Presumption of Sound Condition: Aggravation of a Disability by Active Service, 23027-23029 [05-8899]

Download as PDF Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations access to keys in the computerized key security system (i.e., system administrator) to ensure that table game drop and count keys are restricted to authorized employees. (ii) In the event of an emergency or the key box is inoperable, access to the emergency manual key(s) (a.k.a. override key), used to access the box containing the table game drop and count keys, requires the physical involvement of at least three persons from separate departments, including management. The date, time, and reason for access, must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (iii) The custody of the keys issued pursuant to paragraph (u)(2)(ii) of this section requires the presence of two persons from separate departments from the time of their issuance until the time of their return. (iv) Routine physical maintenance that requires accessing the emergency manual key(s) override key) and does not involve the accessing of the table games drop and count keys, only requires the presence of two persons from separate departments. The date, time and reason for access must be documented with the signatures of all participating employees signing out/in the emergency manual key(s). (3) For computerized key security systems controlling access to table games drop and count keys, accounting/ audit personnel, independent of the system administrator, will perform the following procedures: (i) Daily, review the report generated by the computerized key security system indicating the transactions performed by the individual(s) that adds, deletes, and changes user’s access within the system (i.e., system administrator). Determine whether the transactions completed by the system administrator provide an adequate control over the access to the table games drop and count keys. Also, determine whether any table games drop and count key(s) removed or returned to the key cabinet by the system administrator was properly authorized. (ii) For at least one day each month, review the report generated by the computerized key security system indicating all transactions performed to determine whether any unusual table games drop and count key removals or key returns occurred. (iii) At least quarterly, review a sample of users that are assigned access to the table games drop and count keys to determine that their access to the VerDate jul<14>2003 13:01 May 03, 2005 Jkt 205001 assigned keys is adequate relative to their job position. (iv) All noted improper transactions or unusual occurrences are investigated with the results documented. (4) Quarterly, an inventory of all count room, table game drop box release, storage rack and contents keys is performed, and reconciled to records of keys made, issued, and destroyed. Investigations are performed for all keys unaccounted for, with the investigations being documented. (v) Emergency drop procedures. Emergency drop procedures shall be developed by the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority. (w) Equipment standards for gaming machine count. (1) A weigh scale calibration module shall be secured so as to prevent unauthorized access (e.g., prenumbered seal, lock and key, etc.). (2) A person independent of the cage, vault, gaming machine, and count team functions shall be required to be present whenever the calibration module is accessed. Such access shall be documented and maintained. (3) If a weigh scale interface is used, it shall be adequately restricted so as to prevent unauthorized access (passwords, keys, etc.). (4) If the weigh scale has a zero adjustment mechanism, it shall be physically limited to minor adjustments (e.g., weight of a bucket) or physically situated such that any unnecessary adjustments to it during the weigh process would be observed by other count team members. (5) The weigh scale and weigh scale interface (if applicable) shall be tested by a person or persons independent of the cage, vault, and gaming machine departments and count team at least quarterly. At least annually, this test shall be performed by internal audit in accordance with the internal audit standards. The result of these tests shall be documented and signed by the person or persons performing the test. (6) Prior to the gaming machine count, at least two employees shall verify the accuracy of the weigh scale with varying weights or with varying amounts of previously counted coin for each denomination to ensure the scale is properly calibrated (varying weights/ coin from drop to drop is acceptable). (7) If a mechanical coin counter is used (instead of a weigh scale), the Tribal gaming regulatory authority, or the gaming operation as approved by the Tribal gaming regulatory authority, shall establish and the gaming operation shall comply, with procedures that are equivalent to those described in PO 00000 Frm 00019 Fmt 4700 Sfmt 4700 23027 paragraphs (u)(4), (u)(5), and (u)(6) of this section. (8) If a coin meter count machine is used, the count team member shall record the machine number denomination and number of coins in ink on a source document, unless the meter machine automatically records such information. (i) A count team member shall test the coin meter count machine prior to the actual count to ascertain if the metering device is functioning properly with a predetermined number of coins for each denomination. (ii) [Reserved] Signed in Washington, DC, this 21st day of April, 2005. Philip N. Hogen, Chairman. Nelson Westrin, Vice-Chairman. Cloyce Choney, Commissioner. [FR Doc. 05–8424 Filed 5–3–05; 8:45 am] BILLING CODE 7565–01–P DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 3 RIN 2900–AL90 Presumption of Sound Condition: Aggravation of a Disability by Active Service Department of Veterans Affairs. Final rule. AGENCY: ACTION: SUMMARY: This document amends the Department of Veterans Affairs (VA) adjudication regulations regarding the presumption of soundness of a veteran by adding a requirement that, in order to rebut the presumption of soundness of a veteran on entrance into active service, VA must prove not only that the condition existed prior to entrance into active service, but also that it was not aggravated by the veteran’s active service. This amendment reflects a change in VA’s interpretation of the statute governing the presumption of sound condition, and is based on a recent opinion of VA’s General Counsel as well as a recent decision of the United States Court of Appeals for the Federal Circuit. The intended effect of this amendment is to require that VA, not the claimant, prove that the disability preexisted entrance into military service and that the disability was not aggravated by such service before the presumption of soundness on entrance onto active duty is overcome. DATES: Effective Date: May 4, 2005. E:\FR\FM\04MYR1.SGM 04MYR1 23028 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations Applicability Date: This rule applies to claims that were pending on or filed after the effective date of this rule, May 4, 2005. It does not apply to claims that were finally decided prior to the effective date of this rule or to collateral challenges to final decisions rendered prior to the effective date of this rule. FOR FURTHER INFORMATION CONTACT: David Barrans, Attorney, Office of General Counsel (022), Department of Veterans Affairs, 810 Vermont Avenue, NW., Washington, DC 20420, telephone (202) 273–6315. VA is amending its adjudication regulations at 38 CFR 3.304(b) to reflect a change in the interpretation of the statute governing the presumption of sound condition. Section 1111 of title 38, United States Code, provides that veterans are presumed to have been in sound condition when they were examined, accepted, and enrolled for service, except as to conditions that were noted at the time, or ‘‘where clear and unmistakable evidence demonstrates that the injury or disease existed before acceptance and enrollment and was not aggravated by such service.’’ Section 1153 of title 38, United States Code, states that ‘‘[a] preexisting disease will be considered to have been aggravated by active military, naval, or air service, where there is an increase in disability during such service, unless there is a specific finding that the increase in disability is due to the natural progress of the disease.’’ VA’s regulation implementing the presumption of sound condition, 38 CFR 3.304(b), historically has stated that the presumption may be rebutted by clear and unmistakable evidence that a condition existed prior to service. Although this appears to ignore the last seven words of 38 U.S.C. 1111 (‘‘and was not aggravated by such service’’), VA historically has interpreted those seven words to relate to the presumption of aggravation under 38 U.S.C. 1153. Accordingly, VA’s regulation implementing the presumption of aggravation under 38 U.S.C. 1153 also implements the last seven words of section 1111, as VA previously construed those words. That regulation, 38 CFR 3.306(b), states that, when a preexisting disability increased in severity during service, the presumption of aggravation may be rebutted only by clear and unmistakable evidence that the increase was due to the natural progress of the disease. The regulation further states that aggravation will not be conceded when a preexisting SUPPLEMENTARY INFORMATION: VerDate jul<14>2003 13:01 May 03, 2005 Jkt 205001 disability underwent no increase in severity during service. Under VA’s current regulations, if a condition was not noted at entry but is shown by clear and unmistakable evidence to have existed prior to entry, the burden then shifts to the claimant to show that the condition increased in severity during service. Only if the claimant satisfies this burden will VA incur the burden of refuting aggravation by clear and unmistakable evidence. VA is revising its interpretation of section 1111 to provide that, if a condition is not noted at entry into service, the presumption of sound condition can be rebutted only if clear and unmistakable evidence shows both that the condition existed prior to service and that the condition was not aggravated by service. Under this interpretation, the burden does not shift to the claimant to establish that a preexisting condition increased in severity during service. Rather, VA alone bears the burden of proving both that the condition existed prior to service and that it was not aggravated by service. If the evidence fails to support either of those findings, the presumption of sound condition is not rebutted. Our revised interpretation of section 1111 is based on the extensive analysis of the history of that statute stated in a precedent opinion of VA’s General Counsel, VAOPGCPREC 3–2003, and the Federal Circuit’s opinion in Wagner v. Principi, No. 02–7347 (Fed. Cir. June 1, 2004). As the General Counsel and the Federal Circuit noted, the language of section 1111 literally provides that, if a condition was not noted at entry into service, VA bears the burden of showing both that the condition existed prior to service and that it was not aggravated by service. If VA fails to establish either of those facts, the claimant would be entitled to a presumption that he or she entered service in sound condition. VA has previously refrained from adopting a strictly literal interpretation of section 1111, because such a literal reading compels results that have been described as ‘‘illogical’’ by the General Counsel, ‘‘self-contradictory’’ by the Federal Circuit, and possibly ‘‘absurd’’ by the United States Court of Appeals for Veterans Claims. See VAOPGCPREC 3–2003, Wagner, slip op. at 8; Cotant v. Principi, 17 Vet. App. 116, 129 (2003). Among other things, a literal construction of the statute would require VA to presume that a veteran entered service in sound condition even in cases where clear and unmistakable evidence shows the contrary, merely because VA cannot prove the absence of aggravation in service. It is unclear why PO 00000 Frm 00020 Fmt 4700 Sfmt 4700 the question of whether a preexisting disability was aggravated in service should have any bearing on the logically preliminary question of whether there was a preexisting disability at all. Despite these concerns, VA’s General Counsel and the Federal Circuit have concluded that the legislative history of section 1111 strongly suggests that Congress intended what the language of the statute literally requires. The General Counsel also concluded that, although the statute’s requirements seemed counterintuitive, they were not so bizarre that Congress could not have intended them. The rebuttal standard in what is now section 1111 originated in the Act of July 13, 1943, ch. 233, § 9(b), 57 Stat. 554, 556 (Pub. L. 78–144), as an amendment to Veterans’ Regulation No. 1(a), part I, para. I(b) (Exec. Ord. No. 6,156) (June 6, 1933). Prior to the amendment, paragraph I(b) stated that the presumption of soundness could be rebutted ‘‘where evidence or medical judgment is such as to warrant a finding that the injury or disease existed prior to acceptance and enrollment.’’ In 1943, a bill was introduced in the House to make the presumption of soundness irrebuttable (see H.R. 2703, 78th Cong., 1st Sess. (1943)). That bill apparently was introduced in response to the concern that ‘‘a great many men have been turned out of the service after they had served for a long period of time, some of them probably 2 or 3 years, on the theory that they were disabled before they were ever taken into the service’’ (89 Cong. Rec. 7463 (daily ed. July 7, 1943) (statement of Cong. Rankin)). The Administrator of Veterans Affairs recommended that the bill be revised to permit rebuttal of the presumption ‘‘where clear and unmistakable evidence demonstrates that the injury or disease existed prior to acceptance and enrollment’’ (S. Rep. No. 403, 78th Cong., 1st Sess. 6 (1943)). The Senate thereafter approved an amendment to the bill adopting the Administrator’s suggested language, but adding to it the phrase ‘‘and was not aggravated by such active military or naval service.’’ That language was approved by the House and was included in the legislation enacted as Public Law 78–144. The provisions of Veterans’ Regulation No. 1(a), part I, para. I(b), as amended, were subsequently codified without material change at 38 U.S.C. 311, later renumbered as section 1111. A Senate Committee Report concerning the 1943 statute stated that ‘‘[t]he language added by the committee, ‘and was not aggravated by such active military or naval service’ is to make E:\FR\FM\04MYR1.SGM 04MYR1 Federal Register / Vol. 70, No. 85 / Wednesday, May 4, 2005 / Rules and Regulations clear the intention to preserve the right in aggravation cases as was done in Public [Law] No. [73–]141.’’ S. Rep. No. 403, at 2. Public Law 73–141, referenced as the model for the Senate amendment, provided for restoration of serviceconnected disability awards that had been severed under depression-era statutes, and provided that: The provisions of this section shall not apply * * * to persons as to whom clear and unmistakable evidence discloses that the disease, injury, or disability had inception before or after the period of active military or naval service, unless such disease, injury, or disability is shown to have been aggravated during service * * * and as to all such cases enumerated in this proviso, all reasonable doubts shall be resolved in favor of the veteran, the burden of proof being on the Government. Act of March 27, 1943, ch. 100, § 27, 48 Stat. 508, 524. This statute appears to have placed the burden on the government to show by clear and unmistakable evidence both that the disability existed prior to service and that it was not aggravated by service. It is thus consistent with the view that the presumption of soundness enacted in 1943 was intended to place the burden of proof on VA with respect to both issues. That purpose is also reflected in other statements made during the debate on the 1943 legislation. See 89 Cong. Rec. 7463 (daily ed. July 7, 1943) (statement of Rep. Rankin) (‘‘It places the burden of proof on the Veterans’ Administration to show by unmistakable evidence that the injury or disease existed prior to acceptance and enrollment and was not aggravated by such active military or naval service.’’) Based on the foregoing authorities, VA is revising its regulations at 38 CFR 3.304(b) to provide that, in order to rebut the presumption of sound condition, VA must establish by clear and convincing evidence both that the disability existed prior to service and that it was not aggravated by service. To accomplish this, VA is amending § 3.304(b) by adding, at the end of the first sentence, ‘‘and was not aggravated by such service.’’ The effect of this new interpretation is to establish different standards to govern for disabilities that were noted at entry into service and those that were not. If a disability was not noted at entry into service, VA will apply the presumption of sound condition under 38 U.S.C. 1111. If VA fails to establish either that the disability existed prior to service or that it was not aggravated by service, the presumption of sound condition will govern and the disability will be considered to have been incurred in service if all other VerDate jul<14>2003 13:01 May 03, 2005 Jkt 205001 requirements for service connection are established. In such cases, the presumption of aggravation in 38 U.S.C. 1153 will not apply because VA will presume that the veteran entered service in sound condition. On the other hand, if a condition was noted at entry into service, VA will consider the claim with respect to the presumption of aggravation in section 1153. This final rule is an interpretative rule explaining how VA construes 38 U.S.C. 1111, and it merely reflects the holding in the Federal Circuit’s decision in Wagner. Accordingly, there is a basis for dispensing with prior notice and comment and delayed effective date provisions of 5 U.S.C. 552 and 553. 23029 PART 3—ADJUDICATION Subpart A—Pension, Compensation, and Dependency and Indemnity Compensation 1. The authority citation for part 3, subpart A continues to read as follows: I Authority: 38 U.S.C. 501(a), unless otherwise noted. § 3.304 [Amended] 2. In § 3.304, paragraph (b) introductory text, remove ‘‘thereto.’’ and add, in its place, ‘‘thereto and was not aggravated by such service.’’ I [FR Doc. 05–8899 Filed 5–3–05; 8:45 am] BILLING CODE 8320–01–P Unfunded Mandates The Unfunded Mandates Reform Act of 1995 requires, at 2 U.S.C. 1532, that agencies prepare an assessment of anticipated costs and benefits before developing any rule that may result in an expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any given year. This rule would have no such effect on State, local, or tribal governments, or the private sector. Regulatory Flexibility Act The Secretary hereby certifies that this regulatory amendment will not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act, 5 U.S.C. 601–612. Only VA beneficiaries could be directly affected. Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604. Paperwork Reduction Act This document contains no provisions constituting a collection of information under the Paperwork Reduction Act (44 U.S.C. 3501–3521). The Catalog of Federal Domestic Assistance program numbers are 64.102, 64.109 and 64.110. List of Subjects in 38 CFR Part 3 Administrative practice and procedure, Claims, Health care, Individuals with disabilities, Pensions, Veterans. Approved: April 4, 2005. Gordon H. Mansfield, Deputy Secretary of Veterans Affairs. For the reasons set forth in the preamble, 38 CFR part 3 is amended as follows: I PO 00000 Frm 00021 Fmt 4700 Sfmt 4700 ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [R05–OAR–2004–MI–0002; FRL–7904–4] Approval and Promulgation of State Implementation Plans: Michigan: Oxides of Nitrogen Environmental Protection Agency (EPA). ACTION: Final rule. AGENCY: SUMMARY: The EPA is approving as a revision to Michigan’s Clean Air Act State Implementation Plan (SIP) prepared by Michigan that will limit the emissions of oxides of nitrogen (NOX) from large stationary sources (i.e., electric generating units, industrial boilers and cement kilns). This SIP, which the Michigan Department of Environmental Quality (MDEQ) submitted for EPA approval on August 5, 2004, meets all of the requirements contained in an EPA rule that was published in the Federal Register on October 27, 1998. The federal rule, otherwise known as the Phase I NOX SIP Call, requires NOX reductions from sources in 19 States in the eastern half of the country and the District of Columbia. MDEQ’s August 5, 2004, submittal also satisfies the conditions described in EPA’s conditional approval notice published in the Federal Register on April 16, 2004. The effect of this approval is to ensure federal enforceability of the state NOX plan and to maintain consistency between the state-adopted plan and the approved Michigan SIP. EPA proposed approval of this SIP revision and published a direct final approval on December 23, 2004. EPA received adverse comments on the proposed rulemaking and, therefore, withdrew the direct final rulemaking on February 15, 2005. E:\FR\FM\04MYR1.SGM 04MYR1

Agencies

[Federal Register Volume 70, Number 85 (Wednesday, May 4, 2005)]
[Rules and Regulations]
[Pages 23027-23029]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-8899]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 3

RIN 2900-AL90


Presumption of Sound Condition: Aggravation of a Disability by 
Active Service

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: This document amends the Department of Veterans Affairs (VA) 
adjudication regulations regarding the presumption of soundness of a 
veteran by adding a requirement that, in order to rebut the presumption 
of soundness of a veteran on entrance into active service, VA must 
prove not only that the condition existed prior to entrance into active 
service, but also that it was not aggravated by the veteran's active 
service. This amendment reflects a change in VA's interpretation of the 
statute governing the presumption of sound condition, and is based on a 
recent opinion of VA's General Counsel as well as a recent decision of 
the United States Court of Appeals for the Federal Circuit. The 
intended effect of this amendment is to require that VA, not the 
claimant, prove that the disability preexisted entrance into military 
service and that the disability was not aggravated by such service 
before the presumption of soundness on entrance onto active duty is 
overcome.

DATES: Effective Date: May 4, 2005.

[[Page 23028]]

    Applicability Date: This rule applies to claims that were pending 
on or filed after the effective date of this rule, May 4, 2005. It does 
not apply to claims that were finally decided prior to the effective 
date of this rule or to collateral challenges to final decisions 
rendered prior to the effective date of this rule.

FOR FURTHER INFORMATION CONTACT: David Barrans, Attorney, Office of 
General Counsel (022), Department of Veterans Affairs, 810 Vermont 
Avenue, NW., Washington, DC 20420, telephone (202) 273-6315.

SUPPLEMENTARY INFORMATION: VA is amending its adjudication regulations 
at 38 CFR 3.304(b) to reflect a change in the interpretation of the 
statute governing the presumption of sound condition.
    Section 1111 of title 38, United States Code, provides that 
veterans are presumed to have been in sound condition when they were 
examined, accepted, and enrolled for service, except as to conditions 
that were noted at the time, or ``where clear and unmistakable evidence 
demonstrates that the injury or disease existed before acceptance and 
enrollment and was not aggravated by such service.'' Section 1153 of 
title 38, United States Code, states that ``[a] preexisting disease 
will be considered to have been aggravated by active military, naval, 
or air service, where there is an increase in disability during such 
service, unless there is a specific finding that the increase in 
disability is due to the natural progress of the disease.''
    VA's regulation implementing the presumption of sound condition, 38 
CFR 3.304(b), historically has stated that the presumption may be 
rebutted by clear and unmistakable evidence that a condition existed 
prior to service. Although this appears to ignore the last seven words 
of 38 U.S.C. 1111 (``and was not aggravated by such service''), VA 
historically has interpreted those seven words to relate to the 
presumption of aggravation under 38 U.S.C. 1153. Accordingly, VA's 
regulation implementing the presumption of aggravation under 38 U.S.C. 
1153 also implements the last seven words of section 1111, as VA 
previously construed those words. That regulation, 38 CFR 3.306(b), 
states that, when a preexisting disability increased in severity during 
service, the presumption of aggravation may be rebutted only by clear 
and unmistakable evidence that the increase was due to the natural 
progress of the disease. The regulation further states that aggravation 
will not be conceded when a preexisting disability underwent no 
increase in severity during service.
    Under VA's current regulations, if a condition was not noted at 
entry but is shown by clear and unmistakable evidence to have existed 
prior to entry, the burden then shifts to the claimant to show that the 
condition increased in severity during service. Only if the claimant 
satisfies this burden will VA incur the burden of refuting aggravation 
by clear and unmistakable evidence.
    VA is revising its interpretation of section 1111 to provide that, 
if a condition is not noted at entry into service, the presumption of 
sound condition can be rebutted only if clear and unmistakable evidence 
shows both that the condition existed prior to service and that the 
condition was not aggravated by service. Under this interpretation, the 
burden does not shift to the claimant to establish that a preexisting 
condition increased in severity during service. Rather, VA alone bears 
the burden of proving both that the condition existed prior to service 
and that it was not aggravated by service. If the evidence fails to 
support either of those findings, the presumption of sound condition is 
not rebutted.
    Our revised interpretation of section 1111 is based on the 
extensive analysis of the history of that statute stated in a precedent 
opinion of VA's General Counsel, VAOPGCPREC 3-2003, and the Federal 
Circuit's opinion in Wagner v. Principi, No. 02-7347 (Fed. Cir. June 1, 
2004). As the General Counsel and the Federal Circuit noted, the 
language of section 1111 literally provides that, if a condition was 
not noted at entry into service, VA bears the burden of showing both 
that the condition existed prior to service and that it was not 
aggravated by service. If VA fails to establish either of those facts, 
the claimant would be entitled to a presumption that he or she entered 
service in sound condition.
    VA has previously refrained from adopting a strictly literal 
interpretation of section 1111, because such a literal reading compels 
results that have been described as ``illogical'' by the General 
Counsel, ``self-contradictory'' by the Federal Circuit, and possibly 
``absurd'' by the United States Court of Appeals for Veterans Claims. 
See VAOPGCPREC 3-2003, Wagner, slip op. at 8; Cotant v. Principi, 17 
Vet. App. 116, 129 (2003). Among other things, a literal construction 
of the statute would require VA to presume that a veteran entered 
service in sound condition even in cases where clear and unmistakable 
evidence shows the contrary, merely because VA cannot prove the absence 
of aggravation in service. It is unclear why the question of whether a 
preexisting disability was aggravated in service should have any 
bearing on the logically preliminary question of whether there was a 
preexisting disability at all.
    Despite these concerns, VA's General Counsel and the Federal 
Circuit have concluded that the legislative history of section 1111 
strongly suggests that Congress intended what the language of the 
statute literally requires. The General Counsel also concluded that, 
although the statute's requirements seemed counterintuitive, they were 
not so bizarre that Congress could not have intended them.
    The rebuttal standard in what is now section 1111 originated in the 
Act of July 13, 1943, ch. 233, Sec.  9(b), 57 Stat. 554, 556 (Pub. L. 
78-144), as an amendment to Veterans' Regulation No. 1(a), part I, 
para. I(b) (Exec. Ord. No. 6,156) (June 6, 1933). Prior to the 
amendment, paragraph I(b) stated that the presumption of soundness 
could be rebutted ``where evidence or medical judgment is such as to 
warrant a finding that the injury or disease existed prior to 
acceptance and enrollment.'' In 1943, a bill was introduced in the 
House to make the presumption of soundness irrebuttable (see H.R. 2703, 
78th Cong., 1st Sess. (1943)). That bill apparently was introduced in 
response to the concern that ``a great many men have been turned out of 
the service after they had served for a long period of time, some of 
them probably 2 or 3 years, on the theory that they were disabled 
before they were ever taken into the service'' (89 Cong. Rec. 7463 
(daily ed. July 7, 1943) (statement of Cong. Rankin)). The 
Administrator of Veterans Affairs recommended that the bill be revised 
to permit rebuttal of the presumption ``where clear and unmistakable 
evidence demonstrates that the injury or disease existed prior to 
acceptance and enrollment'' (S. Rep. No. 403, 78th Cong., 1st Sess. 6 
(1943)). The Senate thereafter approved an amendment to the bill 
adopting the Administrator's suggested language, but adding to it the 
phrase ``and was not aggravated by such active military or naval 
service.'' That language was approved by the House and was included in 
the legislation enacted as Public Law 78-144. The provisions of 
Veterans' Regulation No. 1(a), part I, para. I(b), as amended, were 
subsequently codified without material change at 38 U.S.C. 311, later 
renumbered as section 1111.
    A Senate Committee Report concerning the 1943 statute stated that 
``[t]he language added by the committee, `and was not aggravated by 
such active military or naval service' is to make

[[Page 23029]]

clear the intention to preserve the right in aggravation cases as was 
done in Public [Law] No. [73-]141.'' S. Rep. No. 403, at 2. Public Law 
73-141, referenced as the model for the Senate amendment, provided for 
restoration of service-connected disability awards that had been 
severed under depression-era statutes, and provided that:

    The provisions of this section shall not apply * * * to persons 
as to whom clear and unmistakable evidence discloses that the 
disease, injury, or disability had inception before or after the 
period of active military or naval service, unless such disease, 
injury, or disability is shown to have been aggravated during 
service * * * and as to all such cases enumerated in this proviso, 
all reasonable doubts shall be resolved in favor of the veteran, the 
burden of proof being on the Government.

Act of March 27, 1943, ch. 100, Sec.  27, 48 Stat. 508, 524. This 
statute appears to have placed the burden on the government to show by 
clear and unmistakable evidence both that the disability existed prior 
to service and that it was not aggravated by service. It is thus 
consistent with the view that the presumption of soundness enacted in 
1943 was intended to place the burden of proof on VA with respect to 
both issues. That purpose is also reflected in other statements made 
during the debate on the 1943 legislation. See 89 Cong. Rec. 7463 
(daily ed. July 7, 1943) (statement of Rep. Rankin) (``It places the 
burden of proof on the Veterans' Administration to show by unmistakable 
evidence that the injury or disease existed prior to acceptance and 
enrollment and was not aggravated by such active military or naval 
service.'')
    Based on the foregoing authorities, VA is revising its regulations 
at 38 CFR 3.304(b) to provide that, in order to rebut the presumption 
of sound condition, VA must establish by clear and convincing evidence 
both that the disability existed prior to service and that it was not 
aggravated by service. To accomplish this, VA is amending Sec.  
3.304(b) by adding, at the end of the first sentence, ``and was not 
aggravated by such service.''
    The effect of this new interpretation is to establish different 
standards to govern for disabilities that were noted at entry into 
service and those that were not. If a disability was not noted at entry 
into service, VA will apply the presumption of sound condition under 38 
U.S.C. 1111. If VA fails to establish either that the disability 
existed prior to service or that it was not aggravated by service, the 
presumption of sound condition will govern and the disability will be 
considered to have been incurred in service if all other requirements 
for service connection are established. In such cases, the presumption 
of aggravation in 38 U.S.C. 1153 will not apply because VA will presume 
that the veteran entered service in sound condition. On the other hand, 
if a condition was noted at entry into service, VA will consider the 
claim with respect to the presumption of aggravation in section 1153.
    This final rule is an interpretative rule explaining how VA 
construes 38 U.S.C. 1111, and it merely reflects the holding in the 
Federal Circuit's decision in Wagner. Accordingly, there is a basis for 
dispensing with prior notice and comment and delayed effective date 
provisions of 5 U.S.C. 552 and 553.

Unfunded Mandates

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

Regulatory Flexibility Act

    The Secretary hereby certifies that this regulatory amendment will 
not have a significant economic impact on a substantial number of small 
entities as they are defined in the Regulatory Flexibility Act, 5 
U.S.C. 601-612. Only VA beneficiaries could be directly affected. 
Therefore, pursuant to 5 U.S.C. 605(b), this amendment is exempt from 
the initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).
    The Catalog of Federal Domestic Assistance program numbers are 
64.102, 64.109 and 64.110.

List of Subjects in 38 CFR Part 3

    Administrative practice and procedure, Claims, Health care, 
Individuals with disabilities, Pensions, Veterans.

    Approved: April 4, 2005.
Gordon H. Mansfield,
Deputy Secretary of Veterans Affairs.

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For the reasons set forth in the preamble, 38 CFR part 3 is amended as 
follows:

PART 3--ADJUDICATION

Subpart A--Pension, Compensation, and Dependency and Indemnity 
Compensation

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1. The authority citation for part 3, subpart A continues to read as 
follows:

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


Sec.  3.304  [Amended]

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2. In Sec.  3.304, paragraph (b) introductory text, remove ``thereto.'' 
and add, in its place, ``thereto and was not aggravated by such 
service.''

[FR Doc. 05-8899 Filed 5-3-05; 8:45 am]
BILLING CODE 8320-01-P
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