66274 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

DEPARTMENT OF JUSTICE

Office of the Attorney General

28 CFR Part 104

[CIV 104P; AG Order No. 2541–2001]

RIN 1105–AA79

September 11th Victim Compensation

Fund of 2001

ACTION: Interim final rule with request

for comments.

SUMMARY: Shortly after the September

11, 2001 terrorist attacks, the President

signed the ‘‘September 11 Victim

Compensation Fund of 2001’’ (the

‘‘Fund’’) into law as Title IV of Public

Law 107–42 (‘‘Air Transportation Safety

and System Stabilization Act’’) (the

‘‘Act’’). The Act authorizes

compensation to any individual (or the

personal representative of a deceased

individual) who was physically injured

or killed as a result of the terroristrelated aircraft crashes on that day. The

Act provides that the Fund will be

administered by a Special Master

appointed by the Attorney General. On

November 26, 2001, the Attorney

General appointed Kenneth R. Feinberg

as Special Master.

The Department of Justice, in

consultation with the Special Master, is

issuing certain procedural rules so the

Special Master may commence

operations of the program as soon as

practicable. In order to allow the Special

Master to begin distributing funds, the

Department is issuing this rule as an

‘‘Interim Final Rule’’ that will have the

force and effect of law immediately

upon publication. This rule is

designated ‘‘interim,’’ however, because

the Department is also seeking further

comment for a period of 30 days as part

of its further review and may expand or

adjust aspects of the rule after receiving

additional comments.

DATES: This interim rule takes effect on

December 21, 2001. Comments in

response to this notice are due by

January 22, 2002.

ADDRESSES: Comments on the interim

rule should be submitted by e-mail to:

victimcompensation.comments@usdoj

.gov, or by telefax to 301–519–5956.

Telefaxes should be limited to 15 pages.

Comments may also be mailed to

Kenneth L. Zwick, Director, Office of

Management Programs, Civil Division,

U.S. Department of Justice, Main

Building, Room 3140, 950 Pennsylvania

Avenue NW, Washington, DC 20530.

However, the Department encourages

commenters to submit their comments

by e-mail or telefax. Comments received

are public records. The name and

address of the commenter should be

included with all submissions. The

comments will be made available on the

Victim Compensation Fund Web site,

www.usdoj.gov/victimcompensation.

Comments will also be available for

public inspection at a reading room in

Washington, DC. Arrangements to visit

the reading room must be made in

advance by calling 888–714–3385 (TDD:

888–560–0844).

FOR FURTHER INFORMATION CONTACT:

Kenneth L. Zwick, Director, Office of

Management Programs, Civil Division,

U.S. Department of Justice, Main

Building, Room 3140, 950 Pennsylvania

Avenue NW, Washington, DC 20530,

telephone 888–714–3385 (TDD 888–

560–0844).

SUPPLEMENTARY INFORMATION:

Statement by the Special Master

The September 11th Victim

Compensation Fund of 2001 is an

unprecedented expression of

compassion on the part of the American

people to the victims and their families

devastated by the horror and tragedy of

September 11. The Act itself

(specifically Title IV—Victim

Compensation), and the attached

regulations drafted and implemented

pursuant to the Act, are designed to

bring some measure of financial relief to

those most devastated by the events of

September 11. In one important sense,

the Fund symbolizes the commitment of

the American people to those most in

need. It is an example of how

Americans rally around the less

fortunate.

The attached regulations have two

objectives: (1) To provide fair,

predictable and consistent

compensation to the victims of

September 11 and their families

throughout the life of the program; and

(2) to do so in an expedited, efficient

manner without unnecessary

bureaucracy and needless demands on

the victims. The regulations highlight a

fast track administrative compensation

program, eliminating the red tape, time

and expense of a traditional lawsuit.

Quick payment to eligible claimants

characterizes this program.

The Fund offers the eligible claimant

an alternative to litigation. To succeed

in the courtroom, a victim of the

September 11 tragedy, or his or her

representative, would be compelled to

litigate, probably for many years at

excessive cost, and with all the

uncertainty of result which is part of the

litigation process. Among the hazards of

such a court proceeding are: Would

liability be demonstrated? Against

whom? Would sufficient funds be

available to pay in full any resulting tort

award? Would the verdict, even if

favorable, withstand appellate

challenge?

Trade-offs are required in developing

Fund procedures that are different than

those in the more conventional lawsuit.

It is possible to develop an alternative

administrative scheme, providing

speedy and efficient compensation,

which will help bring some closure to

the events of September 11. We should

not require its victims to revisit the

tragic events of September 11 over and

over again during the pendency of a

lawsuit in our courts.

In formulating the regulations, we

heeded the instruction of the Attorney

General to help the neediest of victims

as quickly as possible. Accordingly,

under these regulations, an eligible

claimant can receive an immediate

advance payment of $50,000 in cases

involving death, or $25,000 in certain

cases involving serious physical injury.

These payments are downpayments

only, advanced to provide immediate

financial assistance to those in need.

We were required, of course, to

adhere to the language which Congress

set out in the statute, including the

provisions requiring that awards be

offset by all collateral source

compensation such as benefits from life

insurance and other government

programs. However, we did find

ambiguity in the statute as to gifts

provided to victims and their families

by private charities. These regulations

do not require that awards be offset by

such private charitable assistance.

We have concluded that the purpose

of the Act is not simply to examine

economic and noneconomic harm, but

also to provide compensation that is just

and appropriate in light of claimants’

individual circumstances. We have

concluded that any methodology that

does nothing more than attempt to

replicate a theoretically possible future

income stream would lead to awards

that would be insufficient relative to the

needs of some victims’ families, and

excessive relative to the needs of others.

The statute specifies that individual

circumstances beyond economic and

noneconomic harm should be taken into

account. It is our view that, absent

extraordinary circumstances, awards in

excess of $3 million, tax-free, will rarely

be appropriate in light of individual

needs and resources. At the same time,

we want to ensure that victims’ families

are receiving at least a minimum level

of resources to help meet their needs

and rebuild their lives. Thus, we have

concluded that the families of deceased

victims should receive a combined total

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66275

of at least $500,000 from this program,

other state and Federal programs, life

insurance policies and other sources of

compensation. Similarly, the baseline

for single decedents should be $300,000.

This ensures that every needy

claimant’s total compensation from this

program and other sources will be at

least equal to these threshold amounts.

In sum, the September 11th Victim

Compensation Fund of 2001 is an

attempt by the American people to

demonstrate their solidarity with, and

generosity for, those injured by the

terrible September 11 attack on our

country. It provides an alternative

compensation scheme to the traditional

tort system, a method of providing

substantial and quick compensation to

those who elect to participate.

Neither this Fund nor any monetary

compensation can possibly provide a

full measure of relief to those who have

suffered as a result of September 11. But

the Fund will provide appropriate

compensation and some measure of

comfort to those whose lives have been

torn asunder by the events of September

11.

Background

The following discussion provides

background information and

explanation of the regulations

promulgated herein. Section A describes

the statutory backdrop for the

regulations; Section B discusses the

Department’s rulemaking procedures to

date; Section C addresses Eligibility;

Section D pertains to Advance Benefits;

Section E discusses Final Awards made

by the Fund; Section F describes the

Special Master’s claims evaluation

process; and Section G relates to

Assistance to Claimants. The text of the

regulations is set forth following these

explanatory sections. A catalog of public

commentary is set forth thereafter as an

Appendix. More detailed information

regarding the program, including a flow

chart of applicable procedures and a

table of estimated or ‘‘presumed’’

awards, will be available on the Victims

Compensation Fund Web site at

www.usdoj.gov/victimcompensation.

A. The Statute

The President signed the ‘‘September

11th Victim Compensation Fund of

2001’’ (the ‘‘Fund’’) into law on

September 22, 2001, as Title IV of

Public Law 107–42 (‘‘Air Transportation

Safety and System Stabilization Act’’)

(‘‘the Act’’). The purpose of this Fund is

to provide compensation to eligible

individuals who were physically

injured as a result of the terrorist-related

aircraft crashes of September 11, 2001,

and compensation through a ‘‘personal

representative’’ for those who died as a

result of the crashes. Generally,

eligibility is limited to: (1) Individuals

on the planes at the time of the crashes

(other than the terrorists); and (2)

individuals present at the World Trade

Center, the Pentagon or the site of the

crash in Pennsylvania at the time of the

crashes or in the immediate aftermath of

the crashes.

The Fund is designed to provide a nofault alternative to tort litigation for

individuals who were physically

injured or killed as a result of the

aircraft hijackings and crashes on

September 11, 2001. Others who may

have suffered losses as a result of those

events (e.g., those without identifiable

physical injuries but who lost

employment) are not included in this

special program. Indeed, compensation

will be provided only for losses caused

on account of personal physical injuries

or death, even though the victims may

have suffered other losses, such as

property loss. For this reason, the

Department and the Special Master

anticipate that all awards from the Fund

will be free of federal taxation. See

I.R.C. § 104(a)(2) (stating that damages

received ‘‘on account of personal

physical injuries or physical sickness’’

are excludable from gross income for

purposes of federal income taxation).

A claimant who files for

compensation waives any right to file a

civil action (or to be a party to an action)

in any federal or state court for damages

sustained as a result of the terroristrelated aircraft crashes of September 11,

2001, except for actions to recover

collateral source obligations.

Determinations on eligibility and the

amount of compensation are to be made

by the Special Master. After determining

whether an individual is an eligible

claimant under the Act, the Special

Master is to determine the amount of

compensation to be awarded based

upon the harm to the claimant, the facts

of the claim, and the individual

circumstances of the claimant.

The law also provides that the Special

Master is to make a final determination

on any claim within 120 days from

when the claim was filed and, if an

award is made, to authorize payment

within 20 days thereafter. The

determinations of the Special Master are

final and are not reviewable by any

court. Claims with the Fund must be

filed on or before two years after the

effective date of these regulations, i.e.

December 22, 2003. Payments from the

Fund are made by the United States

Government, which in turn obtains the

right of subrogation to each award.

Pursuant to the Act, regulations

addressing certain administrative

matters must be issued within 90 days

of enactment. Section 407 of the Act

provides that the Department, in

consultation with the Special Master,

promulgate regulations on four matters

by December 21, 2001:

(1) Forms to be used in submitting

claims;

(2) The information to be included in

such forms;

(3) Procedures for hearing and the

presentation of evidence; and

(4) Procedures to assist an individual

in filing and pursuing claims under this

title.

In addition, section 407 authorizes,

but does not require, the Department to

issue additional rules to implement the

program. This Interim Final Rule

addresses issues beyond the four

specifically required by the Act in order

to create a program that will be efficient,

will treat similarly situated claimants

alike, and will allow potential claimants

to make informed decisions regarding

whether to file claims with the Fund.

Nonetheless, the Department recognizes

that it cannot anticipate all of the issues

that will arise over the course of the

program and that there will inevitably

be many difficult issues that the Special

Master will have to resolve in the course

of making determinations on individual

claims.

B. Rulemaking History to Date

On November 5, 2001, the Department

requested public input on a number of

issues. 66 FR 55901. The Department

noted that, at that time, the Special

Master had not yet been appointed, but

that it wanted as much public comment

as feasible before issuing the regulations

by December 21, 2001. On November

26, 2001, the Attorney General

appointed Kenneth R. Feinberg as

Special Master. As called for by the Act,

this interim final rule is promulgated in

consultation with the Special Master.

The Department received more than

800 comments in response to the

Department’s Notice of Inquiry. Some

were very brief and only spoke to a

single issue; others responded to the

Department’s questions on a point by

point basis. Still others contained

detailed analyses, recommendations and

even proposed regulatory language.

The range of commenters was very

broad. Some commenters identified

themselves as citizens, taxpayers or law

professors, and many identified

themselves as individuals who had

contributed to charities for those

impacted by the terrorist crashes. Many

other commenters identified themselves

as members of victims’ families,

partners or close friends, including

some from organizations and groups of

66276 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

survivors. Several commenters

identified themselves as employers who

lost a significant number of employees

in the crashes. A number of commenters

identified themselves as residents of

housing near ‘‘Ground Zero’’ in New

York.

In addition, the Department received

comments from many organizations

including the American Insurance

Association, the American Arbitration

Association, the American Bar

Association, Trial Lawyers Care, New

York Trial Lawyers’ Association, New

York City Bar Association,

Massachusetts Bar Association, National

Center for Victims of Crime, National

Association of Crime Victim

Compensation Boards, the Oklahoma

Crime Victim Compensation Board,

Consumers Union, Public Citizen, the

National Right To Life Committee, the

Lamda Legal Defense & Education Fund,

the American Civil Liberties Union, the

Association of Flight Attendants, the

Council on Foundations, the Nonprofit

Coordinating Committee of New York,

Independent Sector, the Alternative

Dispute Resolution of the Federal Bar

Association, the Alliance of Fiduciary

Consultants, and the Foreign Claims

Settlement Commission.

Individual members of Congress,

groups of members, and members of the

Senate leadership also provided

comments. Further, joint comments

were submitted on behalf of the New

York City Mayor, the New York

Governor, and the New York Attorney

General, by members of the New York

Assembly, and by the Attorney General

of Connecticut.

Comments were also submitted by

United Airlines and American Airlines,

and from various individuals and

companies who identified themselves as

having expertise or experience in the

administration of claims programs.

The Department has read every

submission it received in response to

this notice, from handwritten notes to

scholarly discussions. The Department

wants to express its appreciation for the

time and careful thought reflected in

those submissions.

While the Department has reviewed

every submission it received, it will not

regulate on every topic addressed in

those comments. Over 70 separate

topics were identified; almost two

dozen full size notebooks are necessary

to organize all of the comments by topic.

All of the comments will be retained by

the Department for subsequent

consideration when it reviews

comments on this interim final rule, and

the comments will remain posted on the

Department’s web site where they may

be reviewed by the public. The

Department was pleased to see that

some comments responded to others

placed on the web site, and hopes this

facility will continue to be of interest to

the public.

It is not feasible to repeat here all of

the suggestions received in the

comments, let alone directly respond to

each. The Appendix to this interim final

rulemaking highlights some of the

points raised by commenters in order to

indicate the range of views received on

how various issues should be

approached.

C. Eligibility

Section 405(b) of the Act requires the

Special Master to determine whether a

claimant is an ‘‘eligible individual’’

under section 405(c). ‘‘Eligibility,’’ in

turn, is defined by the Act to include:

(1) individuals (other than the terrorists)

aboard American Airlines flights 11 and

77 and United Airlines flights 93 and

175; (2) individuals who were ‘‘present

at’’ the World Trade Center, the

Pentagon, or the site of the aircraft crash

at Shanksville, Pennsylvania at the time

or in the immediate aftermath of the

crashes; or (3) personal representatives

of deceased individuals who would

otherwise be eligible. Moreover, to be

eligible for an award, an individual

must have suffered physical harm or

death as a result of one of the terroristrelated air crashes. This interim final

rule addresses eligibility by defining the

terms ‘‘present at the site,’’ ‘‘immediate

aftermath,’’ ‘‘physical harm,’’ and

‘‘personal representative.’’

‘‘Present at the site’’: This rule defines

the term ‘‘present at the site’’ (i.e. the

World Trade Center, Pentagon, or

Shanksville site) to mean physically

present at the time of the crashes or

immediate aftermath:

(1) In the buildings or portions of

buildings that were destroyed as a result

of the airplane crashes; or

(2) In any area contiguous to the crash

sites that the Special Master determines

was sufficiently close to the site that

there was a demonstrable risk of

physical harm resulting from the impact

of the aircraft or any subsequent fire,

explosions, or collapse of buildings

(generally, the immediate area in which

the impact occurred, fire occurred,

portions of buildings fell, or debris fell

upon and injured persons).

There are several reasons for this

geographic limitation. First, this

geographic limitation comports with the

plain meaning of the statutory term

‘‘present at.’’ Second, this geographic

limitation is consistent with the further

statutory requirement of physical injury

or death, because the zone designated is

that in which there was a demonstrable

risk of physical harm from falling

debris, explosions, or fire.

‘‘Immediate aftermath’’: This rule

defines the term ‘‘immediate aftermath’’

of the crashes to mean, for purposes of

all claimants other than rescue workers,

the period of time from the crashes until

12 hours after the crashes. This time

frame appears to cover all of those who

suffered physical injury or death, with

the exception of rescue workers.

With respect to rescue workers who

assisted in efforts to search for and

recover victims, the regulations define

‘‘the immediate aftermath’’ to include

the period from the crashes until 96

hours after the crashes. The regulations

provide for this longer time period for

rescue workers in recognition of their

heroic efforts and their selfless reasons

for being at the sites, and responds to a

request by the Mayor of New York City

that the program recognize the high

level of danger and difficulty during the

first four days of rescue operations.

‘‘Physical harm’’: This rule defines

the term ‘‘physical harm’’ to mean an

objectively verifiable physical injury

that was treated by a medical

professional within 24 hours of the

injury having been sustained or within

24 hours of rescue and either required

hospitalization as an in-patient for at

least 24 hours or caused, either

temporarily or permanently, partial or

total physical disability, incapacity, or

disfigurement.

There are several reasons for this

definition. The statutory term ‘‘physical

harm’’ indicates that Congress did not

intend for this Fund to compensate

those who suffered only emotional harm

or property damage. The statutory term

‘‘physical harm’’ also indicates that

Congress did not intend for this Fund to

cover those who face only a risk of

future injury (i.e. latent harm that does

not fully manifest itself within the

statutory time period for this Fund).

Indeed, because participation in this

Fund precludes claimants from

recovering through tort litigation, those

with latent injuries that later became

manifest would likely be

undercompensated if they sought

compensation now from the Fund

before the injuries became manifest.

Conversely, those who recovered for

latent injuries that did not later become

manifest could be overcompensated if

they recovered from the Fund. While

Congress might later consider whether

an administrative program for latent

harm caused by the September 11, 2001

terrorist-related aircraft crashes may be

appropriate, the language of the statute

that created this Fund does not

contemplate awards for that purpose.

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66277

‘‘Personal Representative’’: Section

405(c)(2)(C) provides that in the case of

an individual who is deceased but who

otherwise meets the other criteria for

eligibility, a claim can be filed by the

Personal Representative of the decedent.

Section 405(c)(3)(A) provides that no

more than one claim may be submitted

by an individual or on behalf of a

deceased individual.

In many or most cases, the identity of

the ‘‘Personal Representative’’ will not

be in dispute. Where there are disputes,

two issues arise: (1) What are the rules

for determining who is the Personal

Representative?; and (2) who should

apply the rules and resolve the dispute?

As to the first issue, the regulations

rely on state law. Subject to certain

contingencies, this rule defines the term

‘‘Personal Representative’’ to mean an

individual appointed by a court of

competent jurisdiction as the Personal

Representative of the decedent or as the

executor or administrator of the

decedent’s will or estate. In the event

that no Personal Representative or

executor or administrator has been

appointed by any court of competent

jurisdiction, and such issue is not the

subject of pending litigation or other

dispute, the Special Master may, in his

discretion, determine that the Personal

Representative is the person named by

the decedent in the decedent’s will as

the executor or administrator. In the

event no will exists, the Special Master

may, in his discretion, determine that

the Personal Representative is the first

person in the line of succession

established by the laws of the state of

the decedent’s domicile governing

intestacy.

Reliance on state law is necessary in

part because those who file for recovery

under the Fund waive their rights to

recover through litigation, in which

state law would determine the identity

of the appropriate representatives of the

decedent, or the decedent’s estate, to

bring suit. Thus, if the identity of

Personal Representatives for purposes of

this Fund were determined by federal

regulation, there could be many

situations in which the representative as

defined by state law would choose

litigation while the Personal

Representative as defined by federal

regulation would seek to recover from

the Fund.

The second issue raises questions of

program administration. Disputes

between relatives, former spouses and

other interested parties can be

exceptionally fact-intensive and timeconsuming. Indeed, state courts often

spend considerable time and resources

resolving such matters. The Special

Master cannot accomplish his statutory

duties if bogged down with these types

of complex disputes. Nor would it be

advisable for the Special Master to

attempt to step in and supplant state

court practice or the testamentary intent

of decedents. Consequently, the rule

provides that the Special Master has no

obligation to arbitrate, litigate or

otherwise resolve disputes as to the

identity of the Personal Representative.

Instead, to ensure that funds are not

needlessly tied up due to disputes

regarding the identity of the Personal

Representative, the regulations provide

that the disputing parties may agree in

writing to the identity of a Personal

Representative to act on their behalf,

who may seek and accept payment from

the Fund while those disputing parties

work to settle their dispute. In

appropriate cases, the Special Master

may determine an award, but place the

payment in escrow until the dispute

regarding the Personal Representative is

finally resolved.

Finally, the determination of the

Personal Representative is not the same

question as the determination of who

ultimately will receive the award. In

that regard, this rule provides that the

Personal Representative shall distribute

the award in a manner consistent with

the law of the decedent’s domicile or

any applicable rulings made by a court

of competent jurisdiction. However, in

order to assure that the families of

needy victims receive adequate

compensation, the regulations further

provide that the Personal Representative

shall, before payment is authorized,

provide to the Special Master a plan for

distribution of any award received from

the Fund. Notwithstanding any other

provision of these regulations or any

other provision of state law, in the event

that the Special Master concludes that

the Personal Representative’s plan for

distribution does not appropriately

compensate the victim’s spouse,

children, or other relatives, the Special

Master may direct the personal

representative to distribute all or part of

the award be distributed to such spouse,

children, or other relatives.

D. Advance Benefits

In order to comply with the Attorney

General’s November 26, 2001

instructions to the Special Master to pay

benefits to eligible claimants as quickly

as possible, these regulations permit

claimants to seek immediate ‘‘Advance

Benefits’’ in the fixed amount of $50,000

in the case of deceased individuals and

$25,000 in the case of severely injured

individuals who required

hospitalization for one week or more.

To qualify for advance benefits,

applicants must complete a short form

(the ‘‘Eligibility Form’’) identifying

basic eligibility and indicating that

advance benefits would assist them in

confronting current or immediate

financial hardships. Such forms will be

made available at claims intake centers

as they are established, in response to

telephone requests (888–714–3385, 202–

305–1352, TDD: 888–560–0844), and on

the Victims Compensation Fund Web

site at www.usdoj.gov/

victimcompensation.

Eligible claimants may apply for and

receive advance benefits and then file

their lengthier ‘‘Personal Injury

Compensation Form’’ or ‘‘Death

Compensation Form’’ at any time within

the two-year time frame for filing claims

under the program. This will allow

needy eligible claimants to obtain

prompt advance payments even though

they may need more time to collect full

information regarding the amount of

compensation they seek. The 120-day

period for determination of

compensation will be stayed or tolled

until the claimant files the completed

‘‘Personal Injury Compensation Form’’

or ‘‘Death Compensation Form’’ needed

to allow the Special Master to determine

the amount of the final award. However,

once a claimant applies for Advance

Benefits, the claimant will be deemed to

have waived the right to file a civil

action in state or federal court for

damages sustained as a result of the

September 11 attacks.

Advance benefits will be treated as

advance payments on ultimate awards

from the Fund. Thus, the amount of any

advance benefits received will be

deducted from the claimant’s

subsequent award.

E. Final Awards Made by the Fund

Section 405(b) of the Act provides

that the Special Master shall

compensate eligible claimants based on

the harm to the claimant (including both

economic loss and noneconomic losses),

the facts of the claim, and the individual

circumstances of the claimant. The Act

further provides that the Special Master

shall determine the claimant’s eligibility

and the amount of compensation within

120 days.

The Special Master and the

Department have studied the language

of the Act, the varying public

comments, evidence and data about the

many victims of the September 11

attacks, and economic and demographic

studies and data in fashioning the

interim final rule. After this careful

consideration, the Special Master and

the Department have concluded that the

following principal objectives should

guide any determination of economic

and noneconomic losses.

66278 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

The first objective is that the process

should be efficient, straightforward, and

understandable to the claimants. This

objective is based in part upon the

statutory requirement that the Special

Master review each claim and make an

award determination within 120 days of

filing. More important, however, is that

claimants be able to enter the program—

or choose not to enter the program—

with an understanding of how their

claims will be treated. This is especially

important because the Act provides that,

upon submission of a claim, a claimant

waives the right to file a civil action for

damages sustained as a result of the

September 11 attacks. For claimants to

make an informed decision regarding

this waiver, they should have some

understanding of how their award will

be calculated and how much they

would receive from the Fund should

they decide to file a claim.

The second objective is that each

claimant should, to the greatest extent

possible, be treated fairly based on the

claimant’s own individual

circumstances and relative to other

claimants. While the circumstances of

death for many victims will differ, those

circumstances will in many cases be

unknowable. In principle, similarly

situated claimants should not receive

dramatically differing treatment.

After careful consideration, the

Special Master and the Department have

concluded that, in order best to achieve

these principal objectives, the Special

Master should develop a methodology

for calculating presumed economic and

noneconomic losses that is based on

readily identifiable individual

circumstances for each claimant, such

as age, prior income levels, marital

status, and the number and ages of the

victim’s dependents. A methodology for

determining presumed economic and

noneconomic losses will also assist the

Special Master in making fair and

appropriate compensation

determinations swiftly and efficiently

within the time frame permitted by the

Act.

In order to enable claimants to make

informed decisions regarding whether to

submit a claim under the Fund and, if

so, whether to submit evidence of

extraordinary individual circumstances

that could justify departure from the

presumed awards, the interim final rule

directs the Special Master to publish

schedules, tables, or charts of presumed

determinations for economic and

noneconomic losses. While these

schedules, tables, or charts cannot cover

every possible claimant (e.g., injured

claimants), they are extensive and

detailed enough to provide the majority

of potential claimants with a general

dollar range into which their awards

may fall.

Nonetheless, the Special Master and

the Department recognize that it will be

impossible to fashion a presumptive

methodology that will take into account

all of the individual facts and

circumstances for every claimant.

Rather, some claimants may have

extraordinary individual circumstances

that justify departure from the presumed

awards. Thus, the interim final rule

provides that claimants may request that

the Special Master depart from the

presumed economic and noneconomic

losses based upon a demonstration of

extraordinary circumstances that the

presumed award methodology does not

adequately address.

Economic loss: Determination of

economic loss requires a prediction

about each claimant’s future. This

assessment will be, by its nature,

somewhat speculative. While the

determination of economic loss should

be based upon facts regarding the

individual victim where those facts are

available, some facts cannot be

predicted on an individualized basis.

The regulations also provide that the

Special Master’s schedules, tables, or

charts should identify presumed

determinations of economic loss up to a

salary level commensurate with the 98th

percentile of individual income in the

United States. The Department

recognizes that projecting earnings over

worklife for people with extraordinary

annual incomes is a very complex

exercise, often requiring a detailed

evaluation of variable and often

complex formulae for nonvariable

income, differing work life expectations,

often highly volatile industries or

markets, and other factors that are not

often subject to easy generalization. We

have also concluded that the purpose of

the Act is not simply to examine

economic and noneconomic harm, but

also to provide compensation that is just

and appropriate in light of the financial

needs and resources of claimants. Any

methodology that does nothing more

than attempt to replicate a theoretically

possible future income stream would

lead to awards that would be

insufficient relative to the needs of some

victims’ families, and excessive relative

to the needs of others. Therefore, a

claimant should not assume that he or

she will receive an award greater than

the presumed award simply because the

victim had an income that exceeded the

income for the 98th percentile. Indeed,

the Act’s requirement that the Special

Master consider ‘‘the individual

circumstances of the claimant’’

indicates that the Special Master may

consider a particular claimant’s

financial needs and resources, just as

the Department and the Special Master

considered the needs of the claimants in

concluding that no claimant bringing a

claim on behalf of a deceased victim

should receive less than $500,000 or

$300,000 before collateral source offsets.

If a claimant seeks review of a

presumed award, the Special Master

may consider a range of information,

including demographic information on

retirement trends for high wage earners,

the individual’s historical expenses,

savings, and any other factors he deems

relevant, including economic trends,

information available from the Bureau

of Labor Statistics, the Census Bureau

and other entities on average income

and retirement age for the victim’s

profession or even for the victim’s

former employer. Claimants should not

expect awards grossly in excess of the

highest awards listed on the Special

Master’s presumed award chart, as the

individual circumstances of the

wealthiest and highest-income

claimants will often indicate that multimillion dollar awards out of the public

coffers are not necessary to provide

them with a strong economic foundation

from which to rebuild their lives.

The Special Master and the

Department recognize that the extent of

physical injury for those victims who

survived the September 11 attacks may

vary to a degree that does not lend itself

to a schedule, table, or chart. If the

claimant’s injury causes only a

temporary disability, the Special Master

may consider evidence regarding the

length of time the claimant was absent

from his employment in determining

the appropriate compensation for

economic loss. For those victims who

suffered permanent physical disability,

the Special Master may rely upon his

economic loss methodology, but adjust

the award based upon the extent of the

physical disability. In evaluating claims

of disability, the Special Master will, in

general, make a determination regarding

whether the claimant is capable of

performing his or her usual profession

in light of the injuries.

With respect to claims of total

permanent disability, the Special Master

may accept a determination of disability

made by the Social Security

Administration as evidence of disability

without any further medical evidence or

review. The Special Master may also

consider determinations of permanent

total disability made by other

governmental agencies or private

insurers in evaluating the claim. The

Special Master may require an

evaluation of the claimant’s disability

and ability to perform his or her

occupation from medical experts.

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66279

With respect to claims of partial

disability, the Special Master may

consider evidence of the effect of the

partial disability on the claimant’s

ability to perform his or her usual

occupation as well as the effect of the

partial disability on the claimant’s

ability to participate in usual daily

activities.

Noneconomic losses: Each person

who was killed or injured in the

September 11 attacks suffered grievous

harm, and each person experienced the

unspeakable events of that day in a

unique way. Some victims experienced

terror for many minutes, as they were

held hostage by terrorists on an airplane

or trapped in a burning building. Some

victims had no warning of what was

coming and died within seconds of a

plane hitting the building in which they

worked. While these circumstances may

be knowable in a few extraordinary

circumstances, for the vast majority of

victims these circumstances are

unknowable.

After extensive fact finding, public

outreach, and review of public

comments, the Special Master and the

Department have concluded that the

most rational and just way to approach

the imponderable task of placing a

dollar amount upon the pain, emotional

suffering, loss of enjoyment of life, and

mental anguish suffered by the

thousands of victims of the September

11 attacks is to assess the noneconomic

losses for categories of claimants. The

most obvious distinction is between

those who died and those who suffered

physical injury but survived.

The regulations therefore set a

presumed award for noneconomic

losses sustained. For those victims who

died as a result of the September 11

aircraft crashes, the presumed

noneconomic losses will be $250,000,

plus an additional $50,000 for the

spouse and each dependent of the

deceased victim. That $250,000 figure is

roughly equivalent to the amounts

received under existing federal

programs by public safety officers who

are killed while on duty, or members of

our military who are killed in the line

of duty while serving our nation. See 38

U.S.C. 1967 (military personnel); 42

U.S.C. 3796 (Public Safety Officers

Benefit Program). The latter figures—

$50,000 for the spouse and each

dependent—include a noneconomic

component of ‘‘replacement services

loss.’’

For those victims who suffered

physical injury but survived the

September 11 attacks, the Special

Master may establish a methodology for

estimating their noneconomic losses.

The Special Master may determine that

it is appropriate to give some percentage

of the noneconomic loss award given for

victims who died, based upon the extent

of the injury.

The Special Master and the

Department recognize, however, that no

presumed award can take into account

all of the unique individual

circumstances of each claimant.

Accordingly, as noted above, claimants

may either accept the presumed award

or instead attempt to demonstrate in a

hearing before the Special Master

extraordinary circumstances that justify

departure from the presumed award.

Collateral Sources: Section 405(b)(6)

of the Act provides that the Special

Master shall reduce the amount of

compensation by the amount of the

collateral source compensation ‘‘a

claimant has received or is entitled to

receive’’ as a result of the terroristrelated aircraft crashes of September 11,

2001. The interim final rule provides

that collateral sources will include life

insurance, pension funds, death benefit

programs, and payments by federal,

state, or local governments related to the

terrorist-related aircraft crashes of

September 11, 2001. While many public

commenters voiced strong opposition to

the inclusion of some or all of these as

collateral source compensation, the Act

expressly includes each one within the

definition of ‘‘collateral sources.’’

At the same time, the Act does not

address whether certain other types of

payments constitute collateral source

compensation. The interim final rule

provides that the following are not

collateral source compensation:

(1) The value of services or in-kind

charitable gifts such as provision of

emergency housing, food, or clothing;

and

(2) Charitable donations distributed to

the beneficiaries of the decedent, to the

injured claimant, or to the beneficiaries

of the injured claimant by private

charitable entities; provided, however,

that the Special Master may determine

that funds provided to victims or their

families through a private charitable

entity constitute, in substance, a

collateral source as described above.

The Department has concluded that

charitable contributions should not be

considered collateral source

compensation within the meaning of the

Act because, among other reasons, such

charitable contributions are different in

kind from the collateral sources listed in

the Act. Moreover, because the

collateral offset only applies to

collateral source compensation that the

claimant has received or is entitled to

receive, deducting charitable awards

from the amount of compensation

would have the perverse effect of

encouraging potential donors to

withhold their giving until after

claimants have received their awards

from the Fund.

F. The Claims Evaluation Process

Section 405(b)(4) of the Act provides

that a claimant, after the filing of the

claim, has the right to present evidence

to the Office of the Special Master. The

statute specifically provides that the

claimant has the right to present witness

statements and documents, the right to

obtain legal counsel, and such other due

process rights as are determined to be

appropriate by the Special Master.

The interim final regulations provide

claimants with a choice of two

Procedural Options—Track A or Track

B. If a claimant selects Track A, the

Claims Evaluator will determine

eligibility and the claimant’s presumed

award and, within 45 days of the date

the claim was deemed filed, notify the

claimant in writing of the eligibility

determination, the amount of the

presumed award, and the right to

request a hearing before the Special

Master or his designee under § 104.33 of

these regulations. After an eligible

claimant has been notified of the

presumed award, the claimant may

either accept the presumed

compensation determination as the final

determination and request payment, or

may instead request a review before the

Special Master or his designee pursuant

to § 104.33. If a claimant opts for a

review, the claimant may make

supplemental submissions. The Special

Master may alter or modify the award if

the presumed award was calculated

erroneously, or if the claimant

demonstrates extraordinary

circumstances indicating that the

presumed award does not adequately

address the claimant’s injury. There will

be no further review or appeal from this

determination.

If the claimant selects Track B, a

Claims Evaluator will determine

eligibility within 45 days of the date the

claim was deemed filed, but shall not

determine the claimant’s presumed

award. The Claims Evaluator will then

notify the claimant in writing of the

eligibility determination. Upon

notification of eligibility, the claimant

will proceed to a hearing pursuant to

§ 104.33. At such hearing, the Special

Master or his designee will utilize the

presumed award methodology, but may

modify or vary the award if the claimant

presents extraordinary circumstances

not adequately addressed by the

presumed award methodology. There

shall be no review or appeal from this

determination.

66280 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

Hearings, when sought, will be held

by the Special Master or his designee.

These hearings shall be conducted in a

nonadversarial manner, the objective of

which will be to permit the claimant to

present information or evidence that the

claimant believes is necessary to a full

understanding of the claim. Claimants

will be permitted, but not required, to

present witnesses, including expert

witnesses. The hearing officer shall be

permitted to examine the credentials of

experts.

The hearings shall be limited in

length to a time period determined by

the Special Master or the relevant

hearing officer, but generally not to

exceed two hours. The hearings shall, to

the extent practicable, be scheduled at

times and in locations convenient to the

claimant or his or her representative.

The claimant shall be entitled to be

represented by an attorney in good

standing, but it is not necessary that the

claimant be represented by an attorney.

G. Assistance to Claimants

In its November 5, 2001 Notice of

Inquiry, the Department noted that

section 405(a) of the Act establishes

some specific requirements with respect

to the claim form and the information to

be included. The law requires the

Special Master to develop a claim form

to use in filing claims for compensation

under this program. The Special Master

is to ensure that the form can be filed

electronically if it is determined to be

practicable. Moreover, by law, the form

must include a statement of the factual

basis for eligibility and information

regarding income in recent years. In

addition, the form is to request

information from the claimant as to: (1)

The physical harm suffered by a victim,

or information confirming the death of

the victim, as a result of the terroristrelated aircraft crashes of September 11,

2001; (2) income tax returns for recent

years and other records; and (3)

documentation regarding collateral

source compensation including life

insurance policies and government or

employment-related programs which

have or may provide funds or benefits

to the claimant.

The Department believes that it is

important that this Fund be accessible

to potential claimants who have limited

resources and who are not trained in the

law. Rather than attempt to address in

detail the means by which the Special

Master should provide assistance to

claimants, these regulations leave the

Special Master with discretion to

implement steps to provide assistance to

claimants and to make this Fund

accessible to them.

Because the Act does not provide for

payment of legal or other fees by the

Fund, these regulations do not impose

any limits on the types or amount of

fees that claimants may pay their

attorneys or others providing assistance.

Although the Department’s regulations

do not set specific limits on attorneys

fees separate from those existing in state

law or attorney ethical standards, the

Department believes that contingency

arrangements exceeding 5% of a

claimant’s recovery from the Fund

would not be in the best interest of the

claimants.

The Department contemplates that the

Special Master will have discretion to

inform potential claimants of the nature

of the Fund so that they may make

informed decisions regarding the types

or amount of fees that they pay for legal

or other assistance. For example, the

Special Master may notify claimants

and potential claimants of the

availability of free legal services.

Likewise, the Special Master may

inform claimants and potential

claimants that the Fund is a no-fault,

administrative scheme that should not

involve the kind of risks and expense

that would justify any significant

contingency fees.

These regulations similarly do not

address the manner in which claimants

may use funds that they receive from

the Fund, except that the Personal

Representatives must agree in an

acknowledgment and release form to

distribute the award to the beneficiaries

of the decedent in accordance with the

decedent’s will or applicable state law

or ruling by a court of competent

jurisdiction. While the Department does

not believe that it is appropriate for the

Special Master to place further legal

restrictions on the claimants’ or

beneficiaries’ use of payments from the

Fund, the Department does contemplate

that the Special Master will have

discretion to provide claimants with

information regarding annuities or other

financial planning devices or to offer

structured awards with periodic

payments.

Application of Various Laws and

Executive Orders to This Rulemaking

Administrative Procedure Act, 5 U.S.C.

553

This rule provides for compensation

to eligible individuals who were

physically injured and to the personal

representatives of those who were killed

as a result of the terrorist-related aircraft

crashes of September 11, 2001. In order

to provide compensation to eligible

claimants as expeditiously as possible,

Congress set a short 90-day deadline for

the issuance of these regulations. The

Department did seek public input on the

issues, but it was not possible for the

Department to prepare and publish a

proposed rule for notice and comment

within that very short time period.

The APA provides that an agency

need not go through proposed

rulemaking and comment before issuing

rules to implement benefits programs. 5

U.S.C. 553(a)(2). Moreover, the

Department, in consultation with the

Special Master, determined that taking

the time to draft and publish a proposed

rule for notice and comment before this

rule took effect would have been

impracticable in light of the short time

between the enactment of the statute

and the deadline for rulemaking, and

also would have been contrary to the

public interest, which strongly favors

prompt disbursement of benefits.

Accordingly, the Department has

determined that there is ‘‘good cause’’

for exempting this rule from the

provision of the Administrative

Procedure Act that requires a notice of

proposed rulemaking and the

opportunity for public comment. 5

U.S.C. 553(b)(B).

For the same reasons, the Department

also finds ‘‘good cause’’ for exempting

this rule from the provision of the

Administrative Procedure Act providing

for a delayed effective date. 5 U.S.C.

553(d). Delaying the opportunity for

eligible claimants to seek Advance

Benefits or to file claims under the Act

would be contrary to the public interest.

Congressional Review Act

The Administrator of the Office of

Information and Regulatory Affairs of

the Office of Management and Budget

has designated this interim final rule as

a ‘‘major rule’’ as that term is defined by

the Congressional Review Act (‘‘CRA’’),

5 U.S.C. 801 et. seq. Pursuant to section

808(2) of the CRA, the Department finds

that ‘‘good cause’’ exists for establishing

an effective date for this rule upon

publication because delay would be

impracticable in light of the short time

between the enactment of the statute

and the deadline for rulemaking, and

also would be contrary to the public

interest favoring prompt disbursement

of benefits.

Paperwork Reduction Act of 1995

The Department of Justice, Civil

Division, has submitted the following

information collection request to the

Office of Management and Budget

(OMB) for review and clearance in

accordance with the emergency review

procedures of the Paperwork Reduction

Act of 1995. OMB approval has been

granted, and this information collection

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66281

has been assigned OMB control number

1105–0073. The proposed information

collection is published to obtain

comments from the public and affected

agencies. The emergency approval is

only valid for 180 days. Comments

should be directed to OMB, Office of

Information and Regulatory Affairs,

Attention: Department of Justice Desk

Officer, Washington, DC 20530.

During the first 60 days of this same

review period, a regular review of this

information collection will be

undertaken. All comments and

suggestions, or questions regarding

additional information, including

obtaining a copy of the proposed

information collection instrument with

instructions, should be directed to

Office of the Special Master, U.S.

Department of Justice, 950 Pennsylvania

Avenue, NW., Washington, DC 20530.

We request written comments and

suggestions from the public and affected

agencies concerning the proposed

emergency collection of information.

Your comments should address one or

more of the following four points:

(1) Evaluate whether the proposed

collection of information is necessary

for the proper performance of the

functions of the agency, including

whether the information will have

practical utility;

(2) Evaluate the accuracy of the

agency’s estimate of the burden of the

proposed collection of information,

including the validity of the

methodology and assumptions used;

(3) Enhance the quality, utility, and

clarity of the information to be

collected; and

(4) Minimize the burden of the

collection of information on those who

are to respond, including through the

use of appropriate automated,

electronic, mechanical, or other

technological collection techniques or

other forms of information technology,

e.g., permitting electronic submission of

responses.

Overview of This Information Collection

(1) Type of Information Collection:

New Collection.

(2) Title of the Form/Collection:

Registration/Eligibility Form and

Application for Emergency Benefits

from the Victim Compensation Fund.

(3) Agency form number, if any, and

the applicable component of the

Department of Justice sponsoring the

collection: Form Number: SM–001,

Office of the Special Master, Department

of Justice.

(4) Affected public who will be asked

or required to respond, as well as a brief

abstract: Primary: Individuals who were

physically injured and personal

representatives of those killed as a result

of the terrorist-related aircraft crashes of

September 11, 2001. Abstract: The

information collected from the

Registration/Eligibility Form and

Application for Emergency Benefits

from the Victim Compensation Fund

will be used to make advance payments

to those claimants deemed eligible by

the Special Master or his designee.

(5) An estimate of the total number of

respondents and the amount of time

estimated for an average respondent to

respond: 5,000 claimants with an

average of 6.0 hours per response.

(6) An estimate of the total public

burden (in hours) associated with the

collection: 30,000 hours annually.

If additional information is required,

contact: Robert B. Briggs, Department

Clearance Officer, Information

Management and Security Staff, Justice

Management Division, United States

Department of Justice, 601 D Street NW,

Suite 1600, Washington, D.C. 20004.

Privacy Act of 1974

The Department of Justice, Civil

Division is establishing a new Privacy

Act system of records entitled

‘‘September 11th Victim Compensation

Fund of 2001, JUSTICE/CIV–008.’’ By

law, regulations addressing certain

administrative matters for the

September 11th Victim Compensation

Fund of 2001 must be issued within the

90-day period established by Congress.

The Privacy Act notice will be

published with no routine uses, so that

it will be effective on the date

published. It is likely that amendments

to this notice, including routine uses,

will be published at a later date, with

the opportunity to comment. In the

interim, disclosures necessary to

process claims will be made only with

the written consent of claimants or as

otherwise authorized under 5 U.S.C.

552a(b).

Regulatory Flexibility Act

These regulations set forth procedures

by which the Federal government will

award compensation benefits to eligible

victims of the September 11, 2001

terrorist attacks. Under 5 U.S.C. 601(6),

the term ‘‘small entity’’ does not include

the Federal government, the party

charged with incurring the costs

attendant to the implementation and

administration of the Victims

Compensation Fund. To the extent that

small entities, including small

government entities, will be

economically affected by the

promulgation of these regulations, such

effects will likely be minimal. Further,

the number of entities that will be

affected will, in all probability, fall short

of a ‘‘substantial number’’ of small

entities. In fact, the Department believes

that the promulgation of these rules will

play a considerable role in reducing the

amount of complex, private litigation,

wherein a substantial number of small

(and large) entities would undoubtedly

be significantly impacted.

Accordingly, the Department has

reviewed this rule in accordance with

the Regulatory Flexibility Act (5 U.S.C.

605(b)) and by approving it certifies that

this rule will not have a significant

economic impact on a substantial

number of small entities because it

provides compensation to eligible

individuals who were physically

injured as a result of the terrorist-related

aircraft crashes of September 11, 2001,

and compensation through a ‘‘personal

representative’’ for those who were

killed as a result of those crashes. This

rule provides compensation to

individuals, not to entities.

Unfunded Mandates Reform Act of 1995

This rule will not result in the

expenditure by State, local and tribal

governments, in the aggregate, or by the

private sector, of $100,000,000 or more

in any one year, and it will not

significantly or uniquely affect small

governments. Therefore, no actions were

deemed necessary under the provisions

of the Unfunded Mandates Reform Act

of 1995.

Executive Order 12866—Regulatory

Planning and Review

This regulation has been drafted and

reviewed in accordance with Executive

Order 12866, ‘‘Regulatory Planning and

Review,’’ section 1(b), Principles of

Regulation. The Department of Justice

has determined that this rule is a

‘‘significant regulatory action’’ under

Executive Order 12866, section 3(f),

Regulatory Planning and Review, and

accordingly this rule has been reviewed

by the Office of Management and

Budget.

Executive Order 13132—Federalism

This regulation will not have

substantial direct effects on the States,

on the relationship between the national

government and the States, or on

distribution of power and

responsibilities among the various

levels of government. Therefore, in

accordance with Executive Order 13132,

it is determined that this rule does not

have sufficient federalism implications

to warrant the preparation of a

Federalism Assessment. However, the

Department of Justice has worked

cooperatively with state and local

officials in the affected communities in

the preparation of this rule. Also, the

66282 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

Department individually notified

national associations representing

elected officials of the initial request for

comment and will be taking similar

action in connection with the interim

final rule.

List of Subjects in 28 CFR Part 104

Disaster assistance, Disability

benefits, Terrorism.

Accordingly, for the reasons set forth

in the preamble, Part 104 of chapter I of

Title 28 of the Code of Federal

Regulations is added to read as follows:

PART 104—SEPTEMBER 11TH VICTIM

COMPENSATION FUND OF 2001

Subpart A—General; Eligibility

104.1 Purpose.

104.2 Eligibility definitions and

requirements.

104.3 Other definitions.

104.4 Personal Representative.

104.5 Foreign claims.

104.6 Amendments to this rule.

Subpart B—Filing for Compensation;

Application for Advance Benefits

104.21 Filing for compensation.

104.22 Advance benefits.

Subpart C—Claim Intake, Assistance, and

Review Procedures

104.31 Procedure for claims evaluation.

104.32 Eligibility review.

104.33 Hearing.

104.34 Publication of awards.

104.35 Claims deemed abandoned by

claimants.

Subpart D—Amount of Compensation for

Eligible Claimants

104.41 Amount of compensation.

104.42 Applicable state law.

104.43 Determination of presumed

economic loss for decedents.

104.44 Determination of presumed

noneconomic losses for decedents.

104.45 Determination of presumed

economic loss for claimants who

suffered physical harm.

104.46 Determination of presumed

noneconomic losses for claimants who

suffered physical harm.

104.47 Collateral sources.

Subpart E—Payment of Claims

104.51 Payments to eligible individuals.

104.52 Distribution of award to decedent’s

beneficiaries.

Subpart F—Limitations

104.61 Limitation on civil actions.

104.62 Time limit on filing claims.

104.63 Subrogation.

Subpart G—Measures to Protect the

Integrity of the Compensation Program

104.71 Procedures to prevent and detect

fraud.

Authority: Title IV of Pub. L. 107–42, 115

Stat. 230, 49 U.S.C. 40101 note.

Subpart A—General; Eligibility

§ 104.1 Purpose.

This part implements the provisions

of the September 11th Victim

Compensation Fund of 2001, Title IV of

Public Law 107–42, 115 Stat. 230 (Air

Transportation Safety and System

Stabilization Act) to provide

compensation to eligible individuals

who were physically injured as a result

of the terrorist-related aircraft crashes of

September 11, 2001, and to the

‘‘personal representatives’’ of those who

were killed as a result of the crashes. All

compensation provided through the

Fund will be on account of personal

physical injuries or death.

§ 104.2 Eligibility definitions and

requirements.

(a) Eligible claimants. The term

eligible claimants means:

(1) Individuals present at the World

Trade Center, Pentagon, or Shanksville,

Pennsylvania site at the time of or in the

immediate aftermath of the crashes and

who suffered physical harm, as defined

herein, as a direct result of the terroristrelated aircraft crashes;

(2) The Personal Representatives of

deceased individuals aboard American

Airlines flights 11 or 77 and United

Airlines flights 93 or 175; and

(3) The Personal Representatives of

individuals who were present at the

World Trade Center, Pentagon, or

Shanksville, Pennsylvania site at the

time of or in the immediate aftermath of

the crashes and who died as a direct

result of the terrorist-related aircraft

crash.

(4) The term eligible claimants does

not include any individual or

representative of an individual who is

identified to have been a participant or

conspirator in the terrorist-related

crashes of September 11.

(b) Immediate aftermath. The term

immediate aftermath of the crashes

shall mean, for purposes of all claimants

other than rescue workers, the period of

time from the crashes until 12 hours

after the crashes. With respect to rescue

workers who assisted in efforts to search

for and recover victims, the immediate

aftermath shall include the period from

the crashes until 96 hours after the

crashes.

(c) Physical harm.

(1) The term physical harm shall

mean a physical injury to the body that

was treated by a medical professional

within 24 hours of the injury having

been sustained or within 24 hours of

rescue; and

(i) Required hospitalization as an inpatient for at least 24 hours; or

(ii) Caused, either temporarily or

permanently, partial or total physical

disability, incapacity or disfigurement.

(2) In every case not involving death,

the physical injury must be verified by

contemporaneous medical records

created by or at the direction of the

medical professional who provided the

medical care.

(d) Personal Representative. The term

Personal Representative shall mean the

person determined to be the Personal

Representative under § 104.4 of this

part.

(e) Present at the site. The term

present at the site (i.e., the World Trade

Center, Pentagon, or Shanksville,

Pennsylvania site) shall mean

physically present at the time of the

crashes or in the immediate aftermath:

(1) In the buildings or portions of

buildings that were destroyed as a result

of the airplane crashes; or

(2) In any area contiguous to the crash

sites that the Special Master determines

was sufficiently close to the site that

there was a demonstrable risk of

physical harm resulting from the impact

of the aircraft or any subsequent fire,

explosions, or building collapses

(generally, the immediate area in which

the impact occurred, fire occurred,

portions of buildings fell, or debris fell

upon and injured persons).

§ 104.3 Other definitions.

(a) Beneficiary. The term beneficiary

shall mean a person entitled under the

laws of the decedent’s domicile to

receive payments or benefits from the

estate of or on behalf of the decedent on

whose behalf the claim to the Fund was

filed.

(b) Dependents. The Special Master

shall identify as dependents those

persons so identified by the victim on

his or her federal tax return for the year

2000 unless:

(1) The claimant demonstrates that a

minor child of the victim was born or

adopted on or after January 1, 2001;

(2) Another person became a

dependent in accordance with thenapplicable law on or after January 1,

2001; or

(3) The victim was not required by

law to file a federal income tax return

for the year 2000.

(c) Spouse. The Special Master shall

identify as the spouse of a victim the

person reported as spouse on the

victim’s federal tax return for the year

2000 unless:

(1) The victim was married or

divorced in accordance with applicable

state law on or after January 1, 2001; or

(2) The victim was not required by

law to file a federal income tax return

for the year 2000.

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66283

(d) The Act. The Act, as used in this

part, shall mean Public Law 107–42, 115

Stat. 230 (‘‘Air Transportation Safety

and System Stabilization Act’’), 49

U.S.C. 40101 note.

(e) Victim. The term victim shall mean

an eligible injured claimant or a

decedent on whose behalf a claim is

brought by an eligible Personal

Representative.

§ 104.4 Personal Representative.

(a) In general. The Personal

Representative shall be:

(1) An individual appointed by a

court of competent jurisdiction as the

Personal Representative of the decedent

or as the executor or administrator of

the decedent’s will or estate.

(2) In the event that no Personal

Representative or executor or

administrator has been appointed by

any court of competent jurisdiction, and

such issue is not the subject of pending

litigation or other dispute, the Special

Master may, in his discretion, determine

that the Personal Representative for

purposes of compensation by the Fund

is the person named by the decedent in

the decedent’s will as the executor or

administrator of the decedent’s estate. In

the event no will exists, the Special

Master may, in his discretion, determine

that the Personal Representative for

purposes of compensation by the Fund

is the first person in the line of

succession established by the laws of

the decedent’s domicile governing

intestacy.

(b) Notice to beneficiaries. Any

purported Personal Representative

must, before filing an Eligibility Form,

provide written notice of the claim

(including a designated portion of the

Eligibility Form) to the immediate

family of the decedent (including, but

not limited to, the decedent’s spouse,

former spouses, children, other

dependents, and parents), to the

executor, administrator, and

beneficiaries of the decedent’s will, and

to any other persons who may

reasonably be expected to assert an

interest in an award or to have a cause

of action to recover damages relating to

the wrongful death of the decedent.

Personal delivery or transmission by

certified mail, return receipt requested,

shall be deemed sufficient notice under

this provision. The claim forms shall

require that the purported Personal

Representative certify that such notice

(or other notice that the Special Master

deems appropriate) has been given. In

addition, as provided in § 104.21(b)(5)

of this part, the Special Master may

publish a list of individuals who have

filed Eligibility Forms and the names of

the victims for whom compensation is

sought, but shall not publish the content

of any such form.

(c) Objections to Personal

Representatives. Objections to the

authority of an individual to file as the

Personal Representative of a decedent

may be filed with the Special Master by

parties who assert a financial interest in

the award up to 30 days following the

filing by the Personal Representative. If

timely filed, such objections shall be

treated as evidence of a ‘‘dispute’’

pursuant to paragraph (d) of this

section.

(d) Disputes as to identity. The

Special Master shall not be required to

arbitrate, litigate, or otherwise resolve

any dispute as to the identity of the

Personal Representative. In the event of

a dispute over the appropriate Personal

Representative, the Special Master may

suspend adjudication of the claim or, if

sufficient information is provided,

calculate the appropriate award and

authorize payment, but place in escrow

any payment until the dispute is

resolved either by agreement of the

disputing parties or by a court of

competent jurisdiction. Alternatively,

the disputing parties may agree in

writing to the identity of a Personal

Representative to act on their behalf,

who may seek and accept payment from

the Fund while the disputing parties

work to settle their dispute.

§ 104.5 Foreign claims.

In the case of claims brought by or on

behalf of foreign citizens, the Special

Master may alter the requirements for

documentation set forth herein to the

extent such materials are unavailable to

such foreign claimants.

§ 104.6 Amendments to this rule.

In the event that amendments are

subsequently made to any section of this

Part, claimants are entitled to have their

claims processed in accordance with the

provisions that were in effect at the time

that their claims were submitted under

§ 104.21(d).

Subpart B—Filing for Compensation;

Application for Advance Benefits

§ 104.21 Filing for compensation.

(a) Compensation form; ‘‘filing.’’

Except for applications for Advance

Benefits pursuant to § 104.22, no claim

may be considered until the claimant

has submitted both an ‘‘Eligibility

Form’’ and either a ‘‘Personal Injury

Compensation Form’’ or a ‘‘Death

Compensation Form.’’ A claim shall be

deemed ‘‘filed’’ for purposes of section

405(b)(3) of the Act (providing that the

Special Master shall issue a

determination not later than 120 days

after the date on which a claim is filed),

and for any time periods in this part,

when a Claims Evaluator determines

that both the Eligibility Form and either

a Personal Injury Compensation Form or

a Death Compensation Form are

substantially complete. Provided,

however, that if a claimant files an

Eligibility Form requesting Advance

Benefits pursuant to § 104.22 of this part

without filing either a ‘‘Personal Injury

Compensation Form’’ or a ‘‘Death

Compensation Form,’’ the claim shall be

deemed ‘‘filed’’ when the Claims

Evaluator determines that the Eligibility

Form is substantially complete, but the

time period for determination and any

time periods in this part shall be stayed

or tolled as described in § 104.22(g) of

this part.

(b) Eligibility Form. The Special

Master shall develop an Eligibility Form

that will require the claimant to provide

information necessary for determining

the claimant’s eligibility to recover from

the Fund.

(1) The Eligibility Form may require

that the claimant certify that he or she

has dismissed any pending lawsuit

seeking damages as a result of the

terrorist-related airplane crashes of

September 11, 2001 (except for actions

seeking collateral source benefits)

within 90 days of the effective date of

this part pursuant to section

405(c)(3)(B)(ii) of the Act and that there

is no pending lawsuit brought by a

dependent, spouse, or beneficiary of the

victim.

(2) The Special Master may require as

part of the notice requirement pursuant

to § 104.4(b) that the claimant provide

copies of a designated portion of the

Eligibility Form to the immediate family

of the decedent (including, but not

limited to, the spouse, former spouses,

children, other dependents, and

parents), to the executor, administrator,

and beneficiaries of the decedent’s will,

and to any other persons who may

reasonably be expected to assert an

interest in an award or to have a cause

of action to recover damages relating to

the wrongful death of the decedent.

(3) The Eligibility Form may require

claimants to provide the following

proof:

(i) Proof of death: Death certificate or

similar official documentation;

(ii) Proof of presence at site:

Documentation sufficient to establish

presence at one of the crash sites, which

may include, without limitation, a death

certificate, records of employment,

contemporaneous medical records,

contemporaneous records of federal,

state, city or local government, an

affidavit or declaration of the decedent’s

or injured claimant’s employer, or other

66284 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

sworn statement (or unsworn statement

complying with 28 U.S.C. 1746)

regarding the presence of the victim;

(iii) Proof of death on board aircraft:

Death certificate or records of American

or United Airlines or other sufficient

official documentation;

(iv) Proof of physical harm:

Contemporaneous medical records of

hospitals, clinics, physicians, licensed

medical personnel, or registries

maintained by federal, state, or local

government, and records of all

continuing medical treatment;

(v) Personal Representative: Copies of

relevant legal documentation, including

court orders; letters testamentary or

similar documentation; proof of the

purported Personal Representative’s

relationship to the decedent; copies of

wills, trusts, or other testamentary

documents; and information regarding

other possible beneficiaries as requested

by the Eligibility Form;

(vi) Any other information that the

Special Master deems necessary to

determine the claimant’s eligibility.

(4) The Special Master may also

require waivers, consents, or

authorizations from claimants to obtain

directly from third parties tax returns,

medical information, employment

information, or other information that

the Special Master deems relevant in

determining the claimant’s eligibility or

award, and may request an opportunity

to review originals of documents

submitted in connection with the Fund.

(5) Application for Advance Benefits:

The Eligibility Form shall include a

section allowing claimants to indicate

that they wish to apply for Advance

Benefits. Claimants who apply for such

Advance Benefits must certify on that

Form that they have not yet received

$450,000 in collateral source

compensation if they are bringing a

claim on behalf of a deceased victim

with a spouse or dependent, $250,000 in

collateral source compensation if they

are bringing a claim on behalf of a

deceased victim who was single with no

dependents, or an amount in excess of

their lost wages plus out-of-pocket

medical expenses if they are an injured

claimant. All such claimants also must

state on the Form facts establishing

financial hardship that would justify a

determination that they are in need of

Advance Benefits.

(6) The Special Master may publish a

list of individuals who have filed

Eligibility Forms and the names of the

victims for whom compensation is

sought, but shall not publish the content

of any such form.

(c) Personal Injury Compensation

Form and Death Compensation Form.

The Special Master shall develop a

Personal Injury Compensation Form that

each injured claimant must submit. The

Special Master shall also develop a

Death Compensation Form that each

Personal Representative must submit.

These forms shall require the claimant

to provide certain information that the

Special Master deems necessary to

determining the amount of any award,

including information concerning

income, collateral sources, benefits, and

other financial information, and shall

require the claimant to state the factual

basis for the amount of compensation

sought. It shall also allow the claimant

to submit certain other information that

may be relevant, but not necessary, to

the determination of the amount of any

award.

(1) Claimants shall, at a minimum,

submit all tax returns that were filed for

the years 1998, 1999, and 2000. The

Special Master may, at his discretion,

require that claimants submit copies of

tax returns or other records for any other

period of years he deems appropriate for

determination of an award. The Special

Master may also require waivers,

consents, or authorizations from

claimants to obtain directly from third

parties medical information,

employment information, or other

information that the Special Master

deems relevant to determining the

amount of any award.

(2) Claimants may attach to the

‘‘Personal Injury Compensation Form’’

or ‘‘Death Compensation Form’’ any

additional statements, documents or

analyses by physicians, experts,

advisors, or any other person or entity

that the claimant believes may be

relevant to a determination of

compensation.

(d) Submission of a claim. Section

405(c)(3)(B) of the Act provides that

upon the submission of a claim under

the Fund, the claimant waives the right

to file a civil action (or to be a party to

an action) in any Federal or State court

for damages sustained as a result of the

terrorist-related aircraft crashes of

September 11, 2001, except for civil

actions to recover collateral source

obligations. A claim shall be deemed

submitted for purposes of section

405(c)(3)(B) of the Act when the claim

is deemed filed pursuant to § 104.21,

regardless of whether any time limits

are stayed or tolled.

(e) Provisions of information by third

parties. Any third party having an

interest in a claim brought by a Personal

Representative may provide written

statements or information regarding the

Personal Representative’s claim. The

Claims Evaluator or the Special Master

or his designee may, at his or her

discretion, include the written

statements or information as part of the

claim.

§ 104.22 Advance Benefits.

(a) Advance Benefits. Eligible

Claimants may apply for immediate

‘‘Advance Benefits’’ in a fixed amount

as follows:

(1) $50,000 for Personal

Representatives; and

(2) $25,000 for injured claimants who

meet the requirements of paragraph (d)

of this section.

(b) Credit against award. The

Advance Benefit shall be credited

against any final compensation award so

that the amount of the Advance Benefit

is deducted from the final award under

this program.

(c) Application for Advance Benefits.

An otherwise eligible claimant may seek

Advance Benefits to alleviate financial

hardship faced by the claimant (or

financial hardship faced by the

beneficiaries of the decedent) by

submitting an Eligibility Form described

in § 104.21(b) and indicating thereon

that he or she is applying for Advance

Benefits.

(d) Eligibility for Advance Benefits. In

the case of a Personal Representative,

the claimant may be deemed eligible for

Advance Benefits if a Claims Evaluator

or the Special Master or his designee

determines that the claimant is eligible

to recover under the Fund. In the case

of an injured claimant, the claimant may

be deemed eligible for Advance Benefits

when the Special Master or his designee

determines that the claimant is eligible

to recover under the Fund and that the

claimant’s physical injury required

hospitalization for one week or more.

(e) Authorization of payments.

(1) Payment in the amount described

in paragraph (a) of this section will be

authorized immediately upon a

determination that the claimant is

eligible for Advance Benefits and the

claimant is:

(i) An injured claimant;

(ii) A Personal Representative who

was the spouse of the deceased victim

on September 11, 2001; or

(iii) A Personal Representative who

has obtained the consent of the spouse

of the deceased victim (or, if there is no

surviving spouse, all of the dependents

of the deceased victim) to file for

Advance Benefits.

(2)(i) With respect to other Personal

Representatives, payment will be

authorized within 15 days after the

determination that the claimant is

eligible for Advance Benefits, provided

that no other individual has asserted a

colorable conflicting claim as the

Personal Representative with respect to

the decedent and the Personal

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66285

Representative identifies and has given

notice to the beneficiaries to whom such

Advance Benefits will be distributed.

(ii) In the event that a colorable

conflicting claim has been asserted, no

Advance Benefit will be paid until a

final eligibility determination has been

made.

(f) Tolling of 120-day clock and other

time periods. A claimant filing an

Eligibility Form requesting Advance

Benefits before filing a Personal Injury

Compensation Form or Death

Compensation Form will be deemed to

have waived his right to commencement

of the 120-day period in section

405(b)(3) of the Act (providing that the

Special Master shall provide notice to

the claimant of his determination within

120 days after the date on which a claim

is filed). The 120-day period and all

other time limitations in this part,

except those applicable to Advance

Benefit payments, shall be stayed or

tolled until such time that a Claims

Evaluator determines that the claimant’s

Personal Injury Compensation Form or

Death Compensation Form is

substantially complete.

Subpart C—Claim Intake, Assistance,

and Review Procedures

§ 104.31 Procedure for claims evaluation.

(a) Initial review. Claims Evaluators

shall review the forms filed by the

claimant and either deem the claim

‘‘filed’’ (pursuant to 104.21(a)) or notify

the claimant of any deficiency in the

forms or any required documents.

(b) Procedural tracks. Each claim will

be placed on a procedural track,

described herein as ‘‘Track A’’ and

‘‘Track B,’’ selected by the claimant on

the Personal Injury Compensation Form

or Death Compensation Form.

(1) Procedure for Track A. The Claims

Evaluator shall determine eligibility and

the claimant’s presumed award

pursuant to §§ 104.43 to 104.46 of this

part and, within 45 days of the date the

claim was deemed filed, notify the

claimant in writing of the eligibility

determination, the amount of the

presumed award, and the right to

request a hearing before the Special

Master or his designee under § 104.33 of

this part. After an eligible claimant has

been notified of the presumed award,

the claimant may either accept the

presumed compensation determination

as the final determination and request

payment, or may instead request a

review before the Special Master or his

designee pursuant to § 104.33.

Claimants found to be ineligible may

appeal pursuant to § 104.32.

(2) Procedure for Track B. The Claims

Evaluator shall determine eligibility

within 45 days of the date the claim was

deemed filed, but shall not determine

the claimant’s presumed award; the

Claims Evaluator shall notify the

claimant in writing of the eligibility

determination. Upon notification of

eligibility, the claimant will proceed to

a hearing pursuant to § 104.33. At such

hearing, the Special Master or his

designee shall utilize the presumptive

award methodology as set forth in

§§ 104.43 to 104.46 of this part, but may

modify or vary the award if the claimant

presents extraordinary circumstances

not adequately addressed by the

presumptive award methodology. There

shall be no review or appeal from this

determination.

(c) Multiple claims from the same

family. The Special Master may treat

claims brought by or on behalf of two

or more members of the same immediate

family as related or consolidated claims

for purposes of determining the amount

of any award.

§ 104.32 Eligibility review.

Any claimant deemed ineligible by

the Claims Evaluator may appeal that

decision to the Special Master or his

designee by filing an eligibility appeal

on forms created by the office of the

Special Master.

§ 104.33 Hearing.

(a) Supplemental submissions. The

claimant may prepare and file

Supplemental Submissions within 21

calendar days from notification of either

the presumed award (Track A) or

eligibility (Track B). The Special Master

shall develop forms appropriate for

Supplemental Submissions.

(b) Conduct of hearings. Hearings

shall be before the Special Master or his

designee. The objective of hearings shall

be to permit the claimant to present

information or evidence that the

claimant believes is necessary to a full

understanding of the claim. The

claimant may request that the Special

Master or his designee review any

evidence relevant to the determination

of the award, including without

limitation: Factors and variables used in

calculating economic loss; the identity

of the victim’s spouse and dependents;

the financial needs of the claimant; facts

affecting noneconomic loss; and any

factual or legal arguments that the

claimant contends should affect the

award. Claimants shall be entitled to

submit any statements or reports in

writing. The Special Master or his

designee may require authentication of

documents, including medical records

and reports, and may request and

consider information regarding the

financial resources and expenses of the

victim’s family or other material that the

Special Master or his designee deems

relevant.

(c) Location and duration of hearings.

The hearings shall, to the extent

practicable, be scheduled at times and

in locations convenient to the claimant

or his or her representative. The

hearings shall be limited in length to a

time period determined by the Special

Master or his designee, but generally not

to exceed two hours. The claimant may

elect whether the hearing shall be

public or private.

(d) Witnesses, counsel, and experts.

Claimants shall be permitted, but not

required, to present witnesses,

including expert witnesses. The Special

Master or his designee shall be

permitted to question witnesses and

examine the credentials of experts. The

claimant shall be entitled to be

represented by an attorney in good

standing, but it is not necessary that the

claimant be represented by an attorney.

(e) Waivers. The Special Master shall

have authority and discretion to require

any waivers necessary to obtain more

individualized information on specific

claimants.

(f) Track A review of presumed award.

For proceedings under Track A, the

Special Master or his designee shall

make a determination whether:

(1) There was an error in determining

the presumptive award, either because

the claimant’s individual criteria were

misapplied or for another reason; or

(2) The claimant presents

extraordinary circumstances not

adequately addressed by the

presumptive award.

(g) Determination. The Special Master

shall notify the claimant in writing of

the final amount of the award, but need

not create or provide any written record

of the deliberations that resulted in that

determination. There shall be no further

review or appeal of the Special Master’s

determination.

§ 104.34 Publication of awards.

In order to assist potential claimants

in evaluating their options of either

filing a claim with the Special Master or

filing a lawsuit in tort, the Special

Master reserves the right to publicize

the amounts of some or all of the

awards, but shall not publish the name

of the claimants or victims that received

each award. If published, these

decisions would be intended by the

Special Master as general guides for

potential claimants and should not be

viewed as precedent binding on the

Special Master or his staff.

66286 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

§ 104.35 Claims deemed abandoned by

claimants.

The Special Master and his staff will

endeavor to evaluate promptly any

information submitted by claimants.

Nonetheless, it is the responsibility of

the claimant to keep the Special Master

informed of his or her current address

and to respond within the duration of

this two-year program to requests for

additional information. Claims

outstanding at the end of this program

because of a claimant’s failure to

complete his or her filings shall be

deemed abandoned.

Subpart D—Amount of Compensation

for Eligible Claimants.

§ 104.41 Amount of compensation.

As provided in section 405(b)(1)(B)(ii)

of the Act, in determining the amount

of compensation to which a claimant is

entitled, the Special Master shall take

into consideration the harm to the

claimant, the facts of the claim, and the

individual circumstances of the

claimant. The individual circumstances

of the claimant may include the

financial needs or financial resources of

the claimant or the victim’s dependents

and beneficiaries. As provided in

section 405(b)(6) of the Act, the Special

Master shall reduce the amount of

compensation by the amount of

collateral source compensation the

claimant (or, in the case of a Personal

Representative, the victim’s

beneficiaries) has received or is entitled

to receive as a result of the terroristrelated aircraft crashes of September 11,

2001. In no event shall an award (before

collateral source compensation has been

deducted) be less than $500,000 in any

case brought on behalf of a deceased

victim with a spouse or dependent, or

$300,000 in any case brought on behalf

of a deceased victim who was single

with no dependents.

§ 104.42 Applicable state law.

The phrase ‘‘to the extent recovery for

such loss is allowed under applicable

state law,’’ as used in the statute’s

definition of economic loss in section

402(5) of the Act, is interpreted to mean

that the Special Master is not permitted

to compensate claimants for those

categories or types of economic losses

that would not be compensable under

the law of the state that would be

applicable to any tort claims brought by

or on behalf of the victim.

§ 104.43 Determination of presumed

economic loss for decedents.

In reaching presumed determinations

for economic loss for Personal

Representatives bringing claims on

behalf of decedents, the Special Master

shall consider sums corresponding to

the following:

(a) Loss of earnings or other benefits

related to employment. The Special

Master, as part of the process of

reaching a ‘‘determination’’ pursuant to

section 405(b) of the Act, shall develop

a methodology and publish schedules,

tables, or charts that will permit

prospective claimants to estimate

determinations of loss of earnings or

other benefits related to employment

based upon individual circumstances of

the deceased victim, including: The age

of the decedent as of September 11,

2001; the number of dependents who

survive the decedent; whether the

decedent is survived by a spouse; and

the amount and nature of the decedent’s

income for recent years. The decedent’s

salary/income in 1998–2000 shall be

evaluated in a manner that the Special

Master deems appropriate. The Special

Master may, if he deems appropriate,

take an average of income figures for

each of those three years. The Special

Master’s methodology and schedules,

tables, or charts shall yield presumed

determinations of loss of earnings or

other benefits related to employment for

annual incomes up to but not beyond

the 98th percentile of individual income

in the United States for the year 2000.

In cases where the victim was a minor

child, the Special Master may assume

an average income for the child

commensurate with the average income

of all wage earners in the United States.

(b) Medical expense loss. This loss

equals the out-of-pocket medical

expenses that were incurred as a result

of the physical harm suffered by the

victim (i.e., those medical expenses that

were not paid for or reimbursed through

health insurance). This loss shall be

calculated on a case-by-case basis, using

documentation and other information

submitted by the Personal

Representative.

(c) Replacement services loss. For

decedents who did not have any prior

earned income, or who worked only

part time outside the home, economic

loss may be determined with reference

to replacement services and similar

measures.

(d) Loss due to death/burial costs.

This loss shall be calculated on a caseby-case basis, using documentation and

other information submitted by the

personal representative and includes the

out-of-pocket burial costs that were

incurred.

(e) Loss of business or employment

opportunities. Such losses shall be

addressed through the procedure

outlined above in paragraph (a) of this

section.

§ 104.44 Determination of presumed

noneconomic losses for decedents.

The presumed noneconomic losses for

decedents shall be $250,000 plus an

additional $50,000 for the spouse and

each dependent of the deceased victim.

Such presumed losses include a

noneconomic component of

replacement services loss.

§ 104.45 Determination of presumed

economic loss for claimants who suffered

physical harm.

In reaching presumed determinations

for economic loss for claimants who

suffered physical harm (but did not die),

the Special Master shall consider sums

corresponding to the following:

(a) Loss of earnings or other benefits

related to employment. The Special

Master may determine the loss of

earnings or other benefits related to

employment on a case-by-case basis,

using documentation and other

information submitted by the claimant,

regarding the actual amount of work

that the claimant has missed or will

miss without compensation.

Alternatively, the Special Master may

determine the loss of earnings or other

benefits related to employment by

relying upon the methodology created

pursuant to § 104.43(a) and adjusting

the loss based upon the extent of the

victim’s physical harm.

(1) Disability; in general. In evaluating

claims of disability, the Special Master

will, in general, make a determination

regarding whether the claimant is

capable of performing his or her usual

profession in light of the injuries.

(2) Total permanent disability. With

respect to claims of total permanent

disability, the Special Master may

accept a determination of disability

made by the Social Security

Administration as evidence of disability

without any further medical evidence or

review. The Special Master may also

consider determinations of permanent

total disability made by other

governmental agencies or private

insurers in evaluating the claim. The

Special Master may require that the

claimant submit an evaluation of the

claimant’s disability and ability to

perform his or her occupation prepared

by medical experts.

(3) Partial disability. With respect to

claims of partial disability, the Special

Master may consider evidence of the

effect of the partial disability on the

claimant’s ability to perform his or her

usual occupation as well as the effect of

the partial disability on the claimant’s

ability to participate in usual daily

activities.

(b) Medical Expense Loss. This loss

equals the out-of-pocket medical

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66287

expenses that were incurred as a result

of the physical harm suffered by the

victim (i.e., those medical expenses that

were not paid for or reimbursed through

health insurance). In addition, this loss

equals future out-of-pocket medical

expenses that will be incurred as a

result of the physical harm suffered by

the victim (i.e., those medical expenses

that will not be paid for or reimbursed

through health insurance). These losses

shall be calculated on a case-by-case

basis, using documentation and other

information submitted by the claimant.

(c) Replacement services loss. For

injured claimants who did not have any

prior earned income, or who worked

only part-time outside the home,

economic loss may be determined with

reference to replacement services and

similar measures.

(d) Loss of business or employment

opportunities. Such losses shall be

addressed through the procedure

outlined above in paragraph (a) of this

section.

§ 104.46 Determination of presumed

noneconomic losses for claimants who

suffered physical harm.

The Special Master may determine

the presumed noneconomic losses for

claimants who suffered physical harm

(but did not die) by relying upon the

noneconomic losses described in

§ 104.44 and adjusting the losses based

upon the extent of the victim’s physical

harm. Such presumed losses include

any noneconomic component of

replacement services loss.

§ 104.47 Collateral sources.

(a) Payments that constitute collateral

source compensation. The amount of

compensation shall be reduced by all

collateral source compensation,

including life insurance, pension funds,

death benefit programs, and payments

by federal, state, or local governments

related to the terrorist-related aircraft

crashes of September 11, 2001.

(b) Payments that do not constitute

collateral source compensation. The

following payments received by

claimants do not constitute collateral

source compensation:

(1) The value of services or in-kind

charitable gifts such as provision of

emergency housing, food, or clothing;

and

(2) Charitable donations distributed to

the beneficiaries of the decedent, to the

injured claimant, or to the beneficiaries

of the injured claimant by private

charitable entities; provided, however,

that the Special Master may determine

that funds provided to victims or their

families through a private charitable

entity constitute, in substance, a

payment described in paragraph (a) of

this section.

Subpart E—Payment of Claims

§ 104.51 Payments to eligible individuals.

Not later than 20 days after the date

on which a determination is made by

the Special Master regarding the amount

of compensation due a claimant under

the Fund, the Special Master shall

authorize payment to such claimant of

the amount determined with respect to

the claimant.

§ 104.52 Distribution of award to

decedent’s beneficiaries.

The Personal Representative shall

distribute the award in a manner

consistent with the law of the

decedent’s domicile or any applicable

rulings made by a court of competent

jurisdiction. The Personal

Representative shall, before payment is

authorized, provide to the Special

Master a plan for distribution of any

award received from the Fund.

Notwithstanding any other provision of

these regulations or any other provision

of state law, in the event that the Special

Master concludes that the Personal

Representative’s plan for distribution

does not appropriately compensate the

victim’s spouse, children, or other

relatives, the Special Master may direct

the Personal Representative to distribute

all or part of the award be distributed to

such spouse, children, or other relatives.

Subpart F—Limitations

§ 104.61 Limitation on civil actions.

(a) General. Section 405(c)(3)(B) of the

Act provides that upon the submission

of a claim under the Fund, the claimant

waives the right to file a civil action (or

to be a party to an action) in any federal

or state court for damages sustained as

a result of the terrorist-related aircraft

crashes of September 11, 2001, except

that this limitation does not apply to

civil actions to recover collateral source

obligations. The Special Master shall

take appropriate steps to inform

potential claimants of section

405(c)(3)(B) of the Act.

(b) Pending actions. Claimants who

have filed a civil action or who are a

party to such an action as described in

paragraph (a) of this section may not file

a claim with the Special Master unless

they withdraw from such action not

later than March 21, 2002.

§ 104.62 Time limit on filing claims.

In accordance with the Act, no claim

may be filed under this part after

December 22, 2003.

§ 104.63 Subrogation.

Compensation under this Fund does

not constitute the recovery of tort

damages against a third party nor the

settlement of a third party action, and

the United States shall be subrogated to

all potential claims against third party

tortfeasors of any victim receiving

compensation from the Fund. For that

reason, no person or entity having paid

other benefits or compensation to or on

behalf of a victim shall have any right

of recovery, whether through

subrogation or otherwise, against the

compensation paid by the Fund.

Subpart G—Measures to Protect the

Integrity of the Compensation Program

§ 104.71 Procedures to prevent and detect

fraud.

(a) Review of claims. For the purpose

of detecting and preventing the payment

of fraudulent claims and for the purpose

of assuring accurate and appropriate

payments to eligible claimants, the

Special Master shall implement

procedures to:

(1) Verify, authenticate, and audit

claims;

(2) Analyze claim submissions to

detect inconsistencies, irregularities,

duplication, and multiple claimants;

and

(3) Ensure the quality control of

claims review procedures.

(b) Quality control. The Special

Master shall institute periodic quality

control audits designed to evaluate the

accuracy of submissions and the

accuracy of payments, subject to the

oversight of the Inspector General of the

Department of Justice.

(c) False or fraudulent claims. The

Special Master shall refer all evidence of

false or fraudulent claims to appropriate

law enforcement authorities.

Dated: December 19, 2001.

John Ashcroft,

Attorney General.

Note: This Appendix will not appear in the

Code of Federal Regulations.

Appendix to Preamble—Summary of

Public Comments Submitted in

Response to the November 5, 2001

Notice of Inquiry and Advance Notice

of Rulemaking

The following is a summary of the

comments the Department of Justice (‘‘the

Department’’) received in response to its

Notice of Inquiry published on November 5,

2001. The Notice of Inquiry sought input on

numerous issues regarding potential

regulations for the ‘‘September 11 Victim

Compensation Fund of 2001’’ (the ‘‘Fund’’),

which was signed into law as Title IV of

Public Law 107–42 (‘‘Air Transportation

66288 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

Safety and System Stabilization Act’’) (the

‘‘Act’’).

Over 800 comments were received by the

November 26, 2001 deadline established by

the Department. Additionally, hundreds of

comments have been received since that date.

Every comment was—and continues to be—

reviewed, considered, and catalogued into

one or more of 72 different topics. While the

following summary does not address every

issue raised by commenters, it provides a

general synopsis of the most often raised

issues. The summary is not intended to be an

exhaustive illustration of every issue

contemplated by the Special Master or the

Department. Indeed, as mentioned above, all

comments were considered in the

promulgation of these interim final rules.

Finally, the summarized issues below are not

arranged in any particular order of

importance or level of volume.

The Effective Date of This Interim Final Rule

While the Act specified that this rule

should be issued by December 21, 2001, it

did not specify when they should become

effective. Accordingly, the Department

sought comment on this issue. The

Department noted that the Administrative

Procedure Act generally provides that rules

not go into effect for at least 30 days absent

‘‘good cause.’’

Many commenters favored an immediate

effective date so that claims could be filed

right away. Many indicated an immediate

need for relief and expressed frustration

about their experiences with obtaining shortterm assistance from other sources. However,

some commenters thought an immediate

effective date would be difficult to

implement because the Special Master would

need time to hire personnel and to set up the

operation of the program before beginning to

process claims.

A number of commenters suggested a

compromise—making available some amount

of short-term relief on an immediate basis to

eligible claimants, and then commencing the

more detailed review process necessary to

provide a final award. Some suggested using

flat amounts for these immediate awards,

while another commenter suggested

establishing an interest-free line of credit

upon which families could draw. Another

suggestion was that claims for immediate

assistance be prioritized by ‘‘need.’’

Eligibility

In its November 5, 2001, Notice of Inquiry,

the Department noted that section 405(b) of

the statute requires the Special Master to

determine whether a claimant is an ‘‘eligible

individual’’ under section 405(c).

‘‘Eligibility,’’ in turn, is defined by the Act

to include: (1) individuals (other than the

terrorists) aboard American Airlines flights

11 and 77 and United Airlines flights 93 and

175; or (2) individuals who were ‘‘present at’’

the World Trade Center, the Pentagon, or the

site of the aircraft crash at Shanksville,

Pennsylvania at the time or in the immediate

aftermath of the crashes; or (3) personal

representatives of deceased individuals who

would otherwise be eligible. Moreover, to be

eligible for an award, an individual must

have suffered physical harm or death as a

result of one of the terrorist-related air

crashes. The Department sought comment on

whether a Departmental regulation or a

statement of policy by the Special Master

would be appropriate to clarify these criteria,

and if so, what those criteria should be.

The Department specifically invited

comment on the following questions related

to eligibility:

• How should ‘‘present at’’ be interpreted?

• Should the term ‘‘physical harm’’ be

limited to serious injuries, as it is under some

other no-fault compensation schemes, (see,

e.g., N.Y. Ins. Law § 5102), or should it be

construed more broadly?

• Should ‘‘physical harm’’ be limited to

currently identifiable injuries?

• Can and should the program address

latent, but not yet evident, harm?

• What duration of time is intended by the

statutory phrase ‘‘immediate aftermath’’?

(1) ‘‘Present At’’ And ‘‘Immediate Aftermath’’

Many of the comments addressed the

question of how to define the terms ‘‘present

at the site’’ and ‘‘immediate aftermath,’’

especially for purposes of those who were in

New York at the time of the crashes. Some

commenters urged a broad definition of these

terms. They recommended that anybody in

New York City be considered ‘‘present’’

because the debris and ash from the collapse

of the World Trade Towers was widespread.

Residents who live near the Ground Zero site

in New York urged that they be eligible to

recover under the Fund.

In contrast, other commenters argued for a

narrower definition of the terms, asserting

that the legislation intended to constrain the

Fund to the locus of the buildings

themselves, and to some very limited time

period after the crashes. One comment

recommended that ‘‘immediate aftermath’’ be

defined as 48 hours after the crashes.

(2) Physical Harm

With respect to the nature of harm

involved, some commenters asserted there

should be no lower boundary for

‘‘nonserious’’ injuries. Of those who

commented on the point, there were

disagreements as to whether post-traumatic

stress could be considered physical harm for

purposes of filing a claim under the Fund.

Certain commenters indicated that many

people suffered substantial stress from

witnessing the attacks and devastation and

that they should be eligible to recover from

the Fund. However, others argued that the

Fund was not intended to cover

psychological injury because the language of

the statute specifically requires that the

claimant suffer ‘‘physical harm.’’ These

commenters feared that recovery for stressrelated injuries would open a Pandora’s Box

of less serious claims, which, in turn, may

reduce the amount of compensation issued to

those with the most serious physical injuries.

(3) Latent Harm

Some of the comments focused on the

problem of latent injuries and diseases.

Several commenters mentioned the coughing

they have experienced as a result of exposure

to the crash site in New York, and some

nearby residents expressed concern about

latent harm that might accrue from returning

to their homes before the conclusion of the

rescue and cleanup efforts. On the other

hand, other commenters expressed concern

about covering any harms that do not

manifest themselves within the two-year

lifetime of the Fund. They argued the Fund

was not designed to compensate for latent

harm primarily because the Fund only exists

for two years, and many injuries may not

become manifest until after that time.

(4) Eligibility of Victims And Survivors

Some commenters addressed the meaning

of the word ‘‘victim.’’ For example, some

commenters urged that any unborn child

who died should be considered eligible for

an award as a victim. With respect to a

different group of potential claimants, some

commenters argued that illegal aliens should

not be eligible for awards. However, other

commenters did not think that legal status

should preclude an award from the Fund.

With regard to claims on behalf of

decedent victims, the comments evidenced a

tremendous amount of confusion about

whether the statute intended to cover only

the losses incurred by the victim or the losses

incurred by relatives and others. Some

commenters noted that section 405 of the Act

provides that only claims on behalf of the

victim can be filed with the Fund,

presumably leaving to the courts any claims

by family members or partners on their own

behalf. However, some commenters noted

that section 403 of the Act states that its

purpose is to provide compensation to any

individual ‘‘or relatives of a deceased

individual’’ who were killed as a result of the

terrorist-related aircraft crashes. The

commenters further noted that various types

of losses that may be compensated by the

Fund pursuant to section 402 are akin to

those that in civil actions are normally

considered losses to survivors rather than to

the victim.

Many commenters commented on the

‘‘eligibility’’ of particular ‘‘survivors’’ of the

victim. Some suggested that only a spouse

and children be considered ‘‘eligible.’’ Others

expressed concern as to whether parents,

divorced spouses, children of a prior

marriage, and others with a legal relationship

would be ‘‘eligible’’ for an award under the

Fund. In this regard, a number of comments

specifically urged that non-married partners

and others with a non-traditional

relationship be considered ‘‘eligible’’ for an

award. Some commenters opposed the idea

of extending eligibility under the Fund to

those in non-traditional relationships and

argued for a narrower definition of eligibility.

Similarly, there were a number of

comments about how ‘‘eligible’’ survivors

would participate in the decision of whether

to submit an application to the Fund, since

in their view the application to the Fund

would prohibit all of them from filing civil

litigation. Some commenters explicitly

suggested the law be interpreted to allow

claims both on behalf of the decedent’s estate

and on behalf of any survivors, and suggested

that such claims could be consolidated for

decision before the Special Master. Others,

however, specifically recommended that

claims be limited to those on behalf of the

estate. Many commenters, presuming that to

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66289

be the case, recommended that the state

courts be responsible for designating the

representative to represent the estate, and

that any award be distributed in accordance

with the requirements of the will or state

intestacy law.

Assistance to Claimants

In its Notice of Inquiry of November 5,

2001, the Department noted that it would

appear that these requirements—combined

with the statutory time frame for the Special

Master to reach a decision once a claim is

filed—contemplate a detailed form and filing.

Accordingly, the Department invited

comments on whether there are actions the

Special Master should be required to take

before he can accept a claim, or deem a claim

‘‘filed.’’ The Department noted that the

statute appeared to provide a very limited

time frame for the Special Master to evaluate

a claim before making a decision—120 days

from the date a claim is filed. Accordingly,

the Department sought comment on whether

the Special Master should be permitted to

dismiss a claim as not properly filed for lack

of adequate supporting information and, if

so, whether an individual should thereafter

be permitted to refile the claim. Comments

were also solicited on whether it would be

advisable to include in the rules a procedure

where the time for making a determination

could be extended by agreement.

The Department also requested comment

on the design and content of the claim forms

in light of the statutory requirements, as well

as on making the forms and their instructions

readable and readily available. The

Department also sought comment on how it

should implement the statutory requirement

that claimants be provided with assistance.

While most of those who commented

supported maintaining firm deadlines, many

commenters suggested that a claimant be able

to ‘‘halt the clock’’ at the claimant’s

discretion for various purposes (e.g., to

provide further evidence before the claim is

evaluated, to allow more time to prepare for

a hearing, or to allow for an administrative

review of an initial award determination).

Some suggested that the Special Master also

have the authority not to start the clock until

the claim contained sufficient information

upon which an award determination could

be made, or to halt the process for a set

period of time to allow for review of an

initial determination (provided that the

claimant concurred with that decision).

A number of commenters stressed that a

claimant should not lose the right to proceed

with their claim due to an incomplete file.

One commenter suggested the Special Master

should have 14 days to review a claim before

deciding if there is enough information to

proceed. Several commenters suggested that

claimants not be required to waive their right

to litigation until it was determined the

claimant was eligible to recover from the

Fund. Similarly, some commenters stated

they would have difficulty deciding whether

or not to opt into the fund (and thus waive

their right to sue) if they did not have some

idea or presumption of the range of recovery

they might expect from the Fund.

Many commenters urged the Department to

establish a simplified procedure for initiating

a claim with the Fund. They expressed

frustration with the barrage of paperwork

required to apply for assistance with other

organizations. Some employers offered to

provide information on behalf of their

employees or survivors in an effort to reduce

the paperwork burden on claimants. On the

other hand, some noted that—in light of the

pro bono legal assistance that has been

offered to the survivors—claimants would

have the option to have the assistance of an

attorney to complete the forms. A number of

commenters suggested a two-step claims

process that would involve a simple initial

submission, followed by a more asserted

effort to collect additional information with

the guidance of claimant assistance

personnel from the Office of the Special

Master.

A number of commenters had suggestions

as to how the Special Master might assist

claimants both in filing claims and

completing the claims process. Many

suggested that local offices be established in

New York City, Washington DC,

Pennsylvania, and other cities that served as

the domicile of victims. Some urged that

outreach efforts be made to locate potential

claimants and make them aware of the

program’s operations. Some mentioned that

outreach should include multi-lingual

assistance and publications. One group

suggested that each Hearing Office have an

Applicant’s Assistant. Others suggested the

Special Master hire victim advocates to assist

claimants throughout the process.

The Claims Evaluation Process

The Department solicited comment on

whether every claimant should be granted an

oral hearing or whether paper hearings may

be sufficient, and what types of oral hearing

might be practicable in light of the statutory

time frames.

Further, the Department sought comment

on how evidence might be established and

whether it is authorized to enforce requests

made by the hearing officer to third parties

for evidence that is necessary to a proceeding

(e.g., evidence that might bear on whether all

aspects of the claim file on which the

decision will be based are accurate and

complete). The Department sought comment

on whether such proceedings should be

recorded, whether such proceedings should

be held in a location convenient to the

claimant, how to deal with scheduling

conflicts, and whether the opportunity for a

hearing can be waived by a claimant through

inaction or unwarranted delay.

Many commenters had opposing views on

the role hearings should play in claims

evaluation. Some commenters—comparing

this program to civil litigation—viewed the

hearings as essential to each and every claim.

These commenters recommended hearings as

a sort of ‘‘mini-trial,’’ which would include

rules of evidence (albeit relaxed rules) and

adversarial questioning of witnesses. Using

the same analogy, however, these

commenters suggested that many claims

could be ‘‘settled’’ based on only the paper

submissions. Other comments suggested the

hearings be more akin to an opportunity—for

those claimants who want to exercise it—to

make an informal oral presentation of their

cases. They viewed the hearing as an

opportunity to ensure that the decision

maker was aware of their individual

circumstances. Many of these commenters

also suggested, for various reasons, that not

all claimants would want a hearing. Some

commenters suggested allowing claimants,

upon filing a claim, to elect among different

‘‘tracks’’—one that would involve a hearing,

and one that would not.

On the question of who should be hired as

hearing officers, suggestions included retired

trust executives, retired judges, attorneys

experienced in handling high volume

caseloads, and those experienced in civil

litigation. Some commenters recommended

there be a panel of hearing officers rather

than one hearing officer. A number of

commenters also recommended that

claimants have the opportunity for review of

their award to ensure that the decision maker

was aware of their individual circumstances.

Many commenters submitted detailed

procedural suggestions for the claims

process. Among other things, these

suggestions dealt with how eligibility and

damages could be established through the

use of affidavits under penalty of perjury in

the event relevant documents had been lost

as a result of the crashes themselves (e.g.,

designations of beneficiaries maintained by

employers). Additionally, a number of

commenters suggested the Special Master

have the right to subpoena evidence required

to make a determination.

Awards Under the Fund

(1) Meeting the 120-Day Deadline

The Department invited comment on what

means and mechanisms could be

implemented to allow just compensation

within the statutorily-mandated 120-day

period for processing claims. In particular,

the Department sought input on whether and

how statistical methodologies should be

developed and used as a starting point for

decision, and whether publication of

hypothetical or presumptive awards for

classes of individuals would assist potential

claimants in determining whether to opt into

the Fund. For the most part, these comments

were encapsulated in discussions regarding

the calculation of damages; namely,

economic and noneconomic losses.

(2) Calculating ‘‘Economic Losses’’

The Department sought specific comment

on how the Special Master should determine

‘‘economic losses.’’ Although retaining

experts is certainly not prohibited, the

Special Master will not require any claimant

to obtain legal counsel or other experts to

assist in proving or presenting evidence of

damages. The Special Master may, however,

draw on available information from

appropriate specialists in relevant fields to

analyze economic losses. The Department

invited comment regarding the necessary

qualifications for such specialists, the data

that should be utilized, the methodologies

that should be employed, the documentation

that should be required for every claimant,

and how state law should bear upon such

determinations. In addition, the Department

invited comments on how to address the

economic losses of individuals whose lost

66290 Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations

future income streams would have been

highly contingent, variable, or unpredictable.

As expected, the range of comments on

how best to calculate economic losses was

widely varied. One group suggested a

minimum value be calculated based on

median income and remaining years of work,

with flexibility to adjust the award after

hearing all the evidence in individual cases.

Similarly, certain comments suggested the

use of a grid would be appropriate in certain

circumstances to identify presumed awards.

Others urged that no type of grid be used.

In terms of presumptive valuation, a few

commenters recommended that awards

mirror the amount a party could anticipate

receiving from personal injury or wrongful

death actions. Others disagreed. Many

recognized the limited opportunities now

available to potential plaintiffs filing claims

in civil courts arising out of the September

11, 2001 terrorist attacks. At least one

commenter argued that the fairest approach

in determining economic losses is that which

insurance companies use in settling claims.

Some commenters indicated that economic

awards should not be based on differences in

individual income prior to the crash. Some

suggested using a flat dollar figure per

surviving family member (e.g., $250,000 for

each survivor). Another suggested a flat

amount for death at $100,000, injury at

$50,000, and various other losses at slated

dollar figures. On the other hand, some

commenters felt the purpose of the program

is to act as a substitute for civil damage

actions, and that efforts should be made to

determine and take into consideration the

amount of income likely lost by a decedent.

A large number of comments were received

with respect to how to establish such income

(e.g., average over a certain number of prior

years, plus information supplied by

employers on future prospects).

(3) Calculating ‘‘Noneconomic Losses’’

The Department also sought comment as to

‘‘noneconomic losses.’’ Most notably, the

Department invited comments regarding

whether, and in what manner, the Special

Master can or should draw meaningful

distinctions between both those victims who

died in different locations and those who

suffered similar injuries. The Department

also invited comments on whether the

Department should (as some have suggested)

issue regulations determining the amount of

noneconomic loss for classes of similarly

situated individuals or whether, instead, the

Special Master should determine all

noneconomic loss on a detailed claim-byclaim basis. Further, the Department

requested comment on what facts and

circumstances should be considered in

determining noneconomic losses for each

individual, and what standards should be

employed.

Comments regarding noneconomic losses

were similarly varied. One commenting

association suggested noneconomic losses—

such as pain and suffering—should be

standardized because such losses do not vary

by income strata. Numerous commenters

advocated a ‘‘fixed’’ noneconomic award,

stating that the government should not

attempt to draw distinctions in the amount

of pain suffered by victims or their survivors.

One commenter suggested the most equitable

process for determining noneconomic awards

would be an elective process. Under this

proposed method, a claimant could elect to

have the award calculated by use of a matrix,

or alternatively, could present evidence at a

hearing to establish the amount to which the

claimant believes he or she is entitled. A

number of commenters argued that the

statute necessitated an entirely

individualized determination of

noneconomic losses in every case. A group

representing survivors of decedents

suggested that noneconomic losses must be

uncapped and based, in part, on the number

and age of any surviving children or

dependents, the current and future pain and

suffering experienced by the victim’s family,

and the severity of pain suffered by the

victim himself or herself.

(4) Taxation

A number of commenters raised questions

about the taxability of various kinds of

awards issued under the Fund. Several

commenters asserted that compensation from

the Fund should be nontaxable under federal

law, similar to various types of tort awards.

Another commenter stated that state victim

compensation fund awards generally are not

taxable, either by the state or the federal

government. On the other hand, another

commenter stated he did not see the purpose

of distributing taxpayers’ money to victims,

and urged taxing the awards so as to return

some of the money to the Treasury.

Collateral Sources

The Department sought comments on the

issue of collateral sources. Although the Act

requires that collateral sources be deducted

from awards issued under the Fund (and

explicitly outlines examples of certain types

of collateral sources), the Department invited

comment as to how the term ‘‘collateral

source’’ should be defined.

(1) General Comments

Despite the explicit language in the Act, a

number of commenters took issue with

deducting any collateral sources whatsoever.

Although many recognized that both the

Department and the Special Master are

bound to follow the language in the Act, they

nonetheless argued that collateral sources

are—in many states—not offset in wrongful

death suits. Some urged that the type of

collateral source offsets should be interpreted

narrowly. A number of commenters also

suggested that if collateral source benefits to

a victim are to be offset, a counter-offset

should be made for the premiums or

contributions made by the victim to purchase

various benefits. Others specifically

suggested that only the value of collateral

benefits funded by a victim’s employer

should be offset.

Many commenters, however, asserted that

the program should not ‘‘unjustly enrich’’ the

victims or their survivors, and supported the

use of widespread offsets. Some of these

comments mentioned that—although the

statute does not provide either a ceiling or

floor for the amount of awards—the Fund

may have only a limited pool of resources to

distribute to claimants (akin to the funds

being collected and distributed by charitable

organizations), and suggested the need to

help those most in need. Other comments

noted that unjust enrichment should not flow

through tax-payer dollars. It was mentioned

that many taxpayers—who ultimately will

provide the funds under the program—also

sent in charitable contributions not to

unjustly enrich victims or their families, but,

rather, solely to help them through these

troubled times.

(2) ‘‘A claimant has received or is entitled to

receive’’

Some commenters specifically focused on

the word ‘‘claimant’’ in the phrase ‘‘a

claimant has received or is entitled to

receive,’’ and urged that any collateral source

benefits not paid or to be paid directly to the

claimant not be deducted from the award.

These comments were often parallel to those

concerning the question of whose losses are

to be compensated under the Fund: only

those of the decedent (estate), or those of

others as well. (See the discussion of

Eligibility.)

A number of comments also focused on the

words ‘‘entitled to receive.’’ Some

recommended that only those collateral

benefits scheduled to be paid as a result of

contractual or other clear obligations should

be deducted from an award. Others

recommended that only the present value of

any future contingent awards be considered

in making any offset.

(3) Life Insurance

Many commenters were frustrated that the

Act requires life insurance proceeds to be

deducted from awards. Many asserted that

deducting life insurance will penalize those

who planned ahead. One suggested that life

insurance should only be offset if payable to

a dependent of the victim, and another group

of commenters indicated that only the sums

received by the eligible applicant net of all

taxes that exceed the premiums—or other

payments made by the applicant—be

deducted. A number suggested that if life

insurance is to be offset, the premiums paid

should be returned to the victim by reducing

the amount of the benefit offset.

(4) Pensions

While similar concerns (as to life

insurance) were raised in connection with

pensions, a more common comment

concerned the meaning of the term

‘‘pension.’’ For example, some commenters

noted that pensions are not normally

considered to be ‘‘compensation for a loss’’

but are instead akin to savings.

(5) Workers Compensation And Victim

Assistance Programs

One commenter pointed out that most of

the victims may be eligible for workers’

compensation benefits because they were

killed while on the job. Further, with respect

to those receiving benefits under New York

law, the compensation insurer can terminate

workers’ compensation payments—absent

claimants obtaining consent to enter the

Fund—if benefits are being paid to the

injured workers or survivors. New York State

legal authorities confirmed the

noteworthiness of this issue, and

Federal Register / Vol. 66, No. 246 / Friday, December 21, 2001 / Rules and Regulations 66291

recommended that workers’ compensation

payments not be considered a collateral

source to this extent.

With respect to state victim assistance

funds, one commenter noted that 42 U.S.C.

10602(e)—which generally provides that

state crime victim boards may refuse to pay

out benefits if another Federal program is

paying benefits—was explicitly amended to

exclude payments made under the September

11th Victim Compensation Fund of 2001.

The commenter suggested that some

programs covered under that code

provision—that have already made

payments—may be entitled to reimbursement

as a result.

(6) Charitable Contributions

Many victims of the terrorist-related

crashes on September 11, 2001, have or may

receive support from special funds set up to

assist them, as well as from special programs

established by some of their employers to

share future profits and the like. Accordingly,

whether to reduce Fund awards by the

amount of such contributions was one of the

issues given the most attention in the

comments. Notably, this issue was discussed

in a number of news articles at about the time

the Notice of Inquiry was issued.

Commenters were heavily divided on this

issue. Many were strongly opposed to

reducing awards by the amount of charity

funding received. This includes some

commenters who donated to charities

established for this purpose, as well as

employers who established funds to help the

families of the victims. Many insisted that

funds collected by employers solely for the

purpose of compensating victims of the

September 11 attacks should not be deemed

a collateral source. Many drew a distinction

between funds provided for short-term

assistance and need, and those designed to

compensate victims for their losses.

On the other hand, a number of comments

from those who contributed money to various

charities viewed the purposes of the charities

and the Fund as one and the same; namely,

compensating the victims. These commenters

asserted they had not intended making

contributions to unjustly enrich the families,

and would hesitate to make such

contributions in the future if their help turns

out only to ensure persons maintain a certain

lifestyle.

A number of commenters also pointed to

the practical difficulties of trying to establish

what claimants may have received from

charities. Some suggested the Fund should

have access to any database of charitable

contributions, including one that was

reported to be under consideration in New

York.

After discussing these factors, some

commenters suggested that the Special

Master only offset charitable contributions

over a certain amount. A few commenters

suggested only offsetting charities set up for

longer term assistance to the victims (e.g.,

tuition funds or scholarships for the children

of all the victims).

Payment of Awards

Some commenters expressed the view that

payments by the fund should be in the form

of ‘‘structured settlements’’ or annuities

rather than in lump sum. One commenter

suggested payments to children should go to

a trustee for the benefit of the child.

However, other commenters argued for lump

sum payments and objected to the

government placing any restrictions on the

claimants’ award.

Limitations on Fees for Assistance And

Payment by the Special Master

The Department requested comments on

whether the Special Master has the authority

to limit the types and amounts of fees that

can be charged by counsel, accountants,

experts or others who are retained by

claimants to assist them to file and pursue

compensation claims, and whether such fees

can and should be paid by the Special Master

directly out of compensation awards. The

Department also solicited comments on what

limitations, if any, the rules should impose

on non-attorney, non-claimant

representatives’ participation in filing claims.

A number of commenters noted that the

right to be represented by counsel is

provided by the statute, that not all claimants

would be comfortable using pro-bono

counsel to represent their interests, and that

payment of attorneys’ fees is necessary to

ensure representation by counsel of choice.

Some of these commenters suggested,

however, that fees could be limited so as not

to exceed 10% of the award to claimant.

Paradoxically, some commenters opposed

using any amount of money from the Fund

to pay legal fees.

[FR Doc. 01–31681 Filed 12–19–01; 4:09 pm]

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