Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules 65861

Small Business Regulatory Enforcement

Fairness Act

This rule is not a major rule under 5

U.S.C. 804(2), the Small Business

Regulatory Enforcement Fairness Act.

This rule: (a) Does not have an annual

effect on the economy of $100 million;

(b) Will not cause a major increase in

costs or prices for consumers,

individual industries, Federal, State, or

local governmental agencies or

geographic regions; and (c) Does not

have significant adverse effects on

competition, employment, investment,

productivity, innovation, or the ability

of U.S.-based enterprises to compete

with foreign-based enterprises. This

determination is based upon the fact

that the State submittal, which is the

subject of this rule, is based upon

counterpart Federal regulations for

which an analysis was prepared and a

determination made that the Federal

regulation was not considered a major

rule.

Unfunded Mandates

This rule will not impose an

unfunded mandate on State, local, or

tribal governments or the private sector

of $100 million or more in any given

year. This determination is based upon

the fact that the State submittal, which

is the subject of this rule, is based upon

counterpart Federal regulations for

which an analysis was prepared and a

determination made that the Federal

regulation did not impose an unfunded

mandate.

List of Subjects in 30 CFR Part 936

Intergovernmental relations, Surface

mining, Underground mining.

Dated: November 30, 2001.

Charles E. Sandberg,

Acting Regional Director, Mid-Continent

Regional Coordinating Center.

[FR Doc. 01–31536 Filed 12–20–01; 8:45 am]

BILLING CODE 4310–05–P

DEPARTMENT OF VETERANS

AFFAIRS

38 CFR Part 20

RIN 2900–AL11

Board of Veterans’ Appeals Rules of

Practice: Claim for Death Benefits by

Survivor

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

SUMMARY: This document proposes to

amend the Department of Veterans

Affairs’ (VA) Rules of Practice at the

Board of Veterans’ Appeals (Board) to

clarify that the general rule that the

Board is not bound by prior dispositions

during the veteran’s lifetime of issues

involved in the survivor’s claim does

not include claims for ‘‘enhanced’’

Dependency and Indemnity

Compensation (DIC). This amendment is

necessary to eliminate confusion

between the Board’s current rule and

another rule relating to DIC for survivors

of certain veterans rated totally disabled

at the time of death.

DATES: Comments must be received on

or before January 22, 2002.

ADDRESSES: Mail or hand-deliver

written comments to: Director, Office of

Regulations Management (02D),

Department of Veterans Affairs, 810

Vermont Ave., NW., Room 1154,

Washington, DC 20420; or fax comments

to (202) 273–9289; or e-mail comments

to OGCRegulations@mail.va.gov.

Comments should indicate that they are

submitted in response to ‘‘RIN 2900–

AL11.’’ All comments received will be

available for public inspection in the

Office of Regulations Management,

Room 1158, between the hours of 8 a.m.

and 4:30 p.m., Monday through Friday

(except holidays).

FOR FURTHER INFORMATION CONTACT:

Steven L. Keller, Senior Deputy Vice

Chairman, Board of Veterans’ Appeals,

Department of Veterans Affairs, 810

Vermont Avenue, NW., Washington, DC

20420 (202–565–5978).

SUPPLEMENTARY INFORMATION: The Board

of Veterans’ Appeals (Board) is an

administrative body that decides

appeals from denials of claims for

veterans’ benefits.

The purpose of this document is to

comply with the order of the U.S. Court

of Appeals for the Federal Circuit in

National Organization of Veterans’

Advocates, Inc. v. Secretary of Veterans

Affairs, Nos. 00–7095, 00–7096, 00–

7098 (Fed. Cir. Aug. 16, 2001)

(‘‘NOVA’’). That case was a petition

challenging VA’s January 2000 final rule

which amended 38 CFR 3.22, relating to

dependency and indemnity

compensation (DIC) benefits for

survivors of certain veterans rated

totally disabled at the time of death. See

65 FR 3388 (Jan. 21, 2000).

While the NOVA court explicitly

declined to invalidate the rule, NOVA,

slip op. at 42, it did note that there was

an apparent conflict between the new

rule and 38 CFR 20.1106. The court

concluded that those two rules stated

conflicting interpretations of two

virtually identical statutes. The statutes,

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

provide benefits to the survivor of a

veteran who was at the time of death ‘‘in

receipt of or entitled to receive’’

compensation for a service-connected

disability that was continuously rated

totally disabling for a specified number

of years prior to death. The regulation

in 38 CFR 3.22 interprets the phrase

‘‘entitled to receive’’ in 38 U.S.C. 1318

to mean that the VA had awarded the

veteran a total disability rating for the

specified period during his or her

lifetime, but for some reason the veteran

did not receive payment based on that

rating, or that the veteran would have

had a total disability rating for that

period if not for a clear and

unmistakable error by VA during the

veteran’s lifetime. The NOVA court

concluded that 38 CFR 20.1106

interprets the same language in 38

U.S.C. 1311(a)(2) to require a

posthumous determination of the

veteran’s ‘‘entitlement’’ to compensation

without regard to whether VA rating

decisions during the veteran’s lifetime

established such entitlement. Having

concluded that VA established

conflicting interpretations of the

identical language in these two statutes,

the NOVA court ordered VA to conduct

an expedited rulemaking to either

explain the basis for the differing

interpretations or to revise one of its

regulations to remove any

inconsistency. NOVA, slip op. at 43.

As explained in this notice, VA has

not interpreted 38 U.S.C. 1318, and 38

U.S.C. 1311 in inconsistent ways.

Nevertheless, to eliminate the potential

ambiguity identified in the NOVA

decision, we are amending 38 CFR

20.1106 to clarify that, as with decisions

under 38 U.S.C. 1318, decisions under

38 U.S.C. 1311(a)(2) will be decided

taking into consideration prior

dispositions made during the veteran’s

lifetime of issues involved in the

survivor’s claim. The effect of this

change is to make VA’s position clear

that entitlement to benefits under either

38 U.S.C. 1318 or 38 U.S.C. 1311 must

be based on the determinations made

during the veteran’s lifetime, or

challenges to such decisions on the

basis of clear and unmistakable error,

rather than on de novo posthumous

determinations as to whether the

veteran hypothetically could have been

entitled to certain benefits if he or she

had applied for them during his or her

lifetime.

Background on Dependency and

Indemnity Compensation

Since 1957, survivors of a veteran

who died in service or as a result of a

service-connected disability have been

entitled to a monthly benefit called

‘‘Dependency and Indemnity

Compensation’’ (DIC). 38 U.S.C. 1310(a),

1311.

65862 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

DIC and Survivors of Veterans Who Die

Other Than as a Result of Service

Until 1978, DIC was payable only if

the veteran died in service or as a result

of service. In 1978, Pub. L. No. 95–479,

92 Stat. 1564 (1978), amended title 38,

United States Code to pay the same

benefit as if the veteran had died of a

service-connected disability to survivors

of a veteran (1) whose death was not

caused by service-connected disability,

but (2) who, at the time of death, ‘‘was

in receipt of (or but for the receipt of

retired or retirement pay was entitled to

receive)’’ compensation for a serviceconnected disability rated 100 percent

disabling for 10 years immediately

preceding death, or for a period of at

least 5 years extending from date of

discharge from service until date of

death. That provision was codified in 38

U.S.C. 410(b)(1). In 1979, VA issued 38

CFR 3.22 to implement the statute. 44

FR 22716–22718 (Apr. 17, 1979).

In a 1981 opinion, VA’s General

Counsel concluded that 38 U.S.C.

410(b)(1) did not permit a DIC award to

the survivors of a veteran who was not

actually in receipt of compensation for

a total disability for a full 10 years prior

to death, but who would have been in

receipt of such benefits if not for error

by VA in a decision rendered during the

veteran’s lifetime. Op. G.C. 2–81 (Mar.

24, 1981).

In response to that opinion, Congress

enacted Public Law 97–306, 96 Stat.

1429 (1982), which revised 38 U.S.C.

410(b)(1), to amend the phrase ‘‘was in

receipt of’’ to ‘‘was in receipt of or

entitled to receive ***’’ (emphasis

added). The legislative history states

that the purpose of this amendment was

‘‘to provide that the requirement that

the veteran have been in receipt of

compensation for a service-connected

disability rated as total for a period of

10 years prior to death (or for 5 years

continuously from the date of discharge)

is met if the veteran would have been

in receipt of such compensation for

such period but for a clear and

unmistakable error regarding the award

of a total disability rating.’’ Explanatory

Statement of Compromise Agreement,

128 Cong. Rec. H7777 (1982), reprinted

in 1982 U.S.C.C.A.N. 3012, 3013.

Accordingly, the amended statute, now

codified at 38 U.S.C. 1318(b), authorizes

payment of DIC in cases where the

veteran ‘‘was in receipt of or entitled to

receive (or but for the receipt of retired

or retirement pay was entitled to

receive)’’ compensation for a serviceconnected disability rated totally

disabling for 10 years immediately

preceding death or a period of 5 years

from the date of discharge.

In 1983, VA revised 38 CFR 3.22 to

state that DIC would be payable under

38 U.S.C. 410(b)(1) (now 38 U.S.C.

1318(b)) when the veteran ‘‘was in

receipt of or for any reason (including

receipt of military retired or retirement

pay or correction of a rating after the

veteran’s death based on clear and

unmistakable error) was not in receipt of

but would have been entitled to receive

compensation at the time of death’’ for

service-connected disability rated

totally disabling for 10 years prior to

death or 5 years continuously from date

of discharge to date of death. 48 FR

41160, 41161 (Sep. 14, 1983).

Payment Under DIC; ‘‘Enhanced

Benefit’’

DIC provides a monthly cash benefit

to survivors. Until 1993, surviving

spouses received a monthly benefit

based on the veteran’s pay grade while

on active duty.

In the ‘‘Dependency and Indemnity

Compensation Reform Act of 1992,’’

Pub. L. No. 102–568, Title I, § 102 (Oct.

29, 1992), 106 Stat. 4321, 4322,

Congress made substantial changes to

the DIC program. The primary change

was to the payment system. For deaths

occurring subsequent to January 1, 1993,

all surviving spouses are paid at the

same rate. In addition, the Act provided

an ‘‘enhancement’’ to the benefits paid

to some surviving spouses: If the veteran

was in receipt of or was entitled to

receive compensation for a serviceconnected disability rated totally

disabling for a continuous period of at

least eight years immediately preceding

death, the surviving spouse receives an

additional monthly benefit, currently

$197 per month. 38 U.S.C. 1311(a)(2); 66

FR 28598 (May 23, 2001) (adjusted rate).

In 1993, VA issued a regulation at 38

CFR 3.5(e) to implement 38 U.S.C.

1311(a)(2). That regulation states that

the additional DIC amount will be paid

‘‘in the case of the death of a veteran

who at the time of death was in receipt

of or was entitled to receive (or but for

the receipt of retired pay or retirement

pay was entitled to receive)

compensation for a service-connected

disability that was evaluated as totally

disabling for a continuous period of at

least eight years immediately preceding

death.’’

Background on 38 CFR 20.1106

38 CFR 20.1106—‘‘Rule 1106’’—is a

Rule of Practice at the Board of

Veterans’ Appeals. Essentially, it sets

forth the rule that, in most cases, 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.

Specifically, it provides 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. 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

disposition of those issues during the

veteran’s lifetime.

This particular version of the rule

became effective in February 1992, 9

months prior to enactment of Pub. L.

No. 102–568.

Rule 1106 was originally proposed in

1989. It was part of a large package of

revisions to the Board’s rules in the

wake of enactment of the Veterans’

Judicial Review Act of 1988, Pub. L. No.

100–687, Div. A, 102 Stat. 4105 (1988).

The predecessor to Rule 1106 was

Rule 96 (38 CFR 19.196 (1991)). That

rule provided as follows:

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.

When the Board proposed rule 96 in

1980, it explained that the purpose was

to ‘‘[a]llow the Board to review ‘‘de

novo’’ service connection cause of death

cases notwithstanding the fact that a

final appellate decision had been

rendered during the veteran’s lifetime.’’

45 FR 56093 (1980). As indicated, the

rule was intended to apply in cases

where a DIC claim is dependent on a

finding that the cause of death was

service connected, the most common

type of DIC claim. It was not intended

to preclude consideration of decisions

during the veteran’s lifetime in cases

where a DIC claim was dependent upon

a showing that the veteran was entitled

to receive compensation during his or

her lifetime for a service-connected

disability rated totally disabling for a

specified pre-death period. However, it

became apparent that the language of

Rule 96 could be construed as covering

such cases. Accordingly, in 1989, VA

proposed to amend Rule 96 with current

Rule 1106, explaining:

The old rule was inconsistent with 38 CFR

3.22(a)(2) which, in effect, requires that it be

shown that there was clear and unmistakable

error in prior rating decisions which failed to

give a veteran a total rating for the required

period of time in order to qualify for ‘‘410(b)’’

benefits. (Former 38 U.S.C. 410(b) is now 38

U.S.C. 418, see Section 1403 of Public Law

100–687.) 38 U.S.C. 3504(c) forbids the

payment of benefits to any person after

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules 65863

September 1, 1959, based on the service of

an individual before the date of a treasonous

act if that individual’s Department of

Veterans Affairs benefits have been forfeited

for treason. There is a similar prohibition in

38 U.S.C. 3505(a) pertaining to cases

involving forfeiture for subversive activities.

These provisions are now recognized. 54 FR

34334, 34338 (Aug. 18, 1989)

In February 1992, having received no

comments on the proposed rule, VA

published Rule 1106 as a final rule (57

FR 4088, 4103 (Feb 3, 1992)).

VA’s Interpretation of 38 U.S.C. 1318

In Wingo v. West, 11 Vet. App. 307

(1998), the United States Court of

Appeals for Veterans Claims (CAVC)

interpreted 38 CFR 3.22(a) to permit a

DIC award in a case where the veteran

had never established entitlement to VA

compensation for a service-connected

total disability and had never filed a

claim for such benefits which could

have resulted in entitlement to

compensation for the required period.

The CAVC concluded that the language

of § 3.22(a) would permit a DIC award

where it is determined that the veteran

‘‘hypothetically’’ would have been

entitled to a total disability rating for the

required period if he or she had applied

for compensation during his or her

lifetime. 11 Vet. App. at 311.

The CAVC’s interpretation of § 3.22(a)

did not accurately reflect VA’s intent in

issuing that regulation. Section 1318 of

the statute authorizes DIC where the

veteran was ‘‘in receipt of or entitled to

receive’’ compensation for total serviceconnected disability for a specified

period preceding death. The statute

does not authorize VA to award DIC

benefits in cases where the veteran

merely had hypothetical, as opposed to

actual, entitlement to compensation. VA

does not have authority to provide by

regulation for payment of DIC in a

manner not authorized by 38 U.S.C.

1318. Section 3.22(a) is an interpretive

rule that was intended to explain the

requirements of 38 U.S.C. 1318, and not

to establish any substantive rights

beyond those authorized by section

1318. However, since the language of

§ 3.22(a) apparently caused confusion

regarding VA’s interpretation of 38

U.S.C. 1318, VA revised § 3.22(a) to

ensure that it clearly expresses VA’s

interpretation of section 1318. See 65 FR

3388 (Jan. 21, 2000).

Section 1318 authorizes payment of

DIC in cases where the veteran was, at

the time of death, ‘‘in receipt of or

entitled to receive (or but for the receipt

of retired or retirement pay was entitled

to receive)’’ compensation for serviceconnected disability that ‘‘was

continuously rated totally disabling for

a period of 10 or more years

immediately preceding death’’ or was so

rated for 5 years continuously from date

of discharge to date of death. The phrase

‘‘in receipt of * * * compensation’’

unambiguously refers to cases where the

veteran was, at the time of death,

actually receiving compensation for

service-connected disability rated

totally disabling for the required period.

VA concluded that the phrase ‘‘entitled

to receive * * * compensation’’ is most

reasonably interpreted as referring to

cases where the veteran had established

a legal right to receive compensation for

the required period under the laws and

regulations governing such entitlement,

but was not actually receiving the

compensation.

Under 38 U.S.C. 5101, ‘‘a specific

claim in the form prescribed by the

Secretary * * * must be filed in order

for benefits to be paid or furnished to

any individual under the laws

administered by the Secretary.’’ No

person can have a right to receive

compensation from VA in the absence of

a properly filed claim. Jones v. West,

136 F.3d 1296, 1299–1300 (Fed. Cir.),

cert. denied, 119 S. Ct. 90 (1998).

Section 5110(a) of title 38, United States

Code, provides that an award of

compensation may not be made

effective earlier than the date of the

claimant’s application, unless

specifically provided otherwise by

statute. Accordingly, a person cannot

have a right to receive compensation

from VA for any period prior to the date

of an application for benefits except as

expressly authorized by specific

statutory provision.

Moreover, as set forth above, the

legislative history of Public Law 97–

306—which added the phrase ‘‘or

entitled to receive’’ to what is now 38

U.S.C. 1318—clearly shows that

Congress made the amendment to

provide that DIC may be paid in cases

where the veteran would have been in

receipt of compensation for a total

service-connected disability for the

specified period prior to death if not for

a clear and unmistakable error (CUE) by

VA. A ‘‘clear and unmistakable error’’ is

an error in a prior final VA decision

which materially affected the outcome

of the decision. See, e.g., Disabled

American Veterans v. Gober, 234 F.3d

682, 695–97 (Fed. Cir. 2000), cert.

denied sub nom. Nat’l Org. of Veterans’

Advocates v. Principi, 121 S. Ct. 1605

(2001); Bustos v. West, 179 F.3d 1378,

1381 (Fed. Cir.), cert. denied 120 S. Ct.

405 (1999). Pursuant to law and

regulation, a decision containing CUE

may be revised retroactively, and

entitlement to benefits may be

established retroactively as if the error

had not occurred. 38 U.S.C. 5109A,

7111; 38 CFR 3.105(a), 38 CFR

20.1406(a).

A retroactive award predicated on a

finding of CUE is, like all awards of VA

benefits, subject to the requirement that

the veteran have filed a claim for

benefits under 38 U.S.C. 5101(a).

Further, the period of the veteran’s

retroactive entitlement is governed by

the effective-date provisions of 38

U.S.C. 5110, and generally may not be

earlier than the date of the veteran’s

claim which resulted in the erroneous

decision. In using the phrase ‘‘entitled

to receive’’ to refer to the specific class

of cases where the veteran’s entitlement

was established by correction of CUE,

Congress plainly contemplated that

determinations concerning the existence

and duration of the veteran’s

entitlement to benefits would continue

to be governed by the requirements of

38 U.S.C. 5101(a) and 5110.

The legislative history also suggests

that final decisions concerning a

veteran’s disability rating and effective

date would be binding for purposes of

determinations under 38 U.S.C. 1318(b)

unless there was CUE in such decisions.

Sections 7104(b) and 7105(c) of title 38,

United States Code provide that

determinations of the Board of Veterans’

Appeals and VA regional offices,

respectively, are final unless a timely

appeal is filed. Such final decisions may

be revised only on the basis of CUE. By

clearly stating its intent that DIC

benefits may be awarded if there was

CUE in a prior final decision which

prevented the veteran from receiving

total disability compensation for the

specified period, Congress plainly

contemplated that the prior final

decision would continue to be binding

in the absence of CUE. The extensive

discussion of CUE in the legislative

history would have been unnecessary

and illogical if Congress had intended

VA to ignore any final VA decisions

during the veteran’s lifetime.

Accordingly, if a regional office or the

Board had rendered a final decision that

the veteran was not entitled to a total

rating for at least 10 years immediately

preceding death (or at least 5 years from

date of discharge to date of death), such

decision would preclude VA from

reaching a contrary conclusion in

adjudicating a claim for DIC under 38

U.S.C. 1318(b).

In view of Congress’ clear intent, VA

has concluded that determinations

concerning the existence and duration

of the veteran’s entitlement to

compensation for a service-connected

disability rated totally disabling are

governed by the generally-applicable

provisions of 38 U.S.C. 5101(a), 5110,

65864 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules

7104(b), and 7105(c), governing claimfiling requirements, effective dates of

entitlement, and the finality of regionaloffice and Board decisions. Congress’

stated purpose to authorize DIC in cases

where clear and unmistakable error was

the only obstacle to the veteran’s receipt

of total disability compensation for the

required period fits logically within this

well-established statutory scheme.

In contrast, interpreting 38 U.S.C.

1318(b) to permit DIC awards where the

veteran ‘‘hypothetically’’ could have

been entitled to benefits would create a

substantially broader rule which would

be inconsistent with the general

statutory requirements governing a

veteran’s entitlement to compensation.

VA has found no indication in section

1318(b) or its legislative history that

Congress intended VA to ignore those

established statutory requirements in

making determinations regarding the

veteran’s entitlement to compensation

for purposes of section 1318(b). To the

contrary, Congress indicated that the

purpose of the phrase ‘‘or entitled to

receive’’ was to authorize DIC awards in

a specific class of cases where the

veteran’s entitlement is established

under those generally-applicable

statutory requirements.

The language of 38 U.S.C. 1318(b) is

consistent with Congress’ stated

purpose. Section 1318(b) authorizes

payment of DIC in cases where the

veteran was entitled to receive

compensation for a service-connected

disability that ‘‘was continuously rated

totally disabling for a period of 10 or

more years immediately preceding

death.’’ The requirement that the

disability have been ‘‘continuously

rated’’ totally disabling for the specified

period is most reasonably construed as

referring to ratings which had actually

been assigned by VA for the duration of

that period in accordance with the

established statutory requirements

governing claims, ratings, and effective

dates. A contrary interpretation would

render the term ‘‘rated’’ wholly

unnecessary, for Congress could simply

have provided that DIC would be

payable based on a posthumous

determination that the veteran had a

service-connected disability that ‘‘was

continuously * * * totally disabling for

a period of 10 or more years

immediately preceding death.’’ In cases

where a rating is assigned retroactively

through correction of CUE, the statutory

requirements for a continuous rating

and entitlement at death are satisfied, as

a matter of law, because Congress has

mandated that decisions correcting CUE

shall have the same effect as if they had

been issued on the date of the erroneous

decision.

For the foregoing reasons, we

conclude that the meaning of section

1318 is clear from its language, history,

and context. Accordingly, given the

absence of ambiguity in the statute and

in view of Congress’ clear intent, there

is no ‘‘interpretive doubt * * * to be

resolved in the veteran’s favor.’’ Brown

v. Gardner, 513 U.S. 115, 118 (1994).

This interpretation of 38 U.S.C.

1318(b) is consistent with VA’s prior

interpretation of that provision. In a

1990 precedent opinion which is

binding on all VA officials and

employees, the VA General Counsel

examined the language and history of

section 1318(b) (previously section

410(b)), and concluded that the

legislative history clearly indicated that

Congress intended to authorize DIC in

cases where the veteran had a total

service-connected disability rating for

the specified period, or would have had

such a rating but for clear and

unmistakable error by VA. The General

Counsel concluded further that VA

could not award DIC in cases where the

veteran did not have a total serviceconnected rating for the specified period

and there was no clear and

unmistakable error which could have

provided a basis for retroactively

assigning such a rating. VAOPGCPREC

68–90, 55 FR 43255 (Oct. 26, 1990).

Definition of ‘‘Entitled to Receive’’

In order to clarify the requirements of

38 U.S.C. 1318, VA revised 38 CFR 3.22

to expressly define the statutory term

‘‘entitled to receive.’’ VA defined that

term to refer to each specific

circumstance where a veteran could

have had a service-connected disability

rated totally disabling by VA but may

not have been receiving VA

compensation for such disability at the

time of death. The revised regulation

provides seven circumstances:

(1) VA was paying the compensation

to the veteran’s dependents;

(2) VA was withholding the

compensation under authority of 38

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

the veteran;

(3) The veteran had applied for

compensation but had not received total

disability compensation due solely to

clear and unmistakable error in a VA

decision concerning the issue of service

connection, disability evaluation, or

effective date;

(4) The veteran had not waived retired

or retirement pay in order to receive

compensation;

(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 was

unknown, but the veteran was otherwise

entitled to continued payments based

on a total service-connected disability

rating; or

(7) VA was withholding payments

under 38 U.S.C. 5308 but determines

that benefits were payable under 38

U.S.C. 5309. 38 CFR 3.22(b) (2000).

VA’s Interpretation of 38 U.S.C.

1311(a)(2)

Section 1311(a)(2) was enacted in

1992. In view of the nearly identical

language in 38 U.S.C. 1311(a)(2) and the

earlier-enacted 38 U.S.C. 1318, and the

similar purpose of the two statutes, VA

believes those statutes should be

interpreted in the same manner. The

NOVA court reached the same

conclusion, noting that the wellestablished rule that identical words

used in different parts of a statute are

intended to have the same meaning

‘‘applies with equal force where, as

here, the words at issue are used in two

different sections of a complex statutory

scheme and those two sections serve the

same purpose, namely, the award of DIC

benefits to survivors.’’ Slip op. at 23–24.

The legislative history of section

1311(a)(2) makes clear it was modeled

on section 1318 and intended to have

the same meaning. H.R. Rep. 753, 102d

Cong. 17 (1992) (discussing application

of sections 1311(a)(2) and 1318).

The legislative history further

supports the conclusion that section

1311(a)(2), like section 1318, was

intended to require that the veteran’s

entitlement to total disability ratings be

based on ratings during the veteran’s

lifetime, rather than posthumous

determinations regarding the veteran’s

‘‘hypothetical’’ entitlement to benefits.

The joint explanatory statement on the

compromise agreement resulting in

section 1311(a)(2) explained that it was

intended to provide an additional

amount of compensation for survivors of

veterans who were ‘‘rated totally

disabled while married to the surviving

spouse.’’ 138 Cong. Rec. 17376 (1992).

In 1993, VA issued a regulation to

implement 38 U.S.C. 1311(a)(2). That

regulation, codified at 38 CFR 3.5(e),

states that the additional DIC amount

will be paid ‘‘in the case of the death of

a veteran who at the time of death was

in receipt of or was entitled to receive

(or but for the receipt of retired pay or

retirement pay was entitled to receive)

compensation for a service-connected

disability that was evaluated as totally

disabling for a continuous period of at

least eight years immediately preceding

death.’’

For the reasons stated above with

respect to 38 U.S.C. 1318, VA has

consistently construed 38 U.S.C.

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Proposed Rules 65865

1311(a)(2) and 38 CFR 3.5(e) as

requiring that the veteran’s entitlement

to total disability compensation be

established by ratings during the

veteran’s lifetime or by CUE challenge

to a decision or decisions rendered

during the veteran’s lifetime. Because

this construction comports with the

language, legislative history, and

principles of construction discussed

above, VA will continue to interpret

both 38 U.S.C. 1311(a)(2) and 38 U.S.C.

1318 in this manner.

The NOVA Case: Revision of Rule 1106

The NOVA court concluded that VA

has interpreted 38 U.S.C. 1318 and 38

U.S.C. 1311(a)(2) differently because the

rule in 38 CFR 20.1106 concerning

disregard of decisions during the

veteran’s lifetime contains an exception

for section 1318 but not for section

1311(a)(2). As explained above, VA has

consistently interpreted 38 U.S.C.

1311(a)(2) and 1318 in the same

manner. The cited inconsistency

between 38 CFR 3.22(a) and Rule 1106

is a function of time, not of VA’s

interpretation of the two statutes at

issue in the NOVA case.

Despite the court’s characterization of

Rule 1106 as the ‘‘implementing’’

regulation for 38 U.S.C. 1311, NOVA,

slip op. at 9–10; 37, the fact is that Rule

1106 was proposed three and one-half

years before, and published as final 9

months before, the amendments to 38

U.S.C. 1311 were enacted. Simply put,

Rule 1106 was not, and could not have

been, drafted with the enhanced DIC

benefits of 38 U.S.C. 1311(a)(2) in mind.

VA implemented 38 U.S.C. 1311(a)(2) in

a different regulation, 38 CFR 3.5(e),

published in April 1993, after

enactment of Pub. L. No. 102–568. 58

FR 25561 (Apr. 27, 1993).

Rule 1106 was intended to apply to

claims for DIC where the veteran’s death

is service connected. It was never

intended to preclude consideration of

decisions during the veteran’s lifetime

in cases where the veteran’s death is not

service connected and, therefore, a

survivor’s entitlement to DIC is

dependent upon a showing that the

veteran was entitled to receive

compensation during his or her lifetime

for a service-connected disability rated

totally disabling for a specified predeath period. In view of the purpose of

Rule 1106 and the clear requirements of

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

VA has not interpreted Rule 1106 to

preclude reliance on decisions during

the veteran’s lifetime in determining

entitlement to enhanced DIC benefits.

VA has interpreted 38 CFR 3.22 and

38 CFR 20.1106 to preclude

‘‘hypothetical’’ determinations of

eligibility for nonservice-connected DIC

under 38 U.S.C. 1318, an explicit

exclusion in Rule 1106 recognized by

the Federal Circuit in Hix, 225 F.2d at

1380. In the same way, under Rule 1106,

we interpreted the exact same

language—‘‘in receipt of or entitled to

receive’’—in 38 U.S.C. 1311(a)(2) to

preclude hypothetical determinations of

eligibility for the enhanced DIC benefit.

In Hix, the court declined to defer to

VA’s interpretation because Rule 1106

mentions 38 U.S.C. 1318, but does not

mention 38 U.S.C. 1311(a)(2). As

indicated above, the reason for this

omission is that Rule 1106 became final

9 months before the current 38 U.S.C.

1311(a)(2) was enacted. There is,

frankly, no basis for concluding that VA

meant to exclude a statute that did not

yet exist. Although we recognize that

further revision of Rule 1106 to include

express reference to 38 U.S.C. 1311(a)(2)

will help clarify VA’s position, this

revision does not reflect any change in

VA’s interpretation of the governing

statutes.

Nevertheless, because of the apparent

confusion, and in accordance with the

court’s order in NOVA, we propose to

amend 38 CFR 20.1106 to add a specific

exception for 38 U.S.C. 1311(a)(2). In

our view, the statutory language does

not support paying either DIC or

enhanced DIC benefits where the

veteran never made a claim for total

disability benefits in his or her lifetime,

or where a survivor cannot show clear

and unmistakable error in decisions

made during the veteran’s lifetime.

Comment Period

We are providing a comment period

of 30 days for this proposed rule. In its

August 16, 2001, order in the NOVA

case, the Federal Circuit directed VA to

issue its final rules on this matter within

120 days after the date of issuance of the

court’s mandate in that case. The

Federal Circuit further ordered VA to

stay all proceedings on claims for DIC

under 38 U.S.C. 1318 until such final

rules are issued. Although the Federal

Circuit indicated that VA may request

an extension of time, if necessary, we

believe that the Court intended that VA

would make every effort to issue final

rules within the specified 120-day

period. A shortened comment period of

30 days is necessary to help us meet the

objecive of the Court. Further, we

believe that prompt completion of the

rulemaking process is necessary to

ensure that the court-ordered stay of

proceedings does not result in

prolonged delays in pending claims that

may be affected by this rule.

Executive Order 12866

This document has been reviewed by

the Office of Management and Budget

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).

Regulatory Flexibility Act

The Secretary hereby certifies that

this proposed rule would not have a

significant economic impact on a

substantial number of small entities as

they are defined in the Regulatory

Flexibility Act, 5 U.S.C. 601–612,

inasmuch as this rule applies to

individual claimants for veterans’

benefits and does not affect such

entities. Therefore, pursuant to 5 U.S.C.

605(b), this proposed rule is exempt

from the initial and final regulatory

flexibility analyses requirement of

sections 603 and 604.

There is no Catalog of Federal

Domestic Assistance number for this

proposed rule.

List of Subjects in 38 CFR Part 20

Administrative practice and

procedure, Claims, Veterans.

Approved: November 26, 2001.

Anthony J. Principi,

Secretary of Veterans Affairs.

For the reasons set out in the

preamble, VA proposes amending 38

CFR part 20 as follows:

PART 20—BOARD OF VETERANS’

APPEALS: RULES OF PRACTICE

1. The authority citation for part 20

continues to read as follows:

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

specific sections.

2. 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 disposition of those issues during

the veteran’s lifetime.

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

[FR Doc. 01–31479 Filed 12–20–01; 8:45 am]

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