Special and Ancillary Benefits for Veterans, Dependents, and Survivors, 10860-10876 [E7-4146]

Agencies

• DEPARTMENT OF VETERANS AFFAIRS

[Federal Register Volume 72, Number 46 (Friday, March 9, 2007)]
[Proposed Rules]
[Pages 10860-10876]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4146]



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Part III





Department of Veterans Affairs





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38 CFR Part 5



Special and Ancillary Benefits for Veterans, Dependents, and Survivors; 
Proposed Rule

Federal Register / Vol. 72, No. 46 / Friday, March 9, 2007 / Proposed 
Rules

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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 5

RIN 2900-AL84


Special and Ancillary Benefits for Veterans, Dependents, and 
Survivors

AGENCY: Department of Veterans Affairs.

ACTION: Proposed rule.

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SUMMARY: The Department of Veterans Affairs (VA) proposes to reorganize 
and rewrite in plain language regulations concerning special and 
ancillary benefits for veterans, dependents, and survivors. These 
revisions are proposed as part of VA's rewrite and reorganization of 
all of its compensation and pension rules in a logical, claimant-
focused, and user-friendly format. The intended effect of the proposed 
revisions is to assist claimants and VA personnel in locating and 
understanding these provisions.

DATES: Comments must be received by VA on or before May 8, 2007.

ADDRESSES: Written comments may be submitted through https://
www.Regulations.gov; by mail or hand-delivery to Director, Regulations 
Management (00REG), Department of Veterans Affairs, 810 Vermont Ave., 
NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. 
Comments should indicate that they are submitted in response to ``RIN 
2900-AL84--Special and Ancillary Benefits for Veterans, Dependents, and 
Survivors.'' Copies of comments received will be available for public 
inspection in the Office of Regulation Policy and Management, Room 
1063B, between the hours of 8 a.m. and 4:30 p.m., Monday through Friday 
(except holidays). Please call (202) 273-9515 for an appointment. In 
addition, during the comment period, comments may be viewed online 
through the Federal Docket Management System (FDMS) at https://
www.Regulations.gov.

FOR FURTHER INFORMATION CONTACT: William F. Russo, Director of 
Regulations Management (00REG), Department of Veterans Affairs, 810 
Vermont Avenue, NW., Washington, DC 20420, (202) 273-9515.

SUPPLEMENTARY INFORMATION: The Secretary of Veterans Affairs has 
established an Office of Regulation Policy and Management (ORPM) to 
provide centralized management and coordination of VA's rulemaking 
process. One of the major functions of this office is to oversee a 
Regulation Rewrite Project (the Project) to improve the clarity and 
consistency of existing VA regulations. The Project responds to a 
recommendation made in the October 2001 ``VA Claims Processing Task 
Force: Report to the Secretary of Veterans Affairs.'' The Task Force 
recommended that the compensation and pension regulations be rewritten 
and reorganized in order to improve VA's claims adjudication process. 
Therefore, the Project began its efforts by reviewing, reorganizing and 
redrafting the content of the regulations in 38 CFR part 3 governing 
the compensation and pension program of the Veterans Benefits 
Administration. These regulations are among the most difficult VA 
regulations for readers to understand and apply.
    Once rewritten, the proposed regulations will be published in 
several portions for public review and comment. This is one such 
portion. It adds subpart H, which includes proposed rules regarding the 
special and ancillary benefits for veterans, dependents, and survivors. 
After review and consideration of public comments, final versions of 
these proposed regulations will ultimately be published in a new part 5 
in 38 CFR.

Outline

Overview of New Part 5 Organization
Overview of Proposed Subpart H Organization
Table Comparing Current Part 3 Rules with Proposed Part 5 Rules
Content of Proposed Regulations

Special Benefits for Veterans, Dependents, and Survivors

5.580 Medal of Honor pension.
5.581 Awards of VA benefits based on special acts or private laws.
5.582 Naval pension.
5.583 Special allowance under 38 U.S.C. 1312.
5.584 Loan guaranty for surviving spouses; certification.
5.585 Certification for death gratuity.
5.586 Certification for dependents' educational assistance (DEA).
5.587 Minimum income annuity and gratuitous annuity.
5.588 Special allowance payable under section 156 of Public Law 97-
377.
5.589 Monetary allowance for Vietnam veterans' children born with 
spina bifida.
5.590 Monetary allowance for female Vietnam veterans' children with 
certain birth defects.
5.591 Effective dates of awards for certain disabled children of 
Vietnam veterans.

Ancillary Benefits for Certain Service-Connected Veterans and 
Certain Members of the Armed Forces Serving on Active Duty

5.603 Financial assistance to purchase a vehicle and adaptive 
equipment.
5.606 Clothing allowance.
Endnote Regarding Amendatory Language
Paperwork Reduction Act
Regulatory Flexibility Act
Executive Order 12866
Unfunded Mandates
Catalog of Federal Domestic Assistance Numbers
List of Subjects in 38 CFR Part 5

Overview of New Part 5 Organization

    We plan to organize the part 5 regulations so that all provisions 
governing a specific benefit are located in the same subpart, with 
general provisions pertaining to all compensation and pension benefits 
also grouped together. We believe this organization will allow 
claimants, beneficiaries, and their representatives, as well as VA 
personnel, to find information relating to a specific benefit more 
quickly than the organization provided in current part 3.
    The first major subdivision would be ``Subpart A--General 
Provisions.'' It would include information regarding the scope of the 
regulations in new part 5, delegations of authority, general 
definitions, and general policy provisions for this part. This subpart 
was published as proposed on March 31, 2006. See 71 FR 16464.
    ``Subpart B--Service Requirements for Veterans'' would include 
information regarding a veteran's military service, including the 
minimum service requirement, types of service, periods of war, and 
service evidence requirements. This subpart was published as proposed 
on January 30, 2004. See 69 FR 4820.
    ``Subpart C--Adjudicative Process, General'' would inform readers 
about claims and benefit application filing procedures, VA's duties, 
rights and responsibilities of claimants and beneficiaries, general 
evidence requirements, and general effective dates, as well as revision 
of decisions and protection of VA ratings. This subpart will be 
published as three separate Notices of Proposed Rulemaking (NPRM)s due 
to its size. The first of these three separate NPRMs, concerning VA's 
duties and the rights and responsibilities of claimants and 
beneficiaries, was published as proposed on May 10, 2005. See 70 FR 
24680.
    ``Subpart D--Dependents or Survivors of Veterans'' would inform 
readers how VA determines whether an individual is a dependent or a 
survivor of a veteran. It would also provide the evidence requirements 
for these determinations. This subpart was published as proposed on 
September 20, 2006. See 71 FR 55052.
    ``Subpart E--Claims for Service Connection and Disability 
Compensation'' would define service-connected disability compensation,

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including direct and secondary service connection. This subpart would 
inform readers how VA determines entitlement to service connection. The 
subpart would also contain those provisions governing presumptions 
related to service connection, rating principles, and effective dates, 
as well as several special ratings. This subpart will be published as 
three separate NPRMs due to its size. The first, concerning 
presumptions related to service connection, was published on July 27, 
2004. See 69 FR 44614.
    ``Subpart F--Nonservice-Connected Disability Pensions and Death 
Pensions'' would include information regarding the three types of 
nonservice-connected pension: Improved Pension, Old-Law Pension, and 
Section 306 Pension. This subpart would also include those provisions 
that state how to establish entitlement to Improved Pension, and the 
effective dates governing each pension. This subpart will be published 
as two separate NPRMs due to its size. The portion concerning Old-Law 
Pension, Section 306 Pension, and elections of Improved Pension was 
published as proposed on December 27, 2004. See 69 FR 77578.
    ``Subpart G--Dependency and Indemnity Compensation, Death 
Compensation, and Accrued Benefits, and Special Rules Applicable Upon 
Death of a Beneficiary'' would contain regulations governing claims for 
dependency and indemnity compensation (DIC); death compensation; 
accrued benefits; benefits awarded, but unpaid at death; and various 
special rules that apply to the disposition of VA benefits, or proceeds 
of VA benefits, when a beneficiary dies. This subpart would also 
include related definitions, effective-date rules, and rate-of-payment 
rules. This subpart will be published as two separate NPRMs due to its 
size. The portion concerning accrued benefits, special rules applicable 
upon the death of a beneficiary, and several effective date rules, was 
published as proposed on October 1, 2004. See 69 FR 59072. The portion 
concerning DIC benefits and general provisions relating to proof of 
death and service-connected cause of death was published as proposed on 
October 21, 2005. See 70 FR 61326.
    ``Subpart H--Special and Ancillary Benefits for Veterans, 
Dependents, and Survivors'' would pertain to special and ancillary 
benefits available, including benefits for children with various birth 
defects. This subpart is the subject of this document.
    ``Subpart I--Benefits for Certain Filipino Veterans and Survivors'' 
would pertain to the various benefits available to Filipino veterans 
and their survivors. This subpart was published as proposed on June 30, 
2006. See 71 FR 37790.
    ``Subpart J--Burial Benefits'' would pertain to burial allowances.
    ``Subpart K--Matters Affecting the Receipt of Benefits'' would 
contain those provisions regarding bars to benefits, forfeiture of 
benefits, and renouncement of benefits. This subpart was published as 
proposed on May 31, 2006. See 71 FR 31056.
    ``Subpart L--Payments and Adjustments to Payments'' would include 
general rate-setting rules, several adjustment and resumption 
regulations, and election-of-benefit rules. Because of its size, 
proposed regulations in subpart L will be published in two separate 
NPRMs.
    The final subpart, ``Subpart M--Apportionments and Payments to 
Fiduciaries or Incarcerated Beneficiaries,'' would include regulations 
governing apportionments, benefits for incarcerated beneficiaries, and 
guardianship.
    Some of the regulations in this NPRM cross-reference other 
compensation and pension regulations. If those regulations have been 
published in this or earlier NPRMs for the Project, we cite the 
proposed part 5 section. We also include, in the relevant portion of 
the SUPPLEMENTARY INFORMATION, the Federal Register page where a 
proposed part 5 section published in an earlier NPRM may be found. 
However, where a regulation proposed in this NPRM would cross-reference 
a proposed part 5 regulation that has not yet been published, we cite 
to the current part 3 regulation that deals with the same subject 
matter. The current part 3 section we cite may differ from its eventual 
part 5 counterpart in some respects, but we believe this method will 
assist readers in understanding these proposed regulations where no 
part 5 counterpart has yet been published. If there is no part 3 
counterpart to a proposed part 5 regulation that has not yet been 
published, we have inserted ``[regulation that will be published in a 
future Notice of Proposed Rulemaking]'' where the part 5 regulation 
citation would be placed.
    Because of its large size, proposed part 5 will be published in a 
number of NPRMs, such as this one. VA will not adopt any portion of 
part 5 as final until all of the NPRMs have been published for public 
comment.
    In connection with this rulemaking, VA will accept comments 
relating to a prior rulemaking issued as a part of the Project, if the 
matter being commented on relates to both NPRMs.

Overview of Proposed Subpart H Organization

    This NPRM pertains to the VA adjudication rules that concern 
special and ancillary benefits for veterans, dependents, and survivors. 
The document addresses the rules that govern special benefits, such as 
Sec.  3.802 related to Medal of Honor, Sec.  3.801 related to special 
acts of Congress, and Sec.  3.814 related to children with spina 
bifida. We will also address the rules that govern ancillary benefits 
for which veterans with certain service-connected disabilities are 
eligible. These include the current Sec.  3.808 related to 
certification for automobiles or other conveyances under 38 U.S.C. 
3902; and Sec.  3.810 related to the clothing allowance under 38 U.S.C. 
1162. While these regulations have been substantially restructured and 
rewritten for greater clarity and ease of use, most of the basic 
concepts contained in these proposed regulations are the same as in 
their existing counterparts in 38 CFR part 3. However, a few 
substantive changes are proposed. We specifically note in the NPRM 
where the substantive changes occur.

Table Comparing Current Part 3 Rules With Proposed Part 5 Rules

    The following table shows the relationship between the current 
regulations in part 3 and the proposed regulations contained in this 
NPRM:

------------------------------------------------------------------------
                                            Based in whole or in part on
   Proposed part 5 section or paragraph       38 CFR part 3 section or
                                               paragraph (or ``New'')
------------------------------------------------------------------------
                            Special Benefits
------------------------------------------------------------------------
5.580(a)-(b)..............................  3.802(a)
(c)(1)-(2)................................  3.802(b).
5.580(c)(3)...............................  3.802(c).
5.580(c)(4)...............................  3.27(d).
5.580(d)-(e)..............................  3.802(b).
5.581(a)-(b)..............................  3.801(a).
5.581(c)(1)...............................  3.801(c)(2).
5.581(c)(2)...............................  3.801(d).
5.581(d)..................................  3.801(b).
5.581(e)(1)...............................  3.801(e).
5.581(e)(2)...............................  New.
5.581(f)..................................  3.801(c)(1).
5.582.....................................  3.803.
5.583.....................................  3.804.
5.584.....................................  3.805.
5.585.....................................  3.806.
5.586(a)..................................  New.
5.586(b)..................................  3.807(c).
5.586(c)..................................  3.807(c).
5.586(d)..................................  3.807(d).
5.587.....................................  3.811.
5.588.....................................  3.812.
5.589.....................................  3.814.
5.590.....................................  3.815.
5.591 (introductory paragraph)............  New.

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5.591(a) (introductory paragraph).........  3.814(e) (introductory
                                             paragraph), 3.815(i)
                                             (introductory paragraph).
5.591(a)(1)...............................  3.403(b).
5.591(a)(2)...............................  3.403(c), 3.815(i)
                                             (introductory paragraph).
5.591(a)(3)...............................  3.403(b), (c).
                                            3.815(i).
5.591(a)(4)...............................  3.400(g).
                                            3.814(e)(2), 3.815(i)(2).
5.591(a)(5)...............................  3.400(o)(2).
                                            3.814(e)(1).
                                            3.815(i)(1).
5.591(a)(6)...............................  3.114(a), 3.815(i)
                                             (introductory paragraph),
                                             3.403(c).
5.591(b) (introductory paragraph).........  3.500(a), 3.814(f),
                                             3.815(j).
5.591(b)(1)...............................  3.500(b)(1), 3.814(f)(1),
                                             3.815(j)(1).
5.591(b)(2)...............................  3.500(b)(2), 3.814(f)(2),
                                             3.815(j)(2).
5.591(b)(3)...............................  3.503(b).
5.591(b)(4)...............................  3.814(f) (introductory
                                             paragraph); 3.815(j)
                                             (introductory paragraph).
------------------------------------------------------------------------
                           Ancillary Benefits
------------------------------------------------------------------------
5.603(a)..................................  New.
5.603(b)(1)...............................  3.808(e).
5.603(b)(2)...............................  New.
5.603(c)(1)...............................  3.808(a), (b), and New.
5.603(c)(2)...............................  3.808(b).
5.603(c)(3)...............................  3.808(c).
5.603(d)(1)...............................  New.
5.603(d)(2)...............................  3.808(d) and 17.158.
5.603(e)..................................  3.808(c) and New.
5.603(f)..................................  New and 17.158.
5.606(a)..................................  New.
5.606(b)(1)...............................  3.810(a) (introductory
                                             paragraph).
5.606(b)(2) (introductory paragraph)......  3.810(a)(1).
5.606(b)(2)(i)............................  3.810(a)(1), (a)(2).
5.606(b)(2)(ii)...........................  3.810(a)(2).
5.606(b)(3)...............................  3.810(a) (introductory
                                             paragraph).
5.606(c)..................................  3.810(a)(1), (a)(2) and New.
5.606(d)..................................  3.810(b).
5.606(e)(1)...............................  3.810(c)(1).
5.606(e)(2)...............................  3.810(c)(2).
5.606(f)..................................  New.
5.606(g)..................................  New.
5.606(h)..................................  3.810(d).
------------------------------------------------------------------------

    Readers who use this table to compare existing regulatory 
provisions with the proposed provisions, and who observe a substantive 
difference between them, should consult the text that appears later in 
this document for an explanation of significant changes in each 
regulation. Not every paragraph of every current part 3 section 
regarding the subject matter of this rulemaking is accounted for in the 
table. In some instances other portions of the part 3 sections that are 
contained in these proposed regulations appear in subparts of part 5 
that will be published for public comment at a later time. For example, 
a reader might find a reference to paragraph (a) of a part 3 section in 
the table, but no reference to paragraph (b) of that section because 
paragraph (b) will be addressed in a separate NPRM. The table also does 
not include provisions from part 3 regulations that will not be carried 
forward to part 5. Such provisions are discussed specifically under the 
appropriate part 5 heading in this preamble. Readers are invited to 
comment on the proposed part 5 provisions and also on our proposals to 
omit those part 3 provisions from part 5.

Content of Proposed Rules

Special Benefits for Veterans, Dependents, and Survivors

Section 5.580 Medal of Honor Pension
    Current Sec.  3.802 and the authorizing statutes, 38 U.S.C. 
1560(c), 1561(c), and 1562, use the phrase ``special pension'' to 
reference benefits payable under those provisions to Medal of Honor 
recipients. In order to make this regulation more specific, however, VA 
proposes to use the phrase ``Medal of Honor pension'' when referring to 
benefits paid under proposed Sec.  5.580.
    Proposed Sec.  5.580 restates in plain language current Sec.  
3.802, regarding allocation of responsibilities between the service 
departments and VA with regard to Medal of Honor pension.
    Current Sec.  3.802(a) consists of two sentences. The first 
sentence briefly explains that the Secretaries of the Armed Forces and 
of the Department of Transportation are responsible for determining 
whether an applicant has been placed on the Medal of Honor Roll and for 
delivering to VA a certified copy of the certificate noting that the 
applicant has been placed on the Medal of Honor Roll and has a right to 
the Medal of Honor pension. The second sentence states: ``The special 
pension will be authorized on the basis of such certification.'' The 
current regulation does not clearly indicate that VA is authorized to 
pay the pension to a person placed on the Medal of Honor Roll.
    We propose to divide current Sec.  3.802(a) into two paragraphs. 
Proposed Sec.  5.580(a) explains that the service departments are 
responsible for determining the eligibility of an applicant to be 
entered on the Medal of Honor Roll, a determination in which VA has no 
role. We also propose in Sec.  5.580 to refer to the Department of 
Homeland Security instead of the Department of Transportation. This 
change is needed because the United States Coast Guard now falls under 
the jurisdiction of the Department of Homeland Security. Homeland 
Security Act of 2002, Public Law 107-296, Sec.  888(b), 116 Stat. 2249. 
Proposed Sec.  5.580(b) clarifies that it is the responsibility of VA 
to award the Medal of Honor pension after it receives a certified copy 
of the certificate. The authorities for proposed Sec.  5.580(a) and (b) 
are 38 U.S.C. 1560 and 38 U.S.C. 1561.
    Proposed Sec.  5.580(c) describes how VA calculates the amount and 
effective date of the Medal of Honor pension award and the retroactive 
lump sum payment associated with the pension award. Current Sec.  
3.802(b) provides, in part: ``An award of special pension at the 
monthly rate specified in 38 U.S.C. 1562 will be made as of the date of 
filing of the application [for placement on the Medal of Honor Roll] 
with the Secretary concerned.'' This sentence is split into proposed 
Sec.  5.580(c)(1) and (c)(2) and restated in plain language.
    Proposed Sec.  5.580(c)(3) is a restatement in plain language of 
current Sec.  3.802(c), with the exception of the last sentence of 
Sec.  3.802(c). The last sentence states ``VA will not make a 
retroactive lump sum payment under this section before October 1, 
2003.'' We propose not to include this sentence in Sec.  5.580(c) 
because, due to the passage of time, it no longer serves any useful 
purpose.
    In keeping with our objective to consolidate material concerning 
the same benefit, we propose to repeat the content of current Sec.  
3.27(d) relating to automatic adjustments of Medal of Honor pension in 
proposed Sec.  5.580(c)(4) without substantive change. We propose to 
title Sec.  5.580(c)(4) ``Automatic annual adjustment.''
    Proposed Sec.  5.580(d) is based, in part, on current Sec.  
3.802(b). The first sentence of proposed Sec.  5.580(d) is derived from 
the current rule. The second sentence of proposed Sec.  5.580(d) 
restates 38 U.S.C. 1562(c): ``Pensions payable under this section are 
not subject to any attachment, execution, levy, tax lien, or detention 
under any process whatever.'' We propose to add this statement to the 
regulation in order to emphasize the protections afforded the Medal of 
Honor pension.
    Proposed Sec.  5.580(e) restates the last sentence of current Sec.  
3.802(b) which explains that a veteran is entitled to only one Medal of 
Honor pension even

[[Page 10863]]

if the veteran is awarded more than one Medal of Honor.
Section 5.581 Awards of VA Benefits Based on Special Acts or Private 
Laws
    Proposed Sec.  5.581 restates current Sec.  3.801, governing awards 
of VA benefits based on a special act of Congress, and adds language 
clarifying the existing rule.
    Proposed Sec.  5.581(a) restates the definition of a ``special 
act'' from current Sec.  3.801(a), also called a ``private law,'' as an 
act of Congress that authorizes VA to pay benefits to a particular 
person.
    Proposed Sec.  5.581(b) clarifies the rule stated in current Sec.  
3.801(a) that VA will not award benefits based on a special act until a 
claimant-beneficiary has filed a formal application. The purpose of 
this provision is to ensure that VA has all of the necessary 
information (such as full name, address, military status, etc.), and 
that the information is current and accurate, in order to properly 
identify and make payments to the beneficiary.
    Proposed Sec.  5.581(c) restates current Sec.  3.801(c)(2) and (d), 
with clarification. The rule pertains to a special act that modifies 
the dates of a veteran's service or the character of a former 
servicemember's discharge. We propose to restate current Sec.  
3.801(c)(2) in plain language as Sec.  5.581(c)(1).
    Current Sec.  3.801(d) provides that a special act that shows a 
person commenced service in the active military service on a particular 
date and was honorably discharged on a subsequent date ``is sufficient 
regardless of whether the service department has any record of such 
service.'' In Sec.  5.581(c)(2), we propose to characterize a special 
act as ``conclusive'' rather than ``sufficient'' proof of the period of 
service described in the special act. For VA purposes, Congress' act on 
the matter is conclusive and no further investigation of the veteran's 
period of service is authorized.
    Proposed Sec.  5.581(d) restates in plain language current Sec.  
3.801(b). Paragraph (d) states that VA will pay the benefit in 
accordance with the rate, effective date, and duration prescribed in a 
special act. If the special act does not provide for the rate, 
effective date, or duration of payments, VA will set them consistent 
with existing public law.
    Proposed Sec.  5.581(e) describes two situations where the rate of 
pension or disability compensation may be changed. Proposed paragraph 
(e)(1), based on current Sec.  3.801(e), states that the rate of 
pension may be reduced when a payee is hospitalized. Proposed paragraph 
(e)(2) states that the rate of pension or disability compensation may 
be reduced when a payee is incarcerated. This is a new provision based 
on section 1505 of Title 38, United States Code, and 38 CFR 3.666, 
which prohibit the payment of pension under private laws administered 
by VA to an individual who is imprisoned for more than 60 days in a 
Federal, State, or local penal institution. It is also based on section 
5313 of Title 38, United States Code, and 38 CFR 3.365, which prohibit 
the payment of VA disability compensation to an individual who is 
imprisoned for more than 60 days in a Federal, State, or local penal 
institution. Although section 5313 and 38 CFR 3.365 do not specify that 
they are applicable to compensation paid under private law, there is no 
indication that they would apply only to compensation paid under public 
laws.
    Proposed paragraph Sec.  5.581(f) is based on current Sec.  
3.801(c)(1), which states that VA will not pay any other pension or 
disability compensation award other than the award authorized by the 
special act, unless the payee makes an election or unless the special 
act expressly authorizes VA to do so. We note that this provision might 
be problematic if it prohibits payment for a disability other than the 
disability for which payments are awarded under the special act. For 
example, if a special act awarded disability compensation for a back 
injury, VA should not be precluded from paying additional compensation 
for a different service-connected condition. Therefore, we have amended 
the provision to state that if VA is authorized to pay pension or 
disability compensation by a special act, it may not pay any other 
pension or disability compensation award to the extent that such award 
would be duplicative under section 5304 of Title 38, United States 
Code. Thus, the payee will be prevented from receiving more than one 
award for the same disability, but will not be prevented from receiving 
an award for a different disability or manifestation of disability. See 
Subpart L, Payments to Beneficiaries Who Are Eligible for More than One 
Benefit, Sec. Sec.  5.740 through 5.769, which will be published in a 
future NPRM.
Sections 5.582, Naval Pension, 5.583, Special Allowance Under 38 U.S.C. 
1312, and 5.584, Loan Guaranty for Surviving Spouses; Certification
    We propose to repeat the content of current Sec. Sec.  3.803 (Naval 
Pension), 3.804 (Special allowance under 38 U.S.C. 1312), and 3.805 
(Loan guaranty for surviving spouses; certification), in Sec. Sec.  
5.582, 5.583, and 5.584, respectively, without making any substantive 
changes to the text of the rules. We note that these sections do not 
have internal paragraph headings to identify the subject matter 
contained therein. Therefore, we propose to insert paragraph headings 
where appropriate to aid the reader in locating subject matter and to 
make these regulations easier to read.
    Further, in proposed Sec.  5.582, we inserted the word 
``disability'' before the word ``compensation'' in each instance to be 
consistent with other regulations in this NPRM. For the purpose of 
clarity and to avoid confusion between naval pension and VA pension, we 
propose not to use the phrase ``disability pension,'' which appears in 
current Sec.  3.803(b), in Sec.  5.582. We propose to place the word 
``VA'' before the phrase ``pension or disability compensation'' in 
order to distinguish the Department of Defense programs from the VA 
programs.
    Proposed Sec.  5.582(c) is based on current Sec.  3.803(c), which 
states that new awards of naval pension may not be made concurrently 
with VA pension or compensation. We note that the meaning of ``new'' is 
ambiguous. It is actually referring to awards of naval pension made on 
or after July 14, 1943. See 38 U.S.C. 5304(a)(1). To make this clear to 
the reader, we have amended this provision to include this date.
    Proposed Sec.  5.583(b)(1) is based on current Sec.  3.804(b)(1), 
which states that the special allowance under 38 U.S.C. 1312 is not 
payable where the veteran's death resulted from VA hospitalization, 
treatment, examination, or training. The purpose of this provision is 
to exclude deaths treated ``as if'' service connected, because such 
deaths do not meet the criteria of 38 U.S.C. 1312(a)(2). Since Sec.  
3.804 was promulgated, however, the criteria of 38 U.S.C. 1151 
(authorizing dependency and indemnity compensation for deaths treated 
``as if'' service connected because death was due to VA treatment or 
vocational rehabilitation) have been expanded, and 38 U.S.C. 1318 
(authorizing dependency and indemnity compensation for certain deaths 
treated ``as if'' service connected because the veteran was rated 
totally disabled at time of death) has been enacted. Therefore, current 
Sec.  3.804(b)(1) has been rewritten in proposed Sec.  5.583(b)(1) to 
encompass this expanded criteria for deaths that may be treated ``as 
if'' service connected. We have included a reference to proposed Sec.  
5.510(b)(2) and (3), which address deaths treated ``as if'' service 
connected under 38 U.S.C. 1151 and 1318. No substantive change is 
intended.
    Proposed Sec.  5.583(e)(1)(ii) is based on current Sec.  
3.804(e)(1)(ii), which states that the special allowance is payable for

[[Page 10864]]

death occurring as the result of a disease or injury which was incurred 
or aggravated in line of duty while on active duty or active duty for 
training, or an injury which was incurred or aggravated in line of duty 
while on inactive duty training, as a member of a uniformed service 
after September 15, 1940, if the veteran was discharged or released 
from the period of such duty under conditions other than dishonorable. 
We note that this provision does not incorporate the 2000 amendment to 
the statutory definition of ``active military, naval, or air service.'' 
The amendment included as ``active military, naval, or air service'' 
any period of inactive duty training during which the individual 
concerned was disabled or died from an acute myocardial infarction, a 
cardiac arrest, or a cerebrovascular accident occurring during such 
training. Rather than amend the regulatory provision to include this 
new language, we have decided to utilize the corresponding statutory 
language instead, which states simply ``as the result of a service-
connected disability incurred after September 15, 1940.'' See 38 U.S.C. 
1312(a)(2)(B). The statutory definition of ``service-connected'' 
includes the requirement that the disability was incurred or aggravated 
in the line of duty in the active military, naval, or air service. See 
38 U.S.C. 101(16). By using the statutory language in the regulation, 
it will not be necessary to amend the regulation every time there is an 
amendment to the statutory definition of ``active military, naval, or 
air service.'' No substantive change to the regulatory provision is 
intended. The requirement that the veteran was discharged or released 
under conditions other than dishonorable, currently found in Sec.  
3.804(e)(1)(ii), is contained in proposed Sec.  5.583(e)(2).
    In proposed Sec.  5.583(e)(2)(ii), the counterpart to current Sec.  
3.804(e)(2)(ii), we have replaced the reference to current Sec.  3.1(m) 
with proposed Sec.  5.660, which was published in Subpart K on May 31, 
2006. See 71 FR 31056. Current Sec.  3.804(e)(2)(ii) also includes a 
reference to the Sec.  3.300 series. Therefore, we have included 
references to any published proposed Part 5 counterparts to regulations 
in the current Sec.  3.300 series. These include Sec. Sec.  5.661 and 
5.662, which are the Part 5 counterparts to Sec. Sec.  3.301 and 3.302. 
These were published in Subpart K on May 31, 2006. These also include 
proposed Sec. Sec.  5.260 through 5.269, which are the Part 5 
counterparts to Sec. Sec.  3.307 through 3.309, 3.311, 3.316 and 317. 
These were published in Subpart E on July 27, 2004. See 69 FR 44614. We 
have retained the reference to the current Sec.  3.300 series, because 
the remaining regulations in that series have not yet been published in 
a Part 5 NPRM.
Section 5.585 Certification for Death Gratuity
    We propose to reword the text of current Sec.  3.806 for the sake 
of clarity. Current paragraph (a) refers to situations where VA makes a 
certification based on a claim filed with it, and current paragraph (b) 
refers to situations where VA makes a certification at the request of 
the Secretary concerned. As VA must go through the same determination 
criteria in either situation, we propose to combine paragraphs (a) and 
(b), as there is no need for them to be separate. Current paragraph (c) 
(which is proposed paragraph (b)) has also been slightly reorganized.
Section 5.586 Certification for Dependents' Educational Assistance 
(DEA)
    Proposed Sec.  5.586 is based on current Sec.  3.807 relating to 
certification for DEA. We note that the current provisions of Sec.  
3.807(a) and (b) are redundant of provisions already contained in Sec.  
21.3021. The provisions of Sec.  3.807(a) appear in Sec.  21.3021(a). 
The provisions of Sec.  3.807(b) appear in Sec.  21.3021(b), with the 
exception of the sentence stating that service-connected disability or 
death must have been the result of active military, naval, or air 
service on or after April 21, 1898. (Pub. L. 8-358). However, due to 
the passage of time, this date is no longer necessary and no longer 
needs to be included in this regulation. Further, the requirement that 
the service-connected disability or death must have been the result of 
active military, naval, or air service is necessarily implied in the 
eligibility requirements of Sec.  21.3021(a), that the veteran has or 
had a service-connected disability. A service-connected disability or 
death is, by statutory definition, the result of active military, 
naval, or air service. See 38 U.S.C. 101(16).
    Instead of repeating the same criteria already contained in Sec.  
21.3021, we propose to simply refer the reader to Sec.  21.3021 for the 
eligibility criteria. This will prevent possibly conflicting 
substantive provisions, and will prevent the necessity of amending two 
regulations for the same provision. We have also added a brief 
description of DEA.
    Proposed Sec.  5.586(b) is based on the second sentence of Sec.  
3.807(c), which indicates that the standards and criteria for 
determining service connection, either direct or presumptive, are those 
applicable to the period of service during which the disability was 
incurred or aggravated.
    Proposed Sec.  5.586(c)(1) is based on the first sentence of Sec.  
3.807(c), which states that a disability treated as if service 
connected under Sec.  3.383(a) (paired organs and extremities) is 
included for purposes of determining eligibility for DEA. Proposed 
Sec.  5.586(c)(2) is based on the third sentence of Sec.  3.807(c), 
which states that a disability treated as if service connected under 
Sec. Sec.  3.358, 3.361, or 3.800 (disability or death due to 
hospitalization or vocational rehabilitation) is not included for 
purposes of determining eligibility for DEA.
    Proposed Sec.  5.586(d) is based on current Sec.  3.807(d), 
containing the definitions of child, spouse, and surviving spouse for 
purposes of determining eligibility for DEA. Paragraph (d)(1), 
pertaining to the definition of ``child,'' remains essentially 
unchanged, since the definition is particular to eligibility for DEA. 
In paragraph (d)(2), we propose to add that a spouse means a person of 
the opposite sex. Currently, (d)(2) merely refers the reader to the 
appropriate regulation, Sec.  3.50 (proposed Sec.  5.190), for that 
definition. The reader is still referred to the appropriate regulation 
(old Sec.  3.1(j); proposed Sec.  5.190) for the requirements of a 
valid marriage. Paragraph (d)(3) is reworded but contains no 
substantive change.
Sections 5.587, Minimum Income Annuity and Gratuitous Annuity, and 
5.588, Special Allowance Payable Under Section 156 of Public Law 97-377
    We propose to repeat the content of current Sec. Sec.  3.811 and 
3.812 in Sec. Sec.  5.587 and 5.588 without making any substantive 
changes to the text of these rules. We note that current Sec.  3.811 is 
without internal paragraph headings in certain places to properly 
identify the subject matter. Therefore, we propose to insert paragraph 
headings in proposed Sec.  5.587(b)(2)-(d) as appropriate guideposts to 
aid the reader in locating subject matter and to make the regulation 
easier to read. For the purpose of consistency in usage between the 
various NPRMs, we propose to substitute the terms ``discontinue'' and 
``discontinuance'' in place of ``terminate'' and ``termination'' in 
Sec. Sec.  5.587(e) and 5.588.

[[Page 10865]]

Sections 5.589, Monetary Allowance for Vietnam Veterans' Children Born 
With Spina Bifida, and 5.590, Monetary Allowance for Female Vietnam 
Veterans' Children With Certain Birth Defects
    We propose to revise the titles of current Sec. Sec.  3.814 and 
3.815, respectively. We propose to revise the title of current Sec.  
3.814 (proposed Sec.  5.589) to read, ``Monetary allowance for Vietnam 
veterans' children born with spina bifida.'' We believe that this title 
more accurately and completely represents the content of the rule. For 
the same reason, we propose to amend the title of current Sec.  3.815 
(proposed Sec.  5.590), to read, ``Monetary allowance for female 
Vietnam veterans' children with certain birth defects.'' The proposed 
titles make the regulations easier to locate and identify in part 5.
    We note that the second sentence of Sec.  3.814(a), which indicates 
that a recipient of a monetary allowance under chapter 18 is not 
prevented from receiving other VA benefits, is substantively the same 
provision as found in Sec.  3.815(b), which uses slightly different 
language. We think the provisions in each regulation should use the 
same language, however, because they are both based on the same 
statute, 38 U.S.C. 1823. Therefore, in proposed Sec.  5.589, we have 
added paragraph (b), which is identical to the paragraph found in 
current Sec.  3.185(b) and proposed Sec.  5.590(b). For this reason, 
the second sentence of Sec.  3.814(a) is not carried over to proposed 
Sec.  5.589.
    Current Sec. Sec.  3.814 and 3.815 use the phrase ``active 
military, naval, or air service'' to refer to qualifying service for 
benefits under those regulations. VA has previously proposed, with 
regard to the regulations relating to service requirements for 
veterans, to use the term ``active military service'' in lieu of the 
longer term ``active military, naval, or air service'' in 38 U.S.C. 
101(24) and current part 3. 69 FR 4820, 4822 (2004). In order to 
maintain consistency, we propose to use the same phrase in these 
regulations pertaining to special and ancillary benefits. Note that, as 
an equivalent to the longer ``active military, naval, or air service,'' 
``active military service'' is a broader term than ``active duty.'' 
Compare 38 U.S.C. 101(21) with 38 U.S.C. 101(24).
    Neither the authorizing statutes nor the current regulations 
concerning these monetary allowances define ``service in the Republic 
of Vietnam''. To promote consistency among VA adjudications and because 
we believe it reflects Congressional intent in enacting Chapter 18, we 
propose to cross reference our proposed definition of the phrase as it 
applies to veterans seeking a presumption of exposure to herbicides, 
contained in Sec.  5.262(a)(1). See 69 FR 44614, July 27, 2004.
    We propose to move the effective date provisions of these rules, 
Sec. Sec.  3.814(e) and (f) and 3.815(i) and (j), to a new regulation, 
Sec.  5.591.
Section 5.591 Effective Dates of Awards for Certain Disabled Children 
of Vietnam Veterans
    Pursuant to 38 U.S.C. 1805(a), VA is required to pay ``a monthly 
allowance * * * to any child of a Vietnam veteran for any disability 
resulting from spina bifida suffered by such child.'' Current 
Sec. Sec.  3.403(b) and 3.814 implement 38 U.S.C. 1805. Similarly, VA 
is required by 38 U.S.C. 1815(a) to pay ``a monthly allowance to any 
eligible child for any disability resulting from the covered birth 
defects of that child.'' The term ``eligible child'' is defined in 38 
U.S.C. 1811 as a child of a ``woman Vietnam veteran'' who ``was born 
with one or more covered birth defects.'' Current Sec. Sec.  3.403(c) 
and 3.815 implement 38 U.S.C. 1815.
    The effective date of awards (and discontinuances or reductions of 
awards) of the monthly allowances described above are governed by 38 
U.S.C. 1832, which incorporates the provisions of 38 U.S.C. 5110(a), 
(b)(2), (g), and (i); and 5112(a) and (b)(1), (6), (9), and (10). 
Currently, the effective date rules that implement these statutory 
provisions are found in several part 3 regulations. The effective date 
rules for awards based on spina bifida under current Sec.  3.814 appear 
in current Sec. Sec.  3.814(e) and (f), 3.403(b), and 3.503(b). The 
effective date rules for awards based on birth defects under current 
Sec.  3.815 appear in current Sec. Sec.  3.815(i) and (j), 3.403(c), 
and 3.503(b). Much of the language in these rules is repetitive and can 
be simplified. We propose to reduce the repetition and increase the 
clarity in these rules by consolidating the effective date provisions 
located in current Sec. Sec.  3.814 and 3.815 with the provisions 
located in current Sec. Sec.  3.403 and 3.503, resulting in one 
comprehensive rule. We propose Sec.  5.591 as that new comprehensive 
rule.
    The introductory paragraph of proposed Sec.  5.591 outlines the 
scope of the proposed rule. Proposed Sec.  5.591(a) provides the 
general rule for determining the effective date of an award for the 
monetary allowances governed by the proposed rule. It restates content 
from current Sec. Sec.  3.403(b) and (c), 3.814(e), and 3.815(i), all 
of which restate the general rule articulated in 38 U.S.C. 5110(a). The 
general effective date statute, section 5110(a), is applicable to 
monthly allowances set forth in current Sec. Sec.  3.814 and 3.815, 
pursuant to 38 U.S.C. 1832(b)(2).
    Proposed Sec.  5.591(a)(1) and (a)(2) each limit the effective date 
of a monetary allowance to no earlier than the effective dates of 38 
U.S.C. 1805 and 1815. This limitation is required by 38 U.S.C. 5110(g), 
which states that the effective date of an award or increase in 
benefits pursuant to an Act or administrative issue ``shall not be 
earlier than the effective date of the Act or administrative issue.'' 
Subsection (g) of section 5110 is made applicable to these monetary 
awards by 38 U.S.C. 1832(b)(2).
    Proposed Sec.  5.591(a)(3) restates material currently found in 
Sec.  3.403(b) and (c) and Sec.  3.815(i), which is that the effective 
date of a monetary allowance will be the child's date of birth if the 
claim is received within a year of the birth date.
    Proposed Sec.  5.591(a)(4) states that VA will apply the rule in 
Sec.  3.400(g), which governs effective dates in cases where 
entitlement is established because of the correction of military 
records. This rule is applicable under 38 U.S.C. 1832(b)(2) and 
5110(i). Currently, the rule is restated in Sec. Sec.  3.814(e)(2) and 
3.815(i)(2). We propose to simply refer the reader to the actual rule, 
Sec.  3.400(g), instead of restating it.
    Proposed Sec.  5.591(a)(5) states that in a claim for increase of a 
monetary allowance, VA will apply the rule in Sec.  3.400(o)(2), 
pertaining to the effective date of an increase of compensation due to 
an increase in disability. This rule is applicable pursuant to U.S.C. 
5110(b)(2) and 1832(b)(2). Currently, Sec. Sec.  3.814(e)(1) and 
3.815(i)(1) restate the rule. We propose to simply refer the reader to 
the actual rule, Sec.  3.400(o)(2), instead of restating it.
    Proposed Sec.  5.591(a)(6) states that VA will apply the rule in 
Sec.  3.114(a), pertaining to a change of law or VA issue. Proposed 
Sec.  5.591(a)(6) incorporates the reference to Sec.  3.114(a) which 
appears in current Sec. Sec.  3.403(c) and 3.815(i). The statutory 
authority for current Sec.  3.114(a) is 38 U.S.C. 5110(g) and 
1832(b)(2).
    Proposed Sec.  5.591(b) governs reductions and discontinuances of 
the monetary allowances. Pursuant to 38 U.S.C. 1832, the provisions of 
38 U.S.C. 5112(a) and 5112(b)(1), (6), (9), and (10), governing 
effectives dates of reductions and discontinuances, are applicable.
    Currently, Sec. Sec.  3.814(f) and 3.815(j) restate 38 U.S.C. 
5112(a), which provides that the effective date of a reduction or 
discontinuance of certain

[[Page 10866]]

awards will be fixed according to the facts found, except as otherwise 
provided. This is implemented by current Sec.  3.500(a). We have 
included a reference to Sec.  3.500(a) in proposed Sec.  5.591(b).
    Proposed Sec.  5.591(b)(1) and (b)(2) applies the rules regarding 
the reduction or discontinuance of erroneous awards based on 
beneficiary or administrative error, located in current Sec.  
3.500(b)(1) and (2). Currently, paragraphs (1) and (2) of Sec.  
3.814(f) and paragraphs (1) and (2) of Sec.  3.815(j) repeat the 
language in paragraphs (1) and (2) of Sec.  3.500(b). We propose to 
simply incorporate those rules by reference to reduce repetitiveness.
    Proposed Sec.  5.591(b)(3) governs the effective date of a 
discontinuance based on the beneficiary's death, and restates current 
Sec.  3.503(b), which states that the last day of the month before the 
month in which a child's death occurs serves as the effective date of 
discontinuance. The statutory authority for this rule is 38 U.S.C. 
5112(b)(1), which is made applicable to these benefits through 38 
U.S.C. 1832(b)(4).
    Proposed Sec.  5.591(b)(4) restates the two cross references 
contained in the introductory paragraphs of current Sec. Sec.  3.814(f) 
and 3.815(j). The current rules cross-reference current Sec.  3.114(b), 
Discontinuance of Benefits based on a Change of Law or VA Issue.

Ancillary Benefits for Certain Service-Connected Veterans and Certain 
Members of the Armed Forces Serving on Active Duty

Section 5.603 Financial Assistance To Purchase a Vehicle and Adaptive 
Equipment
    Section 3902 of title 38, U.S.C., authorizes VA to assist certain 
veterans and servicemembers in acquiring a vehicle and adaptive 
equipment for a vehicle. Such assistance is available to claimants who 
have incurred certain disabilities as the result of injury sustained or 
disease contracted in or aggravated by active military service. See 38 
U.S.C. 3901(1)(A). VA's implementing regulations for 38 U.S.C. 3902 are 
currently codified at Sec.  3.808. It is our intent to rewrite the 
provisions currently in Sec.  3.808 in plain language to improve 
readability. As proposed, we have changed the title of this section to 
``Financial assistance to purchase a vehicle and adaptive equipment'' 
to better reflect the purpose of the regulation.
    Proposed Sec.  5.603(a) simply states in plain language the general 
nature of the benefit involved in this section.
    Proposed Sec.  5.603(b) provides definitions of applicable terms, 
namely ``adaptive equipment'' and ``vehicle.'' No substantive change 
from current Sec.  3.808 has been made to either term. We propose to 
include in Sec.  5.603(b) the types of adaptive equipment to which an 
eligible person may be entitled under this section. We propose to use 
the term ``vehicle'' in lieu of ``automobile or other conveyance'' to 
make the regulation easier to read.
    Proposed Sec.  5.603(c) identifies the criteria that a claimant 
must satisfy to obtain a certification of eligibility for the purchase 
of a vehicle and adaptive equipment. This is a plain language rewrite 
of current Sec.  3.808 criteria, and there is no change to the 
substantive provisions.
    Proposed Sec.  5.603(d), which is based on 38 CFR 17.158 and 
current VA practice, specifies certain limitations for eligibility for 
financial assistance to purchase a vehicle and/or adaptive equipment. 
It also states the limitations on how often an eligible person may take 
advantage of these benefits for the purchase of a vehicle and adaptive 
equipment, and states that payments may not be made for the repair, 
maintenance, or replacement of a vehicle, but payments may be made for 
the repair, replacement, or reinstallation of adaptive equipment.
    We note that current Sec.  3.808(d), which is entitled ``additional 
eligibility criteria for adaptive equipment,'' states that claimants 
for adaptive equipment must also satisfy the additional eligibility 
criteria of Sec. Sec.  17.156, 17.157, and 17.158 of this chapter. We 
have not included this provision in proposed Sec.  5.603 because the 
part 17 provisions do not state additional ``eligibility criteria.'' 
Rather, they state additional details regarding the assistance VA may 
provide. However, we have added a reference to those part 17 provisions 
in proposed Sec.  5.603(d)(2).
    Proposed Sec.  5.603(e) is based partly on current Sec.  3.808(c). 
We have also added a few details regarding the procedure of 
certification. These provisions reflect current VA practice; no 
substantive changes are intended.
    Proposed Sec.  5.603(f) is based on 38 CFR 17.158 and current VA 
practice; no substantive change is intended.
Section 5.606 Clothing Allowance
    Proposed Sec.  5.606 is derived from current Sec.  3.810 but is 
written in plain language to clarify certain provisions and to improve 
readability. We have reorganized the information in a logical format, 
addressing basic eligibility and applications, examinations, payments, 
and reduction for incarceration. We have also included rules for 
Filipino veterans and veterans living abroad to ensure that all 
affected persons have the information necessary to file an annual 
clothing allowance claim.
    Proposed Sec.  5.606(a) states generally the nature of the 
regulation. It does not add any substantive material to the regulation, 
but is merely intended to familiarize the reader with the nature of the 
regulation.
    Proposed Sec.  5.606(b), based on current Sec.  3.810(a), states 
the eligibility requirements for receiving benefits under this section. 
It is reorganized and rewritten in plain English. No substantive change 
from current Sec.  3.810(a) is intended, except for the reference to 
Sec.  3.326(c). The reference to Sec.  3.326(c) is in current Sec.  
3.810(a)(1), which states that one of the eligibility criteria is a VA 
examination or hospital or examination report from a facility specified 
in Sec.  3.326(c) which discloses that the veteran wears or uses 
certain prosthetic or orthopedic appliances (including a wheelchair) 
which tend to wear or tear clothing because of such disability and such 
disability is the loss or loss of use of a hand or foot compensable at 
a rate specified in Sec.  3.350(a), (b), (c), (d), or (f). The 
reference to Sec.  3.326(c) is not completely correct. Current Sec.  
3.326(c) states: ``Provided that it is otherwise adequate for rating 
purposes, a statement from a private physician may be accepted for 
rating a claim without further examination.'' This provision does not 
refer to a ``facility,'' as current Sec.  3.810(a)(1) might suggest. 
Rather, current Sec.  3.326(b) is the appropriate provision regarding 
reports from private facilities. Current Sec.  3.326(b) states in 
pertinent part: ``Provided that it is otherwise adequate for rating 
purposes, any hospital report, or any examination report, from any 
government or private institution may be accepted for rating a claim 
without further examination.'' Both paragraph (b) and paragraph (c) of 
current Sec.  3.326 are appropriate references, and therefore we have 
adjusted the reference to include both (b) and (c) of current Sec.  
3.326, which have been published as proposed Sec.  5.91(a). See 70 FR 
24680.
    We note that we have not carried forward the provision in current 
Sec.  3.810(a)(2) which states that VA's Chief Medical Director or 
designee will make the certification of eligibility. This provision 
addresses an internal administrative procedure within VA and does not 
need to be included in the regulation. Instead we have stated the 
provision in more general terms by indicating that VA will make the 
determination whether the service-

[[Page 10867]]

connected disability tends to wear out or tear the veteran's clothing 
or whether the prescribed medication causes irreparable damage to the 
veteran's outergarments. This is consistent with the language of the 
authorizing statute, 38 U.S.C. 1162, which indicates that such 
determinations are made by the Secretary. We have used the term ``VA'' 
instead of ``Secretary,'' which is consistent with the meaning of the 
statute. It is understood that an employee of VA will make the actual 
determination on behalf of the Secretary, and therefore ``VA'' is a 
more appropriate term. Using more general language (``VA'' instead of 
``Chief Medical Director'') in the proposed regulation removes the 
necessity of amending the regulation every time there is a change in VA 
procedure.
    Proposed Sec.  5.606(c) is a new provision based on current VA 
practice. It describes the criteria required for continuing entitlement 
to the clothing allowance. If a veteran has continuing entitlement to 
the clothing allowance, the veteran is not required to reapply for the 
clothing allowance each year.
    Proposed Sec.  5.606(d), regarding the annual payment period and 
anniversary date, is based on current Sec.  3.810(b). The first 
sentence of current Sec.  3.810(b) states that effective August 1, 
1972, the initial lump sum clothing allowance is due and payable for 
veterans meeting the eligibility requirements of paragraph (a) of this 
section as of that date. The August 1, 1972, date is the date that the 
clothing allowance was first effective. The first sentence of current 
Sec.  3.810(b) means that if a veteran met the eligibility requirements 
for the clothing allowance as of August 1, 1972, the clothing allowance 
was due and payable as of August 1, 1972. Due to the passage of time, 
this date and this sentence are no longer necessary, and they have not 
been carried forward to proposed Sec.  5.606.
    The second sentence of current Sec.  3.810(b) states that 
subsequent annual payments for those meeting the eligibility 
requirements of paragraph (a) of this section will become due on the 
anniversary date thereafter, both as to initial claims and recurring 
payments under previously established entitlement. The phrase 
``subsequent annual payments'' means payments after August 1, 1972. The 
``anniversary date'' means August 1 of each year after 1972. The 
sentence merely establishes that the clothing allowance is due to 
eligible veterans on August 1 of each year. The August 1 date applies 
to initial claims for the clothing allowance, and for automatically 
recurring payments.
    Proposed Sec.  5.606(d) is a plain language rewrite of current 
Sec.  3.810(b). We believe that the proposed language is clearer than 
the current version. In essence, current Sec.  3.810(b) relies on a 
reference to the original August 1, 1972, effective date of the 
clothing allowance statute in order to explain that the clothing 
allowance is due on August 1 of each year. A simpler way of saying this 
is to state that the clothing allowance is paid annually following each 
12-month period which begins August 1 and ends July 31. In addition, we 
have explained that the August 1 date is referred to as the anniversary 
date. It is helpful to keep the ``anniversary date'' terminology in 
order to easily explain the effective date provisions in proposed Sec.  
5.606(e). We have also added a definition of ``initial anniversary 
date,'' which is a phrase used in proposed Sec.  5.606(e). No 
substantive change from the current regulation is intended.
    Proposed Sec.  5.606(e), regarding the time for filing a claim for 
the clothing allowance, is based on current Sec.  3.810(c). It is 
rewritten in plain English. In addition, examples have been added in 
order to more clearly illustrate the meaning of these provisions. No 
substantive change from the current regulation is intended.
    Proposed Sec.  5.606(f) and (g) discuss clothing allowance claims 
for Filipino veterans and veterans living abroad. These two rules 
reflect current VA practice. The appropriate VA medical center 
prosthetic and sensory aids service will process the annual clothing 
allowance payment for those claims under the jurisdiction of the VA 
medical center assigned the geographical area where the veteran 
maintains a permanent address. Claims filed by Filipino veterans not 
permanently residing in the U.S. are processed locally in Manila, 
Philippines. Claims authorized for veterans of the U.S. Army and Old 
Philippine Scouts are paid in dollars. Claims authorized for New 
Philippine Scouts, Commonwealth Army of the Philippines, and guerilla 
service, are paid at a rate in Philippine pesos equivalent to $.50 for 
each dollar authorized under the law. See Sec.  3.42 (proposed Sec.  
5.613).
    Proposed Sec.  5.606(h) restates current Sec.  3.810(d) pertaining 
to reduction of the amount of the clothing allowance when a veteran is 
incarcerated for a period in excess of 60 days and is furnished 
clothing without charge by the penal institution. This regulation 
implements 38 U.S.C. 5313A. We propose to include a notation that the 
reduction applies to incarceration for any reason. We believe this 
brings focus to the controlling issue of whether the veteran is being 
furnished clothing without charge during incarceration, and not the 
reason for the veteran's incarceration. The statutory language of 38 
U.S.C. 5313A does not contain a requirement that a veteran be convicted 
of a felony for the reduction to occur. Proposed Sec.  5.606(h) 
clarifies that the reduction applies to all veterans who are 
incarcerated for more than 60 days and are furnished clothing without 
charge, without regard to the nature of the crime for which the veteran 
was convicted.

Endnote Regarding Amendatory Language

    We intend to ultimately remove part 3 entirely, but we are not 
including amendatory language to accomplish that at this time. VA will 
provide public notice before removing part 3.

Paperwork Reduction Act

    Although this document contains provisions constituting a 
collection of information in 38 CFR 5.603 and 5.606 under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501-3521), no new 
or proposed revised collections of information are associated with 
these proposed rules. The information collection requirements for 
Sec. Sec.  5.603 and 5.606 are currently approved by the Office of 
Management and Budget (OMB) and have been assigned OMB control numbers 
2900-0067, 2900-0188, and 2900-0198.

Regulatory Flexibility Act

    The Secretary hereby certifies that these proposed regulatory 
amendments 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. Although these proposed amendments 
affect some small entities, specifically auto dealerships, the proposed 
amendments do not substantively change the current regulation (38 CFR 
3.808) concerning auto dealerships. The current regulation does not 
have a significant economic impact on auto dealerships. Therefore, 
pursuant to 5 U.S.C. 605(b), this proposed amendment are exempt from 
the initial and final regulatory flexibility analysis requirements of 
sections 603 and 604.

Executive Order 12866

    Executive Order 12866 directs agencies to assess all costs and 
benefits of available regulatory alternatives and, when regulation is 
necessary, to select regulatory approaches that maximize net benefits 
(including potential economic, environmental, public health

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

Unfunded Mandates

    The Unfunded Mandates Reform Act 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, 
or tribal governments, in the aggregate, or by the private sector of 
$100 million or more in any given year. This rule would have no such 
effect on State, local, or tribal governments, or the private sector.

Catalog of Federal Domestic Assistance Numbers

    The Catalog of Federal Domestic Assistance program numbers and 
title for this proposal are 64.100, Automobiles and Adaptive Equipment 
for Certain Disabled Veterans and Members of the Armed