[Federal Register Volume 74, Number 88 (Friday, May 8, 2009)]
[Proposed Rules]
[Pages 21565-21568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-10806]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 21

RIN 2900-AN13


Vocational Rehabilitation and Employment Program--Basic 
Entitlement; Effective Date of Induction Into a Rehabilitation Program; 
Cooperation in Initial Evaluation

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: This document proposes to amend the vocational rehabilitation 
and employment regulations of the Department of Veterans Affairs (VA). 
Specifically, it proposes to amend provisions concerning: individuals' 
basic entitlement to vocational rehabilitation benefits and services; 
effective dates of induction into a rehabilitation program, including 
retroactive induction; and cooperation and lack of cooperation in the 
initial evaluation process. The proposed amendments are intended to 
update pertinent regulations to reflect changes in law, VA's 
interpretation of applicable law, and VA's determination of appropriate 
procedures, and to improve clarity.

DATES: Comments must be received on or before July 7, 2009.

ADDRESSES: Written comments may be submitted through http://www.Regulations.gov; by mail or hand-delivery to the Director, 
Regulations Management (02REG), Department of Veterans Affairs, 810 
Vermont Ave., NW., Room 1068, Washington, DC 20420; or by fax to (202) 
273-9026. Comments should indicate that they are submitted in response 
to ``RIN 2900-AN13--Vocational Rehabilitation and Employment Program--
Basic Entitlement, etc.'' Copies of comments received will be available 
for public inspection in the Office of Regulation Policy and 
Management, Room 1063B, between the hours of 8 a.m. and 4:30 p.m., 
Monday through Friday (except holidays). Please call (202) 461-4902 for 
an appointment. In addition, during the comment period, comments may be 
viewed online through the Federal Docket Management System (FDMS) at 
http://www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: Alvin Bauman, Senior Policy Analyst, 
Vocational Rehabilitation and Employment Service (28), Veterans 
Benefits Administration, Department of Veterans Affairs, 810 Vermont 
Ave., NW., Washington, DC 20420, (202) 461-9613.

SUPPLEMENTARY INFORMATION: In 38 CFR Part 21, Subpart A--Vocational 
Rehabilitation Under 38 U.S.C. Chapter 31, we propose to revise VA's 
regulations in 38 CFR 21.40 concerning basic entitlement to vocational 
rehabilitation benefits and services; in Sec.  21.282 concerning 
effective dates of induction into a rehabilitation program; and in 
Sec.  21.50(d) concerning cooperation and lack of cooperation in the 
initial evaluation process. We note that VA previously addressed 
changes in the provision of services under 38 U.S.C. chapter 31 that 
resulted from a court decision and the enactment of Public Law 104-275, 
the Veterans Benefits Improvement Act of 1996. This included VA's 
issuance of Circular 28-97-1 in 1997 (last revised in October 2004) to 
provide guidance regarding the implementation of these changes. The 
proposed rule would update 38 CFR part 21 consistent with current VA 
practice. In addition, the proposed rule would make other 
nonsubstantive changes.

Basic Entitlement to Vocational Rehabilitation Benefits and Services

    We propose to revise Sec.  21.40 to include criteria, effective 
October 1, 1993, for vocational rehabilitation basic entitlement 
determinations resulting from the Veterans' Benefits Act of 1992 (Pub. 
L. 102-568), enacted October 29, 1992. Public Law 102-568 amended 38 
U.S.C. 3102(2) to entitle veterans to vocational rehabilitation if they 
have a 10 percent service-connected disability and are determined by 
the Secretary of Veterans Affairs to be in need of rehabilitation 
because of a serious employment handicap.
    The proposed changes to Sec.  21.40 are also intended to reflect 
the provisions of section 602(c) of the Veterans Benefits Improvement 
Act of 1994 (Pub. L. 103-446), which amended section 404(b) of Public 
Law 102-568 with a technical correction, effective October 29, 1992. 
VA's interpretation of the effect of these statutory changes is to give 
individuals basic entitlement to vocational rehabilitation if:
    <bullet> They have a 10 percent service-connected disability;
    <bullet> They originally applied for assistance under chapter 31 of 
title 38, United States Code, before November 1, 1990; and
    <bullet> VA determines they need rehabilitation because of an 
employment handicap.
    In addition, the proposed changes to Sec.  21.40 are intended to 
make clarifying changes and to restructure and rewrite this section in 
reader-focused plain English.
    Due to changes that this document proposes in the structure of 
Sec.  21.40, we are proposing to make a conforming change to refer 
elsewhere in Subpart A to Sec.  21.40 rather than Sec.  21.40(a).

Effective Dates of Induction Into a Rehabilitation Program, Including 
Retroactive Induction

    In Sec.  21.282, we propose to reflect a decision by the United 
States Court of Appeals for Veterans Claims (then the United States 
Court of Veterans Appeals) in Bernier v. Brown, 7 Vet. App. 434 (1995), 
which concerned effective dates for induction into a program of 
rehabilitation benefits and services. The Bernier decision set aside 
two provisions of current Sec.  21.282 that limit retroactive induction 
into programs of rehabilitation benefits and services under 38 U.S.C. 
chapter 31. The first provision, in current Sec.  21.282(b)(2)(ii), 
prohibits retroactive induction for any period for which an individual 
received another VA education benefit. The other provision, in current 
Sec.  21.282(c), limits retroactive induction to no more than one year 
prior to the date of application for chapter 31 benefits and services. 
We address each of these provisions in our proposed revision of Sec.  
21.282.
    Under proposed Sec.  21.282, VA would be able to retroactively 
approve a period of training that occurred within an individual's 
period of eligibility under 38 CFR 21.41 through 21.46, beginning for a 
veteran on the effective date of the individual's entitlement to 
disability compensation, provided that the

[[Page 21566]]

individual met the criteria for entitlement to chapter 31 benefits and 
services for that period. VA must also determine that the training and 
other rehabilitation services that the individual received during the 
period of retroactive induction were reasonably needed to achieve the 
planned goals and objectives identified for the individual. If the 
individual received other VA-administered education benefits during any 
portion of that period, VA must offset the previous education benefits 
received against the payment of chapter 31 vocational rehabilitation 
benefits for the same period.
    We propose to add specific language in Sec.  21.282(b) and (c) to 
clarify when an individual on active duty can qualify for retroactive 
induction and when the conditions for retroactive induction may apply 
to both veterans and servicemembers. For servicemembers, we propose, as 
one condition for retroactive induction, that the period of retroactive 
induction must be within a period under proposed Sec.  21.40(c) during 
which a servicemember was awaiting discharge for disability. In Sec.  
21.282(b), we also propose to include clear statements, applicable in 
the case of an individual who is retroactively inducted, regarding 
authorization by VA of payment for tuition, fees, and other verifiable 
expenses that an individual paid or incurred consistent with an 
approved rehabilitation program, and authorization by VA of payments of 
subsistence allowance for the period of retroactive induction, not 
including any period for which the individual was on active duty, in 
order to provide more complete information for the benefit of the 
reader. In Sec.  21.282(c), we propose to restructure current 
provisions to more objectively state the conditions that must be met 
before an individual may be inducted into a rehabilitation program on a 
retroactive basis in order to comply fully with pertinent statutory 
authorities.
    In response to the invalidation of language in current Sec.  
21.282(c) in Bernier, we propose to state in Sec.  21.282(d) that the 
effective date for retroactive induction is the date on which all the 
entitlement conditions set forth in proposed Sec.  21.282(c) are met, 
and for a veteran (except as to a period prior to discharge from active 
duty) in no event before the effective date of a VA rating establishing 
a qualifying level of service-connected disability under Sec.  21.40. 
We believe this change will bring the effective-date provision in line 
with the court's decision, and with 38 U.S.C. 5113.
    We are also proposing nonsubstantive changes in Sec.  21.282 for 
purposes of clarity and a conforming change in the center heading 
preceding Sec.  21.282.

Cooperation and Lack of Cooperation in the Initial Evaluation Process

    This document also proposes changes with regard to Sec.  21.50, 
Initial evaluations. In the Federal Register of March 26, 2007, (72 FR 
14041), VA published amendments to several sections in 38 CFR part 21, 
including Sec.  21.50. Here, we propose a further amendment, to revise 
Sec.  21.50(d), Need for cooperation in evaluation. The changes are 
intended to reflect VA's determination of appropriate procedures and to 
clarify the action VA will take if an individual fails to cooperate 
with the counseling psychologist (CP) or vocational rehabilitation 
counselor (VRC) in the initial evaluation process. In brief, this 
document's proposed revision would provide that if after reasonable 
efforts are made to secure an individual's cooperation the individual 
continues to be uncooperative, VA will ``suspend'' that evaluation 
process. The changes proposed in this document would add references to 
Sec.  21.362, Satisfactory conduct and cooperation, and Sec.  21.364, 
Unsatisfactory conduct and cooperation. The changes would remove from 
that paragraph an unnecessary and potentially confusing statement that 
``[a] redetermination of entitlement as described in Sec.  21.58 will 
be made in the case of an individual whose program has been 
discontinued due to failure to cooperate.'' During the initial 
evaluation process, it would not be correct to consider the individual 
to have already been inducted into a program, and therefore it would 
not be correct to state that his or her ``program'' has been 
discontinued. In addition, we believe that Sec.  21.50(d) does not need 
to refer to the provisions of Sec.  21.58 concerning redeterminations.

Paperwork Reduction Act of 1995

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-
3521).

Unfunded Mandates

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

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health and safety, 
and other advantages; distributive impacts; and equity). The Executive 
Order classifies a regulatory action as a ``significant regulatory 
action,'' requiring review by the Office of Management and Budget (OMB) 
unless OMB waives such review, if it is a regulatory action that is 
likely to result in a rule that may: (1) Have an annual effect on the 
economy of $100 million or more or adversely affect in a material way 
the economy, a sector of the economy, productivity, competition, jobs, 
the environment, public health or safety, or State, local, or tribal 
governments or communities; (2) create a serious inconsistency or 
otherwise interfere with an action taken or planned by another agency; 
(3) materially alter the budgetary impact of entitlements, grants, user 
fees, or loan programs or the rights and obligations of recipients 
thereof; or (4) raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    The economic, interagency, budgetary, legal, and policy 
implications of this proposed rule have been examined and it has been 
determined to be a significant regulatory action under the Executive 
Order because it is likely to result in a rule that may raise novel 
legal or policy issues arising out of legal mandates, the President's 
priorities, or the principles set forth in the Executive Order.

Regulatory Flexibility Act

    The Secretary hereby certifies that this proposed regulatory 
amendment 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. This proposed amendment would not 
directly affect any small entities. Only individuals could be directly 
affected. Therefore, pursuant to 5 U.S.C. 605(b), this proposed 
amendment is exempt from the initial and final regulatory flexibility 
analysis requirements of sections 603 and 604.

Catalog of Federal Domestic Assistance

    The program that this rule would affect has the following Catalog 
of Federal Domestic Assistance number

[[Page 21567]]

and title: 64.116, Vocational Rehabilitation for Disabled Veterans.

List of Subjects in 38 CFR Part 21

    Administrative practice and procedure, Armed forces, Civil rights, 
Claims, Colleges and universities, Conflict of interests, Education, 
Employment, Grant programs--education, Grant programs--veterans, Health 
care, Loan programs--education, Loan programs--veterans, Manpower 
training programs, Reporting and recordkeeping requirements, Schools, 
Travel and transportation expenses, Veterans, Vocational education, 
Vocational rehabilitation.

    Approved: February 24, 2009.
John R. Gingrich,
Chief of Staff, Department of Veterans Affairs.

    For the reasons set forth in the preamble, VA proposes to amend 38 
CFR part 21 (subpart A) as follows:

PART 21--VOCATIONAL REHABILITATION AND EDUCATION

    1. Revise the authority citation for part 21, subpart A to read as 
follows:

    Authority: 38 U.S.C. 501(a), chs. 18, 31, and as noted in 
specific sections.

Subpart A--Vocational Rehabilitation and Employment Under 38 U.S.C. 
Chapter 31

    2. The subpart A heading is revised as set forth above.
    3. Revise the undesignated center heading immediately preceding 
Sec.  21.40 and that section to read as follows:

Entitlement


Sec.  21.40  Basic entitlement to vocational rehabilitation benefits 
and services.

    An individual meets the basic entitlement criteria for vocational 
rehabilitation benefits and services under this subpart if VA 
determines that he or she meets the requirements of paragraph (a), (b), 
(c), or (d) of this section. For other requirements affecting the 
provision of vocational rehabilitation benefits and services, see 
Sec. Sec.  21.41 through 21.46 (period of eligibility), Sec.  21.53 
(reasonable feasibility of achieving a vocational goal), and Sec. Sec.  
21.70 through 21.79 (months of entitlement).
    (a) Veterans with at least 20 percent disability. The individual is 
a veteran who meets all of the following criteria:
    (1) Has a service-connected disability or combination of 
disabilities rated 20 percent or more under 38 U.S.C. chapter 11.
    (2) Incurred or aggravated the disability or disabilities in active 
military, naval, or air service on or after September 16, 1940.
    (3) Is determined by VA to be in need of rehabilitation because of 
an employment handicap.
    (b) Veterans with 10 percent disability. The individual is a 
veteran who meets all of the following criteria:
    (1) Has a service-connected disability or combination of 
disabilities rated less than 20 percent under 38 U.S.C. chapter 11.
    (2) Incurred or aggravated the disability or disabilities in active 
military, naval, or air service on or after September 16, 1940.
    (3) Is determined by VA to be in need of rehabilitation because of 
a serious employment handicap.
    (c) Servicemembers awaiting discharge. The individual is a 
servicemember who, while waiting for discharge from the active 
military, naval, or air service, is hospitalized, or receiving 
outpatient medical care, services, or treatment, for a disability that 
VA will likely determine to be service-connected. In addition, VA must 
have determined that:
    (1) The hospital or other medical facility providing the 
hospitalization, care, service, or treatment is doing so under contract 
or agreement with the Secretary concerned, or is under the jurisdiction 
of the Secretary of Veterans Affairs or the Secretary concerned;
    (2) The individual is in need of rehabilitation because of an 
employment handicap; and
    (3) The individual has a disability or combination or disabilities 
that will likely be:
    (i) At least 10 percent compensable under 38 U.S.C. chapter 11 and 
he or she originally applied for assistance under 38 U.S.C. chapter 31 
after March 31, 1981, and before November 1, 1990; or
    (ii) At least 20 percent compensable under 38 U.S.C. chapter 11 and 
he or she originally applied for assistance under 38 U.S.C. chapter 31 
on or after November 1, 1990.
    (d) Exception for veterans who first applied after March 31, 1981, 
and before November 1, 1990. The individual is a veteran who:
    (1) Has a service-connected disability or combination of 
disabilities rated less than 20 percent under 38 U.S.C. chapter 11;
    (2) Originally applied for assistance under 38 U.S.C. chapter 31 
after March 31, 1981, and before November 1, 1990; and
    (3) Is determined by VA to be in need of rehabilitation because of 
an employment handicap.

    Authority: 38 U.S.C. ch. 11, 3102, 3103, 3106; sec. 8021(b), 
Public Law 101-508, 104 Stat. 1388-347; sec. 404(b), Public Law 102-
568, 106 Stat. 4338, as amended by sec. 602, Public Law 103-446, 108 
Stat. 4671)


Sec.  21.42  [Amended]

    4. In Sec.  21.42, remove ``Sec.  21.40(a)'' each place that it 
appears in paragraph (a) and add, in its place, ``Sec.  21.40''.


Sec.  21.47  [Amended]

    5. In Sec.  21.47, remove ``Sec.  21.40(a)'' from paragraph (b)(3) 
and add, in its place, ``Sec.  21.40''.
    6. Revise Sec.  21.50(d) to read as follows:


Sec.  21.50  Initial evaluation.

* * * * *
    (d) Need for cooperation in the initial evaluation process. The 
individual's cooperation is essential in the initial evaluation 
process. If the individual does not cooperate, the CP or VRC will make 
reasonable efforts to secure the individual's cooperation. If, despite 
those efforts, the individual fails to cooperate, VA will suspend the 
initial evaluation process (see Sec.  21.362, regarding satisfactory 
conduct and cooperation, and Sec.  21.364, regarding unsatisfactory 
conduct and cooperation).

(Authority: 38 U.S.C. 3111)


    7. Revise the undesignated center heading immediately preceding 
Sec.  21.282 and that section to read as follows:

Induction Into a Rehabilitation Program


Sec.  21.282  Effective date of induction into a rehabilitation 
program; retroactive induction.

    (a) Entering a rehabilitation program. The effective date of 
induction into a rehabilitation program is governed by the provisions 
of Sec. Sec.  21.320 through 21.334, except as provided in this 
section.

(Authority: 38 U.S.C. 3108, 5113)


    (b) Retroactive induction. Subject to paragraphs (c) and (d) of 
this section, an individual may be inducted into a rehabilitation 
program on a retroactive basis. If the individual is retroactively 
inducted, VA may authorize payment pursuant to Sec.  21.262 or Sec.  
21.264 for tuition, fees, and other verifiable expenses that an 
individual paid or incurred consistent with the approved rehabilitation 
program. In addition, VA may authorize payment of subsistence allowance 
pursuant to Sec. Sec.  21.260, 21.266, and 21.270 for the period of 
retroactive induction, except for any period during which the 
individual was on active duty.

(Authority: 38 U.S.C. 3108, 3113, 3681, 5113)



[[Page 21568]]


    (c) Conditions for retroactive induction. Retroactive induction 
into a rehabilitation program may be authorized for a past period under 
a claim for vocational rehabilitation benefits when all of the 
following conditions are met:
    (1) The past period is within--
    (i) A period under Sec.  21.40(c) during which a servicemember was 
awaiting discharge for disability; or
    (ii) A period of eligibility under Sec. Sec.  21.41 through 21.44 
or 38 U.S.C. 3103.
    (2) The individual was entitled to disability compensation under 38 
U.S.C. chapter 11 during the period or would likely have been entitled 
to that compensation but for active-duty service.
    (3) The individual met the criteria for entitlement to vocational 
rehabilitation benefits and services under 38 U.S.C. chapter 31 in 
effect during the period.
    (4) VA determines that the individual's training and other 
rehabilitation services received during the period were reasonably 
needed to achieve the goals and objectives identified for the 
individual and may be included in the plan developed for the individual 
(see Sec. Sec.  21.80 through 21.88, and Sec. Sec.  21.92 through 
21.98).
    (5) VA has recouped any benefits that it paid the individual for 
education or training pursued under any VA education program during any 
portion of the period.
    (6) An initial evaluation was completed under Sec.  21.50.
    (7) A period of extended evaluation is not needed to be able to 
determine the reasonable feasibility of the achievement of a vocational 
goal.

(Authority: 38 U.S.C. 3102, 3103, 3108, 5113)


    (d) Effective date for retroactive induction. The effective date 
for retroactive induction is the date when all the entitlement 
conditions set forth in paragraph (c) of this section are met, and for 
a veteran (except as to a period prior to discharge from active duty) 
in no event before the effective date of a VA rating under 38 U.S.C. 
chapter 11 establishing a qualifying level under Sec.  21.40 of 
service-connected disability.

(Authority: 38 U.S.C. 5113)


[FR Doc. E9-10806 Filed 5-7-09; 8:45 am]
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