Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations 21871

because it does not have a substantial

direct effect on one or more Indian

tribes, on the relationship between the

Federal Government and Indian tribes,

or on the distribution of power and

responsibilities between the Federal

Government and Indian tribes.

Environment

The Coast Guard has considered the

environmental impact of this temporary

regulation and concluded that, under

Figure 2–1, paragraph (34)(g), of

Commandant Instruction M16475.1C, it

will have no significant environmental

impact and it is categorically excluded

from further environmental

documentation. A Categorical Exclusion

Determination and Environmental

Analysis Checklist will be available for

inspection and copying in the docket to

be maintained at the address listed in

ADDRESSES.

List of Subjects in 33 CFR Part 165

Harbors, Marine safety, Navigation

(water), Reporting and record keeping

requirements, Security measures,

Waterways.

Regulation

For the reasons discussed in the

preamble, the Coast Guard amends 33

CFR part 165 as follows:

PART 165—REGULATED NAVIGATION

AREAS AND LIMITED ACCESS AREAS

1. The authority citation for 33 CFR

Part 165 continues to read as follows:

Authority: 33 U.S.C. 1231; 50 U.S.C. 191;

33 CFR 1.05–1(g) 6.04–1, 6.04–6, and 160.5;

49 CFR 1.46.

2. Add section 165.T11–036 to read as

follows:

§ 165.T11–036 Security Zone: San Diego

Bay, CA.

(a) Location. The following area is a

security zone: the water area within

Naval Station, San Diego enclosed by

the following points: Beginning at

32°41′16.5′′ N, 117°08′01′′ W (Point A);

thence running southwesterly to

32°41′06′′ N, 117°08′09.3′′ W (Point B);

thence running southeasterly along the

U.S. Pierhead Line to 32°39′36.9′′ N,

117°07′23.5′′ W (Point C); thence

running easterly to 32°39′38.5′′ N,

117°07′06.5′′ W (Point D); thence

running generally northwesterly along

the shoreline of the Naval Station to the

place of beginning.

(b) Effective Dates. This temporary

regulation is effective May 2, 2001

through October 29, 2001.

(c) Regulations. In accordance with

the general regulations in section 165.33

of this part, entry into the area of this

zone is prohibited unless authorized by

the Captain of the Port or the

Commanding Officer, Naval Base, San

Diego.

(d) The U.S. Navy may assist the U.S.

Coast Guard in the patrol and

enforcement of this security zone.

Dated: April 6, 2001.

S.P. Metruck,

Commander, U.S. Coast Guard, Captain of

the Port, San Diego.

[FR Doc. 01–10712 Filed 5–1–01; 8:45 am]

BILLING CODE 4910–15–U

DEPARTMENT OF VETERANS

AFFAIRS

38 CFR Part 3

RIN 2900–AJ99

Review of Benefit Claims Decisions

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

SUMMARY: This document concerns the

Department of Veterans Affairs’ (VA)

adjudication regulations. We are adding

new provisions to allow any claimants

who file a timely Notice of

Disagreement to obtain a de novo review

of their claims at the Veterans Service

Center level before deciding whether to

proceed with the traditional appeal

process. This is intended to provide a

more efficient means for resolving

disagreements concerning claims.

DATES: Effective Date: June 1, 2001.

FOR FURTHER INFORMATION CONTACT: Bill

Russo, Attorney-Advisor, Compensation

and Pension Service, or John Bisset, Jr.,

Consultant, Compensation and Pension

Service, Regulations Staff, Veterans

Benefits Administration, 810 Vermont

Avenue, NW., Washington, DC 20420,

telephone (202) 273–7210 and (202)

273–7213, respectively.

SUPPLEMENTARY INFORMATION: On

February 18, 2000, VA published in the

Federal Register (65 FR 8329–8330), a

proposed rule which would establish

provisions at 38 CFR 3.2600 to allow

any claimants who file a timely Notice

of Disagreement to obtain a de novo

review (a new and complete review

with no deference given to the decision

being reviewed) by Veterans Service

Center personnel before deciding

whether to proceed with the traditional

appeal process. We received written

comments from American Veterans of

WWII, Korea and Vietnam (AMVETS),

Florida Department of Veterans’ Affairs,

National Organization of Veterans

Advocates, Paralyzed Veterans of

America, Veterans of Foreign Wars

(Department of Maine), three VA

employees and two concerned private

individuals.

Potential Changes to the Traditional

Appeal Process

We proposed to establish a new de

novo review procedure that would be

available to any claimant who files a

Notice of Disagreement with a decision

on a claim governed by 38 CFR part 3.

We did not, and do not, intend the new

de novo review procedure to change the

procedures or rights involved with

appealing such claims decisions to the

Board of Veterans’ Appeals. We intend

it to be an additional, optional

procedure to be conducted, if at all,

between a claimant’s filing a Notice of

Disagreement and VA’s issuance of a

Statement of the Case. If de novo review

under § 3.2600 is not requested with the

Notice of Disagreement or after the

Notice of Disagreement is filed but

within 60 days after VA mails notice of

the right of such review to the claimant,

then the appeal will proceed in

accordance with the traditional appeal

process. However, a claimant may not

pursue de novo review and the

traditional appeal simultaneously. A

traditional appeal is suspended until de

novo review is complete. Otherwise,

there would be a risk of duplicative

development and inconsistent decisions

made in the same claim.

Two commenters stated that the

proposed regulations are unclear as to

whether they change existing

procedures regarding filing and

processing of the Notice of

Disagreement and the issuance of the

Statement of the Case.

The final rule does not modify the

procedures of the traditional appeal

process. To make this clear, we are

amending the proposed rule in two

respects. At the end of § 3.2600(b), we

are adding language that provides that if

a claimant fails to timely request de

novo review under § 3.2600, VA will

proceed with the traditional appellate

process by issuing a Statement of the

Case. For clarity, we are also adding a

sentence to § 3.2600(b) to preclude any

extension of the time limit. Section

3.109(b) allows for a good cause

extension of time limits within which a

claimant is required to act to perfect a

claim or challenge an adverse VA

decision. Since the de novo review

process is an optional procedure, not a

required one, § 3.109(b) does not apply

to the period during which a claimant

may request the de novo review process.

Moreover, VA believes that a 60-day

time limit, without the possibility of

extension, is a reasonable amount of

time for a claimant to decide whether to

opt for the de novo review process.

21872 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations

In addition, we are using the last

sentence of the proposed § 3.2600(b) to

begin a new § 3.2600(f). This new

paragraph provides that review under

§ 3.2600 does not limit the appeal rights

of a claimant, and, if the claimant does

not withdraw his or her Notice of

Disagreement as a result of this review

process, VA will proceed with the

traditional appellate process by issuing

a Statement of the Case.

One commenter suggested that the

proposed § 3.2600 be amended to make

clear that claimants who have filed a

Notice of Disagreement may present

additional evidence.

This final rule does not modify

existing procedures for submission of

evidence. Under current regulations,

any claimant may present additional

evidence after filing a Notice of

Disagreement (38 CFR 19.37, 20.304 and

20.1304). Furthermore, § 3.2600(c)

allows the reviewer to obtain additional

evidence. We therefore make no change

based on this comment.

Two commenters expressed concern

that this rulemaking would limit the

right of a claimant to have a hearing at

some point following this new review

process.

This final rule doesn’t place any

limitations on existing rights: 38 CFR

3.103(c) states, ‘‘Upon request, a

claimant is entitled to a hearing at any

time on any issue involved in a claim

within the purview of part 3 of this

chapter, subject to the limitations

described in § 20.1304 of this chapter

with respect to hearings in claims which

have been certified to the Board of

Veterans[’] Appeals for appellate

review.’’ In fact, proposed § 3.2600(b)

specified that review under § 3.2600

‘‘does not limit the appellate rights of a

claimant.’’ For these reasons, we make

no change based on these comments.

Management and Personnel Matters

One commenter predicted that

implementation of the de novo review

process that VA proposed would

increase the backlog of pending claims

because VA would assign its most

productive adjudicators to this new

review process. This same commenter

predicted that implementation of this

review process will cause a decline in

the quality of VA claims decisions, for

this same reason, and because there

would be insufficient oversight of

decisions made during this review

process. Another commenter expressed

concern that no benefit would be gained

from the de novo review process unless

Veterans Service Centers are authorized

to hire additional personnel to conduct

the de novo review.

VA believes that there is no evidence

that implementation of the de novo

review process will increase the backlog

of pending claims. In addition, VA

believes that any increase in the backlog

of pending claims which might occur as

the de novo review program begins, will

be offset by a greater long-term

reduction in pending appeals. At the

twelve VA Veterans Service Centers that

have participated in the pilot test of the

Decision Review Officer program since

December 1997, there has been a

significant decline in the number of

substantive appeals filed. VA also

believes that there will be no decline in

the quality of VA decisions due to the

de novo review program. There has been

no such decline at the twelve pilot

Service Centers. Moreover, decisions

rendered under the de novo review

process will be subject to VA Central

Office oversight under VA’s Systematic

Technical Advisory Review (STAR), just

like other Service Center decisions. VA

believes there will be significant

efficiency benefits gained through the

de novo review program: We believe it

will reduce the number of cases that go

to the Board of Veterans’ Appeals,

which will in turn reduce the number

of claims which must be readjudicated

on remand from the Board of Veterans’

Appeals. We therefore make no changes

based on these comments.

One commenter suggested that the

Decision Review Officers should be

placed outside the chain of command of

the Veterans Service Center Manager

and report directly to the Director of

their VA Regional Office to ensure that

the Decision Review Officer is

independent.

VA believes that it is not necessary to

remove the Decision Review Officers

from the chain of command of the

Veterans Service Center Manager in

order for them to function

independently. Under the final rule, a

Service Center Manager has no

authority, other than the existing clear

and unmistakable error authority under

§ 3.105(a) or the difference of opinion

authority under § 3.105(b) (which must

be approved by VA Central Office), to

overturn a Decision Review Officer’s

decision. We therefore make no change

based on this comment.

This same commenter suggested that

attorneys perform de novo reviews

under § 3.2600, since attorneys are most

familiar with the statutes, regulations

and adjudication manual provisions

regarding veterans benefits.

VA believes that other staff besides

attorneys are qualified to serve as

Decision Review Officers. For example,

staff which are currently working as

Hearing Officers or Master Rating

Specialists have extensive knowledge of

statutes, regulations and adjudication

manual provisions regarding veterans

benefits, and are well qualified to serve

as Decision Review Officers. We

therefore make no change based on this

comment.

Representation for Claimants

Two commenters urged that the de

novo review process include a

claimant’s duly appointed

representative, and that the proposed

§ 3.2600 be amended for that purpose.

Nothing in this final rule excludes or

discourages the participation of

claimants’ representatives. Furthermore,

§ 3.103(e) states, ‘‘Subject to the

provisions of §§ 14.626 through 14.637

of this title [concerning recognition of

veterans service organizations and

accreditation of individual

representatives], claimants are entitled

to representation of their choice at every

stage in the prosecution of a claim.’’

Therefore, we believe that VA

regulations make it clear that a claimant

is allowed to have representation during

this new review process, and we make

no change based on these comments.

Timing of VA Notice of Right to De

Novo Review

One commenter said that the

proposed regulation fails to make it

clear when the VA will send the

claimant notice of the right to the de

novo review.

Based on this comment, we have

specified in § 3.2600(b) that VA will

send the notice ‘‘upon receipt of the

Notice of Disagreement.’’

Timing of Claimant’s Request for De

Novo Review

Two commenters said the proposed

rule was unclear as to whether a request

for a de novo review, filed at the same

time as the Notice of Disagreement,

would be considered valid.

VA concurs. We have amended

§ 3.2600(b) to provide that a claimant

may request review under § 3.2600 with

his or her Notice of Disagreement or

after the Notice of Disagreement is filed

but not later than 60 days after VA mails

notice of the right to de novo review.

Time Limits for VA Action

One commenter suggested that this

rulemaking include a provision to

require VA to respond to a Notice of

Disagreement within 30 days. We

believe the intent of the comment is to

require, by regulation, that VA furnish

notice of the right to a review under

§ 3.2600 within 30 days of the receipt of

the Notice of Disagreement. This

Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations 21873

commenter felt that this would improve

VA’s accountability to claimants.

VA believes that it would be

inadvisable to set a deadline for VA to

furnish this notice. Instances arise

where VA must ask the claimant to

clarify some aspect of the Notice of

Disagreement. This would make it

impracticable for VA to furnish the

notice within a specified time period.

We therefore make no change based on

this comment.

One commenter suggested that this

rulemaking strictly limit the time VA

has to conclude the de novo review, for

example, within 30–60 days.

We believe that it would be

inadvisable to set time limits on the

review process. Due to factors such as

VA’s workload or illness of the

claimant, there may be unavoidable

delays in scheduling an informal

conference or obtaining additional

relevant evidence. We therefore make

no change based on this comment.

Clear and Unmistakable Error

One commenter stated the rulemaking

is unclear as to whether the reviewer

will have independent authority to

revise decisions based on clear and

unmistakable error, or whether the

Veterans Service Center Manager must

approve such decisions.

Section 3.2600(e) clearly authorizes

the reviewer to reverse or revise prior

decisions based on clear and

unmistakable error under § 3.105(a)

without obtaining the approval of any

other VA official. We therefore make no

change to § 3.2600 based on this

comment. However, VA has amended

§ 3.104 to make clear that not only

§ 3.105 but also new § 3.2600 are valid

bases for revision of decisions on the

same factual basis as the initial decision

by the agency of original jurisdiction.

One commenter stated the rulemaking

is unfair because it gives the reviewer

authority to revise decisions based on

clear and unmistakable error in a

manner unfavorable to the claimant,

without any prior notice to the claimant.

This same commenter stated that the

rulemaking should be amended to allow

a claimant to obtain de novo review of

a clear and unmistakable error. This

commenter also stated that the potential

for clear and unmistakable error review

of prior, final decisions may be a

disincentive to seeking a review under

§ 3.2600.

As stated in § 3.2600(e), the reviewer

will have the same clear and

unmistakable error authority as any

other VA adjudicator under § 3.105(a).

However, we note that § 3.103(b) and

§ 3.105(e) and (f) do already require

advanced notice of proposed reductions

or terminations of benefits. With respect

to clear and unmistakable error claims

filed by claimants, under § 3.2600, if

such claims are denied, the claimant

may file a Notice of Disagreement, and

will then be notified of his or her right

to the de novo review process, just as

with any other claim governed by 38

CFR part 3. The potential for clear and

unmistakable error review is not unique

to the de novo review process under

§ 3.2600. It applies to any claim filed

subsequent to a final VA decision. We

therefore make no change based on this

comment.

Date of Implementation

One commenter said that the

proposed regulations fail to make it

clear which claimants will be eligible

for the de novo review (i.e. those with

appeals pending on the effective date of

the regulation, or those filing claims on

or after the effective date).

To clarify this issue, we have added

to proposed § 3.2600 a new paragraph

(g), which states: ‘‘This section applies

to all claims in which a Notice of

Disagreement is filed on or after June 1,

2001.’’ This will provide claimants with

a date certain on which the de novo

review will be available. We believe that

including claims which are pending at

various stages of the appellate process

would be administratively difficult

because the de novo review is designed

to occur prior to the traditional

appellate process.

Other Comments

One commenter suggested that VA

conduct de novo review in every claim

in which a Notice of Disagreement is

filed, unless claimants specifically state

they do not want to go through this

review process.

As was stated in proposed § 3.2600(b),

‘‘This [de novo] review does not limit

the appellate rights of a claimant.’’ We

believe the suggestion made by this

commenter would interfere with the

traditional appeal process by requiring

claimants who want only the traditional

process (and not the de novo process) to

file an extra document which makes

that statement. We also believe that the

de novo review process should be

optional for claimants, not mandatory.

We therefore make no change based on

this comment.

One commenter suggested that a

favorable decision resulting from the de

novo review process need not contain a

citation to the pertinent laws.

We believe that requiring all decisions

issued under the de novo review

process to contain the items listed in

§ 3.2600(d) will provide more

consistent, uniform decisions. This will

benefit both claimants and the Board of

Veterans’ Appeals (if the claim is

ultimately appealed there). We therefore

make no change based on this

suggestion.

One commenter urged that VA allow

claimants whose cases have been

remanded to the Veterans Service

Center by the Board of Veterans’

Appeals to obtain review under § 3.2600

at that stage.

Nothing in this final rule modifies the

post-remand VA claims process. We

note, however, that no existing

regulations or policies prohibit a

Veterans Service Center from assigning

whatever staff they deem appropriate

(including the Decision Review Officer)

to review a case following a remand by

the Board of Veterans’ Appeals. Review

by a Decision Review Officer following

remand from the Board would not,

however, be made under § 3.2600

procedures because, as we stated above,

the de novo review under § 3.2600 is

designed to occur prior to the traditional

appellate process. We therefore make no

change based on this suggestion.

One commenter suggested that the

proposed § 3.2600 be revised to give the

reviewer authority to grant entitlement

to non-service connected pension on an

extra-schedular basis under 38 CFR

3.321(b)(2).

This final rule is not intended to

modify the procedure or authority

established by § 3.321(b)(2), which

authorizes only Adjudication Officers to

grant pension on an extra-schedular

basis if schedular percentage standards

are not met. That procedure and

authority is intended to function as a

rare exception to the general

requirement in § 4.17 that a claimant

must meet certain minimum disability

rating percentage criteria to be entitled

to pension benefits. VA believes that the

Adjudication Officer (now called

Veterans Service Center Manager in

certain VA Regional Offices) is capable

of deciding all such claims. We

therefore make no change based on this

comment.

One commenter suggested that VA

should discuss the applicability of the

U.S. Court of Appeals for the Federal

Circuit decisions in Hayre v. West, 188

F.3d 1327 (Fed. Cir. 1999), and Brown

v. West, 203 F.3d 1378 (Fed. Cir. 2000),

but did not elaborate.

These cases have no applicability to

the subject of this rulemaking, which is

de novo review of certain appealed

decisions, so we make no change based

on this comment. We note, however,

that the de novo review process will be

available in any claim for which a

Notice of Disagreement has been filed

on or after the effective date of this

21874 Federal Register / Vol. 66, No. 85 / Wednesday, May 2, 2001 / Rules and Regulations

regulation, including claims for an

earlier effective date (e.g., Hayre) and

clear and unmistakable error (e.g.,

Brown).

Finally, we are making one other

change from the proposed rule. We

proposed to add a new subpart D to part

3 and a new § 3.2100, which would

have governed the scope of applicability

of provisions in subpart D. After the

proposed rule was published, VA

published another final rule that added

subpart D and new § 3.2100.

Accordingly, we do not include either

subpart D or § 3.2100 in this final rule.

Executive Order 12866

The Office of Management and Budget

has reviewed this final rule 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. 3501–3520).

Unfunded Mandates

The Unfunded Mandates Reform Act

requires (in section 202) 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 final rule will have no

consequential effect on State, local, or

tribal governments.

Regulatory Flexibility Act

The Secretary hereby certifies that the

adoption of this final 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. 601–612. The

final rule does not directly affect any

small entities. Only VA beneficiaries are

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.

The Catalog of Federal Domestic

Assistance program numbers are 64.100,

64.101, 64.104, 64.105, 64.106, 64.109,

64.110, and 64.127.

List of Subjects in 38 CFR Part 3

Administrative practice and

procedure, Claims, Disability benefits,

Health care, Pensions, Veterans,

Vietnam.

Approved: February 15, 2001.

Anthony J. Principi,

Secretary of Veterans Affairs.

For the reasons set forth in the

preamble, 38 CFR part 3 is 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.

§ 3.104 Amended

2. In § 3.104, paragraph (a), the second

sentence is amended by removing

‘‘§ 3.105’’ and adding, in its place,

‘‘§ 3.105’’ and adding, in its place,

‘‘§ 3.105 and § 3.2600’’.

§ 3.105 Amended

3. In § 3.105, paragraph (b) is

amended by adding, as the last

sentence, ‘‘However, a decision may be

revised under § 3.2600 without being

recommended to Central Office.’’

Subpart D—Universal Adjudication

Rules That Apply to Benefit Claims

Governed by Part 3 of this Title

4. The authority citation for part 3,

subpart D continues to read as follows:

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

otherwise noted.

5. A new undesignated center heading

and § 3.2600 are added to subpart D to

read as follows:

Revisions

§ 3.2600 Review of benefit claims

decisions.

(a) A claimant who has filed a timely

Notice of Disagreement with a decision

of an agency of original jurisdiction on

a benefit claim has a right to a review

of that decision under this section. The

review will be conducted by an

Adjudication Officer, Veterans Service

Center Manager, or Decision Review

Officer, at VA’s discretion. An

individual who did not participate in

the decision being reviewed will

conduct this review. Only a decision

that has not yet become final (by

appellate decision or failure to timely

appeal) may be reviewed. Review under

this section will encompass only

decisions with which the claimant has

expressed disagreement in the Notice of

Disagreement. The reviewer will

consider all evidence of record and

applicable law, and will give no

deference to the decision being

reviewed.

(b) Unless the claimant has requested

review under this section with his or

her Notice of Disagreement, VA will,

upon receipt of the Notice of

Disagreement, notify the claimant in

writing of his or her right to a review

under this section. To obtain such a

review, the claimant must request it not

later than 60 days after the date VA

mails the notice. This 60-day time limit

may not be extended. If the claimant

fails to request review under this section

not later than 60 days after the date VA

mails the notice, VA will proceed with

the traditional appellate process by

issuing a Statement of the Case. A

claimant may not have more than one

review under this section of the same

decision.

(c) The reviewer may conduct

whatever development he or she

considers necessary to resolve any

disagreements in the Notice of

Disagreement, consistent with

applicable law. This may include an

attempt to obtain additional evidence or

the holding of an informal conference

with the claimant. Upon the request of

the claimant, the reviewer will conduct

a hearing under § 3.103(c).

(d) The reviewer may grant a benefit

sought in the claim notwithstanding

§ 3.105(b), but, except as provided in

paragraph (e) of this section, may not

revise the decision in a manner that is

less advantageous to the claimant than

the decision under review. A review

decision made under this section will

include a summary of the evidence, a

citation to pertinent laws, a discussion

of how those laws affect the decision,

and a summary of the reasons for the

decision.

(e) Notwithstanding any other

provisions of this section, the reviewer

may reverse or revise (even if

disadvantageous to the claimant) prior

decisions of an agency of original

jurisdiction (including the decision

being reviewed or any prior decision

that has become final due to failure to

timely appeal) on the grounds of clear

and unmistakable error (see § 3.105(a)).

(f) Review under this section does not

limit the appeal rights of a claimant.

Unless a claimant withdraws his or her

Notice of Disagreement as a result of

this review process, VA will proceed

with the traditional appellate process by

issuing a Statement of the Case.

(g) This section applies to all claims

in which a Notice of Disagreement is

filed on or after June 1, 2001.

(Authority: 38 U.S.C. 5109A and 7105(d))

[FR Doc. 01–11028 Filed 5–1–01; 8:45 am]

BILLING CODE 8320–01–U