Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 62229

DEPARTMENT OF THE TREASURY

Internal Revenue Service 

26 CFR Part 301 

[REG–124872–04] 

RIN 1545–BD37 

Clarification of Definitions; Hearing 

Cancellation

AGENCY: Internal Revenue Service (IRS), 

Treasury.

ACTION: Cancellation of public hearing 

on proposed rulemaking by crossreference to temporary regulations. 

SUMMARY: This document cancels a 

public hearing on a notice of proposed 

rulemaking by cross-reference to 

temporary regulations under section 

7701 of the Internal Revenue Code that 

provide clarification of the definitions 

of a corporation and a domestic entity 

in circumstances where the business 

entity is considered to be created or 

organized in more than one jurisdiction.

DATES: The public hearing originally 

scheduled for November 3, 2004, at 10 

a.m., is cancelled.

FOR FURTHER INFORMATION CONTACT:

Sonya M. Cruse of the Publications and 

Regulations Branch, Legal Processing 

Division, Associate Chief Counsel 

(Procedures and Administration), (202) 

622–4693 (not a toll-free number).

SUPPLEMENTARY INFORMATION: A notice 

of proposed rulemaking by crossreference to temporary regulations and 

notice of public hearing that appeared 

in the Federal Register on Thursday, 

August 12, 2004 (69 FR 49840), 

announced that a public hearing was 

scheduled for November 3, 2004 at 10 

a.m., in the auditorium, Internal 

Revenue Service Building, 1111 

Constitution Avenue, NW., Washington, 

DC. The subject of the public hearing is 

under section 7701 of the Internal 

Revenue Code. 

The public comment period for these 

regulations expired on October 15, 2004. 

The notice of proposed rulemaking 

instructed those interested in testifying 

at the public hearing to submit a request 

to speak and an outline of the topics to 

be addressed. As of Wednesday, October 

20, 2004, no one has requested to speak. 

Therefore, the public hearing scheduled 

for November 3, 2004, is cancelled.

Cynthia E. Grigsby, 

Acting Chief, Publications and Regulations 

Branch, Legal Processing Division, Associate 

Chief Counsel (Procedures and 

Administration).

[FR Doc. 04–23843 Filed 10–22–04; 8:45 am] 

BILLING CODE 4830–01–P

DEPARTMENT OF THE TREASURY

Fiscal Service 

31 CFR Part 344

[Department of the Treasury Circular, Public 

Debt Series No. 3–72] 

U.S. Treasury Securities—State and 

Local Government Series; Extension of 

Comment Period

AGENCY: Bureau of the Public Debt, 

Fiscal Service, Treasury.

ACTION: Notice of proposed rulemaking; 

extension of comment period. 

SUMMARY: The Department of the 

Treasury is extending the comment 

period for the notice of proposed 

rulemaking published September 30, 

2004, proposing revisions of the 

regulations governing State and Local 

Government Series (SLGS) securities. 

SLGS securities are non-marketable 

Treasury securities that are only 

available for purchase by issuers of taxexempt securities. The notice of 

proposed rulemaking provided for a 

comment period to end on November 1, 

2004. Treasury is extending the 

comment period to November 16, 2004, 

in response to industry requests for 

more time to provide comments.

DATES: Comments must be received no 

later than November 16, 2004.

ADDRESSES: You may submit comments, 

identified by Docket Number BPD–02–

04, by any of the following methods: 

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

• Agency Web Site: http://

www.publicdebt.treas.gov. Follow the 

instructions for submitting comments 

via e-mail to opda-sib@bpd.treas.gov. 

• E-mail: opda-sib@bpd.treas.gov. 

Include Docket Number BPD–02–04 in 

the subject line of the message. 

• Fax: 304–480–5277. 

• Mail: Keith Rake, Deputy Assistant 

Commissioner, Office of the Assistant 

Commissioner, Bureau of the Public 

Debt, Department of the Treasury, P.O. 

Box 396, Parkersburg, WV 26101–0396, 

or Edward Gronseth, Deputy Chief 

Counsel, Elizabeth Spears, Senior 

Attorney, or Brian Metz, AttorneyAdviser, Office of the Chief Counsel, 

Bureau of the Public Debt, Department 

of the Treasury, P.O. Box 1328, 

Parkersburg, WV 26106–1328. 

• Hand Delivery/Courier: Keith Rake, 

Deputy Assistant Commissioner, Office 

of the Assistant Commissioner, Bureau 

of the Public Debt, Department of the 

Treasury, 200 3rd St., Parkersburg, WV 

26101, or Edward Gronseth, Deputy 

Chief Counsel, Elizabeth Spears, Senior 

Attorney, or Brian Metz, AttorneyAdviser, Office of the Chief Counsel, 

Bureau of the Public Debt, Department 

of the Treasury, 200 3rd St., 

Parkersburg, WV 26101. 

Instructions: All submissions received 

must be addressed to the Bureau of the 

Public Debt and include the Docket 

Number for this notice of proposed 

rulemaking, BPD–02–04. All comments 

received will be posted without change 

to http://www.publicdebt.treas.gov. The 

posting will include any personal 

information that you provide in the 

submission.

FOR FURTHER INFORMATION CONTACT:

Keith Rake, Deputy Assistant 

Commissioner, Office of the Assistant 

Commissioner, Bureau of the Public 

Debt, P.O. Box 396, Parkersburg, WV 

26106–0396, (304) 480–5101, or by email at opda-sib@bpd.treas.gov or 

Edward Gronseth, Deputy Chief 

Counsel, Elizabeth Spears, Senior 

Attorney, or Brian Metz, AttorneyAdviser, Office of the Chief Counsel, 

Bureau of the Public Debt, Department 

of the Treasury, P.O. Box 1328, 

Parkersburg, WV 26106–1328, (304) 

480–8692, or by e-mail at opdasib@bpd.treas.gov.

SUPPLEMENTARY INFORMATION: The notice 

of proposed rulemaking for which the 

comment period is being extended was 

published on September 30, 2004, at 69 

FR 58756. In order to provide ample 

time for interested parties to review and 

comment on the notice of proposed 

rulemaking, the comment period is 

extended until November 16, 2004.

Dated: October 20, 2004. 

Donald V. Hammond, 

Fiscal Assistant Secretary.

[FR Doc. 04–23897 Filed 10–21–04; 10:19 

am] 

BILLING CODE 4810–39–P

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Parts 3 and 20 

RIN 2900–AL86 

Dependency and Indemnity 

Compensation: Surviving Spouse’s 

Rate; Payments Based on Veteran’s 

Entitlement to Compensation for 

Service-Connected Disability Rated 

Totally Disabling for Specified Periods 

Prior to Death

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

SUMMARY: The Department of Veterans 

Affairs (VA) proposes to amend its 

62230 Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 

adjudication regulations concerning 

payment of dependency and indemnity 

compensation (DIC) for certain nonservice-connected deaths and the rate of 

DIC payable to a surviving spouse for 

either service-connected or non-serviceconnected deaths. The proposed rules 

would clarify VA’s interpretation of 

similar statutes governing both matters, 

which provide for payments to the 

survivors of veterans who were, at the 

time of death, in receipt of or entitled 

to receive disability compensation for 

service-connected disability that was 

rated totally disabling for a specified 

period prior to death. The proposed 

rules would also reorganize and revise 

the regulations governing surviving 

spouses’ DIC rate with the intent of 

making them easier to identify and 

understand. VA also proposes to 

reissue, with a minor nonsubstantive 

change, the Board of Veterans’ Appeals 

rule concerning the effect of unfavorable 

decisions during a veteran’s lifetime on 

claims for death benefits by the 

veteran’s survivors. This reissuance is 

necessitated by a court decision 

vacating VA’s prior action in revising 

that rule.

DATES: Comments must be received on 

or before December 27, 2004.

ADDRESSES: Mail or hand deliver written 

comments to: Director, Regulations 

Management (00REG1), Department of 

Veterans Affairs, 810 Vermont Ave., 

Room 1068, NW., Washington, DC 

20420; or fax comments to (202) 273–

9026; or e-mail comments to 

VAregulations@mail.va.gov; or, through 

www.Regulations.gov. Comments 

should indicate that they are submitted 

in response to ‘‘RIN 2900–AL86.’’ All 

comments received will be available for 

public inspection in the Office of 

Regulations Management, Room 1063B, 

between the hours of 8 a.m. and 4:30 

p.m., Monday through Friday (except 

holidays). Please call (202) 273–9515 for 

an appointment.

FOR FURTHER INFORMATION CONTACT:

David Barrans, Staff Attorney (022), 

Office of General Counsel, Department 

of Veterans Affairs, 810 Vermont 

Avenue, NW., Washington, DC 20420, 

(202) 273–6332.

SUPPLEMENTARY INFORMATION: VA 

proposes to revise its regulations 

relating to DIC to clarify its 

interpretation of two statutory 

provisions and to reorganize and restate 

provisions in current VA regulations. 

Specifically, we propose to move the 

provisions of current 38 CFR 3.5(e) to a 

new regulation at 38 CFR 3.10, to revise 

those provisions, and to revise 38 CFR 

3.22(b). 

DIC is a benefit paid to survivors of 

veterans in cases of service-connected 

death or certain cases of non-serviceconnected death. Provisions governing 

entitlement to DIC for service-connected 

death are set forth in 38 CFR 3.5(b), 

while provisions governing entitlement 

to DIC in cases of certain non-serviceconnected deaths are set forth in 38 CFR 

3.22. Provisions governing the rate of 

DIC payable to a surviving spouse in 

either circumstance are set forth in 38 

CFR 3.5(e). Because those payment-rate 

provisions apply to DIC awarded under 

either § 3.5 or § 3.22, their placement in 

§ 3.5 may cause unnecessary confusion. 

Accordingly, we propose to delete 

paragraph (e) from current § 3.5, and to 

establish a separate regulation in 38 CFR 

3.10 to govern the rate of DIC payment 

to a surviving spouse. In new § 3.10, we 

propose to reorganize the existing 

provisions of § 3.5(e), to revise certain 

language for clarity, and to significantly 

elaborate upon the criteria governing 

one basis for entitlement to DIC 

payment at a level above the basic DIC 

rate, as explained below. 

Current § 3.5(e)(1) states that, for 

deaths occurring on or after January 1, 

1993, DIC will be paid at a flat rate 

specified in 38 U.S.C. 1311(a)(1). 

Section 3.5(e)(1) further states, however, 

that the basic rate may be increased by 

a specified amount in the case of the 

death of a veteran who at the time of 

death was in receipt of or ‘‘entitled to 

receive’’ compensation for a serviceconnected disability that was rated as 

totally disabling for a continuous period 

of at least eight years immediately 

preceding death. In a decision in 

National Organization of Veterans’ 

Advocates, Inc. v. Secretary of Veterans 

Affairs, 314 F.3d 1373 (Fed. Cir. 2003) 

(‘‘NOVA’’), the United States Court of 

Appeals for the Federal Circuit 

criticized VA for not elaborating upon 

the meaning of the phrase ‘‘entitled to 

receive’’ in this provision, as VA had 

done in § 3.22, where that phrase is also 

used. The Court ordered VA to revise its 

regulations for clarity and consistency. 

Although the court gave VA the option 

of amending either § 3.5(e) or 38 CFR 

20.1106, VA has concluded that the 

meaning of the phrase ‘‘entitled to 

receive’’ logically should be explained 

in a revision to § 3.5(e), the regulation 

that uses that phrase and sets forth the 

substantive criteria governing DIC 

payment rates. Because we propose to 

move the relevant provisions of § 3.5(e) 

to 38 CFR 3.10, we will address the 

meaning of the phrase ‘‘entitled to 

receive’’ in § 3.10. 

VA has concluded that the phrase 

‘‘entitled to receive’’ should be given the 

same meaning for purposes of both 

§ 3.22 and § 3.5(e) and the Federal 

Circuit upheld that conclusion in its 

January 2003 NOVA decision. Section 

3.22 implements 38 U.S.C. 1318, which 

provides that basic entitlement to DIC 

may be established in certain cases of 

non-service-connected deaths, if the 

veteran, at the time of death, was in 

receipt of or ‘‘entitled to receive’’

compensation for a service-connected 

disability that was either continuously 

rated totally disabling for a period of ten 

or more years immediately preceding 

death, or was so rated continuously for 

a period of not less than five years from 

the date of separation from service to 

the date of death, or in the case of a 

former prisoner of war who died after 

September 30, 1999, was so rated for a 

period of not less than one year 

immediately preceding death. Section 

3.5(e) implements 38 U.S.C. 1311(a)(2), 

which provides that a survivor having 

entitlement to DIC at the basic rate may 

receive an enhanced DIC payment in 

cases where the veteran was, at the time 

of death, in receipt of or ‘‘entitled to 

receive’’ compensation for a serviceconnected disability that was rated 

totally disabling for a continuous period 

of at least eight years immediately 

preceding death.

In the Federal Register of April 5, 

2002, VA published a final rule 

amending 38 CFR 20.1106 to provide, in 

effect, that a survivor’s claim under 

either section 1311 or 1318 must be 

decided with reference to decisions 

rendered during the veteran’s lifetime. 

67 FR 16309 (2002). That rule reflects 

our conclusion that a veteran could 

have been in receipt of or entitled to 

receive total disability compensation for 

a specified number of years prior to 

death only if VA had granted such 

benefits during the veteran’s lifetime or 

had denied the benefits based on an 

error that could be corrected 

retroactively under the laws governing 

veterans’ benefits. We have explained 

the basis for this conclusion in several 

prior notices in the Federal Register. 

See 67 FR 16309 (2002); 66 FR 65861 

(2001); 65 FR 3388 (2000). In its January 

2003 NOVA decision, however, the 

Federal Circuit stated that VA’s 

regulations were disparate in that § 3.22 

contained a detailed definition of the 

phrase ‘‘entitled to receive’’ for 

purposes of 38 U.S.C. 1318, but neither 

§ 3.5(e) nor § 20.1106 contained a 

similarly detailed definition of that 

phrase for purposes of 38 U.S.C. 1311. 

To eliminate that disparity, we propose 

to include in new § 3.10 a definition of 

the phrase ‘‘entitled to receive’’ that will 

be nearly identical to the definition in 

§ 3.22(b), with only minor differences 

Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 62231

necessary to reference the different 

durational requirements of the two 

governing statutes. As explained below, 

we propose to revise the definitional 

provisions of current § 3.22(b) in two 

respects, and those revisions will be 

reflected in the definition of ‘‘entitled to 

receive’’ included in new § 3.10. 

Section 3.22(b) currently defines the 

phrase ‘‘entitled to receive’’ to mean 

that, at the time of death, the veteran 

had service-connected disability that 

was rated totally disabling by VA but 

was not receiving compensation 

because: (1) VA was paying the 

compensation to the veteran’s 

dependents; (2) VA was withholding the 

compensation to offset an indebtedness 

of the veteran; (3) the veteran had 

applied for compensation but had not 

received total disability compensation 

for the required number of years prior 

to death due solely to a clear and 

unmistakable error in a VA decision; (4) 

the veteran had not waived retired or 

retirement pay; (5) VA was withholding 

payments under the provisions of 10 

U.S.C. 1174(h)(2); (6) VA was 

withholding payments because the 

veteran’s whereabouts were unknown 

but the veteran was otherwise entitled 

to payment; or (7) VA was withholding 

payments under 38 U.S.C. 5308 but 

determines that benefits were payable 

under 38 U.S.C. 5309. We propose to 

adopt these criteria into new § 3.10 with 

certain changes discussed below, which 

will be made in both § 3.10 and 

§ 3.22(b). 

Revision of § 3.22(b) 

We propose to revise § 3.22(b) in two 

respects. First, we propose to reorganize 

and restate the provision concerning 

correction of clear and unmistakable 

error (CUE) to eliminate a potential 

ambiguity in the current regulation. 

Second, we propose to include one 

additional circumstance under which a 

veteran may be found to have been 

‘‘entitled to receive’’ total disability 

compensation for the specified period 

prior to death. 

We propose to revise for clarity the 

provisions of § 3.22(b) regarding 

correction of CUE as a basis for DIC 

entitlement. Current § 3.22(b) states that 

the phrase ‘‘entitled to receive’’ means 

that, at the time of death, the veteran 

had service-connected disability rated 

totally disabling by VA but was not 

receiving compensation for one of seven 

specified reasons, including the fact that 

the veteran was not receiving total 

disability compensation at the time of 

death due solely to CUE in a VA 

decision. This provision is potentially 

ambiguous as to whether DIC may be 

paid in circumstances where the CUE is 

not corrected until after the veteran’s 

death. In cases involving CUE, the 

veteran’s disability may not actually 

have been rated totally disabling at the 

time of death. Once VA has issued a 

decision correcting CUE, the veteran 

would be deemed, as a matter of law, to 

have held a service-connected total 

disability rating at the time of death, 

because 38 U.S.C. 5109A(b) and 7111(b) 

mandate that a decision correcting CUE 

has the same effect as if it had been 

made at the time of the prior erroneous 

decision. 

VA has consistently construed the 

statutes and regulations to permit DIC 

payment based on correction of CUE 

after a veteran’s death. We note, 

however, that the requirement in 

current § 3.22(b) that the veteran’s 

disability was rated totally disabling at 

the time of death, may not adequately 

convey this conclusion to readers. 

Accordingly, we propose to revise 

§ 3.22(b) to contain a separate paragraph 

addressing DIC awards based on 

correction of CUE, which will not 

contain the requirement of a total 

disability rating existing at the time of 

the veteran’s death. We note that 38 

U.S.C. 1311(a)(2) and 1318 both require 

that the veteran have been entitled to 

receive total disability benefits at the 

time of death for a service-connected 

disability that was rated totally 

disabling by VA for a specified period. 

We continue to believe that awards 

based on correction of CUE will satisfy 

this requirement, due to the retroactive 

effect of decisions correcting CUE. In 

order to avoid confusion, however, we 

believe it is clearer to state simply that 

the phrase ‘‘entitled to receive’’ includes 

circumstances where the veteran would 

have received total disability 

compensation at the time of death for a 

service-connected disability rated 

totally disabling for the specified period 

but for a CUE committed by VA in a 

decision on a claim filed during the 

veteran’s lifetime, without expressly 

requiring a finding that such entitlement 

existed at the time of death. We will 

retain the requirement of entitlement 

existing at the time of the veteran’s 

death with respect to the other six 

criteria in current § 3.22(b), because we 

do not believe there is similar potential 

for confusion with respect to those 

criteria. 

We also propose to add a provision to 

§ 3.22(b) explaining that the phrase 

‘‘entitled to receive’’ includes 

circumstances where new and material 

evidence consisting solely of service 

department records provides a basis for 

reopening a claim finally decided 

during the veteran’s lifetime and for 

awarding a total service-connected 

disability rating retroactively in 

accordance with 38 CFR 3.156(c) and 

3.400(q)(2) for the relevant continuous 

period required by 38 CFR 3.22(a)(2). 

The reasons for this change are 

discussed below. In light of the Federal 

Circuit’s January 2003 decision in 

NOVA, however, it is also necessary to 

explain why VA does not propose to 

extend DIC entitlement to cases where 

a survivor submits new and material 

evidence consisting of items other than 

such contemporaneous service 

department records and alleges that 

such evidence establishes that the 

veteran was entitled to receive total 

disability compensation for a retroactive 

period of several years before the 

veteran’s death and before such 

evidence was submitted to VA. 

In its January 2003 decision in NOVA, 

the Federal Circuit held that VA 

regulations implementing 38 U.S.C. 

1311(a)(2) and 1318 are reasonable 

insofar as they reflect the conclusion 

that DIC cannot be paid under those 

statutes in cases where the veteran had 

never filed a claim for VA disability 

compensation during his or her lifetime. 

NOVA, 314 F.3d at 1378–80. The court 

concluded, however, that VA had not 

adequately addressed whether 

entitlement to DIC under those statutes 

may be established in cases where the 

veteran had filed a claim during his or 

her lifetime, but had not received a 

rating meeting the duration or degree-ofdisability requirements of section 1311 

or 1318, and the survivor seeks to 

reopen the claim based on new and 

material evidence submitted after the 

veteran’s death. Id. at 1380–81. The 

court directed VA to address the issue 

of whether reopening based on new and 

material evidence may provide a means 

of establishing entitlement to DIC under 

sections 1311 and 1318. 

As a general matter, the submission of 

new and material evidence cannot 

establish any person’s entitlement to 

benefits for a past period. Congress has 

established a statutory scheme 

prescribing in detail the starting date 

and duration of any benefit award based 

on original claims or claims reopened 

by new and material evidence. As 

explained below, those statutes define 

VA’s authority to award—and thus, a 

veteran’s entitlement to receive—

benefits for any specific period.

Pursuant to 38 U.S.C. 7104(b) and 

7105(c), VA decisions are final once a 

final appellate decision has been made 

or the period for seeking appeal has 

expired. As these provisions state, VA 

decisions are ‘‘final,’’ and the finality 

serves as a bar to subsequent 

consideration of the claim as well as to 

a subsequent award of benefits based on 

62232 Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 

the claim. There are two statutory 

exceptions to this bar. One exception, 

permitting correction of CUE, operates 

retroactively, as explained above. See 38 

U.S.C. 5109A(b) and 7111(b). 

Accordingly, a claim of CUE that is 

brought after a veteran’s death may 

nevertheless operate retroactively to 

establish that the veteran was entitled to 

total disability compensation for the 

required period prior to the veteran’s 

death. 

The other exception to the finality of 

VA decisions derives from 38 U.S.C. 

5108, which permits a previouslydisallowed claim to be reopened if new 

and material evidence is obtained. In 

contrast to the correction of CUE, 

however, a reopening based on new and 

material evidence generally does not 

have retroactive effect and cannot 

establish an individual’s entitlement to 

benefits for past periods. The effective 

dates of benefit awards are governed by 

38 U.S.C. 5110. Section 5110(a) states 

that, unless specifically provided 

otherwise by statute, the effective date 

of an award based on a claim reopened 

after final adjudication ‘‘shall not be 

earlier than the date of receipt of 

application therefor.’’ VA has 

consistently interpreted this statute to 

provide that an award based on a 

reopened claim generally can be 

effective no earlier than the date the 

claim for reopening was filed, and the 

United States Court of Appeals for the 

Federal Circuit has upheld that 

interpretation. See Sears v. Principi, 349 

F.3d 1326 (Fed. Cir. 2003), cert. denied,

124 S. Ct. 1723 (2004). The CAVC has 

further explained that a reopening 

under 38 U.S.C. 5108 ‘‘is not a 

reactivation of the previous claim, based 

upon the original application for 

benefits,’’ and that ‘‘even upon a 

reopening, the prior claim is still ‘final’

in a sense’’ because any award based on 

the reopening can be effective no earlier 

than the date of the application to 

reopen. Spencer v. Brown, 4 Vet. App. 

283, 293 (1993), aff’d, 17 F.3d 368 (Fed. 

Cir. 1994). 

VA has concluded that the different 

temporal effects of these two finality 

exceptions, as prescribed by statute, are 

significant in the context of 38 U.S.C. 

1311 and 1318. By statute, when VA 

corrects CUE, it is required to give 

retroactive effect to its decision and to 

grant entitlement retroactive to the date 

of a previously denied claim. 

Accordingly, correction of CUE even 

after a veteran’s death clearly may result 

in a conclusion that the veteran was 

entitled to receive total disability 

compensation for a number of years 

prior to death. In contrast, when VA 

awards benefits in a reopened claim, it 

is prohibited by statute from giving 

retroactive effect to its decision or from 

awarding benefit entitlement for any 

period prior to the date of the 

application for reopening. Thus, the 

reopening of a claim after a veteran’s 

death ordinarily could not establish that 

the veteran was entitled to total 

disability compensation for any period 

prior to death. 

We believe it is logical to conclude 

that, when Congress conditioned a 

survivor’s DIC eligibility on the extent 

and duration of a veteran’s entitlement 

to benefits, it intended that VA would 

apply the existing statutory provisions 

governing the extent and duration of the 

veteran’s entitlement, including those 

prohibiting VA from according 

retroactive effect to decisions based on 

new and material evidence. 

We also conclude that adherence to 

the provisions regarding the 

nonretroactivity of decisions based on 

new and material evidence is consistent 

with the purpose of the DIC statutes as 

indicated by their legislative history. In 

providing for payment of DIC based on 

the veteran’s entitlement to total 

disability compensation during his or 

her lifetime, Congress explained that its 

purpose was to replace the source of 

income the veteran’s family would 

otherwise lose when the veteran died 

and his or her compensation payments 

ceased. The Senate Committee on 

Veterans’ Affairs explained this purpose 

by stating:

The appropriate Federal obligation to these 

survivors should, in the Committee’s view, 

be the replacement of the support lost when 

the veteran dies. For example, assume that a 

veteran who is totally blind from serviceconnected causes dies at the age of 55 from 

a heart attack, having been so disabled from 

the age of 22—a period of 33 years. During 

that period, his wife and he depended upon 

his disability compensation for income 

support, but, because his death is not service 

connected, she would not receive DIC.

S. Rep. No. 1054, 95th Cong., 2nd Sess. 

28 (1978), reprinted in, 1978 

U.S.C.C.A.N. 3465, 3486. Permitting 

survivors to rely on new and material 

evidence to establish a veteran’s 

entitlement to benefits that were not 

actually awarded during the veteran’s 

lifetime—and could not have been 

awarded to the veteran retroactively if 

he or she had survived—would be 

contrary to the stated purpose to replace 

income that veterans and their families 

had come to depend on by virtue of 

having received total disability 

payments for a prolonged period prior 

to death.

In 1982, Congress expanded DIC 

eligibility under what is now 38 U.S.C. 

1318, by authorizing DIC in cases where 

the veteran would have received total 

disability compensation for the 

specified period prior to death but for 

CUE committed by VA in a decision on 

a claim submitted during the veteran’s 

lifetime. The stated purpose of that 

change was ‘‘to provide that the 

existence of a clear and unmistakable 

error should not defeat entitlement to 

the survivors’ benefits.’’ S. Rep. No. 550, 

97th Cong., 2nd Sess. 35 (1982), 

reprinted in 1982 U.S.C.C.A.N. 2877, 

2898. The legislative history further 

explained that, ‘‘[u]nder the 

amendment, a veteran would not need 

actually to have been ‘‘in receipt’’ of 

total disability benefits for the requisite 

period of time in order to provide 

eligibility to the survivors if a clear and 

unmistakable error had been made that 

resulted in a shorter period of receipt 

than should have been provided.’’ Id.

Permitting survivors to rely on new 

and material evidence to establish a 

veteran’s entitlement to benefits that 

were not actually awarded during the 

veteran’s lifetime would go well beyond 

the stated purpose to provide DIC in 

cases where CUE resulted in a shorter 

period of entitlement than should have 

been provided. As noted above, new 

and material evidence does not have 

retroactive effect and could not establish 

a longer period of compensation 

entitlement for any veteran, as 

correction of CUE may do. The 

legislative history of the 1982 statute 

reasonably reflects the principle that 

veterans and their families should not 

be penalized in cases where the veteran 

did everything necessary to establish 

entitlement to a total disability rating for 

the required period, but VA’s error 

prevented the timely assignment of such 

rating. The purpose of that amendment 

was clearly remedial, in the same way 

that the general authority to correct CUE 

retroactively is remedial. In contrast, the 

authority to reopen and grant claims 

upon receipt of new and material 

evidence is not remedial, in the sense 

that it does not correct any past error, 

but merely permits a new adjudication 

informed by new evidence. 

In view of the stated congressional 

purpose, we believe it is appropriate to 

recognize the distinction between 

statutory procedures that may result in 

the retroactive assignment of a total 

disability rating for periods prior to 

death (i.e., correction of CUE) and those 

that may not (i.e., reopening based on 

new and material evidence). It is, 

further, appropriate to recognize a 

distinction between procedures 

designed to remedy VA error (i.e., 

correction of CUE) and those that are 

not (i.e., reopening based on new and 

material evidence). In view of 

Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 62233

Congress’s stated purpose to allow DIC 

where VA’s error was the only obstacle 

to the veteran’s receipt of benefits, we 

find no basis for extending DIC to 

circumstances where there was no VA 

error and, moreover, where VA would 

have no statutory authority to award 

retroactive entitlement to the veteran, if 

the veteran were still alive. 

Finally, VA notes that interpreting 38 

U.S.C. 1311 and 1318 to permit 

reopening based on new and material 

evidence concerning past disability 

would have significant practical effects 

on VA claims processing. In VA’s view, 

those statutes require determinations 

based on an existing record of evidence 

and adjudications made during the 

veteran’s lifetime. Either VA had 

awarded a total disability rating during 

the veteran’s lifetime or the evidentiary 

record established during the veteran’s 

lifetime demonstrates that VA 

committed CUE in failing to award such 

a rating. Moreover, the duration of the 

veteran’s entitlement could be readily 

established by reference to existing 

ratings or to the effective-date 

provisions of 38 U.S.C. 5110. In 

contrast, if new and material evidence 

were a basis for establishing DIC 

entitlement under 38 U.S.C. 1311 and 

1318, VA potentially would be required 

to conduct significant new evidentiary 

development, including requesting 

medical opinions as necessary to resolve 

issues concerning the extent and 

duration of past disability. In addition, 

if VA were required to ignore the 

provisions of 38 U.S.C. 5110 prohibiting 

retroactive awards based on new and 

material evidence, determinations 

concerning the duration of the veteran’s 

‘‘entitlement’’ would be a matter of 

significant uncertainty and dispute. 

Inasmuch as Congress’s stated purpose 

is limited to cases involving existing 

ratings and correction of CUE in an 

existing record, we cannot conclude that 

Congress intended to impose the 

burdens of the much more complex, 

uncertain, and hypothetical adjudicative 

actions that would be necessary in 

determinations based on new and 

material evidence. 

For the foregoing reasons, VA has 

concluded that new and material 

evidence submitted after a veteran’s 

death generally may not provide a basis 

for establishing that the veteran was 

‘‘entitled to receive’’ benefits not 

awarded during the veteran’s lifetime 

and thus may not provide a basis for 

establishing entitlement to DIC under 38 

U.S.C. 1318. 

As noted above, however, there is one 

circumstance in which additional 

evidence submitted after a veteran’s 

death may result in retroactive benefit 

awards, potentially for several years 

prior to the date of reopening—where 

the additional evidence consists of 

service department records that existed 

at the time of a final decision by VA 

during the veteran’s lifetime but for 

some reason were not previously 

considered by VA. 

Arguably, VA regulation 38 CFR 

3.156(c) indicates that retroactive 

entitlement is potentially possible for 

several years prior to the date of 

reopening of a previously denied claim 

based upon the submission of new 

evidence consisting of either previouslyexisting service department records that 

VA presumes to have been lost or 

mislaid at the time of a prior decision 

or supplemental service department 

reports correcting a prior service 

department record. However, as 

discussed below, regulatory provisions 

governing the assignment of effective 

dates for awards clearly establish that 

retroactive entitlement for several years 

prior to the date of a reopening of a 

previously denied claim is potentially 

possible only when a claim has been 

reopened and granted based upon the 

submission of new evidence in the form 

of service department records that 

existed when the prior decision was 

made and which VA presumes to have 

been previously lost or mislaid. 38 CFR 

3.400(q)(2). When a claim has been 

reopened and granted based upon the 

submission of new and material 

evidence in the form of corrected 

service department records, entitlement 

to such awards is limited to the date of 

filing the application for change, 

correction, or modification with the 

service department; the date VA 

received a prior claim if it disallowed 

the claim; or the date one year prior to 

the date of reopening of the disallowed 

claim, whichever is later. 38 CFR 

3.400(g).

A VA regulation, 38 CFR 3.400(q)(2), 

states that when a claim is reopened and 

granted based on new and material 

evidence in the form of records from a 

service department (i.e., the Army, 

Navy, or Air Force) that VA considers to 

have been lost or mislaid, benefits may 

be awarded retroactive to the date of the 

previously denied claim. Under the 

plain language of this section, new and 

material evidence in the form of 

presumably lost or mislaid official 

service department records submitted 

after a veteran’s death potentially may 

establish that the veteran was entitled to 

total disability benefits for retroactive 

periods during his or her lifetime. This 

regulation reflects a longstanding VA 

policy of treating service department 

records that were presumably lost or 

mislaid as providing a basis for an 

award of benefits based on the veteran’s 

original claim. Moreover, this regulation 

is clearly intended to remedy error (the 

loss or misplacement of service 

department records or failure to 

associate pertinent service department 

records with the file) affecting the prior 

final decision. 

VA regulation 38 CFR 3.400(g) 

prohibits the awarding of retroactive 

entitlement for several years prior to the 

date of reopening of a previously denied 

claim when a claim has been reopened 

and granted based on the submission of 

new and material evidence in the form 

of corrected military records. This 

implementing regulation mirrors its 

authorizing statutory provision, 38 

U.S.C. 5110(i). Section 5110(i) provides 

that, ‘‘[w]henever any disallowed claim 

is reopened and thereafter allowed on 

the basis of new and material evidence 

resulting from the correction of the 

military records of the proper service 

department under section 1552 of title 

10, or the change, correction, or 

modification of a discharge or dismissal 

under section 1553 of title 10, or from 

other corrective action by competent 

authority, the effective date of 

commencement of the benefits so 

awarded shall be the date on which the 

application was filed for the correction 

of the military record or for the change, 

modification, or correction of a 

discharge or dismissal, as the case may 

be, or the date the disallowed claim was 

filed, whichever date is later, but in no 

event shall such award of benefits be 

retroactive for more than one year from 

the date of reopening of such disallowed 

claim.’’ 38 U.S.C. 5110(i) (emphasis 

added). Accordingly, a reopening based 

on new and material evidence in the 

form of corrected service department 

records could establish a veteran’s 

entitlement to benefits for no more than 

one year prior to the date of reopening, 

and could not satisfy the periods of 

entitlement necessary to support a 

survivor’s DIC award under 38 U.S.C. 

1311 and 1318. Reopenings based on 

corrected military records are therefore 

excluded from this regulation. 

As noted above, we believe 38 U.S.C. 

1311 and 1318 are most reasonably 

construed as requiring VA to apply its 

existing statutes and regulations in 

determining the extent and duration of 

a veteran’s entitlement to benefits. 

Further, those statutes reflect an intent 

that a survivor’s DIC entitlement should 

not be defeated solely by VA error. 

Although the misplacement of service 

department records may have been due 

to error by the service department, 

rather than VA, we believe it would be 

consistent with the language and 

purpose of 38 U.S.C. 1311 and 1318 to 

62234 Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 

permit DIC in cases where new and 

material evidence solely in the form of 

presumably lost or misplaced service 

department records results in 

assignment of a total disability rating 

with a retroactive effective date 

sufficient to satisfy the requirements of 

those statutes. Accordingly, we propose 

to add provisions to 38 CFR 3.10 and 

3.22(b) to reflect this determination. 

Although VA regulation 38 CFR 

3.400(q)(2) refers to records that VA 

considers to have been lost or mislaid, 

we do not believe it requires a factual 

determination that the records were 

actually lost or mislaid. The reference to 

records ‘‘considered’’ to have been lost 

or mislaid serves to draw a distinction 

between service department records that 

existed at the time of the prior VA 

decision and therefore presumably 

could or should have been available for 

VA’s consideration when the veteran’s 

original claim was filed, and the type of 

post-service corrections of service 

department records that are separately 

addressed in 38 CFR 3.400(g). If a 

service department record existed at the 

time of VA’s prior decision, but for 

some reason was not provided to and 

considered by VA at the time of its 

decision on the veteran’s original claim, 

VA will presume that the record was 

lost or mislaid. In order to clarify the 

distinction between this type of service 

department record covered by 38 CFR 

3.400(q)(2) and the type of post-service 

corrections covered by 38 CFR 3.400(g), 

we propose to state that DIC entitlement 

under 38 U.S.C. 1311 and 1318 may be 

established where additional evidence 

consisting solely of service department 

records that existed at the time of VA’s 

prior decision but were not previously 

considered by VA provide a basis for 

reopening a claim finally decided 

during the veteran’s lifetime and for 

awarding a total service-connected 

disability rating in accordance with 

§ 3.156(c) and § 3.400(q)(2) for the 

retroactive period specified in 38 U.S.C. 

1311 or 1318. 

Provisions in New 38 CFR 3.10 

As explained above, we propose to 

move provisions currently in 38 CFR 

3.5(e) to a new provision codified at 38 

CFR 3.10. We further propose to 

reorganize those provisions for clarity, 

and to add provisions mirroring those in 

38 CFR 3.22(b), as modified by these 

proposed rules. 

Proposed § 3.10 will state rules 

governing the DIC rate payable to the 

surviving spouse of a deceased veteran. 

Paragraph (a) of § 3.10 will state that the 

rate of DIC payable to a surviving 

spouse will be the total of a basic 

monthly rate and any applicable 

increases. This provision would merely 

provide a general summary of the 

existing provisions in § 3.5(e), and 

would not effect any change in existing 

requirements. 

Paragraph (b) of proposed § 3.10 is a 

restatement of the first sentence of 

current § 3.5(e)(1), which states the 

basic monthly rate of DIC. Current 

§ 3.5(e)(1) states that this rate is payable 

for deaths occurring on or after January 

1, 1993. Under 38 U.S.C. 1311(a)(3) and 

current 38 CFR 3.5(e)(2), however, this 

rate may also be paid for deaths 

occurring prior to that date, if it would 

be greater than the alternative rate 

payable for such deaths, which is 

discussed below. To avoid confusion 

regarding this point, we propose to 

delete the reference to deaths occurring 

on or after January 1, 1993, in this 

provision. As explained below, we 

propose a separate paragraph explaining 

the alternative rate that may be payable 

for deaths occurring before January 1, 

1993. No substantive change is intended 

by this revision.

Paragraph (c) of proposed § 3.10 is a 

restatement of the second sentence of 

current § 3.5(e)(1). It would explain that 

the basic monthly rate may be increased 

in cases where the veteran, at the time 

of death, was receiving, or was entitled 

to receive, compensation for serviceconnected disability that was rated by 

VA as totally disabling for a continuous 

period of at least eight years 

immediately preceding death. We 

propose to refer to this increase as the 

‘‘veteran’s compensation increase’’ in 

the caption of paragraph (c) and in 

subsequent references in other 

paragraphs of proposed § 3.10. We 

further propose to state that 

determinations of entitlement to that 

increase will be made in accordance 

with provisions in paragraph (f) of 

§ 3.10. 

Paragraph (d) of proposed § 3.10 is a 

restatement of the first two sentences of 

current § 3.5(e)(2). This provision states 

that, in the case of death occurring 

before January 1, 1993, the basic 

monthly rate of DIC is a rate specified 

in 38 U.S.C. 1311(a)(3), based on the 

veteran’s pay grade, but only if such rate 

would be greater than the total of the 

basic monthly rate under paragraph (b) 

of proposed § 3.10 and the veteran’s 

compensation increase, if applicable, 

payable under paragraph (c) of proposed 

§ 3.10. 

Paragraph (e) of proposed § 3.10 

addresses three additional increases that 

may augment the monthly DIC rate. 

Paragraph (e)(1) restates, without 

substantive change, the provisions of 

current § 3.5(e)(3), governing additional 

amounts for children. Paragraph (e)(2) 

restates, without substantive change, the 

first sentence of current § 3.5(e)(4), 

governing additional amounts based on 

the surviving spouse’s need for regular 

aid and attendance. Paragraph (e)(3) 

restates, without substantive change, the 

second sentence of current § 3.5(e)(4), 

governing additional amounts based on 

the surviving spouse’s housebound 

status. 

Paragraph (f) of the proposed rule 

states criteria governing entitlement to 

the veteran’s compensation increase 

under paragraph (c) of the proposed 

rule. We propose to place those criteria 

in a separate paragraph at the end of the 

regulation, rather than including them 

in paragraph (c), due to their length. We 

believe proposed § 3.10 will be easier to 

follow if it provides a succinct 

statement of the DIC rates and 

allowances payable to a surviving 

spouse in paragraphs (b) through (e), 

and the lengthy explanation necessary 

to fully explain the veteran’s 

compensation increase is reserved for 

the end. 

Proposed paragraph (f)(1) states that 

the surviving spouse must have been 

married to the veteran for the entire 

eight-year period referenced in 

paragraph (c) in order to qualify for the 

veteran’s compensation increase. This is 

a restatement of the third sentence of 

current § 3.5(e)(1), which says that, in 

determining the eight-year period, only 

periods during which the veteran was 

married to the surviving spouse shall be 

considered. We believe it is clearer to 

state simply that the surviving spouse 

must have been married to the veteran 

for the entire period required by 

paragraph (c). No substantive change is 

intended by this different wording. 

Proposed paragraph (f)(2) states that 

the phrase ‘‘rated by VA as totally 

disabling,’’ as used in paragraph (c), 

includes total disability ratings based on 

unemployability. This paragraph would 

contain a reference to 38 CFR 4.16, 

which provides that, even though a 

veteran’s service-connected disability 

does not qualify for a 100% rating under 

VA’s disability rating schedule, VA may 

assign a total disability rating if the 

veteran’s service-connected disability 

prevents him or her from pursuing 

substantially gainful employment. 

Current § 3.5(e) does not contain this 

provision. However, proposed 

paragraph (f)(2) would mirror the 

provision in current 38 CFR 3.22(c) 

defining the phrase ‘‘rated by VA as 

totally disabling’’ for purposes of 38 

U.S.C. 1318. We propose to add a 

similar statement in § 3.10(f)(2) based on 

our conclusion that the language of 38 

U.S.C. 1311(a)(2) and 38 U.S.C. 1318, 

must be interpreted in the same manner. 

Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 62235

Proposed paragraph (f)(3) would 

define the phrase ‘‘entitled to receive’’

as used in proposed paragraph (c). 

Paragraph (f)(3) is based on the 

provisions of 38 CFR 3.22(b), which 

define the phrase ‘‘entitled to receive’’

for purposes of 38 U.S.C. 1318. We have 

previously explained the basis for our 

interpretation of the phrase ‘‘entitled to 

receive’’ in 38 U.S.C. 1318 and our 

reasons for concluding the phrase must 

be interpreted in the same manner for 

purposes of 38 U.S.C. 1311(a)(2). See 67 

FR 16309 (2002); 66 FR 65861 (2001); 65 

FR 3388 (2000). The Federal Circuit 

upheld that determination in its January 

2003 NOVA decision. Accordingly, we 

propose to include in paragraph (f)(3) of 

§ 3.10 a provision mirroring the 

provisions of 38 CFR 3.22(b), as 

proposed to be amended by this 

document.

Reissuance of 38 CFR 20.1106 

In the Federal Register of April 5, 

2002 (67 FR 16309), VA published a 

final rule amending 38 CFR 20.1106, the 

Board of Veterans’ Appeals regulation 

governing the effect of adverse decisions 

during a veteran’s lifetime on a 

survivor’s claim for death benefits. As 

amended, the final rule stated that, 

except with respect to benefits under 38 

U.S.C. 1311 and 1318 and certain cases 

involving veterans whose benefits have 

been forfeited for treason or subversive 

activities under 38 U.S.C. 6104 and 

6105, issues involved in a survivor’s 

claim for death benefits will be decided 

without regard to any prior disposition 

of those issues during the veteran’s 

lifetime. That rule reflects VA’s 

longstanding practice of adjudicating de 

novo the issue of service connection for 

the cause of a veteran’s death even if VA 

had denied the veteran’s claim during 

his or her lifetime for compensation for 

the disease or injury that later caused 

death. The April 2002 final-rule notice 

explained that claims under 38 U.S.C. 

1311 and 1318 were excepted from that 

principle because VA construed those 

statutes to require that determinations 

regarding the veteran’s entitlement to 

receive total disability compensation for 

a specified number of years prior to 

death must be made with reference to 

decisions rendered during the veteran’s 

lifetime. 

The final rule was issued pursuant to 

the Federal Circuit’s August 2001 order 

in National Organization of Veterans’

Advocates, Inc. v. Secretary of Veterans 

Affairs, 260 F.3d 1365 (2001). In its 

January 2003 order in NOVA, the 

Federal Circuit concluded that the final 

rule did not fully comply with the 

court’s prior order. Specifically, the 

Federal Circuit stated that VA had not 

amended either 38 CFR 3.5 or 20.1106 

to state criteria similar to those in 38 

CFR 3.22 and that the final rule did not 

explain the scope of the rule concerning 

prior adjudications. The court stated 

that it could not sustain the final rule, 

but instead ‘‘vacate[d] and remand[ed] 

for a further rulemaking proceeding.’’

In response to the court’s order, we 

are proposing to revise the provisions 

currently in 38 CFR 3.5(e) to explain the 

criteria governing entitlement to 

benefits under 38 U.S.C. 1311. The 

proposed revision will make clear that 

the veteran must have filed a claim for 

disability compensation during his or 

her lifetime in order for the survivors to 

be eligible for DIC under section 1311, 

and will explain the circumstances 

under which DIC may be paid based on 

correction of CUE or submission of new 

and material evidence. 

We have concluded that these 

provisions are more appropriately 

included in proposed § 3.10 than in 38 

CFR 20.1106. Section 3.10 will be the 

VA regulation specifically 

implementing 38 U.S.C. 1311 and will 

be codified in part 3 of title 38, Code of 

Federal Regulations, the part containing 

the regulations governing awards of 

compensation, pension, and DIC. 

Section 20.1106, in contrast, 

implements 38 U.S.C. 7104(b), 

governing the finality of Board 

decisions, rather than 38 U.S.C. 1311 or 

1318, and the regulation is codified in 

the portion of title 38, Code of Federal 

Regulations, setting forth the rules of the 

Board of Veterans’ Appeals. Section 

20.1106 states a general rule of finality 

applicable to a broad range of statutory 

provisions and is not limited to 38 

U.S.C. 1311. We believe the revision to 

38 CFR 3.5(e) proposed in this notice 

will satisfy the requirements of the 

Federal Circuit’s remand order. 

We further conclude that the 

provisions of 38 CFR 20.1106 issued in 

our April 2002 Federal Register notice 

properly reflect VA’s interpretation of 

38 U.S.C. 1311 and 1318 and are 

consistent with the VA regulations 

implementing those statutes. As revised 

in April 2002, section 20.1106 provides 

in effect that claims under 38 U.S.C. 

1311 and 1318 will be decided with 

regard to decisions during the veteran’s 

lifetime. This comports with our 

conclusion, stated above and in our 

April 2002 final-rule notice, that DIC 

entitlement under those statutes may 

exist when ratings during the veteran’s 

lifetime granted total disability 

compensation, or would have granted 

such compensation but for CUE, or 

where new and material evidence in the 

form of presumably lost or mislaid 

service department records warrants a 

retroactive award of total disability 

compensation. 

Where a DIC claim is based on the 

allegation of CUE in a decision made 

during the veteran’s lifetime, the DIC 

claim must be made with regard to the 

prior decision, in order to determine 

whether there was error in that decision. 

Similarly, where a DIC claim is based on 

new and material evidence in the form 

of presumably lost or mislaid service 

department records, the claim must be 

made with regard to the prior decision 

on the veteran’s claim. As the CAVC 

stated in Spencer v. Brown, 4 Vet. App. 

at 293, ‘‘where the claim is reopened on 

the basis of new and material evidence 

from service department reports, the VA 

has consistently treated it as a true 

‘reopening’ of the original claim and a 

review of the former disposition in light 

of the service department reports which 

were considered to have been lost or 

mislaid.’’ (Emphasis in original).

For the foregoing reasons, we 

conclude that the final rule issued in 

April 2002 revising 38 CFR 20.1106 is 

valid and reasonable. However, because 

the status of that rule is uncertain in 

light of the Federal Circuit’s January 

2003 order ‘‘vacat[ing]’’ the matter 

before it, we propose to reissue the 

provisions of the April 2002 rule, with 

one minor, nonsubstantive change 

discussed below. 

Although the caption of current 

§ 20.1106 refers to ‘‘unfavorable’’

decisions during made a veteran’s 

lifetime, the term ‘‘unfavorable’’ does 

not appear in the text of the regulation, 

which states that, with certain 

exceptions, issues involved in a 

survivor’s claim for death benefits will 

be decided without regard to ‘‘any prior 

disposition’’ of those issues during the 

veteran’s lifetime. We propose to add 

the word ‘‘unfavorable’’ before 

‘‘disposition’’ in the text of the 

regulation, to clarify that VA generally 

will disregard only unfavorable 

decisions made during the veteran’s 

lifetime. This change will resolve any 

ambiguity that could result from the 

different terminology used in the 

caption and text of the current 

regulation. 

The added language does not alter the 

meaning of the regulation, but merely 

clarifies VA’s existing interpretation of 

the regulation as requiring VA to 

disregard only unfavorable decisions. 

As noted above, the caption of the 

current regulation indicates that it is 

intended to apply only to prior 

unfavorable decisions. Further, the 

statutory authority cited for the current 

regulation, 38 U.S.C. 7104(b), addresses 

the finality of Board decisions that have 

‘‘disallowed’’ a claim. Section 20.1106 

62236 Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 

implements that statute by prescribing 

rules to govern the finality of prior 

unfavorable decisions, and the proposed 

amendment would merely clarify that 

purpose. 

Unfunded Mandates 

The Unfunded Mandates Reform Act 

requires, at 2 U.S.C. 1532, that agencies 

prepare an assessment of anticipated 

costs and benefits before developing any 

rule that may result in an expenditure 

by State, local, or tribal governments, in 

the aggregate, or by the private sector, of 

$100 million or more in any given year. 

This proposed amendment would have 

no such effect on State, local, or tribal 

governments, or the private sector. 

Executive Order 12866 

The Office of management and Budget 

has reviewed this document under 

Executive Order 12866. 

Paperwork Reduction Act 

This document contains no provisions 

constituting a collection of information 

under the Paperwork Reduction Act (44 

U.S.C. 3501–3521). 

Regulatory Flexibility Act 

The Secretary hereby certifies that 

this 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 (RFA), 5 U.S.C. 601–612. 

The reason for this certification is that 

these amendments would not directly 

affect any small entities. Only VA 

beneficiaries and their survivors could 

be directly affected. Therefore, pursuant 

to 5 U.S.C. 605(b), these amendments 

are exempt from the initial and final 

regulatory flexibility analysis 

requirements of sections 603 and 604. 

Catalog of Federal Domestic Assistance 

The Catalog of Federal Domestic 

Assistance program numbers are 64.109, 

and 64.110.

List of Subjects 

38 CFR Part 3 

Administrative practice and 

procedure, Claims, Disability benefits, 

Health care, Pensions, Radioactive 

materials, Veterans, Vietnam. 

38 CFR Part 20 

Administrative practice and 

procedure, Claims, Veterans.

Approved: July 13, 2004. 

Anthony J. Principi, 

Secretary of Veterans Affairs.

For the reasons set forth in the 

preamble, 38 CFR parts 3 and 20 are 

proposed to be amended as follows:

PART 3—ADJUDICATION

Subpart A—Pension, Compensation, 

and Dependency and Indemnity 

Compensation 

1. The authority citation for part 3, 

subpart A continues to read as follows:

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

otherwise noted.

§ 3.5 [Amended] 

2. Section 3.5 is amended by 

removing paragraph (e). 

3. Section 3.10 is added to read as 

follows:

§ 3.10 Dependency and indemnity 

compensation rate for a surviving spouse. 

(a) General determination of rate.

When VA grants a surviving spouse 

entitlement to DIC, VA will determine 

the rate of the benefit it will award. The 

rate of the benefit will be the total of the 

basic monthly rate specified in 

paragraph (b) or (d) of this section and 

any applicable increases specified in 

paragraph (c) or (e) of this section. 

(b) Basic monthly rate. Except as 

provided in paragraph (d) of this 

section, the basic monthly rate of DIC 

for a surviving spouse will be the 

amount set forth in 38 U.S.C. 1311(a)(1). 

(c) Veteran’s compensation increase.

The basic monthly rate under paragraph 

(b) of this section shall be increased by 

the amount specified in 38 U.S.C. 

1311(a)(2) if the veteran, at the time of 

death, was receiving, or was entitled to 

receive, compensation for serviceconnected disability that was rated by 

VA as totally disabling for a continuous 

period of at least eight years 

immediately preceding death. 

Determinations of entitlement to this 

increase shall be made in accordance 

with paragraph (f) of this section. 

(d) Alternative basic monthly rate for 

death occurring prior to January 1, 

1993. The basic monthly rate of DIC for 

a surviving spouse when the death of 

the veteran occurred prior to January 1, 

1993, will be the amount specified in 38 

U.S.C. 1311(a)(3) corresponding to the 

veteran’s pay grade in service, but only 

if such rate is greater than the total of 

the basic monthly rate and veteran’s 

compensation increase (if applicable) 

the surviving spouse is entitled to 

receive under paragraphs (b) and (c) of 

this section. The Secretary of the 

concerned service department will 

certify the veteran’s pay grade and the 

certification will be binding on VA. DIC 

paid pursuant to this paragraph may not 

be increased by the veteran’s 

compensation increase under paragraph 

(c) of this section. 

(e) Additional increases. One or more 

of the following increases may be paid 

in addition to the basic monthly rate 

and veteran’s compensation increase. 

(1) Increase for children. If the 

surviving spouse has one or more 

children under the age of 18 of the 

deceased veteran (including a child not 

in the surviving spouse’s actual or 

constructive custody, or a child who is 

in active military service), the monthly 

DIC rate will be increased by the 

amount set forth in 38 U.S.C. 1311(b) for 

each child. 

(2) Increase for regular aid and 

attendance. If the surviving spouse is 

determined to be in need of regular aid 

and attendance under the criteria in 

§ 3.352 or is a patient in a nursing home, 

the monthly DIC rate will be increased 

by the amount set forth in 38 U.S.C. 

1311(c). 

(3) Increase for housebound status. If 

the surviving spouse does not qualify 

for the regular aid and attendance 

allowance but is housebound under the 

criteria in § 3.351(f), the monthly DIC 

rate will be increased by the amount set 

forth in 38 U.S.C. 1311(d). 

(f) Criteria governing veteran’s 

compensation increase. In determining 

whether a surviving spouse qualifies for 

the veteran’s compensation increase 

under paragraph (c) of this section, the 

following standards shall apply. 

(1) Marriage requirement. The 

surviving spouse must have been 

married to the veteran for the entire 

eight-year period referenced in 

paragraph (c) of this section in order to 

qualify for the veteran’s compensation 

increase. 

(2) Determination of total disability.

As used in paragraph (c) of this section, 

the phrase ‘‘rated by VA as totally 

disabling’’ includes total disability 

ratings based on unemployability (§ 4.16 

of this chapter). 

(3) Definition of ‘‘entitled to receive’’.

As used in paragraph (c) of this section, 

the phrase ‘‘entitled to receive’’ means 

that the veteran filed a claim for 

disability compensation during his or 

her lifetime and one of the following 

circumstances is satisfied: 

(i) The veteran would have received 

total disability compensation for the 

period specified in paragraph (c) of this 

section but for clear and unmistakable 

error committed by VA in a decision on 

a claim filed during the veteran’s 

lifetime; or 

(ii) Additional evidence submitted to 

VA before or after the veteran’s death, 

consisting solely of service department 

records that existed at the time of a prior 

VA decision but were not previously 

considered by VA, provides a basis for 

reopening a claim finally decided 

during the veteran’s lifetime and for 

awarding a total service-connected 

Federal Register / Vol. 69, No. 205 / Monday, October 25, 2004 / Proposed Rules 62237

disability rating retroactively in 

accordance with §§ 3.156(c) and 

3.400(q)(2) of this part for the period 

specified in paragraph (c) of this 

section; or 

(iii) At the time of death, the veteran 

had a service-connected disability that 

was continuously rated totally disabling 

by VA for the period specified in 

paragraph (c) of this section, but was not 

receiving compensation because: 

(A) VA was paying the compensation 

to the veteran’s dependents; 

(B) VA was withholding the 

compensation under the authority of 38 

U.S.C. 5314 to offset an indebtedness of 

the veteran; 

(C) The veteran had not waived 

retired or retirement pay in order to 

receive compensation; 

(D) VA was withholding payments 

under the provisions of 10 U.S.C. 

1174(h)(2);

(E) VA was withholding payments 

because the veteran’s whereabouts were 

unknown, but the veteran was otherwise 

entitled to continued payments based 

on a total service-connected disability 

rating; or 

(F) VA was withholding payments 

under 38 U.S.C. 5308 but determines 

that benefits were payable under 38 

U.S.C. 5309.

(Authority: 38 U.S.C. 501(a), 1311, 1314, and 

1321).

4. Section 3.22 is amended by revising 

paragraph (b) to read as follows:

§ 3.22 DIC benefits for survivors of certain 

veterans rated totally disabled at time of 

death.

* * * * *

(b) For purposes of this section, 

‘‘entitled to receive’’ means that the 

veteran filed a claim for disability 

compensation during his or her lifetime 

and one of the following circumstances 

is satisfied: 

(1) The veteran would have received 

total disability compensation at the time 

of death for a service-connected 

disability rated totally disabling for the 

period specified in paragraph (a)(2) of 

this section but for clear and 

unmistakable error committed by VA in 

a decision on a claim filed during the 

veteran’s lifetime; or 

(2) Additional evidence submitted to 

VA before or after the veteran’s death, 

consisting solely of service department 

records that existed at the time of a prior 

VA decision but were not previously 

considered by VA, provides a basis for 

reopening a claim finally decided 

during the veteran’s lifetime and for 

awarding a total service-connected 

disability rating retroactively in 

accordance with §§ 3.156(c) and 

3.400(q)(2) of this part for the relevant 

period specified in paragraph (a)(2) of 

this section; or 

(3) At the time of death, the veteran 

had a service-connected disability that 

was continuously rated totally disabling 

by VA for the period specified in 

paragraph (a)(2), but was not receiving 

compensation because: 

(i) VA was paying the compensation 

to the veteran’s dependents; 

(ii) VA was withholding the 

compensation under authority of 38 

U.S.C. 5314 to offset an indebtedness of 

the veteran; 

(iii) The veteran had not waived 

retired or retirement pay in order to 

receive compensation; 

(iv) VA was withholding payments 

under the provisions of 10 U.S.C. 

1174(h)(2); 

(v) VA was withholding payments 

because the veteran’s whereabouts were 

unknown, but the veteran was otherwise 

entitled to continued payments based 

on a total service-connected disability 

rating; or 

(vi) VA was withholding payments 

under 38 U.S.C. 5308 but determines 

that benefits were payable under 38 

U.S.C. 5309.

* * * * *

PART 20—BOARD OF VETERANS’

APPEALS: RULES OF PRACTICE 

5. The authority citation for part 20 

continues to read as follows:

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

specific sections.

Subpart L—Finality 

6. Section 20.1106 is revised to read 

as follows:

§ 20.1106 Rule 1106. Claim for death 

benefits by survivor—prior unfavorable 

decisions during veteran’s lifetime. 

Except with respect to benefits under 

the provisions of 38 U.S.C. 1311(a)(2), 

1318, and certain cases involving 

individuals whose Department of 

Veterans Affairs benefits have been 

forfeited for treason or for subversive 

activities under the provisions of 38 

U.S.C. 6104 and 6105, issues involved 

in a survivor’s claim for death benefits 

will be decided without regard to any 

prior unfavorable disposition of those 

issues during the veteran’s lifetime.

(Authority: 38 U.S.C. 7104(b))

[FR Doc. 04–23488 Filed 10–22–04; 8:45 am] 

BILLING CODE 8320–01–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 262 

[OA–2004–0004; FRL–7829–9] 

RIN 2090–AA13 

National Environmental Performance 

Track Program, Parallel Proposal To 

Direct Final Rule for RCRA Corrections

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed Rule.

SUMMARY: This proposed rulemaking is 

a parallel proposal to the direct final 

rulemaking EPA is also publishing 

today. EPA is taking direct final action 

on the National Environmental 

Performance Track Program, Direct 

Final Rule for RCRA Corrections. The 

revisions concern the proposed rule 

published on August 13, 2002 (67 FR 

52674), and the subsequent final rule 

published on April 22, 2004 (69 FR 

21737). Both the 2002 proposal and the 

2004 final rule contained an 

inconsistency between the preamble 

language and regulatory language. The 

final rule also inadvertently omitted 

three references to applicable regulatory 

provisions that were properly 

referenced in the proposed rule. We are 

proposing today’s revisions to address 

the inconsistency between the preamble 

and regulatory language, and to correct 

the inadvertently omitted applicable 

regulatory provisions. 

In the ‘‘Rules and Regulations’’

section of today’s Federal Register, we 

are approving these revisions and 

corrections in a direct final rulemaking 

because we view this as a 

noncontroversial amendment and 

anticipate no adverse comment. We 

have explained our reasons for this 

approval in the preamble to the direct 

final rule. If we receive no adverse 

comment, we will not take further 

action on this proposed rule. If we 

receive adverse comment, we will 

withdraw the direct final rule and it will 

not take effect, and we will address all 

public comments in a subsequent final 

rule based on this proposed rule. We 

will not institute a second comment 

period on this action. Any parties 

interested in commenting must do so at 

this time.

DATES: Written comments must be 

received by November 24, 2004.

ADDRESSES: Submit your comments, 

identified by Docket ID No. OA–2004–

0004, by one of the following methods: 

• Federal eRulemaking Portal: http://

www.regulations.gov. Follow the on-line 

instructions for submitting comments.