2) and (3)'' and adding in its place ``paragraphs
(a)(2) through (4)'';
0
b. Adding paragraph (a)(4).
0
c. Adding an authority citation immediately following paragraph (a)(4).
0
d. Revising the Cross References at the end of the section.
The revisions and additions read as follows:
Sec. 3.57 Child.
(a) * * *
(4) For purposes of any benefits provided under 38 U.S.C. 1115,
Additional compensation for dependents, the term child does not include
a child of a veteran who is adopted out of the family of the veteran.
This limitation does not apply to any benefit administered by the
Secretary that is payable directly to a child in the child's own right,
such as dependency and indemnity compensation under 38 CFR 3.5.
(Authority: 38 U.S.C. 101(4), 501, 1115)
* * * * *
Cross References: Improved pension rates. See Sec. 3.23. Improved
pension rates; surviving children. See Sec. 3.24. Child adopted out of
family. See Sec. 3.58. Child's relationship. See Sec. 3.210.
Helplessness. See Sec. 3.403(a)(1). Helplessness. See Sec.
3.503(a)(3). Veteran's benefits not apportionable. See Sec. 3.458.
School attendance. See Sec. 3.667. Helpless children--Spanish-American
and prior wars. See Sec. 3.950.
0
3. Revise Sec. 3.58 to read as follows:
Sec. 3.58 Child adopted out of family.
(a) Except as provided in paragraph (b) of this section, a child of
a veteran adopted out of the family of the veteran either prior or
subsequent to the veteran's death is nevertheless a child within the
meaning of that term as defined by Sec. 3.57 and is eligible for
benefits payable under all laws administered by the Department of
Veterans Affairs.
(b) A child of a veteran adopted out of the family of the veteran
is not a child within the meaning of Sec. 3.57 for purposes of any
benefits provided under 38 U.S.C. 1115, Additional compensation for
dependents.
(Authority: 38 U.S.C. 101(4)(A), 1115)
Cross References: Child. See Sec. 3.57. Veteran's benefits not
apportionable. See Sec. 3.458.
0
4. Amend Sec. 3.458 by:
0
(a) In paragraph (d) removing the phrase ``, except the additional
compensation payable for the child''.
0
(b) Adding Cross References at the end of the section.
The addition reads as follows:
Sec. 3.458 Veterans benefits not apportionable.
* * * * *
Cross References: Child. See Sec. 3.57. Child adopted out of
family. See Sec. 3.58.
[FR Doc. 2014-28374 Filed 12-1-14; 8:45 am]
BILLING CODE 8320-01-P